Capital Project Stage Gate I: Reser Stadium West GrandstandsFinance & Administration CommitteeJanuary 28, 2021

FAC Agenda Item 6a

Completing Reser Stadium Project• Planning for the completion of Reser Stadium began in 2015.

• Fundraising for Completing Reser began in earnest in the spring of 2019.

• Significant progress has been made toward the total fundraising goal of $85M.

FAC Agenda Item 6a

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Considerations• Significant renovation or rebuilding of the west side is required to address seismic risk and meet

accessibility needs and other building standards.

• Loyal donors are motivated to complete the stadium and have pledged gifts for rebuilding the west side, provided it allows for multiple, year-round university use and benefit.

• A private partner is interested in expanding student, faculty and staff health care, allowing the university to advance a long-standing need to improve related facilities and increase the breadth of services offered.

• Recruitment of new students is increasingly competitive. Many of our competitors have better facilities to support tours and recruitment, as well as showcase university accomplishments.

• A new west side creates opportunity to incorporate new meeting space that would be proximate to the LaSells Stewart Center and the Alumni Center, bolstering conferencing and event capacity for university and non-university events.

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Considerations• The pandemic has caused a projected $35M deficit in FY2021 in the Division of

Intercollegiate Athletics that is intended to be financed over 20 years.

• Athletics needs a way to generate more revenues to help repay the $35M borrowing and help avoid absorption of that cost within the E&G budget.

• We can bring together philanthropy, new Athletics revenues, and the multiuse concept to meet three other key needs:

1) A new health center

2) A welcome center

3) More space for university meetings/events/conferences

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Proposed Multiuse Design – Four Elements

Improved Football Venue Health Center

Prospective Student Welcome

Center

Conferencing Facilities

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Premium Seating Close to the Field

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A New Health Services Building FAC Agenda Item 6a

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A Welcome Center – Celebrating Academic and Athletic Achievements of OSUFAC Agenda Item 6a

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Welcome Center Presentation Space – Supporting New Student Recruitment and ToursFAC Agenda Item 6a

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Additional Conference Space – Proximate to LaSells Stewart Center & Alumni CenterFAC Agenda Item 6a

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Project Scope and FinancingComponents

• Philanthropy for over half of project costs.

• Upgraded seating, concessions and general fan experience, capturing additional revenues.

• A public-private partnership in health services, to expand services and make year-round use of facilities.

• A welcome center and additional conference space, to serve needs and make additional year-round use of facilities.

Financing$153M total project cost.

$85M in gifts.

Finance $40M in construction costs, recovered from part of net new premium seating revenues ($2.6M per year for 30 years).

Finance $17.5M in health center costs, recovered with health services revenues ($1.14M per year for 30 years).

Finance $10.5M for welcome center and conference space, recovered with charge to E&G ($680K per year for 30 years).

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What if we did nothing?• Leaves seismic risk and accessibility issues unaddressed.

• Fan experience unchanged.

• Results in turning down committed and pledged philanthropic gifts.

• Means foregoing new net revenues to Athletics that will repay the financing of the $35M FY2020-2021 COVID-generated deficit (with a total cost of $52M - $2.6M annually) and help balance the Athletics budget.

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What if we did a minimal renovation?• Contingent on such work being feasible.

• Addresses seismic and accessibility issues.

• Leaves fan experience mostly unchanged.

• Results in turning down committed and pledged philanthropic gifts.

• Requires financing the estimated renovation $70M cost over 30 years, for total cost of $138M ($4.6M annual charge to E&G).

• Means foregoing new net revenues to Athletics that will repay the financing of the $35M FY2020-2021 COVID-generated deficit (with a total cost of $52M - $2.6M annually) and help balance the Athletics budget.

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Project Economics: Underlying FactorsDo Nothing

$35M FY2020-2021 COVID-related deficit financing with no realistic way for Athletics to cover the cost

Renovate OnlyNo prospect of significant philanthropy

No improvement to fan experience to drive significant new revenues

No public private partnership in student health services

$70M renovation cost paid by E&G

$35M FY2020-2021 COVID-related deficit financing with no realistic way for Athletics to cover the cost

ReplacePhilanthropy covers 56% of project costs

Improvement/expansion of health services

Improvement in student recruitment experience to drive enrollment growth

Improvement in fan experience to drive new net revenues covering 26% of project costs and the financing of $35M FY2020-2021 COVID-related deficit

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Other Considerations• Revenue growth estimates from

improved fan experience are conservative; other sources of potential revenue are not included

• Some or all of debt service costs for welcome center and conference facilities can be offset by resulting conferencing earnings and net growth in tuition/fees

• OSU Athletics expenditures remain modest, 11th in Pac-12

$71.7

$82.4

$96.0

$98.4

$100.6

$106.7

$118.4

$127.3

$128.9

$131.3

$0 $50 $100 $150

WSU

OSU

Utah

Colorado

Arizona

Cal

ASU

UCLA

Oregon

Wasington

Athletics Expenditures, FY2019

Stanford and USC do not report.

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Completing Reser Stadium Project Schedule

Meaning “The Heart of the Valley”, Corvallis is on the Willamette river. It is the home of OSU and has many natural areas for hiking, horseback riding, and biking.

Salem is Oregon’s capital. It is located halfway between Corvallis and Portland. It is also situated on the Willamette River.

Portland is Oregon’s most populous city located where the Willamette and Columbia rivers merge.

2020

Jan Feb March Apr May June July Aug Sept Oct Nov Dec Jan Feb March Apr May June July Aug Sept Oct Nov Dec Jan Feb March Apr May June July Aug Sept Oct Nov Dec

∗ Board of Trustees Stage Gate 1

∗ Board of Trustees Stage Gate 2

∗ Substantial Completion

Construction

Fit Out

Schematic Design

2021 2022 2023

21 Football Season 22 Football Season 23 Football Season

Design Development

Construction Documents

Bidding/Permitting

Demolition

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Recommendation

Staff recommend that the Finance & Administration Committee

approve advancing the Reser Stadium West Grandstands project

to the next phase of design development.

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