KFC Yum! Center Net Income To Fall Far Short Of Financial Projections
The KFC Yum! Center by all accounts has been a "spectacular success since it opened in fall 2010, meeting every expectation except one -- profitability," according to Marcus Green of the Louisville COURIER-JOURNAL. The Kentucky State Fair Board, which "manages the building for the Louisville Arena Authority, expects net income of about" $500,000 from operations in '11. That is "far less" than the $1.2M budgeted, and a "fraction" of the $3.7M forecast when the project was financed in '08. The lower profit margin has "potentially serious ramifications for paying off the arena, which depends on a mix of money that includes steadily growing tax revenue near the building, corporate sponsorships and an annual payment" by Louisville Metro Government. If any of those "fall short ... arena leaders had planned to fill the gap by tapping leftover funds from the center’s operations." The Louisville Arena Authority is "due to receive a consultant's report evaluating the building's operations" in April. Arena Authority Chair Jim Host said that the "preliminary figures for the building's first full year show revenues are exceeding expectations, but the costs of running the arena are much higher than projected." Host added that revenues from arena operations, such as concessions, rent from the Univ. of Louisville and ticket fees, are expected to be $9.7M for the year ending in '11 -- higher than the $9.6M consultant Leib Advisors projected. But Host said that expenses, which were "originally estimated at more" than $5M, are expected to be $9.2M for the year. The Arena Authority indicated that the panel would "dip into a maintenance account to come up with an estimated" $3M shortfall in debt payments for '12 (Louisville COURIER-JOURNAL, 3/22).