Posted by John Vrooman on Thursday, September 28, 2017 in NCAA Basketball.

Interview with Louisville Biz First.

I’m wondering about the potential economic impact to the city and university after what has befallen the university of Louisville’s basketball program. Any thoughts?

Usually a D1 college basketball program has little or no impact on the local economy one way or the other, but in the case of University of Louisville basketball the adverse impact of the most recent scandal on the City of Louisville will be relatively quick and possibly severe. This all depends on the magnitude and severity of the sanctions placed on Coach Pitino and the Cardinals basketball program.

The unique economic linkages between the basketball Cardinals and the City of Louisville pass directly through the publicly funded, yet-to-be-paid-for KFC Yum Center where the fighting Pitinos have been the anchor tenant. Since Louisville lost the bid for relocation of the NBA Vancouver Grizzlies to the Memphis FedEx Forum in 2001, the economic architecture of the KFC Yum Center has been interwoven with the NCAA D1 basketball Cardinals.

 The Louisville Cardinals are a stone cold semi-professional money machine. With an annual basketball budget in excess of $50 million and a head coach’s salary around $8 million (just ahead of Kentucky’s John Calipari ), the Louisville Cardinals and their head coach are the most expensive basketball program-coach package in the NCAA by a long shot. This basketball budget would place the Cardinals in the top 25 of Power 5 football budgets and Coach Pitino is/was the second highest paid head coach in college sports period (just behind football Michigan’s Jim Harbaugh).

Thanks John.  So the biggest economic impact would be on the university itself in ticket sales, reluctant university donors, out-of-state prospective students, that kind of thing?

Yes but UL basketball also a direct impact on the city’s arena funding for the KFC yum center. Arena bonds were to be paid by tax increment financing based on sales taxes around the arena. In this unique case, the impact of the team (positive or negative) extends beyond the university into the economic grid.

 Understood. So, if the ticket sales or attendance went down, that could impact nearby businesses and in turn the TIF revenues?

Yep.

Does attendance or sales typically dip after a scandal like this where the hall of fame coach is lost?

not always, but the economic connection between Louisville and UL Cardinals basketball is unique. With a $50 mil basketball budget and an $8 mil salary coaching package they may be able to repeal, reload and replace with whomever they want as coach and not miss a beat, depending on penalties and sanctions. After all the speculation however Rick Pitino is still a one-of-a-kind hall-of-fame coach.

Because Louisville basketball is currently on probation the NCAA may hit the program with the death penalty, which would of course magnify the adverse impact on the school and the city of Louisville.

Good point. Are the chances of that slim, though?

Death penalty is rare, but real and possibly imminent.

That’s when they basically disband the team?

Yep.

V