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Sports venues are money losers
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MissouriStateBears Offline
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Post: #21
RE: Sports venues are money losers
(04-18-2017 07:30 PM)arkstfan Wrote:  Arenas can be profitable but you really have to be careful about the decisions you make.

Sprint Center in Kansas City, perfect example. Which actually makes more money than it would without a sports tenant.
04-18-2017 08:14 PM
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billybobby777 Offline
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Post: #22
RE: Sports venues are money losers
(04-18-2017 06:59 PM)Love and Honor Wrote:  Read the book Field of Schemes if you'd like a good read on the subject.

It's absolutely fabulous...they give some examples of arenas built in small markets across America with weeds pooping up and grass poking through the sidewalks...no tenants, no events. Just a big massive building in the middle of nowhere sitting empty because a greedy developer talked a small town mayor into putting a game changing venue in their town with the logic," if you build it, they will come" Nope.
04-18-2017 08:20 PM
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Love and Honor Online
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Post: #23
RE: Sports venues are money losers
(04-18-2017 08:20 PM)billybobby777 Wrote:  
(04-18-2017 06:59 PM)Love and Honor Wrote:  Read the book Field of Schemes if you'd like a good read on the subject.

It's absolutely fabulous...they give some examples of arenas built in small markets across America with weeds pooping up and grass poking through the sidewalks...no tenants, no events. Just a big massive building in the middle of nowhere sitting empty because a greedy developer talked a small town mayor into putting a game changing venue in their town with the logic," if you build it, they will come" Nope.

Reminds me of that episode of The Simpsons where Marge saves the town from the swindler with the monorail, only this is real life. While some cities have wised up and have stopped paying or now demand more private investment, you still see some baffling cases like how Atlanta got a new ballpark with Dallas soon to follow. What were the teams gonna do if they said no, move to Albuquerque?

The irony is that some of those owners are probably kicking themselves over the decision to build new and/or relocate. Who goes to a Tigers or White Sox game for Comerica Park or whatever US Cellular Field is called now? How many more would go to Tiger Stadium or Comiskey Park if they were maintained like Fenway and Wrigley? Similarly, how much fun are the Coyotes having away from Winnipeg in the desert while the new Jets do pretty well?
04-18-2017 10:20 PM
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miko33 Offline
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Post: #24
RE: Sports venues are money losers
(04-18-2017 12:43 PM)Attackcoog Wrote:  
(04-18-2017 12:27 PM)miko33 Wrote:  The articles apply to baseball ball parks; however, it can easily be applied to stadium projects for FB and most likely other sporting venues too.

http://www.richmond.com/opinion/our-opin...af399.html

https://www.wsj.com/articles/new-ballpar...1491912002

The economic projections never pan out. How many universities screw themselves over trying to compete with the FB and BB factories who are only too happy to continue ratcheting up the costs. Out of all schools playing in the revenue sports conferences of FBS (and the main BB counterpart league), only 20 to 30 can actually afford our current levels. UMD is a mess. Rutgers is a mess. Cal-Berkeley is a mess. Vast majority of these schools playing at the highest levels are taking from the general funds to subsidize athletics.

Couple all this with the realities that 1) tuition costs continue to rise at rates higher than annual inflation, 2) states are funding public universities at lower levels than they have in decades and 3) people are wising up to false narrative that all college is good - no matter what degree choice you make.

I don't see how all of this is sustainable over the long term.

Its probably not---but sports isn't really the reason for the issue. These schools have billion dollar budgets. The athletics budgets support much of their own costs with most G5's running deficits of 10-20 million. Most P5's are running athletic deficits of just a few million. Its like pointing to foreign aid in the US budget as the reason for our national debt. Like NoDak said, most stadiums that are responsibly built with a reasonable cost and a significant portion of the funds donated---those will work out fine. A situation like Colorado St is one where I'd be concerned. Overly high cost for a 30K stadium with most of it financed with debt. That situation could easily go bad if ticket sales go south after a poor season or two.

