Colleagues,

Time passes quickly and I find it's now the last week in September 2014, and you all know what that
means. Cub fans are about to have some time on our hands. Wait.was there something else.?
Yes, I'm writing to let you all know my thinking about the stadium in advance of next week's Board of
Governors meeting. This message contains the information I will present to the Board as well as the
recommendation I'll be making to them. The presentation will take place at approximately 3:30 p.m.
next Thursday, October 2, in the North Ballroom of the Lory Student Center here on campus. The Board
will then take public comment before their discussion and before acting on my recommendation.
For those of you who are wondering if there is anything else in this email because you're not interested
in the stadium, God bless you. Go back to work. For those of you who want the answer up front, get
used to disappointment; "the answer" is embedded (I think) somewhere in this tome and you'll have to
excavate for it. If you've waited this long, surely you can wait a few minutes longer?
For those of you new to this saga, in previous episodes of "How the Stadium Turns," CSU conducted a
feasibility study that concluded it was feasible for us to construct an on-campus stadium. I then spent
several months evaluating the materials, gathering public input from a variety of routes, and I
recommended to the Board in October 2012 that we should move ahead with the construction of the
new stadium if it could be done without impact to the general fund (essentially, the money we have
from the state of Colorado and tuition to fund University operations). I proposed the latter could be
conservatively defined as funding half of the stadium with revenue bonds based on the lowest end of
the low range of the new revenue projections (recall these came from a leading professional firm and
were validated by another leading professional firm) and funding the other half via philanthropy. The
cost of the athletic portion of the stadium facility complex was estimated to be $220M (including
appropriate mitigation of city impacts) leaving us a philanthropic goal of $110M. It's worth noting that
under this scenario (assuming the conservative revenue projections held up), the projected impact on
the academic budget of the university would have been zero. We established a two-year fundraising
window for the project. The Board approved this recommendation, and that two-year fundraising
window will be completed next week. Using formally booked pledges and some (to me at least) not
unreasonable assumptions about the sort of retail fundraising campaign that accompanies the
conclusion of such projects, I feel comfortable asserting that we could rely on approximately $50M of
philanthropic funds. $50M is a lot of money.
It compares favorably with amounts raised for stadiums at larger universities such as Minnesota and
Washington. But it is, by my arithmetic, less than $110M.
And so I will inform the Board of Governors that we have not reached our $110M fundraising goal, and
as a result, I will not be bringing them a plan of finance at the October meeting.
I do not, however, believe this fundraising result resolves the stadium issue. To people who see the
world in a binary fashion, failing to move ahead with the financing plan I outlined in October
2012 would imply that we will now fix up Hughes Stadium and remain there. That is a legitimate option.
But it is an option that causes me great concern. Although we have continued some expenditures on
Hughes Stadium over the past two years for safety and equipment failure reasons, there remains
approximately $30M of deferred maintenance, replacements and minimal modernizations (there's
public detail on this available at http://www.colostate.edu/stadium/ ).
None of our current stadium donors at or above the $50K level have expressed an interest in donating
to what is essentially maintenance of the current Hughes Stadium. Further, there are no new seating
products in a maintained Hughes Stadium scenario to support revenue bonds to pay for the work. In
short, $30M would need to come from the university's general fund, whether in annual cash
expenditures over something like a 10-year period, or via general obligation bonds issued by the
university to allow all the repairs to be conducted immediately. The general fund is, as I noted above,
primarily composed of tuition payments and state appropriations and is the primary fund source used to
support the educational mission of the university. I am extremely reluctant to add an expense line of
this magnitude to our annual budgets for a non-academic purpose.
For this reason, I will be recommending to the Board of Governors that I be allowed to examine at least
four options over the next two months before bringing them a final recommendation at their December
2014 meeting. The first option is one I've just commented on - the maintenance of Hughes Stadium.
Despite my concerns above, this is a legitimate option and one we could choose to afford, so it deserves
to be considered. A second option is one I'll call Hughes 2050. It represents a decision to substantially
modernize and improve Hughes Stadium and to remain there for nearly four additional decades. Such a
plan would involve substantial additional cost, but it would also provide new revenue to support
revenue bonds and there might be more excitement among our donor base. A third option is to phase
the current planned stadium in the proposed on-campus location. Under this scenario, the cost of the
stadium is substantially reduced by the removal of items that we could (and would plan to) add back
later if and as funds became available. This project would rely on funds already raised and the revenue
bond capacity. A fourth option would be to close out the current project and rebid our existing plan as a
public-private partnership - this could involve various scenarios, with one being that a private entity
constructs and maintains the stadium to our specifications over multiple decades for annual payments.
Vastly overly simplified, this has similarities to the decision to utilize a 30 year mortgage rather than a 15
year mortgage. The interest rates are higher, the amount we pay over time is greater, but it might result
in annual payments relative to existing philanthropy and new revenues that are within our budget.
For each of these options, careful fiscal and programmatic comparisons need to be made, and I can tell
you - all other factors notwithstanding - the issue that will be foremost on my mind will be minimizing
impact on the university's general fund.
