(WMC-TV) - Memphis City Council Chairman Myron Lowery said Wednesday that Memphis and Shelby County have a $250 million debt to repay for the construction of FedEx Forum, so the city must play defense in light of the NBA lockout.
"Our only recourse is to go back to the citizens and ask for a property revenue increase," said Lowery. "We do not want to do that."
Lowery said the city and Shelby County depend on game day revenues to pay the $600,000 bond debt bill each season.
Memphis and Shelby County Sports Authority Chairman Bill McGaughey said the FedEx Forum finances are not totally dependent on the lockout. He said there are five other revenue streams, from Memphis Tigers basketball to Disney on Ice.
"We still think that we're in good shape as far as being able to pay the bonds and take care of the bonds in the short-term," said McGaughey.
However, if the lockout continues, the shortfall would grow to $10.6 million by 2029.
"There's around $10 million in the reserves at this point that would help make up any shortfall," said McGaughey.
City Attorney Allan Wade said taxpayers would still have to return any lost revenue to the reserves fund.
"We'll have to replenish the debt service reserves fund, but the bond holders might even have more recourse because they anticipate and expected that there will be full seasons to pay the bonds," said Wade.
McGaughey said the Sports Authority rethinks day-by-day.
"We'll rock on with what we've got, but you just don't know," he said. "So we plan and we adjust as the plan adjusts itself."
The council attorney will report his findings to the council in two weeks.
Some council members argued loss is just the risk of doing business, but others countered that it is the council's job to call foul if taxpayers are being targeted.