Cooperative Construction

When a new facility is badly needed, but financially out of reach, teaming up with others can be a great solution.

By Guillermo Metz

Guillermo Metz is an Associate Editor at Athletic Management.

Athletic Management, 15.6, October/November 2003, http://www.momentummedia.com/articles/am/am1506/construction.htm

When Michael Thomas, Director of Athletics at the University of Akron, started planning for a new football stadium, he looked at two things: the school’s needs and its budget. Like many athletic administrators in his shoes, he soon realized that the two were inherently at odds.

Then he started hearing about a new trend that could bring the two closer together: pairing new major construction with other revenue-producing real estate. By including a variety of stores and other elements into the facility’s design, Akron could get a new stadium and meet some important needs of the college community, while generating the money to make it all possible.

More and more athletic directors are finding out that, whether through partnerships with the surrounding community, another nearby school, or private business, combining your needs and dollars with someone else’s is a great way to achieve everyone’s goals. Especially when it comes to facilities.

There are seemingly unlimited partnering options, each with its own pros and cons. In this article, we look at four schools that have recently found creative solutions to their athletic facility needs by joining with other groups, and another that, after considering the options, decided to go it alone.

IT TAKES A TOWN
“It’s a priority to build a football stadium at Akron,” Thomas says. “We have the administration’s and students’ support, but we don’t have the money to do it.

“In today’s economy, trying to secure money from the state to build this kind of large facility is not very practical,” he continues. “So having the option to build something with a component that generates a lot of revenue, which gives you the opportunity to carry a larger initial debt, is appealing.”

That’s why Akron is talking with CollegeTown, a subsidiary of ScheerGame Sports that forms public and private partnerships and develops commercial ventures on university campuses. The commercial operation includes establishments that are leased to private businesses, such as a coffee shop, bookstore, movie theater, or anything that would generate interest in the college community. The developer contributes a share of the money needed for the project, which helps to build not only the additional business locations but the sports facility itself.

There are two ways the business arrangement can work. With a hypothetical $100 million project, the developer could put up a large portion, say $30 million. The revenues generated from the businesses would then be split between the university and the developer. In the other scenario, the school foots more of the up-front costs with the developer backing the project more with clout than money, by helping the university to get larger bank loans and issue bonds. The university pays off its debt with income from the facility and shares a small portion of the revenues with the developer.

“You could do a lot of things with this concept,” Thomas says. “For us, a big part of it is the commercial piece. But we’re also looking at it as a facility that could be used by other entities on campus. We could place any number of varsity programs in there, and we could also do concerts, and recreational and intramural activities. We might also be able to incorporate some academic pieces, such as classrooms or meeting rooms, and we’re now considering adding residence halls, which are badly needed on this campus.

“We’re looking at something that would be accessible 365 days a year,” he adds. “We want it to be used by our students, by our faculty and staff, and by the community.”

Although the facility is still in the early planning stages, Thomas sees the added real estate component as nothing but positive. “It’s good for the community, and it helps fund our primary objective, which in our case is a football stadium,” he says.

Bill Carr, Senior Vice President for Business Development of CollegeTown, and a former Athletic Director at the University of Florida and University of Houston, points to two factors that make the CollegeTown concept attractive. “First, universities are receiving less from state revenue streams for facilities and capital improvements, so they are more receptive to the public/private partnership concept,” he says. “Second, university students today come to campuses with an expectation of a certain lifestyle. That includes access to a community that includes commercial activity.

“It’s a way to get more use out of a facility,” he continues. “Why just build a concessions stand if you can build a food court that’s used around the clock? Sports arenas are happening places on campus. We’re trying to make them happening places every day rather than just on days of sports events.”

Akron has enlisted HOK, an architectural firm based in Kansas City, Mo., and Joseph Freed and Associates, a major developer, to work with CollegeTown on the plan. “What’s nice is that CollegeTown works directly with a developer and an architect so they can move each piece right along,” says Thomas.

The model seems to achieve everyone’s goals, but there is a potential downside for the university. “It ties up the land for a period of years,” Carr says. “Typically, the university is committing that space to commercial development for at least 30 years. During that period, the developer has the right to use that land for commercial purposes, under the parameters established by the university. Some universities will say they don’t want a certain kind of activity—one may not want a hotel, another may not want a movie theater, and another may not want a restaurant that serves alcohol. They can set whatever constraints they want. The developer will have to take those and determine if they can still make a financial return over a 30-year period that would make it worth their while.”