If the Board approves my recommendation, we will be preparing a written analysis of the four options,
comparing costs, philanthropic potential, revenue bond expectations, general fund impact, capacity, and
some of the objective and subjective advantages and disadvantages of each option. We'll make this
analysis publicly available, along with all the previous materials generated related to the stadium
discussion, at http://www.colostate.edu/stadium/. I anticipate asking a community leadership
committee and a campus leadership committee composed of faculty, staff, and students to share their
thoughts with me and we'll be establishing a website where anyone can weigh in with their thoughts
before I finalize my recommendation. I anticipate that in late November I will publicly share my thoughts
about the December recommendation to the Board, and I'm sure the Board will again entertain
substantial public comment after my recommendation and before its action in December.
I should add that there is an argument that simply extending our time for fundraising will result in
reaching our goal. After two years of fund-raising efforts, I do not share this view, and I am concerned
that in the face of rising construction costs, each additional delay in a decision - regardless of the
decision - results in cost escalation and expenditures on temporary repairs at Hughes Stadium that do
not serve our university well. I believe we have the information needed to carefully consider the options
currently available to us, make the decision we believe is in the best long- term interest of our
university, and move forward with the implementation of that option.
For those of you reading this in the evening and who are still having trouble nodding off (and I can't
imagine there are many of you in this category), I thought I'd provide a few additional perspectives on
some of the issues that have frequently arisen around the stadium discussions.
People have wondered whether now is a good time to invest in a stadium given concerns about football,
attendance trends, and changes within the NCAA. Although my roles on the Mountain West Conference
Board and a couple of other responsibilities related to college football nationally give me a bit of insight
into these issues, I'd suggest that no one's crystal ball has 20/20 vision on these points.
Having said that, I have my personal beliefs that (to my mind) are consonant with likely outcomes. I
think football will continue to be played as a competitive sport, including the intercollegiate level, and I
believe it will continue to be immensely popular. I think fluctuations in attendance have more to do with
pricing and technology than popularity, and I believe that competitive teams in a modern venue will
draw fans to games. I don't see any historical or projected evidence this won't be true at CSU if we field
competitive teams. The projected demographic changes for Northern Colorado would also argue that
we are not competing for a static audience, and I think that will provide additional opportunities. I
believe that the FBS (Football Bowl Subdivision) structure will remain intact, and I think the College
Football Playoff structure adds to this stability.
While NCAA autonomy changes could make competition for schools outside the Resource 5 conferences
a bit more complex, I don't see these changes as being substantially greater than discrepancies that
already exist and against which we are already competing. On this topic, I think having a facility capable
of substantial expansion but also capable of serving the campus well in its present form is an important
way to preserve options well into the future for those who will be entrusted with the responsibility of
caring for this university after our time has passed. And I do feel that an appropriate on-campus facility
capable of sustaining lacrosse, soccer, commencements, convocations, and the like has much more to
do with the culture of our campus community than simply football.
Indeed, much of this discussion is, again at least to the way I see these things, broader than football. I
don't see any reasonable argument against the observation that athletics help drive visibility. Whatever
one thinks of the popularity of sports in American culture, factually, sports are highly visible. For an
institution of great academic quality in a wonderful location priced to be an exceptional educational
value, visibility is a key element in our success. I'm also not compelled that having strong athletic
programs indicates a lack of academic focus. As evidence, I'll offer virtually every major public university
in our nation. And while athletics can and sometimes do compete for limited flexible resources, the
argument that we already spend too much on athletics falls flat to me when our $9.4M university
subsidy includes a repayment of $7.4M back to us in the form of tuition from athletic scholarships. A net
investment of $2.M for the visibility and campus- life benefits of our athletic programs does not, to me,
approach the line of excess.
And finally there is the issue of what we expect of ourselves. The quality of the great programs at this
university - in infectious disease, comparative cancer biology, orthopedics and biomedical engineering,
atmospheric sciences and the environment, food, nutrition and health, STEM disciplines and the
performing arts, veterinary medicine and the humanities, IT and Colorado's top ranked public college of
business, fashion design and construction management - did not become what they are because people
settled for less than excellence. They did not attain this status because we had the deepest pockets or
the most resources. These programs exist because we, and those who came before us in these
programs, rolled up our sleeves, committed to the work needed to excel and held ourselves
accountable. I have yet to hear an explanation compelling me to believe these same principles don't
apply to athletics. Settling is simply not who CSU is.
Well, having just reviewed this document for spelling and grammatical errors, I decided to run a word
count. The message from my computer, "Hang on, I'm working on it - this may take a minute," tells me
I've likely gone on too long. I'll close with this sentiment: Over the past 2 years we've discussed this
topic. In general, within our university community, the discourse has been civil and we've put into action
our beliefs that people who care deeply about Colorado State can and do examine complex issues and
arrive at different interpretations, and that an academic community can passionately and openly debate
different schools of thought respectfully. And, as our progress over the last five years in enrollment,
graduation, job placement, research, reputation, alumni and student satisfaction and philanthropy
indicates, we have never lost our focus on our academic mission of discovering new knowledge, passing
that knowledge to the next generation, and applying it for the benefit of our society. I want to thank you
for the manner in which this debate and discussion have occurred on our campus. As always, I'm proud
to work with all of you.
- tony
Dr. Tony Frank
President