How funding changed CSU stadium's scope
As first envisioned, Colorado State University's on-campus stadium would have seated up to 50,000 people and in no way, shape or form would have drawn funding from taxes, fees or tuition received by the university.
As the CSU System Board of Governors prepares to vote on a financing proposal later this week, the planned stadium is closer to 36,000 seats and poses "minimal risk" to the university's general fund.
Since an on-campus stadium proposal helped earn Jack Graham the CSU athletic director job in 2011, the project has been winnowed, molded and remolded until it reached the version tentatively approved by the CSU System board on an 8-0 vote in December 2014.
CSU on Tuesday received approval from the Colorado Legislature to borrow $220 million to build the stadium, even as final details of what will be built are still to be determined. CSU plans to start stadium construction on the southwest side of its main campus this summer.
University President Tony Frank remained adamant Tuesday when he addressed the state Legislature's Capital Development Committee that the project will pay for itself over the next several decades, especially with a favorable lending market. The university expects interest rates on bonds sold for the project to be at 4 percent or less, a better rate than it pays on most of its existing bonds.
"The cost of the financing is very low," Frank said while at the Capitol. "We've got a chance to invest, not just to make up for a couple decades where we didn't invest much in the university, but to really set the stage for two to three decades going forward."
Plans to pay for the facility have gone from requiring more than $100 million in private donations to using one-third of that amount as a backstop to repay bond financing. CSU's ability to cover the bulk of debt payments relies on projections of the new stadium generating between $9.8 million and $14.8 million in annual revenue via ticket sales, luxury seating, naming rights and more.
And in the three years since the idea was pitched, CSU has shifted the conversation on the stadium from simply being a launching point for national prominence of its athletic programs to being the most sound option for a needed, viable venue.
As CSU System Board of Governors Chairwoman Dorothy Horrell put it, "I've come to believe that the risk of not doing this is much greater than the risk of doing it."
But for opponents, this appears to be a stadium that was predestined to be built on campus.
Bob Keller, a CSU economics professor, described the stadium project as a speeding bullet train, ready to hit its destination no matter the obstacles. And one being run by people without much to lose if it crashes.
"If you're wrong in this business, the Board of Governors and Tony (Frank) end up with egg on their face, but not with any financial risk," he said.
CSU's decision to back bond financing with an undisclosed amount of private donations differs from how one of the university's NCAA peers, the University of Minnesota, paid for its new stadium. CSU and Fort Collins officials have repeatedly cited TCF Bank Stadium in Minneapolis as an example of how a university balanced stadium construction with community concerns over location and cost.
There, the university secured a $35 million naming right from the bank before the Minnesota Legislature approved the stadium, along with the $10.25 million per year the state would pay. The university also secured $86 million in private donations and a $25-per-year student fee to pay for the $288.5 million project built in 2009.
This week, Frank will return to the board with details of a plan to fund construction of the stadium through the sale of $220 million in revenue bonds, largely assured that it will receive approval. To get to this point, though, CSU has navigated a twisting path of stadium ideas, in which the target for everything from seating capacity to funding sources has shifted.
Map: Proposed on-campus CSU stadium location
Where it was
When first announced in December 2011, CSU offered few details on a potential stadium. The following February, Frank and Graham pitched a stadium of 40,000 to 50,000 seats at an undetermined location on CSU's campus.
To help determine its location, and whether building the stadium would even be possible, an advisory committee was formed with a mandate that no state appropriations, tuition, fees or taxes be considered as potential funding sources. Consultants were also hired and, in August 2012, a feasibility report was brought into the world.
The result: A facility that would cost $246 million for the athletic portion, plus another $51 million for an alumni center and other associated projects. It would seat 42,000.
The study and CSU leadership also set a goal for fundraising: $125 million in private donations — or just more than half the cost for the athletics portion of the stadium — would have to be raised by October 2014 for Frank to move forward.
"If we're at $120 million and the donations are coming in a pretty steady line, I think I'd come forward and say I think this makes sense," Frank told The Denver Post in October 2012, around the time the proposal was introduced to the Board of Governors. "If we're at $30 million and most of that was raised in the first year, then that would lead me to a very different conclusion."
