CSU governors land a red herring
Will the new Colorado State University football stadium actually generate enough revenue/profits to not require a cash bailout from the students and taxpayers? To answer this question, let’s examine the history.
The Board of Governors’ policy and procedures manual tasks BOG and the administration to “protect the university’s assets.” CSU allowed Hughes Stadium to deteriorate to the point of being bulldozed because of “chronic deferred maintenance” (their own words).
Rather than court-martial the guilty parties within the administration, the BOG instead rewarded them with a new on-campus football stadium that would cost more than $18 million per year for 40 years – $12 million in debt service plus $2.8 million in added operating costs plus $3.6 million to replace the revenue from Hughes.
This new stadium will be run by the same athletics department that, last year, required more than $20 million in student and taxpayer bailouts to survive.
Even the ‘rose-colored-glasses’ estimate of stadium revenue, as forecasted by the stadium builders, comes up $6 million short of the needed income.
So, how will the CSU administration overcome this lack of revenue and escalating debt?
According to the administration, they will call the stadium a “multi-event facility” and all their financial woes will disappear. This is certainly magical thinking at its worst. In the December BOG meeting, governor William Mosher, now the now chairman, extolled the virtues of the multi-event facility as a revenue generator. Even the BOG financial chairperson voted no on the stadium bond motion. What does he see that the rest don’t understand?
Let’s now examine what events the CSU administration anticipates will occur to generate needed revenue. Bear in mind that CSU just completed a $65 million renovation to Lory Student Center; plenty of event space there.
Graduation/commencement? If we assume that each student who graduates will celebrate for six seconds after their name is called, then the 5,000 graduates will consume over eight hours of time, weather cooperating. Certainly not a revenue generator.
Women’s soccer team? The CSU varsity soccer coach has declined to play his home games on the artificial turf, instead choosing to play on natural grass, as do 10 of the 11 other Mountain West teams. No revenue generated here.
Additional academic classrooms in the facility? The cost of these classrooms is approximately $18.2 million for 82,000 square feet, according to a June 20 Coloradoan article that said this construction will save $12 million the long run. The cost of the added space is $221 per square foot. Research done at the RS Means and DCD Building Costs website shows that straight classroom space costs between $123 and $217 per square foot to build. So, where is this $12 million in savings coming from? Definitely no revenue generated, and no costs saved.
Other events, such as concerts? I asked the appropriate CSU sources, “‘Please show me the pro-forma forecast that CSU performed for a music concert.” CSU’s answer was, “I checked around on this and don’t know of any such document.” No one has even attempted to put pencil to paper.
In 2012, Entertainment + Culture Advisors, an international consultant on entertainment projects, was hired to review the revenue projections from Convention, Sports and Leisure International for the new stadium. Even ECA found the projections lacked detailed event planning by CSL and CSU. To paraphrase their quote, “They (CSL) should have developed detailed scenarios about music concerts and those revenue projections for the stadium.” Maybe no one at CSU read that report!
It appears that the BOG has swallowed this multi-event facility hoax, hook, line and sinker, and the bait seems to be a red herring.
The BOG policy and procedures manual clearly states that the university should present a 10-year achievable financial plan before bond approval. It seems to me that CSU does not have an achievable plan; in fact, they don’t have any plan at all. It looks like Colorado taxpayers and the CSU students are going to get stuck with a gigantic bill. Time to guard our wallets!
Before holes are dug and concrete is poured, I recommend that the BOG hire an independent, objective, sports economist to review the financial assumptions and forecasts.
Stress importance of bank branches
Nice article on branch banking plans and value to both banks and credit unions in Northern Colorado (“Branch banking holds its own,” July 10-23).
What would have made the article of increased interest would have been any primary research either firm had done with customers/members or prospects on the importance/role of branches in their financial affairs. This would vary dramatically by customer demographic (primarily age and household income) but is a very important consideration in branching strategy.
The FDIC analysis did not provide any insight from the customer/member perspective; they simply looked at the statistics of number of branches, trends and density. Their data does not even provide for transaction data by branch. Limited usefulness, in my opinion.
Again, nice job on the article.
Chairman, Bank Strategies LLC