The University of Kentucky plans to spend $6.25 million this summer installing a new sound system and video scoreboards in Commonwealth Stadium before the first home football game on September 10.
The UK Athletics Association would pay for the upgrade using $3.15 million in private funds and a $3.1 million internal loan from the cash-strapped university, which has not given raises to most employees for three years.
If the proposal is approved by the Board of Trustees, the Council on Postsecondary Education and the legislature's Capital Projects and Bond Oversight Committee, the athletics association would repay the loan over a period not to exceed five years at a variable interest rate that is now 1.64 percent.
Spokesman Jay Blanton said UK found money for the loan in its "operating funds investment pool," which is the working capital for all university day-to-day operations.
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The funding arrangement raised the eyebrows of some faculty members on Thursday.
"Once again, when the university finds it needs money it is able to find it in some manner, shape or form," said Ernie Yanarella, a political science professor and former faculty trustee. "Given that it is the athletics program that is requesting essentially a match, this needs to be looked into very carefully."
Joe Peek, a current faculty trustee, said he had only recently heard of the big-ticket proposal.
"Why haven't we had a heads-up on this?" he said. "What is the market interest rate that they would have to pay if they went out and borrowed it? If it's more, then that's a subsidy."
The Council on Postsecondary Education is expected to vote on the proposal at its April 28 meeting. The trustees will take up the issue on May 3.
The existing video boards use Cathode Ray Tube technology that was installed in July 1999 and has become difficult to maintain, according to a summary of the project included on the agenda of the council's April 28 meeting.
The university would install two large panels that use Light-Emitting Diode technology, along with "ribbon boards" on the upper deck sidelines and suite corners that would increase advertising revenue.
The stadium's current video boards "don't provide the kind of sophisticated viewing experience that fans have come to expect across the country," Athletics Director Mitch Barnhart said in a written statement.
The new boards will give fans more access to statistics, scoring updates from games, video replays and closed captioning, Barnhart said.
"As importantly, the boards will generate increased revenue through the sales and marketing of video advertising," he said.
Asked why the athletics department didn't pay for the project using its own endowment funds, Blanton said those funds "are invested on a long-term basis and it makes more financial sense, in this instance, to purchase the new boards in this manner."
Trustees chairman Britt Brockman of Louisville said he had not been involved in discussions concerning the new video boards. He said the loan has "got to do with the day-to-day operations of the university," which would be outgoing UK President Lee T. Todd Jr.'s bailiwick.
"My assumption is that he and the athletic director have made this recommendation," Brockman said.
In February, Todd extended Barnhart's contract to 2019, which he said was a favor to his successor. Barnhart's base salary was boosted from $475,000 to $600,000 annually.
The preferred candidate to become Todd's successor is expected to be voted on by the trustees at their May 3 meeting.
Barnhart has long said he wants to upgrade Commonwealth Stadium.
In a December 2010 interview, he said his primary focus in 2011 would be renovating the stadium. Items on his to-do list included new scoreboards, the addition of club seating and more luxury suites, the construction of a multi-purpose recruiting room, upgrades to the concession stand areas and the addition of electronic monitors in the concourse areas and around the perimeter of the stadium.
The renovations would cost an estimated $150 million to $180 million, Barnhart said.
He said the funding could be assembled three ways: support from the state, fund-raising and borrowing.