His suggestion came at a time when CSU fundraising had a full head of steam: The university had recently capped off a half-billion dollar capital campaign, the largest fundraising effort in CSU history.
It was around that time when the state of Hughes Stadium began to come into play; basic maintenance would cost $30 million over the next decade, CSU officials said. Mothballing the 32,500-seat stadium, which opened in 1968, would cost $20,000 per year. Bringing the structure up to the bar Frank set for a new stadium would cost $150 million or more. And that money would need to come from the university's general fund, Frank said, as new revenue opportunities and donor interest in Hughes had dried up.
That argument helped sway Tyler Shannon, founder of pro-new stadium group Be Bold.
"It was the only thing that made financial sense and sense for the future of the university," he said recently. "I think it was inevitable ... that a stadium was going to be built."
University spokesman Mike Hooker said Frank would not talk to the Coloradoan about the history of the stadium project and how it reached where it is today.
Horrell, the CSU Board of Governors chairwoman and the only person authorized to speak on the board's behalf, said through a spokesperson that she had nothing to say beyond the dozens of pages of minutes from the past several years and hours of recorded testimony and discussion about the stadium during the board's December meeting.
Six months into 2013, athletic officials painted a rosy picture of fundraising, though the university maintained it had entered a "quiet phase" of the process with few details made public.
That June, Graham told the Post he was close to guaranteeing fundraising goals would be met and his confidence in success was "as close to 100 percent as you can get." The next month, he talked about how successful athletic programs, like Boise State's string of Cinderella runs in football Bowl Championship Series, bolstered the university's recruitment abilities and overall success.
Tying into that, Frank pitched in October 2013 the idea of including a 55,000-square-foot academic component to the stadium, at a cost of $17.5 million, or 25 percent less than what such a facility would cost as a standalone structure.
The proposal for the academic space preceded other changes: Seating dropped to 36,000 and total cost to $226.5 million. The university's fundraising goal likewise dipped to $100 million.
In March 2014, Frank reiterated the need for donors to pick up a hefty part of the tab to build the stadium.
It would "be hard to justify anything other than putting the plan on the shelf and, at least for the time being, move on," if those goals weren't met, he said.
Six months later, fundraising was reportedly at half of CSU leadership's goal with the self-imposed deadline mere days away, and that financing plan was indeed shelved. Still, Frank announced the university would advance its stadium effort.
It was a move Keller, the economics professor, said didn't sit well with him or other faculty members to whom he has spoken.
"I think it's a matter of trust, quite frankly," Keller said. "It was stated pretty clearly what was going to be done, and it wasn't done and it's still proceeding."
CSU on-campus stadium could loom large in city election
Where it is
In a campuswide email Frank sent in advance of the October 2014 meeting, which he jokingly dubbed "How the Stadium Turns," in reference to the daytime soap opera, he laid out four options for moving forward, making clear that building a stadium on campus was still possible and that it could be paid for without private funding cresting the $100 million mark.
"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," Frank wrote. "… That is a legitimate option. But it is an option that causes me great concern."
Restoring or expanding Hughes would be a poor financial decision, Frank argued, because the university couldn't recoup associated costs. And no donors would chip in, meaning such a project would be fully funded by general-fund bonds, he said.
Two other options involved a new stadium: building it in phases with money already raised and bonds for the $195 million estimated cost; or entering a public-private partnership for a full $220 million build.
Shannon, of the pro-stadium group, said it threw him for a loop.
"When Tony announced the four options, it was kind of, 'Oh are we moving forward or backward now?' " he said.
While still in support of the new stadium, he argues the four options should have come out at the beginning. At the least, it could have nipped a lot of speculation in the bud.
Frank asked the board for two months to evaluate those options and how to best proceed. And two months later, with the Hughes options and the public-private route eliminated, Frank reached a new conclusion. It was framed to the Board of Governors in December as a question: "I wanted to ask, what is the risk if we did the full $220 million project now?"
