New Oregon Arena Revenues Fall Short
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, a new set of financial projections has cut some revenue categories by more than 30 percent for Matthew Knight Arena.
The estimates also show that the athletic department could see small annual net deficits for five years, starting next year.
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 largely is because of 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.
The deficits in the new projections amount to less than 1 percent of total revenues. Mullens said that those deficits will be absorbed by increasing income, cutting expenses or both.
There also is 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 never draws down the fund below $50 million under the latest model projections that extend through 2038.
The revenue projections for the arena long have 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,” said economics professor Bill Harbaugh, a member of the school’s Intercollegiate Athletics Committee. “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.
Revenue from men’s basketball tickets, the arena’s largest moneymaker, is on track to come in at $2.4 million for the fiscal year ending June 30, according to Mullens. That’s down $400,000 from the projections completed last month.