Luring Students With a Stadium

Colorado State University is, like many public institutions, in a precarious financial position due to steady disinvestment by politicians in its state. But as common as its predicament might be, its leaders are consider a decidedly unconventional strategy to turn its financial situation around: building a $226 million on-campus football stadium.

Colorado State is a middling football team in the Mountain West Conference, competing against respectable but not stellar athletic programs. The stadium plan relies on the hypothesis that if the university has great facilities, it will be able to recruit better athletes, sell more tickets and (this is the end game) attract more out-of-state students to help make up for a steep drop in state funding.

“At the end of the day, athletics is part of what drives national attention for the university,” said Kyle Henley, director of public relations and business and community development for the Colorado State system. “We’re a university on the rise and fundamentally, at the end of the day, if we’re not part of that national conversation at the athletic level, we’re missing out on opportunities.”

Yet some sports economists and faculty members who say they're being stonewalled by the administration are warning against the gamble.

Colorado State President Tony Frank has vowed to keep the process public, and CSU System Chancellor Mike Martin said “the fact that we haven’t publicly debated those folks, doesn’t mean [their economic projections] aren’t relevant to our discussions.”

But when asked whether their voices were being heard, Bob Vangermeersch, the local businessman who’s leading the opposition group of faculty and community members, said, “Hell, no.”

“Everything that we do, that we analyze, that we look at, says it’s going to be a loser,” Vangermeersch said of the stadium plan. “They will acknowledge the fact that they got the information that we sent them, but they won’t meet with us.”

Frank, who was not made available for an interview, wants to fund the stadium using about half private money and half borrowed bonds. Donations would cover the strictly football parts, but related costs such as infrastructure and potential additions including academic space and a parking garage would not necessarily have to be funded privately.

For some students, that’s reason enough to support the idea. In a survey taken when the proposal was first floated two years ago, most students said they were opposed to some degree. (An unofficial campus survey found that two-thirds of faculty and staff were against it.) But once they learned tuition dollars would not immediately be used to fund the project, opinions changed, student government president Nigel Daniels said.

“I think they were more receptive to the idea,” Daniels said. “There’s a lot of different angles you can look at it that, I think the benefits kind of weigh out for everybody.”

There are potential benefits, but they come with downsides, too. The facility would be on campus, not four miles away like Hughes Stadium is – drawing more alumni, families and spectators to campus, but clogging up traffic. The 40,000-seat stadium would hold an additional 7,500 people – but games currently don’t even sell out; this season, average attendance is below 17,000. Hughes isn’t in great condition, but it could be repaired. And the new facility could include academic space – but then, why not just build academic space?

“It’s a complicated enterprise, to basically recruit out-of-state students on the basis of a football stadium,” said Louis Scharf, a CSU research professor of mathematics. Scharf said he's tried to meet with the president and board of governors, but all he's gotten is an acknowledgment that they've received his financial projections for the stadium. “If this is our aim, then we should address this aim head-on by using the Internet and all kinds of advertising media to basically sell the excellence of our academic programs to committed students.”

The idea isn’t new; these days, universities left and right are jumping at opportunities to build shiny new facilities or jump to a new conference to try to bolster their athletics profile. One case that economists said is comparable is the University of Connecticut, whose publicly funded $91 million stadium debuted in 2003. UConn’s mediocre football team will move to the new American Athletic Conference, which includes the non-Roman Catholic institutional members of what used to be the Big East, next year.

Swanky facilities, needed or not, can indeed attract more students and bigger checks. Take Louisiana State University, where Martin used to work, or the University of Oregon. The difference is that those are powerhouse programs in top conferences.

Andrew Zimbalist, an economics professor at Smith College who recently spoke at Colorado State about the project, is skeptical that it would succeed in bringing in the funds the university hopes for.

The University of Colorado, which joined the Pacific 12 Conference a few years ago (and typically gets beaten up on any given Saturday), already owns the regional college sports market, Zimbalist said. (The Air Force Academy is in the area as well.) He also doesn’t believe that the numbers pan out or that the revenue would make up for the expenses, and he notes that in month 13 of the two-year fund-raising period, Colorado State only has a third of the private funds it needs to proceed.

“They’re trying to build this football stadium in hopes it will catapult them into a totally different tier,” but they lack the resources to do so effectively, Zimbalist said. “All the cards are stacked against them. I’m not saying there’s zero chance they can do this, but it’s really long odds.”

Colorado State spends less on athletics than others in its conference – and it makes less. In 2011, the university spent about $25.5 million, and made $29 million. But almost half of that money came from the university itself: about $4.9 million from student fees and $9 million from institutional funds, according to USA Today's college athletics finances database.

Compare that to Oregon, which in recent years built lavish football and academic centers for athletes and which Frank cited as an example of why investing in facilities works. The university boasting the second-best team in the nation spent $76 million in 2011 and made $86 million. About $1.5 million came from student fees here, too, but just $900,000 from institutional funds.

Oregon has skyrocketed to prominence and doubled its out-of-state enrollment in the past decade or so, and in the last five years it has benefited from a huge influx in students from California who couldn't get into the University of California because of budget cuts. But it also has a wealthy benefactor in Nike co-founder Phil Knight and competes in one of the best athletic conferences, the Pac-12.

“The athletic director tells a just-so story: Colorado State University will be a perennial top 25 football team, a perennial top 25 basketball team with a Sweet 16 in our future and perhaps even a national championship in our future, and that the Pac-12 and Big 12 will come knocking and as a consequence, of course, television revenues would go up,” Scharf said. “It’s kind of implausible that this story could pan out at that scale -- and that’s not even talking about the values argument.”

Scharf’s economic projections do not suggest that the project will be able to make up for lost revenue. Nor do Zimbalist’s.

“When you go through the finances and their projections, they’re all completely unrealistic,” he said. In the Mountain West, media revenues through television contracts and the like are a fraction (probably between 1/25 and 1/12) of what institutions in the major conferences make. That means less money to sustain the project once it’s up and running. And the corporate and premium seats they’re relying on for revenue are more likely to be sold out at Colorado, Zimbalist said.

It’s all reliant on a bunch of “ifs,” said Manish Tripathi, assistant professor of marketing at Emory University and a contributor to Emory’s Sports Marketing Analytics. There’s no research indicating that building up will trigger moving up to more wins or prestige, but there is another way.

“Winning is the ultimate driver,” Tripathi said. “There’s a lot of ‘hope’ there. It might work, in theory, but there’s nothing to say that it necessarily will.”

For John Thelin, an education professor at the University of Kentucky, Colorado State is another example of the marathon mentality of today’s athletics enterprise.

“I think it’s a very risky, expensive proposition by these institutions that are just one notch out of the really big money,” Thelin said. “I don’t know if it’s desperate, but it’s the latest in a succession of attempts to keep pace. And so the stadium building is what seems to be happening a lot.”

Martin stressed that during this two-year “quiet phase,” officials are still trying to figure out if the plan is feasible, and that it’s not set in stone. But he, the athletics director and Colorado State's president are adamant that the project could be good for campus.

“Our students come here primarily for the academic experience,” Martin said. “But the market is such that you also have to have other amenities that make us attractive relative to the competiton.”