Sales Tax TIF - Flawed Deal Lessons

What can we learn from an extreme example of a TIF failure?

Getting STIF[ed]: Louisville’s Yum! Center, Sales-Tax Increment Financing, and Megaproject Underperformance by Robert Sroka, University of Michigan, 1402 Washington Heights, Ann Arbor, MI 48109, USA.Email : rsroka@umich.edu  link

Abstract

This article evaluates the revenue performance failings of the Yum! Center,

a sports arena in Louisville, with the primary objective of explaining how a

flawed deal arose in the first place. While the literature addressing public

subsidization of sports facilities primarily contemplates economic impact

underperformance, Louisville provides an extreme instance of failed

financial performance leading to a bailout. The revenue challenges, arising

from sales-tax increment financing and the lease agreement, link the arena

to a wider literature on megaproject underperformance, characterized by

three primary threads: rent-seeking, governance structures, and project

cultures. This article evaluates the Yum! Center through representative

lenses from each of these threads before offering key lessons for future

projects.