(10-09-2013 09:24 PM)KNIGHTTIME Wrote: How does it make financial sense for a school with announced attendance of 18k to build a stadium for $78 million? So maybe 8k a game actually bought a ticket.
If you look at it from a gate receipt, pure transaction based dollars and sense transaction (new revenue vs. added cost) , you will struggle a stadium renovation or new stadium built in the last 15 years, anywhere in the country at any level for any sport that makes financial sense. They all use fuzzy math that would make an accountant's head spin.
I equate it to when a company builds a new headquarters. I used to work at a company who back in 1998 spent over $100 million building two new offices, one a 50 story building, and one a campus like building, that was only six stories. They were both wonderful buildings by the way. Anyway, using pure dollars and sense, being that we were not a retail shop so to speak (as in customers did not come into these buildings, so it's not like they can lead to increased sales) it's hard to see how spending $100 million (probably close to $170 million in today's money) on new back office housing is beneficial to the bottom line on a transaction basis. And it probably wasn't. But in time, the value becomes apparent with just the way it improves the perception of the brand. I can't explain it, but it made the company look a lot more major league. The company was sold a few years later for what was said to be double the market capitalization value. Of course the fault in this example is both buildings were later sold netting well over $300 million, so I guess there was a different type of value.
Anyway my point is looking at revenue in, expenditures out, you are probably right on the money. But there is an inherent long term value that comes from having adequate to top notch facilities that go beyond gate revenue. Almost like companies who advertise on TV, not a particular new product, but just constantly advertise so you are always reminded of them. Such as Budweiser, Ford, or AllState.
They may pour $30 million or more into a building on campus to enhance research, add classrooms, etc. Now many schools are full in terms of enrollment, to where adding such buildings cannot really increase the student population. And you likely are not going to now start being able to raise tuition simply because of it. Using the same calculations it would be hard to justify it. But when taken into a whole, with other improvements, other investments, they add up to improve the overall value of the educational experience. And that is where the value comes in. I would say that renovated and new stadiums, seem to fit that mold.
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New Houston Football Stadium nears topping-out ceremony
