Cincy approved $85m stadium expansion

[woomba]

The way they usually do the projections is that a certain % revenue raised from additional seating /upgrades annually is ear marked for debt service. That way the expansion pays for itself (after 20 years or so)

Of course, not all schools make realistic projections so they end up falling behind projections - Cal's a good example of that.

 

[frankthetank]

A lot of people are focusing on the quantity of seats as opposed to the quality of seats.

Why did *two* NFL teams leave LA? It wasn't because they didn't have enough seats. In fact, they had plenty. The Raiders were in the LA Coliseum with 90,000-plus seats. It was the fact that they didn't have stadiums with enough *luxury* seats.

Same thing with the NBA leaving Seattle. Key Arena is a perfectly serviceable 17,000-seat basketball arena on paper... except that it doesn't have enough luxury seats which makes it untenable in the eyes of NBA owners (whether that's fair or not).

This is also where college sports stadium expansions and renovations are heading. That's why Louisville has been able to show such a massive revenue increase with its new basketball arena and recent renovation of Papa John's Stadium - it's the sale of all of those luxury suites more than anything. That was the focus of TCU's latest stadium renovation, too - overall capacity went up by less than 700 seats, but the new suite revenue is going to generate exponentially more ticket money than what they were getting previously (even beyond their new Big 12 conference revenue). It's also what Tulane and Houston are doing with their new stadiums (that are "right-sized" for on-campus games). Rutgers installed over 1000 new premium seats as part of its football stadium expansion.

So, Cincinnati isn't adding in 5000 seats for the sake of increasing capacity by 5000. These aren't going to be bleacher seats. Instead, most of them are going to be high end suites and box seats that are going to require large donations and leasing fees on top of the price of game day tickets. 1 luxury seat sold could easily be worth the revenue of 10 regular seats sold, so the idea is that those 5000 extra seats are going to be high impact revenue generators (not just to get the capacity number higher, which is tangentially helpful but not the real purpose).

As a result, the Rent likely doesn't need to add tens of thousands of "normal" seats, but adding even just a couple of thousand premium seats can make a big difference to the athletic department's revenue line (which in turn gets you a further look from power conferences in the way that Louisville's revenue jumped out at them). Sheer attendance is nice for press releases, but there is increasingly more focus on getting more out of a smaller and more moneyed pool of supporters via luxury suites as opposed to attempting to pack as many people into a stadium as possible.

 

[UConn Dan]

We have beautiful sky boxes already... and they are empty.

 

[Fishy]

The Rent was built ten years ago and therefore has some premium seating - if memory serves, that's just under 40 luxury suites and some number of "club" seats.

 

[frankthetank]

We have beautiful sky boxes already... and they are empty.

Well, then that's an issue that needs to be rectified. This is where Louisville, in particular, is making an absolute killing in terms of revenue.

 

[upstater]

Woomba, it doesn't work anywhere, doesn't work at Michigan, doesn't work at Texas, doesn't work at Rutgers as we saw just recently. It simply doesn't work. They should just say they are spending tens of millions for football renovations and be done with it. UConndoes the same thing: press releases come out highlighting that the AD is self-sufficient and that no general funds are used--then you look at the budget, and it's just not true.

 

[SubbaBub]

We should definitely roll out the expansion plans so at least the media knows they exist.

Sent from my MB860 using Tapatalk 2

 

[woomba]

What do you mean by it doesn't work? Michigan and Texas both run AD department surpluses after debt service - you're probably right about Rutgers but there are successes out there.

 

[huskymedic]

The Rent was built ten years ago and therefore has some premium seating - if memory serves, that's just under 40 luxury suites and some number of "club" seats.

http://www.rentschlerfield.com/luxury_seating.cfm

 

[UConn Dan]

We should definitely roll out the expansion plans so at least the media knows they exist.

Sent from my MB860 using Tapatalk 2

But this the problem with a state owned facility. We, as fans (and tax payers) need to put pressure on the AD to put pressure on the state AND put pressure on the state to make this happen. That's a lot of pressure.

 

[UCFBfan]

They added 5k seats? I don't care what tupes of seats they are, this doesn't mean a thing besides making everyone here find anoyher thing to complain about. Win games and the rest will play out. Let's be honest, Cincy is going Big 12 or no where. They're not a major thrwat to us other than possibly reaching greener pastures earlier than us if yhe Big 12 expands. Seeing that us to the Big 12 is as far fetched as Cincy to the B1G I'm not losing sleep over this.

