5:00am

Thu June 14, 2012
Business

CSU Could Take on Debt for On-Campus Stadium

  • KUNC's Brian Larson speaks to Boulder County Business Report Publisher Chris Wood.

Colorado State University may have to take out a bank loan to have enough money for its proposed on-campus football stadium.

KUNC’s Brian Larson spoke to Boulder County Business Report Publisher Chris Wood about this new development.

Larson: Chris, we know that CSU is looking into the possibility of building a new stadium, but for months now university officials have said, and repeatedly, I might add – that it would only use private donations if this project is approved. And now there’s word that might not be good enough?

Wood: According to the people we spoke with on the stadium financing subcommittee, pursuing a debt initiative is “Plan B.” This is in case their efforts to raise dollars from alumni and others fall short.

Larson: If that is “Plan B” the best case scenario must be “Plan A” and that is still private money?

Wood: Well CSU President Tony Frank must first decide whether or not to build the stadium. If that’s the case, then yes, the first priority will be to secure private donations and corporate naming rights. Revenue will also be brought in from selling premium seating and from non-football events held in the stadium. But even with all of those dollars, there is a possibility that CSU could have to assume some debt to make the stadium a reality.

Larson: Just how much money are we talking about?

Wood: That depends. The loan could range from $167 to $270 million, depending on how the fundraising and other efforts go. According to estimates released last month, the stadium would cost $246 million to build, but CSU wants to bring in much more than that. Under one scenario, as much as $490 million would be raised. That figure is based on the most optimistic fundraising projections, along with the assumption of debt.

Larson: So Where would CSU look for these extra dollars?

Wood: The university official we interviewed said CSU would get a private loan rather than going to the bond market because it wants to preserve its bonding capacity for academic building projects.

Larson: If memory serves, one of the requirements for deciding whether to build the stadium was that no student tuition or fees would be used to pay for the facility. Is it possible, Chris, that students may end up footing this bill down the road?

Wood: The subcommittee member we talked to said not a single dollar of student money will go to pay for the loan, even if it takes decades to pay off. He also stressed that no public funds would be used to pay down such a loan, now or in the future.

Larson: Would this be a risky loan for the university?

Wood: According to the university, pretty low. If the stadium is built, there are four sources of revenue at play including corporate naming and sponsorships rights as I mentioned earlier. Altogether, these “streams” would bring in slightly more than $19 million a year alone.

Larson: There’s been a lot of opposition to the stadium so far. What do opponents of the stadium have to say about all of this?

Wood: Well they don’t think it’s a good idea. They feel that students will end up footing the bill down the road and that the money that does come from donations could be better spent on academics.

Larson: Chris Woods is the Publisher of the Boulder County Business Report.

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