FINDING ICE
The one thing the CollegeTown concept relies on is that the university has some available land to develop. That’s not always the case, though. The University of St. Thomas, in St. Paul, Minn., has been leasing ice time for its men’s and women’s hockey teams for years, mainly because the school didn’t have enough open space on campus for its own rink.

Less than 10 miles down the road, in the suburb of Mendota Heights, St. Thomas Academy was tossing around the idea of building a new ice arena so they wouldn’t have to rent ice time for their teams anymore. The two put their resources together and a new facility is currently under construction that will house not only the academy’s boys’ hockey team and the university’s men’s and women’s teams, but also Mendota Heights Youth Hockey.

“Our men’s team has been playing its games at the state fairgrounds since 1977,” says Steve Fritz, Athletic Director at the University of St. Thomas. “That facility seats about 7,000. The new arena seats about 1,000, which is much more in line with our crowds. Our women’s team plays at the Minneapolis Parade Ice Garden. So this was an opportunity for us to put both our men’s and women’s teams on the same site, in a brand new facility.”

The university contributed $250,000 toward the total $4 million cost of the facility, and signed a 20-year lease with the academy at premium ice rates. “Our contribution represents the cost of things we needed in the facility, like the locker rooms and offices,” Fritz says. “And we had some say in the design of the facility, including the seats.”

“They’re a little bit landlocked over there, and we have the land here,” says Jack Zahr, Athletic Director at St. Thomas Academy, an all-male Catholic, military prep school with about 700 students in grades seven through 12. “Financially, it makes sense to do it this way. It also gets the most use out of the building.

“It will be really nice for the academy to have its own arena, with locker rooms and a weight training facility,” Zahr continues. “Another huge advantage is for our fans. I’m sure we’ll get much more student involvement in the games because it’s right here. It’s also going to be more desirable for incoming students, when they see we have this beautiful new arena on our campus.”

Fitting the needs of the three groups into the building hasn’t been a huge challenge thus far. “We have different needs, which makes it work well,” Zahr says. “Being a college team, their class schedules are different than ours. They’ll be able to get in there earlier in the afternoon, and we’ll be using it from about 3:30 on, and then the community groups will be using it in the evenings. We arranged our game schedules so that both the academy and the university will play on Saturdays, one in the afternoon and one in the evening.”

CREIGHTON TAGS ON
Like the University of St. Thomas, Creighton University recently signed a lease agreement with someone who was building just what they were looking for. With fewer than 10,000 seats, Creighton University’s longtime basketball arena just couldn’t handle the crowds the men’s team was bringing in. Last season, the Bluejays sold out their final six home games. And, going on 50 years old, the arena wasn’t exactly a magnet for new playing talent. But the school couldn’t afford to construct a new facility.

So when the city of Omaha started talking about building a new convention center a few blocks from the Creighton campus, Creighton’s athletics administrators saw the opportunity they’d been waiting for. “We weren’t in a position to build a new facility,” says Kevin Sarver, Assistant Athletic Director for External Operations at Creighton. “Given the choice of playing in a brand-new $291 million facility or a 50-year-old facility we’d outgrown, we opted for the former.”

The university was able to get in on the ground floor as a major tenant in what would become known as the Qwest Arena, which is just one part of the $291 million Qwest Center Omaha. The University of Nebraska-Omaha’s men’s ice hockey team will be the other major tenant in the 17,000-seat arena, which will also host NBA and NHL exhibition games, as well as concerts and family shows.

The teams and their fans will benefit from some of the other Qwest Center amenities as well. The overall development site for the project, most of which opened in September 2003, covers 422 acres, or about 100 city blocks. It contains over 1,000,000 square feet, including a 194,000-square-foot exhibition hall, over 62,000 square feet of meeting space, and approximately 4,500 parking spaces. The whole project will be complemented by an eight-story hotel being built a block away that will be connected to the facility via a skywalk.

“This is a public-private venture,” explains Roger Dixon, Executive Director of the Metropolitan Entertainment and Convention Authority, which manages the facility for the city. “An arena like the Qwest Center is not going to be successful without at least one major tenant. In this case, Creighton was interested and we also have the UNO hockey team.”