I've seen this argument before - that athletics is a small part of an overall university so who cares if they overspend a little. Their scope is small so no big deal. I also saw in another thread that you equated college sports to being a marketing arm for universities, and that the deficit spending (dipping into the general funds) is not a big deal because of the advertising generated thru sports. I get that too. However, I think you are not completely seeing the future trends and what has been happening to universities. To broaden the scope of this response, I see the following phenomena happening at the universities:
  • The majority of states are not subsidizing all public universities to the levels they used to.
  • With annual costs exceeding the rates of inflation, the ROI for an increasing percentage of bachelor degrees offered is poor.
  • More kids are deciding to complete their first 2 years at community colleges to help contain costs
  • Attending classes online is becoming more popular and requires less time on campus - and in some cases zero time on campus

All of this points to larger percentages of people moving away from the traditional concepts of the college experience that we experienced a generation or 2 ago. We're going to see significant changes to the universities in the future. How that will look, I'm not 100% sure. I imagine most states will take a "circle the wagons" approach for their "best" public universities, and IMHO if they were smart funnel more money towards the community colleges and trade schools. This will put significant pressure on the mid-tier schools that are not the "brand name" schools but also not low enough to be the trade schools for students pursuing associate degree level and skill level jobs. That doesn't touch upon what I expect to see is fierce competition between the "branded" public universities for students thru online classes. I expect competition to become more fierce.

I know what your response will be - especially to the last few sentences above - that college sports becomes more important as a means to market schools to differentiate the products. I think it will be too late for that. I think the schools - the public universities specifically - will be commoditized. The dominant mechanism will become price, then geography a distant second and the rest will become background noise.
04-19-2017 07:56 AM
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Attackcoog Online
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Post: #25
RE: Sports venues are money losers
(04-19-2017 07:56 AM)miko33 Wrote:  
(04-18-2017 12:43 PM)Attackcoog Wrote:  
(04-18-2017 12:27 PM)miko33 Wrote:  The articles apply to baseball ball parks; however, it can easily be applied to stadium projects for FB and most likely other sporting venues too.

http://www.richmond.com/opinion/our-opin...af399.html

https://www.wsj.com/articles/new-ballpar...1491912002

The economic projections never pan out. How many universities screw themselves over trying to compete with the FB and BB factories who are only too happy to continue ratcheting up the costs. Out of all schools playing in the revenue sports conferences of FBS (and the main BB counterpart league), only 20 to 30 can actually afford our current levels. UMD is a mess. Rutgers is a mess. Cal-Berkeley is a mess. Vast majority of these schools playing at the highest levels are taking from the general funds to subsidize athletics.

Couple all this with the realities that 1) tuition costs continue to rise at rates higher than annual inflation, 2) states are funding public universities at lower levels than they have in decades and 3) people are wising up to false narrative that all college is good - no matter what degree choice you make.

I don't see how all of this is sustainable over the long term.

Its probably not---but sports isn't really the reason for the issue. These schools have billion dollar budgets. The athletics budgets support much of their own costs with most G5's running deficits of 10-20 million. Most P5's are running athletic deficits of just a few million. Its like pointing to foreign aid in the US budget as the reason for our national debt. Like NoDak said, most stadiums that are responsibly built with a reasonable cost and a significant portion of the funds donated---those will work out fine. A situation like Colorado St is one where I'd be concerned. Overly high cost for a 30K stadium with most of it financed with debt. That situation could easily go bad if ticket sales go south after a poor season or two.

I've seen this argument before - that athletics is a small part of an overall university so who cares if they overspend a little. Their scope is small so no big deal. I also saw in another thread that you equated college sports to being a marketing arm for universities, and that the deficit spending (dipping into the general funds) is not a big deal because of the advertising generated thru sports. I get that too. However, I think you are not completely seeing the future trends and what has been happening to universities. To broaden the scope of this response, I see the following phenomena happening at the universities:
  • The majority of states are not subsidizing all public universities to the levels they used to.
  • With annual costs exceeding the rates of inflation, the ROI for an increasing percentage of bachelor degrees offered is poor.
  • More kids are deciding to complete their first 2 years at community colleges to help contain costs
  • Attending classes online is becoming more popular and requires less time on campus - and in some cases zero time on campus

All of this points to larger percentages of people moving away from the traditional concepts of the college experience that we experienced a generation or 2 ago. We're going to see significant changes to the universities in the future. How that will look, I'm not 100% sure. I imagine most states will take a "circle the wagons" approach for their "best" public universities, and IMHO if they were smart funnel more money towards the community colleges and trade schools. This will put significant pressure on the mid-tier schools that are not the "brand name" schools but also not low enough to be the trade schools for students pursuing associate degree level and skill level jobs. That doesn't touch upon what I expect to see is fierce competition between the "branded" public universities for students thru online classes. I expect competition to become more fierce.

I know what your response will be - especially to the last few sentences above - that college sports becomes more important as a means to market schools to differentiate the products. I think it will be too late for that. I think the schools - the public universities specifically - will be commoditized. The dominant mechanism will become price, then geography a distant second and the rest will become background noise.

