State lawmakers ask for KFC Yum! Center audit

A committee comprised of state lawmakers voted unanimously Tuesday to ask State Auditor Mike Harmon to audit the Louisville Arena Authority, which oversees the KFC Yum! Center, due to ongoing concerns about the facility's finances.

The state legislature's Capital Projects and Bond Oversight Committee, which includes Democrat and Republican legislators, discussed the Yum! Center's financial situation at a meeting Tuesday and ultimately decided to request the audit.

"So you can see there's no partisan politics involved...Our primary concern is the financial future of the Yum! Center, and within the next couple of years we’re going to have a financial crisis on our hands,” state Sen. Julian Carroll, D-Frankfort, said of the unanimous vote.

Carroll, who is on the committee, said he worries about the Yum! Center's ability to cover its future debt payments.

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Committee member and state Sen. Chris McDaniel, R-Taylor Mill, said the arena's arrangement with the University of Louisville, whose basketball teams play at the Yum! Center, is another concern.

The university's athletics programs reap a "tremendous profit" from their partnership with the Yum! Center, McDaniel said, and it's a deal that "ultimately might strangle" the arena itself.

He also mentioned the Arena Authority's financial arrangement with the Kentucky State Fair Board, which used to host U of L basketball games at Freedom Hall before the Yum! Center was built, as another issue that the committee believes warrants further review

State Rep. Jim Wayne, D-Louisville, said the committee will approve a letter formally requesting an audit at an upcoming meeting that will then be sent to Harmon's office.

Wayne, who is also a member of the committee, said it's up to Harmon to decide whether to conduct the review. The committee asked Adam Edelen, Harmon's predecessor, to audit the Louisville Arena Authority, but Wayne said he declined.

This is intended as a constructive endeavor, not a critical one, Wayne said. The committee isn't worried the Yum! Center is being mismanaged, but he hopes an audit could lead to solutions for any financial problems the arena has.

"It's a real jewel in our community, and we want to make sure it stays polished and it stays safe," he said.

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Scott Cox, the Arena Authority's chairman, said the Yum! Center doesn't have any immediate financial problems. There are some issues they're addressing right now, Cox said, but there's no reason to panic.

"The Yum! Center will never go under," he said. "It will never be bankrupt. We will always service the debt."

It's likely that the authority will have new plans in place in a matter of weeks regarding how to strengthen the arena's financial position, Cox said. He also said U of L has been a fantastic partner since the Yum! Center opened in 2010 and has an interest in helping ensure the arena stays in great shape.

As for an audit, Cox said he's "truly indifferent" about the idea. He expressed confidence in the Arena Authority's transparency about its oversight of the Yum! Center and said they're willing to work with the state if legislators think an audit is a good idea. The authority's board members are appointed by the governor and by Louisville's mayor.

Over $340 million in bonds were used to pay for the arena, and some of that debt is meant to be covered through a tax increment financing district that was redrawn after early returns were lower than expected. The bond payments are slated to increase over time and are expected to hit about $37 million in 2029.

Kenny Klein, a spokesman for U of L's athletics department, declined to comment Tuesday on the possibility of an audit but did say the Arena Authority has been a great partner for the university.

Contact reporter Morgan Watkins at (502) 875-5136 or mwatkins@courier-journal.com.