Combining basketball and hockey in the same facility is a tried-and-true formula to maximize its use, and, according to Dixon, the design considerations for fulfilling the teams’ needs weren’t that difficult to meet. “It’s the type of equipment you purchase, how the dressing rooms and locker rooms are set up, how you gain access onto the playing surface, and making the equipment accessible so you can have a true basketball and a true hockey set up,” he says.

Creighton signed a five-year lease but Sarver says he expects the arrangement to last much longer than that. “It’s great for us,” he says. “It’s a much bigger facility, with all the amenities, just 10 blocks from the campus. It’s going to be good for our athletes, for the fans, and for our recruiting, too.”

A SHOWPIECE IN SOUTH CAROLINA
The University of South Carolina just celebrated its first anniversary in one of the nation’s premier arenas—and the first year of the facility has been as good for the city of Columbia as it has for the university. That’s because the two share the 330,000 square foot, $64 million space.

The school put up the bulk of the money for the project, with $2.5 million coming from neighboring counties and Columbia, while the city donated most of the land the arena sits on. State funds also helped the cause. As the largest entertainment venue in South Carolina, everyone benefits from the Carolina Center.

Men’s and women’s basketball are the primary tenants, and the venue is built around their needs. But in its first year, the Carolina Center hosted events as diverse as professional wrestling, a Bruce Springsteen and the E Street Band concert, Ringling Brothers and Barnum and Bailey Circus, IFMA Freestyle Motocross, and Disney on Ice. The facility will host an estimated 120 events a year, about 25 percent of them university events.

The architects at Rosser International were able to create an arena that seats 18,000 fans for basketball and 19,000 for other events while maintaining an intimate feel. This was accomplished by using a double-deck design with a cantilever that extends further than any other arena of its size. To easily make the most of the space, the full 212-foot floor can be exposed by moving just one end of stands.

South Carolina basketball teams seemed to enjoy the new arena, as the men’s team went 11-4 at home in 2002-03 while going 1-11 on the road. The women’s team was 14-2 at home and 5-4 away. That may have been due in part to an expanded student section with almost 500 sideline seats set at a lower level to allow those fans to stand without obstructing the views of spectators behind.

GOING IT ALONE
Ottawa is home to some of Canada’s best runners, but many train elsewhere and some have even chosen to relocate because of the lack of an elite-caliber track. Facing similar financial straits to most major cities in the United States, Ottawa hasn’t been able to meet that need.

In the late 1990s, Ottawa’s Carleton University began looking into building a new indoor track on its campus. The city of Ottawa gave them a proposal: Upgrade your facility plans to Olympic specifications and we’ll sign a rental agreement that will help pay for it. Carleton considered the idea carefully, but ultimately built an arena that would more closely suit their own needs.

“There are two major hurdles to get over when looking at partnering on a facility like this,” says Drew Love, Director of Physical Education and Athletics at Carleton. “One of them is to have two groups that can work together at the same time and at the same speed. The second is deciding on how the facility is going to be used.”

Both of those were obstacles to Carleton’s partnering with the city of Ottawa. “I think more than anything else, the timing was off between the two of us,” Love says. “We needed our facility as quickly as possible and their process to get going on a potential joint venture was much slower.”

The other problem was with usage. “We talked with other groups similar to ourselves that have facilities that are shared with the community,” Love says. “They often had to set up a formal management committee that sits down and discusses the hours of rental for various tenants. One of the benefits of building on our own is the independence we have to manage the facility on our own and to declare our own priorities.”

A third challenge also became quickly apparent: The priorities for the facility were incongruent between the two groups. Rather than an elite training facility, Carleton needed something all of its students could use.

“Initially, we worked with the city to design something more like what they wanted,” says Love. “But we realized that we really did not want a formal 200-meter banked competitive track like they were interested in. We wanted more of a jogging and fitness track. Putting the track down totally flat allows wheelchair use and maximizes the infield for activities like indoor soccer and field hockey.”

The university still rents the facility out to the community, which blocks off about 40 percent of its use but brings in steady revenues. And Carleton controls the rental rates and the usage directly.

“In our case, we decided that we were better off going it alone,” says Love. “We knew the community would provide enough money through rental fees to make it a safe investment for us. So, we funded the building project ourselves and covered much of the principle and the interest on that loan for construction through rentals back to the community.”