A time of state budget cuts for higher education and yearly tuition increases is not the best moment to float a proposed $400 million expansion of a university’s athletic facilities.
Mitch Barnhart understands that.
“When you are going through tough economic times, which our state and our country are right now, you have to have concern over perceptions,” Kentucky’s athletics director said.
Yet in an announcement made Thursday morning, UK officials said they have authorized a feasibility study by sports marketing giant IMG and its affiliates to see if $400 million in private financing can be raised to:
■ build a new downtown basketball facility to replace Rupp Arena;
■ “upgrade” Commonwealth Stadium with additional luxury suites and other amenities;
■ construct an on-campus baseball park.
The reason that UK went forward with the study of athletics expansion in a time of academic austerity, Barnhart said, is that Kentucky has been presented with a new financing model that would require nothing up front.
Not from the university. Not from the commonwealth’s taxpayers.
“I’d like to hear more details,” Barnhart said. “But what I’m hearing is a really exciting opportunity for this university.”
Essentially, the plan being proposed is to borrow against future earnings generated from the new sports facilities to pay for their construction.
To do that, IMG must come up with a business plan showing that it could create enough new cash through additional luxury suites, innovative arena signage, new club seating, etc. ... to attract private capital.
“In terms of how this would be financed, it’s like a commercial real estate project. It’s like Vine Center or CentrePointe,” said Bill Owen, president and general manager of the Lexington Center, which operates Rupp Arena.
It all sounds too good to be true — and it may prove to be.
Yet it is the model IMG used that allowed the financing of the new Wembley Stadium in London. Subsequently, IMG affiliate International Stadia Group has taken the financing plan global.
“It’s the same concept they used to finance a cricket stadium in India and two premier soccer stadiums in Brazil,” Barnhart said. “It’s the first time they’ve tried it with an American college.”
However it is financed, many will wonder if Kentucky needs either a new basketball arena or an enhanced football stadium.
If you are among those who think big-time college sports has long ago become obscene in its extravagance, your answer is obvious.
I long ago reconciled myself to the fact that the Kentucky Wildcats (and the Louisville Cardinals) are the pro sports in our state.
In that context, the question — does UK need a new basketball arena? — looks a little different.
Kentucky has a larger arena than Louisville. Yet because Freedom Hall has 24 luxury suites, U of L makes more money on basketball than UK.
The new downtown arena in Louisville is projected to have more than 70 suites.
Does Kentucky need a Commonwealth Stadium revamped to produce more revenue?
Under UK President Lee Todd and Barnhart, Kentucky at last has made a commitment to try to be good in all sports, not just men’s basketball. Among the biggest beneficiaries of that philosophy have been women athletes at Kentucky.
To try to be good in all sports in the Southeastern Conference — where the football programs at schools like Florida, Georgia and Tennessee are money machines — takes a massive financial commitment.
“Football and men’s basketball pay for everything we do,” Barnhart said.
The question going forward is whether Kentucky can really get such a vast expansion of its sports facilities without having to put any money up front.
Barnhart says he expects the feasibility study to be complete in about six months.
One can’t help but wonder if IMG and UK would have gone public if they didn’t have a pretty strong feeling this could work.
Tom Stultz, the former Host Communications executive who joined IMG when it purchased Host in November 2007, says there is no guarantee.
“But I have to live in Lexington, so I have a lot riding on this,” Stultz said. “This is the most exciting project I’ll work on in my career. I’m very optimistic.”
Even in a time of academic skimping, if this financing proposal works, this is a deal too good for UK to pass up.