July 11, 2012 3 Comments
Let me preface this by putting a few things out there.
- These are my views and do not reflect the views of my university, college, or department
- This is based solely upon the one document that I received that was stated to be official
- This discussion with me having not worked in sports marketing, my work experience is in manufacturing
- I do not know if I am allowed to host the document, if I receive word that I can I will put up a link
Now that we have those details out of the way, let me talk about the background to the proposal. The University of Alabama at Birmingham (UAB) is a school that competes in Conference USA. The Blazers, as the team is called, currently play at an outdated facility named Legion Field. There is a push for some members of the UAB community including the Athletic Director that a on campus stadium be built. As the stadium is not part of the approved multiyear master plan the construction must be approved by the board of trustees for the entire system. The board of trustees did not put the construction on the agenda so as of this post there is no current plan to build the stadium.
The stadium proposed is a 27,500 seat “U” shaped stadium which will be located on the campus itself. This number of seats is no doubt due to the fact that they average 23,139 attendees as of last season even though the current venue seats 71,000. The proposal suggests 16,060 tickets would be sold for each of the 6 home games in addition to 1500 student tickets and the season tickets for suites, loge and club level seating. The total ticket sales of 23,497 is in keeping with the current average so on its face it is reasonable presuming the ticket prices are in keeping with that of the current venue.
There is also an assumption that they sell all boxes and 80% of premium seats. I don’t know how reasonable that assumption is but given the statement that all interviewed schools with on campus stadium wish more had been built I am willing to accept it.
I won’t go line by line for the other assumptions for revenue or expenses other than to say that the numbers were based on the numbers from Legion Field, Bartow Arena (the on campus basketball arena), and input from the other on campus stadium visited (UCF, Akron, SMU, Troy, Louisville, & FAU). If these assumptions are accepted on their face it would result in approximately $5MM a year in operating income.
This leads to the question of financing. The construction cost for this stadium is $60MM. According to the numbers presented it is assumed that this would be by a bond issue with a nominal rate of 5% and a 30 year term. That rate is similar to the issue (Aa2 rated in 2010) of $142MM based on general revenue which helped to partially fund upgrades to Bartow Arena in addition to several capital improvements on the campus.
Given all of the caveats, the plan looks viable. Perhaps the best way forward would be for a group of investors to form a special purpose group to secure the land, build the stadium, and then lease it back to UAB if the school president is unable to get it on the master plan in future Board of Trustee meetings.