Uconn needs to sell their luxary suits that they currently have. Like it was stated earlier, that's what will get more revenue. Not adding another few thousand bleacher seats.

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[upstater]

What do you mean by it doesn't work? Michigan and Texas both run AD department surpluses after debt service - you're probably right about Rutgers but there are successes out there.

I've been over this a thousand times before on this board, with links. The basic is this: the stadium expansions were funded by the academic side. Both schools are hundreds of millions in debt because of big sports facilities (for Michigan, including hockey). When you put that debt into the equation, there is no surplus.

 

[woomba]

Ah - you mean the fact that the university is one of the bondholders that paid for the expansion.

You're not wrong in that university funds are going towards the expansion plans since they are a bondholder - but both departments are paying back the bond annually with interest so it's more accurate to view them as an investor than just giving the money to the AD.

Heck, Michigan earmarks $10M annually to payoff the Big House expansion and $6M of that is in interest payments.

If either department starts depending on school subsidies to balance the budget then you have an argument that the school basically gave them money - however both programs have pulled in a surplus for at least the past few decades, possibly longer.

 

[upstater]

Ah - you mean the fact that the university is one of the bondholders that paid for the expansion.

You're not wrong in that university funds are going towards the expansion plans since they are a bondholder - but both departments are paying back the bond annually with interest so it's more accurate to view them as an investor than just giving the money to the AD.

Heck, Michigan earmarks $10M annually to payoff the Big House expansion and $6M of that is in interest payments

I checked the UM AD budget a few months ago. It's $2m in payments back for the loans, not $10m.
At Texas it's $0.

Read this article: http://admin.collegepublisher.com/preview/2.3382/2.4490/1.2140563?firstComment=20#forum

The writer Hillis doesn't get into the nitty-gritty in the article, but read his replies in the comments.

 

[woomba]

Here - from last year, scroll to the bottom.

FY-2012 http://www.regents.umich.edu/meetings/06-11/2011-06-X-13.pdf

For the upcoming year, slide 6

FY-2013 http://annarborchronicle.com/wp-con...FY2013-Budget-Presentation-6-21-final-v.2.pdf

Maybe you're right about UT, I'm more knowledgeable about Michigan's side.

 

[huskymedic]

Ah - you mean the fact that the university is one of the bondholders that paid for the expansion.

You're not wrong in that university funds are going towards the expansion plans since they are a bondholder - but both departments are paying back the bond annually with interest so it's more accurate to view them as an investor than just giving the money to the AD.

Heck, Michigan earmarks $10M annually to payoff the Big House expansion and $6M of that is in interest payments.

If either department starts depending on school subsidies to balance the budget then you have an argument that the school basically gave them money - however both programs have pulled in a surplus for at least the past few decades, possibly longer.

http://businessofcollegesports.com/2013/06/25/michigan-athletics-budget-news/

 

[woomba]

http://businessofcollegesports.com/2013/06/25/michigan-athletics-budget-news/

I'm not sure what part of that article contradicts what I wrote?

 

[ConnHuskBask]

Nobody, is saying this is the end all be all, but as Frank The tank has said repeatedly on here, other schools are gunning for what we perceive is our spot to lose should a conference expand.

I've never been one to say if we expanded the rent we would've been chosen already, in fact I was against expanding the rent until it was needed.

However, Houston, Cinci, UNLV, and hell even Temple are building new stadiums, and or making plans to invest in facilities.

Even if UConn were to come out with a blue print or some cool graphics i would feel better about things.

Just the way things are now, I feel like the school is fine with the status quo and that in turn has damaged enthusiasm from the fan base.

I'm not about to get all HFD, but would it kill UConn to commission someone to put together a rendering of 55k Rent with the new score board and UConn blue draping over the concrete gray at the rent?

Imagine Cinci today releases plans to upgrade to 40k and then we can reveal our plans to go to 50k? College football is all public opinion and right now we are absolutely being crushed.

 

[upstater]

Here - from last year, scroll to the bottom.

FY-2012 http://www.regents.umich.edu/meetings/06-11/2011-06-X-13.pdf

For the upcoming year, slide 6

FY-2013 http://annarborchronicle.com/wp-con...FY2013-Budget-Presentation-6-21-final-v.2.pdf

Maybe you're right about UT, I'm more knowledgeable about Michigan's side.

The very first page of the budget link you gave me stated this:

Budgeted debt service has increased $2.2 million because of debt incurred for the Stadium and Crisler Arena projects.

The Texas article is interesting only because the writer breaks down how some of the sausage is made not only in terms of debt but also in terms of how universities count donations and royalties.

