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August 6, 2008

A week in the life of the Arena Authority

The Louisville Arena Authority is expected to call an emergency meeting within the next week to discuss alternate plans to pay for a downtown sports and entertainment complex.

The Arena Authority recently was on the brink of finalizing a bond package to pay for construction of a new downtown arena when a major financial market analyst issued a “negative watch” for the bond insurer. The deal was postponed as a result of the dire forecast, and now the authority is scrambling to piece together another financing plan.

During a meeting last week explaining the unexpected turn of events, Arena Authority Chairman Jim Host recounted a call he received on his cell phone the night before they were supposed to close the deal. On the line was a representative of Goldman Sachs — the bond underwriter for the deal — who said, “You won’t believe what just happened … it’s not good.”

Although the $360 million financing package unraveled overnight, Host told fellow board members at last week’s meeting that he is cautiously optimistic that a solution will be found soon. “There’s too much at stake for this state and this community to walk away from this deal at this point,” he said. “We’ll get the money.”

If financing isn’t formalized by the end of September, Host says scheduling issues might arise. The arena currently is slated to open in November 2010, in time for the start of the University of Louisville basketball season. The university will be the venue’s primary tenant, although concerts and other events will be held there as well.

Despite his cautious optimism, Host told colleagues that after receiving news that the deal had died, what came next was “not a good week.”

“I have always operated in my life with a half-full glass,” he said, shaking his head with a laugh before adding, “That glass almost got broken last week.”

The Arena Authority has a regularly scheduled meeting on Aug. 18, but an emergency session is likely to be called before then with 24 hours notice.