'The University of Oregon will not spend a dime of Phil Knight's $100 million donation on a basketball arena.

Instead, it will borrow the $200 million cost of the arena using state bonds and pay back the money with arena revenues and annual donations from fans, Oregon officials say.

The plan means that rather than private donors financing the bulk of construction, as was planned a few years ago, taxpayers will bear the arena project's financial risk.

...[S]ome UO faculty members already are worried about the university borrowing such a huge sum and skeptical about the latest projections for the arena's revenue.

"I will say that we're concerned," UO senate president Gordon Sayre said. "And we're trying to get all the information in its latest form from the athletic department so that we can look at it with a critical eye."

...Although revenue projections still are being finalized through donor surveys and other studies, [the athletic director] said recently that he was "comfortable" in saying a new arena could generate $16 million annually -- about what the University of Arizona's basketball program makes. That sum would more than cover the $11.2 million [he] estimated Oregon would pay each year on 40-year bonds.

But Oregon's latest arena revenue forecast is higher than a projection done a few years ago by an outside firm it hired to research the arena project.

In 2003, sports-facilities consulting firm CSL International projected that a 13,000- to 15,000-seat Oregon arena would generate $6 million per year in a "moderate" scenario and $8.6 million in an "aggressive" scenario, before any bond payments were made.

...Sayre called the arena financing plan "possibly risky," given that new, more expensive priority seating for basketball will compete for many of the same donors already paying for priority seating at Autzen Stadium.

"Lots of people come from all around the state on Saturday to watch football, right? So they get season tickets," Sayre said. "But are people really going to come on a foggy night in December from Portland and Medford for a basketball game?

"Can we rely on a large pool of season-ticket holders who will pay higher prices? Those are some of the questions we need to answer."

...The Oregon arena, if it uses $200 million in bonds, would be the largest single bonding project in the history of the Oregon University System, said Bob Simonton, OUS capital construction director. It also would more than double the University of Oregon's debt load for the type of bonds used for revenue-generating projects such as parking structures and dormitories.

Oregon's current load of XI-F(1) bonds is $178 million, with 3.3 percent of the university's total annual operating budget being used to pay back those bonds. State guidelines recommend a cap of 7 percent, which Oregon would nearly reach if the current arena financing plan went forward.

That's before the university launches a planned overhaul of its dormitories, which could require as much as $450 million in debt, Sayre said...'