 

[huskymedic]

I'm not sure what part of that article contradicts what I wrote?

Chill - Didn't say it did... it just popped in my twitter feed so I shared.

BizCollegeSport 4:03pm via TweetDeck
Michigan predicting a $10.2m surplus this year and $8.9m next year: businessofcollegesports.com/2013/06/25/mic….

 

[upstater]

Nobody, is saying this is the end all be all, but as Frank The tank has said repeatedly on here, other schools are gunning for what we perceive is our spot to lose should a conference expand.

I've never been one to say if we expanded the rent we would've been chosen already, in fact I was against expanding the rent until it was needed.

However, Houston, Cinci, UNLV, and hell even Temple are building new stadiums, and or making plans to invest in facilities.

Even if UConn were to come out with a blue print or some cool graphics i would feel better about things.

Just the way things are now, I feel like the school is fine with the status quo and that in turn has damaged enthusiasm from the fan base.

I'm not about to get all HFD, but would it kill UConn to commission someone to put together a rendering of 55k Rent with the new score board and UConn blue draping over the concrete gray at the rent?

Imagine Cinci today releases plans to upgrade to 40k and then we can reveal our plans to go to 50k? College football is all public opinion and right now we are absolutely being crushed.

When UConn didn't get into the ACC it hurt badly. if I were the B12, I wouldn't be looking UConn's way, and that has absolutely nothing to do with UConn's fan interest in value. It's simply a question of geography. UConn fans should prepare to be disappointed should the B12 expand. I can't see it.

 

[freescooter]

A lot of people are focusing on the quantity of seats as opposed to the quality of seats.



This is also where college sports stadium expansions and renovations are heading. That's why Louisville has been able to show such a massive revenue increase with its new basketball arena

Actually, that a result of A. Cooking the books; and B. Screwing the City of Louisville with a phony lease. The city is going on the hook for 9.8 million in revenue bond (TIF bonds)payments that were supposed to be covered but weren't because UL's lease is a sweetheart deal. UL controls the scheduling, gets a large chunk of the revenue and can veto proposed events. Louisville won't permit a 2nd tenant which is necessary to cover the costs of the project. And worse, it has a vested interest in reducing the number of events in the center and its income because they also have a right to purchase it if it fails to meet its payment obligations. In other words, it is in Louisville's interest to have the project fail because they they can step in and buy it at a discount. The city is projected to have to come up with an extra $3.3 million over the $6.5 it was already ponying up annually for the foreseeable future. And the $6.5 million was already about 3 million more than was originally projected to be its annual share. The Arena Authority also burned through its capital reserve fund to cover debt service before it went to the City. The bonds were reduced to junk status last year and Moodys wrote:
The downgrade principally reflects the lower than expected state sales TIF revenues, high operating expenses of the arena, increased dependence on the Metro Louisville’s additional payments, and the weakened financial metrics going forward. The rating outlook is negative. The negative outlook reflects the uncertainty of TIF revenue growth as well as the narrow debt service coverage ratio going forward. Current near to midterm coverage ratio forecasts fall short of initial projections even after taking into account the expected growth of future TIF revenues. TIF revenues may not fully support the arena’s debt service as initially projected in the near future.
And for what its worth as a side note, after starting high, income from luxury seating has fallen the last two years, form a high of 1.7 million to 1.4 million in 2012. That project was a disaster for everyone involved except UL. A transfer from the pockets of the louisville taxpayers to the lousiville athletic department is what led to the massive revenue increase from YUM.

 

[woomba]

The very first page of the budget link you gave me stated this:

The very first page of the budget link you gave me stated this:

The Texas article is interesting only because the writer breaks down how some of the sausage is made not only in terms of debt but also in terms of how universities count donations and royalties.

That's the figure for the increase from the previous year, not the total. The Big House expansion project's been going on since 2007.

If you look at the components of the debt, the additional debt service is mostly from the Basketball arena renovation.

