CHAMPAIGN, Ill. - The University of Illinois is indefinitely delaying plans to build a new basketball arena or refurbish the 46-year-old Assembly Hall, blaming the sour economy.

Illinois had planned to decide whether to rebuild or replace the on-campus arena by the end of 2008, but Athletic Director Ron Guenther decided to wait after meeting with university Chancellor Richard Herman.

"In talking with the chancellor, (Guenther) feels it's not very prudent to go forward in the current economic climate," Illinois sports information director Kent Brown told The Associated Press on Tuesday.

The university's Division of Intercollegiate Athletics had planned to use privately raised money for the project, much like it financed the recently completed $121 million facelift just across the street at Memorial Stadium.

The university never has released cost estimates for the Assembly Hall project, but either option would cost more than the wor k at Memorial Stadium, Brown said.

Brown said the university's athletics fundraising remained steady through October, but hadn't seen more recent figures.

Herman expects fundraising across the university to be hurt by the economy.

"Certainly we're expecting people to say, 'uh, maybe next year," he said. "It has to be. People have less money."

The decision to postpone the project, Brown said, was based in part on perception. Embarking on a large project after university President Joseph White in October warned the three campuses to look for ways to prepare to cut spending in the months ahead wouldn't be wise, Brown said.

Herman said Tuesday the cost-cutting measures would almost certainly include lost jobs, if not layoffs.

No decisions have been made, personnel accounts for about 70 percent of university expenses, he said. Any cuts would lead to a loss of jobs, either through attrition or the combination of layoffs and leaving unfilled posi tions open.

Brown says the university also is talking to architects on the Assembly Hall project about building it in phases to spread out the costs.