Sports Biz: CSU stadium investment a sensible risk

The most significant worry has merit

Colorado State University is making the smart choice to build a new on-campus football stadium. It’s an investment in the future with the potential to help improve the football program and the school for decades to come.

That does not, however, mean it comes without risks. Then again, investments always do.

The most significant worry has plenty of merit: Will fans fill the new venue for six home games every year? And if they do, will it allow the school to pay off the colossal debt it will incur with revenue from ticket sales, suites and clubs seats? If not, the project could become a heavy anchor around the neck of the athletic department.

CSU plans to pay the entire $220 million price tag through bond sales, paying the debt back over 40 years. This funding model estimates the true cost of the stadium when it is finally paid for by the late 2050s at $451 million.

There is a decade worth of evidence that suggests Rams fans won’t consistently fill the planned 36,000 seats. The football program hasn’t come close to averaging even 30,000 fans over the course of a season at any point in the past 10 years. The stadium’s detractors need no further argument than just last season to make their case against building it.

Consider that on Nov. 22, 2014, the Rams hosted New Mexico at Hughes Stadium, their current home located three miles west of campus. The Rams were 9-1 going into the game with a chance to win the Mountain West Conference, and a spot in a prestigious New Year’s Day bowl game still on the line.

It was a partly cloudy day, 43 degrees at kickoff at 11:38 a.m. There were no obvious reasons for Rams fans to miss the game and plenty of reasons for the stadium to be filled. But it wasn’t. Not by a long shot.

Only 22,131 fans showed to see the Rams improve to 10-1 overall and 6-1 in the conference. Hughes’ capacity is 32,500, which means nearly one-third of the stadium was empty for the final home game of one of the most successful seasons in the school’s history. It’s fair to ask: If Rams fans aren’t going to show up for a game of that magnitude, when will they?

The answer: When there is a new stadium.

Curiosity always fills new arenas and stadiums at first, and that will be the case here as well. The stadium’s backers, including CSU President Tony Frank, believe building the stadium on-campus will make going to Rams games a more popular activity, even when the team is enduring a difficult season.

Fans and alums will be able to hang out at their favorite restaurants and watering holes in town and simply walk over when game time approaches. It will bring those same people back to campus, reconnecting them with memories and introducing them to parts of Fort Collins that have changed over the years. Ultimately, Frank and other supporters are betting that having thousands of Rams fans on campus on Saturday afternoons and evenings in the fall will lead to more investment in the school from supporters in the form of donations.

Obviously none of this is assured. It will be up to campus leadership and the athletic department to make it happen by doing all they can to make game days a worthwhile experience that paying customers want to repeat.

But I stand by my original statement: This is the smart decision. By improving the stadium, CSU is left with a deteriorating attraction that needs an estimated $30 million in maintenance. It also leaves CSU without the desirability of a new stadium to bring fans, alumni and recruits to campus in the future.

Opting for the status quo is viewed as the safe alternative. But in a business for which much of the competition is making these big investments – and make no mistake, college sports is big business – failure to invest now will have repercussions that will only be more difficult and more expensive to address down the road.

Categories: Finance, Magazine Articles