He was given the board's blessing to proceed in December and will return to present a financing plan to the board this week. In it, all private money raised — $30 million, Frank said last week — will serve as a backstop if stadium revenues fail to meet annual bond amounts. Only Sen. John Kefalas, D-Fort Collins, objected to CSU's $220 million bond plan Tuesday. He had too many questions that went unanswered and too many concerns about the university's debt load.
Keller also asked what will happen if revenues fail to materialize or costs exceed projections — does funding start to look more like that of the University of Minnesota's stadium, with student fees and state funding filling in gaps?
"Tony (Frank) has gotten kind of locked in that there will be no general fund used to pay for this thing and student fees will not be raised to support this," Keller said. "... Will that turn out to be true if these projections don't come true?"
But based on those projections, along with what CSU officials describe as an evolving view on the viability of Hughes, a $246 million stadium, half-funded by private donations, has become a $220 million bond-funded stadium three years later.
CSU on-campus stadium timeline
December 2011 — Jack Graham hired as CSU athletic director, at least in part due to a vision of raising $100 million or more to build an on-campus stadium.
February 2012 — CSU Stadium Advisory Committee meets for first time; Graham pitches stadium seating of 40,000 to 50,000; initial cost estimates of $100 million to $200 million; CSU President Tony Frank tells committee state appropriations, tuition, fees and taxes will not be considered as funding sources for stadium.
March 2012 — ICON Venue Group hired for $210,000 as consultant for stadium feasibility study.
April 2012 — Architecture firm Populous hired for $139,000 to site and design stadium.
August 2012 — Advisory committee delivers 177-page feasibility study; core facility would cost $246 million, with $51 million in additional cost for alumni center, parking and other construction; 42,000 seats and total capacity of 44,380.
October 2012 — Frank lays out condition of needing to raise $125 million in private donations within two years before moving forward — though he's clear it's not a firm goal.
June 2013 — Graham says he's close to guaranteeing the fundraising effort's success. A CSU vice president reports that $24.2 million had been raised.
October 2013 — Stadium revisions reduce the project's projected cost by $20 million, to $226.5 million. An academic space of 55,000 square feet is added to plans for an estimated cost of $17.5 million, 25 percent less than it would cost as part of a standalone building. Frank says $37 million will be raised by year's end.
November 2013 — Seating reduced to 36,000.
January 2014 — $40 million reported raised for stadium project.
August 2014 — Graham fired. CSU vice president writes in an email that "the decision is completely unrelated to the proposed stadium project."
September 2014 — Frank says in a report to the Board of Governors only about $50 million has been raised. Cost of athletic portion of stadium downgraded to $220 million.
October 2014 — Frank proposes four options for a useable football stadium: maintenance of Hughes Stadium ($36 million to $42 million); major renovation and expansion of Hughes ($149 million to $209 million); a private-public partnership used to pay for full-vision on-campus stadium ($225 million); or bond-funded, phased-in on-campus stadium ($180 million to $198 million). He asks to have until December to evaluate the options.
November 2014 — Frank writes premeeting memo recommending pursuit of the full-vision $220 million on-campus stadium with use of bond financing. He writes that it can meet the criteria of "the lowest risk of any negative impact on the general fund."
December 2014 — Board OKs Frank pursuing financing option for the on-campus stadium with an 8-0 vote and one abstention. Board Treasurer Joe Zimlich, who abstained, said he could not support the stadium over concerns about cost.
January 2015 — CSU announces plans to begin construction of the stadium, at the northwest corner of Lake and Pitkin streets, this summer.
February 2015 — Frank plans to present a financing plan, in which the stadium's $220 million cost is borrowed, to the Board of Governors during its Feb. 4-6 meeting in Greenwood Village.
Stadium costs
The estimated cost to build an on-campus stadium at Colorado State University has varied widely from the initial estimate provided in February 2012. Here's a look:
•$246 million (August 2012)
•$226.5 million (October 2013)
•$225 million (October 2014 — public-private option)
•$220 million (September 2014 to present)
•$180 million to $198 million (October 2014 — phased option)
•$100 million to $200 million (February 2012)