PORTLAND (AP) - A state budget analyst said the University of Oregon athletic department can afford to build and operate a new arena without resorting to subsidies from the school's general fund, even if a pessimistic revenue forecast proves accurate.

But Steve Bender said the gloomier projection would force the university to dip heavily into its new Legacy Fund, which started with a $100 million gift from Nike co-founder Phil Knight.

In an e-mail to reporters, Bender said he will continue to recommend that the Legislature approve $200 million in state-backed bonds for the arena project. If approved, the arena - the most expensive in the nation on a college campus - is expected to open in 2010.

The Legislative Fiscal Office re-examined the financing plan after a 2004 report by consulting firm ECONorthwest surfaced showing projected arena revenue of about $4 million per year, far lower than estimates provided last year from consultants hired by the university.

The 2007 report, from the consulting firm Conventions, Sports and Leisure International, gave a low-end revenue estimate of $10.5 million with a high end of $16.1 million.

The university released the less-flattering report Feb. 8 after a public-records request by a UO professor. Under that ECONorthwest analysis, net revenue in the ECONorthwest report rises to $4.65 million a year after inflation is factored in, but does not include the increased revenue from a new $67 million marketing-rights deal or debt service costs.

Revenue from the ad contract pushes revenues to $7.6 million a year. That's still about $7 million short of what the athletic department will need to pay debt service on the $200 million in arena construction bonds and $27.4 million in bonds already issued to buy the site.

The athletic department would make up that amount by tapping into the Duck Athletic Fund and other athletic department revenues; those expenditures would then be backfilled by earnings from the Legacy Fund.

The university has said it does not believe the ECONorthwest numbers are valid because they are outdated and were prepared when the university was pursuing a different arena plan. But Bender said he found the ECONorthwest analysis credible.

Legislators are expected to vote on the bond measure before the end of the month.