Oregon’s New Basketball Arena Falling Short In Revenue

February 27, 2012 /
MailTribune.com

http://www.mailtribune.com/apps/pbcs.dll/article?AID=/20120227/SPORTS/202270311

EUGENE — Officials have substantially lowered revenue projections for the University of Oregon’s new basketball arena after the venue failed to bring in as much money as they hoped, The Eugene Register-Guard reported.

According to the report (http:bit.ly/zAoeo5 ), a new set of financial projections have cut some revenue categories by more than 30 percent for the 1-year-old Matthew Knight Arena.

The estimates also show the athletic department could see small annual net deficits for five years, starting next year.

But Athletic Director Rob Mullens said that even with less arena revenue than expected, the department should have more than enough money to keep its budget balanced and teams competitive.

That’s largely due to its lucrative football program and the Legacy Fund, a financial cushion from donors that made the new arena possible.

“The good news is that we can continue to meet the bottom line projections of the Legacy Fund model,” Mullens said. “We can continue to meet all of our operational expenses.”

The deficits in the new projections amount to less than 1 percent of total revenues. Mullens said those deficits will be absorbed by increasing income, cutting expenses or both.

And there is always the Legacy Fund, which was established with a $100 million gift from Phil and Penny Knight. The fund — boosted to $130 million with pledges from others — helps cover the big debt payments on the arena.

The University of Oregon never draws down the fund below $50 million under the latest model projections that extend through 2038.

The revenue projections for the arena have long been a hot topic, with critics saying the university deliberately inflated the expected revenue to make the project look attractive.

“We all knew they were optimistic,” economics professor Bill Harbaugh, a member of the school’s Intercollegiate Athletics Committee, said of the initial estimates. “They just wouldn’t admit it. From what I’ve seen of the athletic department, their budgeting is just smoke and mirrors, so I don’t put much faith in it.”

The new estimates lower the expected 2011-12 revenue from men’s basketball tickets by about 15 percent and from women’s basketball by about 25 percent. Expected revenue from outside events including concerts has been cut by more than 30 percent.


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