UK clubhouses at new, expanded Rupp Arena are $4.8 million over budget and climbing
University of Kentucky and Rupp Arena officials will meet soon to try to reconcile a more than $4.8 million cost overrun for four clubhouses UK wanted as part of the expanded arena and convention center project.
In 2018, UK and Lexington Center Corporation, which oversees Rupp Arena, the convention center and the Lexington Opera House, signed a new lease guaranteeing UK men’s basketball would continue to play in Rupp until 2033. As part of that agreement, UK agreed to increase the amount it paid Lexington Center over the 15-year lease.
In total, UK is expected to pay Lexington Center more than $100 million over the life of the contract.
In return, Lexington Center agreed to spend $12 million to build four clubhouses UK wanted as part of the expansion and renovation project.
According to documents presented at Thursday’s Lexington Center Corporation board meeting, the cost to construct three clubhouses has now topped $16,849,259 or $4.8 million more than the $12 million Lexington Center had agreed to spend.
The fourth clubhouse, referred to as clubhouse C, has not been constructed.
Bob Elliston, board president, said during Thursday’s meeting that UK has agreed to discuss the cost overruns soon.
Bill Owen, president and CEO of Lexington Center Corp, said the cost overruns were not due to big-ticket luxury upgrades but timing.
The lease with UK was signed before final designs for the Rupp Arena and convention center project were completed. That was necessary because UK’s lease and 15-year commitment to continue to play at Rupp Arena were key parts of the financing for the $300 million convention center and upgraded arena project.
Project designs have been tweaked repeatedly over the past few years.
“Due to the evolution of the project, at the beginning in 2017 and 2018, the clubs were at a different location. They were on the east side of the development, and now they have been moved to the west side of the development,” Owen said.
The cost of construction has also climbed since 2018.
Owen said after Thursday’s meeting that he is confident the two groups can come to a resolution. Three of the completed clubhouses have had limited use by UK due to coronavirus restrictions on large group gatherings. One of those clubhouses, deemed clubhouse A, is for UK’s exclusive use. The other clubhouses can be used by Rupp Arena for other events, such as concerts.
“They are a strong partner and supporter of our organization and always have been since 1976,” Owen said.
Tony Neely, an assistant director of communications and public relations for UK Athletics, said UK is aware of the cost concerns.
“LCC has informed us broadly of their cost overruns, and we have agreed to meet with their leadership to learn the specifics of the overruns and of any creative solutions to complete the project in accordance with our agreement,” Neely said in a written statement.
Documents provided to the board on Thursday show the overall project is still within its budget.
Rupp Arena, the convention center and Lexington Opera House were hit hard by cancellations after the coronavirus pandemic started in March. Lexington Center Corp. was forced to lay off nearly all of its workforce this summer to cut expenses. The remaining staff took pay cuts. Some full-time and part-time staff have been brought back as Rupp Arena has added more events, including UK Men’s Basketball games, officials said during Thursday’s meeting.
In June, the Lexington-Fayette Urban County Council agreed to back $34 million in new borrowing or bonds to help the convention center make debt payments on two previous loans totaling $218 million for the convention center expansion, which includes the changes to Rupp Arena.
This story was originally published January 21, 2021 at 2:31 PM.
CORRECTION: A previous headline on the article misstated the amount of the cost overrun, which is $4.8 million.