I don't disagree with any of that. I'm merely saying the runaway costs of college have very little to do with athletics. In other words, the money athletics is "losing" would likely have to be spent on traditional marketing and alternative student amenities if you didn't have a D1 athletics program.

In Texas, Gov Perry had an initiative to create a quality public 4 year college degree that would cost just $10K. It now exists, but it requires jumping through a lot of hoops and is only available in limited locations. So, if you don't live near those locations, you'll need room and board which runs up the cost to near traditional college levels. The answer is a state wide system that utilizes the local community colleges, on-line facilities, and at least one of the major state systems---to create a $10K degree that's accessible no matter where you live in the state. That way, you can live at home while you finish the degree, minimizing costs. It shouldn't really be that hard to create in today's connected internet environment. Its time has come.
(This post was last modified: 04-19-2017 12:17 PM by Attackcoog.)
04-19-2017 08:24 AM
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orangefan Offline
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Post: #26
RE: Sports venues are money losers
(04-19-2017 08:24 AM)Attackcoog Wrote:  
(04-19-2017 07:56 AM)miko33 Wrote:  
(04-18-2017 12:43 PM)Attackcoog Wrote:  
(04-18-2017 12:27 PM)miko33 Wrote:  The articles apply to baseball ball parks; however, it can easily be applied to stadium projects for FB and most likely other sporting venues too.

http://www.richmond.com/opinion/our-opin...af399.html

https://www.wsj.com/articles/new-ballpar...1491912002

The economic projections never pan out. How many universities screw themselves over trying to compete with the FB and BB factories who are only too happy to continue ratcheting up the costs. Out of all schools playing in the revenue sports conferences of FBS (and the main BB counterpart league), only 20 to 30 can actually afford our current levels. UMD is a mess. Rutgers is a mess. Cal-Berkeley is a mess. Vast majority of these schools playing at the highest levels are taking from the general funds to subsidize athletics.

Couple all this with the realities that 1) tuition costs continue to rise at rates higher than annual inflation, 2) states are funding public universities at lower levels than they have in decades and 3) people are wising up to false narrative that all college is good - no matter what degree choice you make.

I don't see how all of this is sustainable over the long term.

Its probably not---but sports isn't really the reason for the issue. These schools have billion dollar budgets. The athletics budgets support much of their own costs with most G5's running deficits of 10-20 million. Most P5's are running athletic deficits of just a few million. Its like pointing to foreign aid in the US budget as the reason for our national debt. Like NoDak said, most stadiums that are responsibly built with a reasonable cost and a significant portion of the funds donated---those will work out fine. A situation like Colorado St is one where I'd be concerned. Overly high cost for a 30K stadium with most of it financed with debt. That situation could easily go bad if ticket sales go south after a poor season or two.

I've seen this argument before - that athletics is a small part of an overall university so who cares if they overspend a little. Their scope is small so no big deal. I also saw in another thread that you equated college sports to being a marketing arm for universities, and that the deficit spending (dipping into the general funds) is not a big deal because of the advertising generated thru sports. I get that too. However, I think you are not completely seeing the future trends and what has been happening to universities. To broaden the scope of this response, I see the following phenomena happening at the universities:
  • The majority of states are not subsidizing all public universities to the levels they used to.
  • With annual costs exceeding the rates of inflation, the ROI for an increasing percentage of bachelor degrees offered is poor.
  • More kids are deciding to complete their first 2 years at community colleges to help contain costs
  • Attending classes online is becoming more popular and requires less time on campus - and in some cases zero time on campus

All of this points to larger percentages of people moving away from the traditional concepts of the college experience that we experienced a generation or 2 ago. We're going to see significant changes to the universities in the future. How that will look, I'm not 100% sure. I imagine most states will take a "circle the wagons" approach for their "best" public universities, and IMHO if they were smart funnel more money towards the community colleges and trade schools. This will put significant pressure on the mid-tier schools that are not the "brand name" schools but also not low enough to be the trade schools for students pursuing associate degree level and skill level jobs. That doesn't touch upon what I expect to see is fierce competition between the "branded" public universities for students thru online classes. I expect competition to become more fierce.

I know what your response will be - especially to the last few sentences above - that college sports becomes more important as a means to market schools to differentiate the products. I think it will be too late for that. I think the schools - the public universities specifically - will be commoditized. The dominant mechanism will become price, then geography a distant second and the rest will become background noise.

