Sent: Tuesday, December 2, 2014 3:20 PM
Subject: Decision to move forward with an on-campus stadium
December 2, 2014
Dear Board of Governors:
President Tony Frank announced by email on November 29 that he intends to proceed with the construction of a stadium on the campus of Colorado State University in Fort Collins. This decision does not reflect a sound strategic plan because it fails to consider the changing environment of college football and educational institutions. Consequently, you should refer the matter back to President Frank for additional analysis based on the transformations taking place in both athletics and education.
The New Game of Football
For many years, the National Collegiate Athletic Association (NCAA) has ruled college athletics using the concept of “student athletes.” The result of this approach was that athletes could not be paid for their participation in sports beyond a scholarship to attend the university. A number of pending lawsuits threaten the NCAA’s monopolistic stranglehold on college athletics. Antitrust suits, administrative claims for workers’ compensation and fair labor standards compliance, and collective bargaining rights are altering the terrain formerly under the exclusive control of the NCAA. The eventual result will be more money for players, and more expensive programs due to regulatory costs. Those costs must be offset by ticket sales.
A recent article in The Economist (Aug. 16, 2014), measures players’ compensation compared to revenue for the NCAA, the National Football League, and the National Basketball League. College sports programs generate over $10 billion in revenue, while the NFL’s revenue is about $9 billion and the NBA’s just over $4 billion. NBA players receive more than half of total revenue, NFL players about 40 percent, and NCAA athletes get no paid salaries. Football players at Northwestern are now defined by the National Labor Relations Board as “employees” with a protected right to form and join unions. That decision, and pending antitrust litigation, have effectively undermined the NCAA’s fictive power to unilaterally control monetary inducements in college football. Football programs are already dominated by a few key teams and conferences. If players and coaches can command ever-increasing salaries and benefits, the market for college football will eventually resemble that of the NFL where successful teams generate vast wealth for a few owners. Certainly CSU will not compete against Alabama, Florida State, Auburn, Louisiana State, and other teams where the university is merely an appendage to the football program. Spending $200 million toward a stadium is a poor investment under such conditions.
President Frank’s justification for a new stadium seems to be that the university will attract greater financial support from alumni, more nonresident students who will pay higher tuition, and increased ticket revenue. The overwhelming consensus of sports economists is that only a handful of football programs yield income over and above the costs of the program. The idea of generating more nonresident tuition is even weaker than the hope for higher ticket sales and contributions. As President Frank and his committees produce evolving explanations for the plan, he has not provided any data to support his position. If greater donor activity and higher tuition is anticipated, how much revenue will it produce relative to the growing expense of the stadium and the football program? The cost of a college education already is beyond the means of many families. In any case, CSU’s fundamental purpose is to educate Colorado citizens, and a football stadium designed to attract nonresidents seems incompatible with that objective.
What’s Changing in Higher Education
The strategy also suffers from a failure to anticipate broader developments in college education. The arrival of massive open online courses, or MOOCs, is already having an impact on the way college credit is delivered. As major online programs roll out, such as Coursera and others, traditional resident instruction will become less attractive than a low-cost alternative. That is, if students can enroll in distance courses at elite universities, it is unlikely they would choose to pay nonresident tuition at CSU because the institution has a football stadium on the campus. President Frank may have an answer to the threat of MOOCs, but I am not aware that MOOCs were ever discussed in the context of the stadium.
CSU already has a response to online education in the form of CSU Global. In the new competitive environment, this branch of the system will be forced to deal with the expansion of MOOCs and fashion a strategy to attract new students. As CSU-G draws off more potential students, the resident program in Fort Collins will be adversely affected by technological developments. A stadium designed for a handful of football games each season creates a sense of separation rather than a community of learning. Graduates with a predominantly online learning experience are not likely to form an attachment to the institution because it has a venue in which to play football.
Faculty and concerned citizens in Fort Collins have vigorously opposed the construction of a new stadium. Looking back on events since the announcement that a new stadium was under consideration, it appears that the decision was made early in the process and any “debate” was a sham intended to convey the appearance of reasoned discussion. At no point was there a realistic possibility to abandon the stadium plan, regardless of the arguments against it. Those arguments have been made vigorously from the beginning and President Frank has not provided a fact-based and persuasive rebuttal against them. His reasons for a new stadium are ambiguous, ill-defined, and unrealistic. The constant stream of anti-stadium commentary published in the Coloradoan confirms there is a high level of hostility to this idea.
The best decision the Board could make is to refer the plan back to President Frank with instructions to provide a detailed cost-benefit assessment over the next decade beginning with this season. The assumptions should be that costs of a football program will increase between 10-15 percent annually, that enrollment at CSU will remain relatively flat, and that tuition will increase by five percent annually. Using those parameters, President Frank should be asked to demonstrate that investment in a new stadium is fiscally sound. If he can do so, then the construction of the stadium should be approved. If not, it should be rejected. There is no reason the Board needs to rush to a decision.
Thank you for your attention.
Raymond L. Hogler
Department of Management
Colorado State University
Fort Collins, CO 80523-1275
Fulbright Distinguished Chair in Labor Law, 2007
University of Tuscia (Viterbo, Italy)