 

[woomba]

Actually, that a result of A. Cooking the books; and B. Screwing the City of Louisville with a phony lease. The city is going on the hook for 9.8 million in revenue bond (TIF bonds)payments that were supposed to be covered but weren't because UL's lease is a sweetheart deal. UL controls the scheduling, gets a large chunk of the revenue and can veto proposed events. Louisville won't permit a 2nd tenant which is necessary to cover the costs of the project. And worse, it has a vested interest in reducing the number of events in the center and its income because they also have a right to purchase it if it fails to meet its payment obligations. In other words, it is in Louisville's interest to have the project fail because they they can step in and buy it at a discount. The city is projected to have to come up with an extra $3.3 million over the $6.5 it was already ponying up annually for the foreseeable future. And the $6.5 million was already about 3 million more than was originally projected to be its annual share. The Arena Authority also burned through its capital reserve fund to cover debt service before it went to the City. The bonds were reduced to junk status last year and Moodys wrote:
The downgrade principally reflects the lower than expected state sales TIF revenues, high operating expenses of the arena, increased dependence on the Metro Louisville’s additional payments, and the weakened financial metrics going forward. The rating outlook is negative. The negative outlook reflects the uncertainty of TIF revenue growth as well as the narrow debt service coverage ratio going forward. Current near to midterm coverage ratio forecasts fall short of initial projections even after taking into account the expected growth of future TIF revenues. TIF revenues may not fully support the arena’s debt service as initially projected in the near future.
And for what its worth as a side note, after starting high, income from luxury seating has fallen the last two years, form a high of 1.7 million to 1.4 million in 2012. That project was a disaster for everyone involved except UL. A transfer from the pockets of the louisville taxpayers to the lousiville athletic department is what led to the massive revenue increase from YUM.

I'm still dumbfounded that the city actually went along with that deal. Anyone with a brain can see that they'll be losing money on that all day long.

 

[upstater]

That's the figure for the increase from the previous year, not the total. The Big House expansion project's been going on since 2007.

If you look at the components of the debt, the additional debt service is mostly from the Basketball arena renovation.

Yep, when last I looked at this, I went through the 2010 budget. You can see in your link that in 2010 the payout was $2m. It went up to $10m in 2011 and has been there the last 2 years.

My only question is this. The bond was secured in 2007. For 3 years, the AD was only paying $2m on it. So how do we know that they are paying the total amount now when they weren't paying it in 2010? Someone like Pudge would need to weigh in on this to tell us if $10m-11m a year is enough to service a $226m bond. Back in 2007 when they secured the bond, the press release said that increased revenue from the renovation (mainly due to premium seating) would generate $14 million that would "help pay for improvements throughout the stadium, such as more concession and restroom facilities, wider aisles and additional concourse space. The most visible change to the 80-year-old stadium would be the construction of two large structures that will span the east and west sidelines and top out at 10 feet above the existing scoreboards. Construction is scheduled to begin after the 2007 season."

When you add Chrisler, something tells me that $10-11m doesn't cut it. I'm not knocking Michigan, they have a surplus of $7m, $8m and $10m the last 3 years. Losing money on sports is not wrong. I was just pointing out that the way these things are accounted and presented are sometimes a little phony (or worse). Never believe the press releases.

 

[UCFBfan]

I'm not about to get all HFD, but would it kill UConn to commission someone to put together a rendering of 55k Rent with the new score board and UConn blue draping over the concrete gray at the rent?

Imagine Cinci today releases plans to upgrade to 40k and then we can reveal our plans to go to 50k? College football is all public opinion and right now we are absolutely being crushed.

Is it really all about public opinion? Does it really matter? Wasn't UConn the public, odds on favorite to take MD's spot? Louisville seemed to come out of nowhere and became the media darling only a day or so before it was a sure thing. I'd be absolutely SHOCKED if UConn doesn't have these plans already spread to other conferences. Maybe I'm giving them too much credit but I really think UConn has learned their lesson from the last go round and are ready to move if needed.

Why put out renderings of something you aren't planning on doing unless you get what you want. Would they expand if the ACC called? Would that be necessary? Would it be more harmful to release plans and then three years later still do nothing? Doesn't that show an even less lack of commitment? I dunno if I truly believe that public opinion is the be all, end all here.

Once again....I could be giving UConn too much credit....

 

[frankthetank]

When UConn didn't get into the ACC it hurt badly. if I were the B12, I wouldn't be looking UConn's way, and that has absolutely nothing to do with UConn's fan interest in value. It's simply a question of geography. UConn fans should prepare to be disappointed should the B12 expand. I can't see it.

This is the perception against UConn with respect to the Big 12, but there are counterarguments to this. A lot of people seem to assume that BYU is geographically friendly for the Big 12, but it's actually as much of a geographic outlier for the Big 12 as West Virginia (only going west instead of east). A Big 12 expansion with both Cincinnati and UConn (in conjunction with WVU) would provide a more geographically compact eastern wing of the league compared to any combo with BYU. I'm not saying that's a slam dunk argument (as BYU's perceived football value may trump everything in the same manner that WVU did as a favorite of TV executives), but I also don't think geography in and of itself is a dealbreaker since WVU is already there. UConn's surrogates in the media and PR circles need to get the message out where the general public at least comes away thinking, "UConn in an expanded Big 12 actually isn't that bad geographically."