I don't disagree with any of that. I'm merely saying the runaway costs of college have very little to do with athletics. In other words, the money athletics is "losing" would likely have to be spent on traditional marketing and alternative student amenities if you didn't have a D1 athletics program.

In Texas, Gov Perry had an initiative to create a quality public 4 year college degree that would cost just $10K. It now exists, but it requires jumping through a lot of hoops and is only available in limited locations. So, if you don't live near those locations, you'll need room and board which runs up the cost to near traditional contract college levels. The answer is a state wide system that utilizes the local community colleges, on-line facilities, and at least one of the major state systems---to create a $10K degree that's accessible no matter where you live in the state. That way, you can live at home while you finish the degree, minimizing costs. It shouldn't really be that hard to create in today's connected internet environment. Its time has come.

The flipside is that there is a large group of students that want the high end college experience, not just a degree at the lowest cost. They want Disney World not Walmart. Schools cater to this group since it often includes the students that are in the highest demand, however it drives up the cost for everyone. Those complaining about the high cost of education generally ignore that this is a significant factor driving the cost. However, I applaud those trying to create value options for students and their families.
04-19-2017 08:48 AM
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miko33 Offline
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Post: #27
RE: Sports venues are money losers
(04-19-2017 08:48 AM)orangefan Wrote:  
(04-19-2017 08:24 AM)Attackcoog Wrote:  
(04-19-2017 07:56 AM)miko33 Wrote:  
(04-18-2017 12:43 PM)Attackcoog Wrote:  
(04-18-2017 12:27 PM)miko33 Wrote:  The articles apply to baseball ball parks; however, it can easily be applied to stadium projects for FB and most likely other sporting venues too.

http://www.richmond.com/opinion/our-opin...af399.html

https://www.wsj.com/articles/new-ballpar...1491912002

The economic projections never pan out. How many universities screw themselves over trying to compete with the FB and BB factories who are only too happy to continue ratcheting up the costs. Out of all schools playing in the revenue sports conferences of FBS (and the main BB counterpart league), only 20 to 30 can actually afford our current levels. UMD is a mess. Rutgers is a mess. Cal-Berkeley is a mess. Vast majority of these schools playing at the highest levels are taking from the general funds to subsidize athletics.

Couple all this with the realities that 1) tuition costs continue to rise at rates higher than annual inflation, 2) states are funding public universities at lower levels than they have in decades and 3) people are wising up to false narrative that all college is good - no matter what degree choice you make.

I don't see how all of this is sustainable over the long term.

Its probably not---but sports isn't really the reason for the issue. These schools have billion dollar budgets. The athletics budgets support much of their own costs with most G5's running deficits of 10-20 million. Most P5's are running athletic deficits of just a few million. Its like pointing to foreign aid in the US budget as the reason for our national debt. Like NoDak said, most stadiums that are responsibly built with a reasonable cost and a significant portion of the funds donated---those will work out fine. A situation like Colorado St is one where I'd be concerned. Overly high cost for a 30K stadium with most of it financed with debt. That situation could easily go bad if ticket sales go south after a poor season or two.

I've seen this argument before - that athletics is a small part of an overall university so who cares if they overspend a little. Their scope is small so no big deal. I also saw in another thread that you equated college sports to being a marketing arm for universities, and that the deficit spending (dipping into the general funds) is not a big deal because of the advertising generated thru sports. I get that too. However, I think you are not completely seeing the future trends and what has been happening to universities. To broaden the scope of this response, I see the following phenomena happening at the universities:
  • The majority of states are not subsidizing all public universities to the levels they used to.
  • With annual costs exceeding the rates of inflation, the ROI for an increasing percentage of bachelor degrees offered is poor.
  • More kids are deciding to complete their first 2 years at community colleges to help contain costs
  • Attending classes online is becoming more popular and requires less time on campus - and in some cases zero time on campus

All of this points to larger percentages of people moving away from the traditional concepts of the college experience that we experienced a generation or 2 ago. We're going to see significant changes to the universities in the future. How that will look, I'm not 100% sure. I imagine most states will take a "circle the wagons" approach for their "best" public universities, and IMHO if they were smart funnel more money towards the community colleges and trade schools. This will put significant pressure on the mid-tier schools that are not the "brand name" schools but also not low enough to be the trade schools for students pursuing associate degree level and skill level jobs. That doesn't touch upon what I expect to see is fierce competition between the "branded" public universities for students thru online classes. I expect competition to become more fierce.

I know what your response will be - especially to the last few sentences above - that college sports becomes more important as a means to market schools to differentiate the products. I think it will be too late for that. I think the schools - the public universities specifically - will be commoditized. The dominant mechanism will become price, then geography a distant second and the rest will become background noise.

