Case Study

With the steady growth in attendance at Saturday home football games, Southwestern University’s president, Dr. Joel Wisner, had reached a decision. The existing stadium, with seating capacity of 54,000, simply would not suffice. Forecasts showed increasing interest in the program and complaints by loyal fans and big-money athletic club boosters revealed the need for premium-class seating and luxury amenities not found in a 1950s-era stadium [see Southwestern University: (C) in Chapter 6].

But the choice of what to do was anything but clear to President Wisner. His vice president of development, Leslie Gardner, had presented three options:

(1) expand the existing stadium to 75,000 seats, adding numerous luxury skyboxes and upgrading most of the yard-line seats to include comfortable backings.

(2) build a brand-new stadium three miles from campus on land, worth about $3 million, donated by a team booster.

(3) signing a 10-year contract with the Dallas Cowboys football team to rent their stadium, 28 miles away, for a fee of $200,000 per game.

Each of these options had clear benefits–yet each had at least one very strong negative as well. Expanding the current facility carried a $12 million price tag, with an annual fixed cost of about $1 million and with a variable cost of about $1 per attendee. If the job were not completed in the nine-month off-period between seasons, the team would be left without a home field on which to play in 2004. This meant reneging on contract dates with powerhouse teams that were signed some 3 to 4 years earlier. Contract violations are not a matter taken lightly in the NCAA or the Big Eleven Football Conference.

Building a brand-new stadium off-campus would yield a plush, state-of-the-art facility, but it had to be named after the donor of the land. It also meant a huge fundraising drive on the order of $40 million by President Wisner, plus likely bond insurance placing a 20-year debt burden on the college’s balance sheet. He...