 

[woomba]

Yep, when last I looked at this, I went through the 2010 budget. You can see in your link that in 2010 the payout was $2m. It went up to $10m in 2011 and has been there the last 2 years.

My only question is this. The bond was secured in 2007. For 3 years, the AD was only paying $2m on it. So how do we know that they are paying the total amount now when they weren't paying it in 2010? Someone like Pudge would need to weigh in on this to tell us if $10m-11m a year is enough to service a $226m bond. Back in 2007 when they secured the bond, the press release said that increased revenue from the renovation (mainly due to premium seating) would generate $14 million that would "help pay for improvements throughout the stadium, such as more concession and restroom facilities, wider aisles and additional concourse space. The most visible change to the 80-year-old stadium would be the construction of two large structures that will span the east and west sidelines and top out at 10 feet above the existing scoreboards. Construction is scheduled to begin after the 2007 season."

When you add Chrisler, something tells me that $10-11m doesn't cut it. I'm not knocking Michigan, they have a surplus of $7m, $8m and $10m the last 3 years. Losing money on sports is not wrong. I was just pointing out that the way these things are accounted and presented are sometimes a little phony (or worse). Never believe the press releases.

Maybe the bond payments were simply not due for the few years of issue? This isn't all that uncommon in the bond world.

You don't know how that debt was structured and they even spell out how much of the debt is still on the books year to year on the balance sheet. It even states how much in interest they are paying annually.

I'm not sure where there's any data supporting that Michigan's faking numbers like you are suggesting and I'm also not sure why you want to keep on insisting that this is happening.

Your original point was that you thought the entire model of funding expansions through private funds was bogus - and while I agree that some schools do fall behind and end up eventually getting bailed out by the school, there's nothing to suggest that the bailout rate is anywhere close to 100%

 

[upstater]

Maybe the bond payments were simply not due for the few years of issue? This isn't all that uncommon in the bond world.

You don't know how that debt was structured and they even spell out how much of the debt is still on the books year to year on the balance sheet. It even states how much in interest they are paying annually.

I'm not sure where there's any data supporting that Michigan's faking numbers like you are suggesting and I'm also not sure why you want to keep on insisting that this is happening.

Because it happens a lot. Some of the private money raised for building gets dumped into donations and they still bond things out. Look at T. Boone Pickens at Oklahoma State and how that was handled. Yes, he gave the school all that money, but they bonded out the entire amount and more, to the tune of $250m, that the school is on the hook for. Pickens, meanwhile, took the money he gave them and put it into escrow in one of his hedge funds. And he is slowly doling it out to them in the form of donations that they are putting into their AD budget as revenue. It's great that he gave them all that money. But when you look at their AD budget, it includes the Pickens money. But the debt that came as a result of the Pickens money is NOT in the budget.

Again, I've seen way too much of this, people gilding PR releases, to not be suspicious. Read the Texas article. It wouldn't surprise me at all if the Michigan numbers (broken down as they are into principal and interest) are not pro-rated using the %s of the actual debt serviced. I don't know if that's true. There is absolutely no law out there that would force Michigan to report things one way or another. Heck, the Mich. AD doesn't even have to give the school a single dime. It's great they are paying off $10m-11m.

All I wondered--and Pudge has background in this--is if that amount could service such a big bond.

 

[upstater]

This is the perception against UConn with respect to the Big 12, but there are counterarguments to this. A lot of people seem to assume that BYU is geographically friendly for the Big 12, but it's actually as much of a geographic outlier for the Big 12 as West Virginia (only going west instead of east). A Big 12 expansion with both Cincinnati and UConn (in conjunction with WVU) would provide a more geographically compact eastern wing of the league compared to any combo with BYU. I'm not saying that's a slam dunk argument (as BYU's perceived football value may trump everything in the same manner that WVU did as a favorite of TV executives), but I also don't think geography in and of itself is a dealbreaker since WVU is already there. UConn's surrogates in the media and PR circles need to get the message out where the general public at least comes away thinking, "UConn in an expanded Big 12 actually isn't that bad geographically."

I would hope UConn would do everything to get into the B12 (as horrible as that sounds). I'm just giving my perception. it seems non-sensical to me.