I don't disagree with any of that. I'm merely saying the runaway costs of college have very little to do with athletics. In other words, the money athletics is "losing" would likely have to be spent on traditional marketing and alternative student amenities if you didn't have a D1 athletics program.

In Texas, Gov Perry had an initiative to create a quality public 4 year college degree that would cost just $10K. It now exists, but it requires jumping through a lot of hoops and is only available in limited locations. So, if you don't live near those locations, you'll need room and board which runs up the cost to near traditional contract college levels. The answer is a state wide system that utilizes the local community colleges, on-line facilities, and at least one of the major state systems---to create a $10K degree that's accessible no matter where you live in the state. That way, you can live at home while you finish the degree, minimizing costs. It shouldn't really be that hard to create in today's connected internet environment. Its time has come.

The flipside is that there is a large group of students that want the high end college experience, not just a degree at the lowest cost. They want Disney World not Walmart. Schools cater to this group since it often includes the students that are in the highest demand, however it drives up the cost for everyone. Those complaining about the high cost of education generally ignore that this is a significant factor driving the cost. However, I applaud those trying to create value options for students and their families.

That could very well be true. However, even for this group of students the cost of attendance may cut into their time on campus and thus ultimately governed by finances. Your best and brightest - those who can get a full academic ride - and even those who can get scholarships for some type of achievement - will likely still go to campus. Even some of the poor who will get grants and scholarships for poverty may be too. However, the majority of the kids will be middle class and will need to carry some level of debt even pursuing the cheaper alternatives. We'll see how it unfolds in the future, but I suspect with these types of changes you won't see the same level of alumni donations as in years past because the experiences will be much more in line with Walmart than Disney.
04-19-2017 09:35 AM
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orangefan Offline
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Post: #28
RE: Sports venues are money losers
(04-19-2017 09:03 AM)MplsBison Wrote:  
(04-19-2017 08:48 AM)orangefan Wrote:  The flipside is that there is a large group of students that want the high end college experience, not just a degree at the lowest cost. They want Disney World not Walmart. Schools cater to this group since it often includes the students that are in the highest demand, however it drives up the cost for everyone. Those complaining about the high cost of education generally ignore that this is a significant factor driving the cost. However, I applaud those trying to create value options for students and their families.

Yeah, all those "Disney World" features like ... free internet access.

Go ask your local college for a trend chart on how much their spending on IT, alone, has gone up over the last 20 years. 07-coffee3

It's also recreational facilities, dorms that are more like luxury apartments than the cinder block castles we enjoyed, enhanced dining opportunities, etc. https://www.forbes.com/sites/caranewlon/...arms-race/
http://www.nationalreview.com/corner/444...-amenities

(04-19-2017 09:35 AM)miko33 Wrote:  That could very well be true. However, even for this group of students the cost of attendance may cut into their time on campus and thus ultimately governed by finances. Your best and brightest - those who can get a full academic ride - and even those who can get scholarships for some type of achievement - will likely still go to campus. Even some of the poor who will get grants and scholarships for poverty may be too. However, the majority of the kids will be middle class and will need to carry some level of debt even pursuing the cheaper alternatives. We'll see how it unfolds in the future, but I suspect with these types of changes you won't see the same level of alumni donations as in years past because the experiences will be much more in line with Walmart than Disney.

Interestingly, the Forbes article says:
Quote:“We found that the lower ability students and higher income students have a greater willingness to pay for these amenities.”

In other words? Harvard University might not spend approximately $700 million to renovate their campus, but High Point University would.
(This post was last modified: 04-19-2017 09:44 AM by orangefan.)
04-19-2017 09:39 AM
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MplsBison Offline
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Post: #29
RE: Sports venues are money losers
Sure ... but dorms and dining halls are usually money makers for schools. So offering better amenities there just allows them to charge more.

Rec sports is also an area where you can charge fees.


Internet access though, is simply expected. So it has to be built into tuition.
04-19-2017 09:52 AM
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Post: #30
RE: Sports venues are money losers
(04-18-2017 08:14 PM)MissouriStateBears Wrote:  
(04-18-2017 07:30 PM)arkstfan Wrote:  Arenas can be profitable but you really have to be careful about the decisions you make.

Sprint Center in Kansas City, perfect example. Which actually makes more money than it would without a sports tenant.

Same deal in Little Rock. When UALR, minor league hockey and indoor football moved out, profitability went up.
04-19-2017 10:05 AM
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