Arena may be paid for completely in bonds
The Oregon Athletic Department has thrown a curveball to the slowly-revealed plans of the new Basketball arena. The administration and AD are seeking to pay the arena by taking out $200 million in 30- or 40-year bonds, according to an article in today’s Oregonian. If this is the case, tax payers would not pay for any of the arena. They would, however, bear the loss if the department is unable to pay off the bonds.
Oregon’s current load of XI-F(1) bonds is $178 million, with 3.3 percent of the university’s total annual operating budget being used to pay back those bonds. State guidelines recommend a cap of 7 percent, which Oregon would nearly reach if the current arena financing plan went forward.
That’s before the university launches a planned overhaul of its dormitories, which could require as much as $450 million in debt,” UO senate president Gordon Sayre said.
Kilkenny said the bonds would be paid by arena revenues, and any shortfall would be paid with money from the Duck Athletic Fund. The Legacy Fund, which was just kicked off by Phil and Penny Knight’s $100 million donation, then, would cover the department’s annual operating costs.
Kilkenny estimates the department would need $11.2 million a year to cover 40-year bonds. A 2003 report estimated a new arena would generate revenues of $6 to $8.6 million, but Kilkenny said those numbers are conservative and thinks the new arena could bring in up to $16 million annually.
