Posted by John Vrooman on Saturday, March 2, 2019 in NCAA Football.

Interview with San Diego Union-Tribune.

I’m working on a story about SDSU’s Mission Valley stadium with the news hook that it’s signed a $250M contract with Clark Construction Company. I was hoping to pick your brain on a few things.

– What do you make of Clark Construction Company? What does the selection signal, if anything, about SDSU’s goals around the project?

Clark Construction is legit. On the East Coast they built Oriole Park (1992) in Baltimore and Nationals Stadium in DC. On the West Coast they were the lead partner for PetCo Park and they are currently partners in construction of the new home of Golden State Warriors in San Francisco.

SDSU is probably going with the familiarity of Clark in the competitive bidding process because of the construction of original PetCo in 2004 and following renovations for All-Star game in 2016. Clark has an office in SD that is also doing renovations on the SDSU campus.

– As far as college football stadiums goes, what does $250M get you? Something world class?

On one-hand, $250 million is only the cost of a major renovation for a Power 5 Conference heavyweight, but complete new stadium for middleweight program like the Big Ten’s University of Minnesota.

On the other hand, $250 will probably get you one of the better stadiums for one of the “Other 5” Conference Schools in D1 FBS. The best comparable would probably be the new Canvas Stadium for Colorado State University that opened in 2017 with a cost of $220 million.

– SDSU has said it will pay for the stadium through revenue bonds. And the repayment of the revenue bonds will be covered by revenue generated by the facility. Is that a risky proposition or not?

Bonds backed by projected revenue are inherently risky business, but at least the revenue base is derived from the venue itself.

The advantage is that the tax burden is directly attached to the benefit derived from the use of public funds, the disadvantage is that those revenue bonds are ultimately still backed by a general fund somewhere.

– SDSU doesn’t yet own the land where it wants to build the stadium. It’s currently in negotiations with the city. Is that a concern for the construction company? The public? Why would it move forward without that guarantee?

Yes uncertain ownership of the land is a risky proposition in an inherently risky business, and most of the preliminary negotiations with Clark and others are probably contingent on SDSU ownership.

The problem is that as the deal progresses through the uncertainty, SDSU’s bargaining position weakens and that of the City strengthens.

SDSU Aztec football at $13.7 million is one of the highest revenue programs in the “other 5 conferences”, but is still about one-fifth to one-sixth the size of the big boys in the Power 5 mega-conferences (compare to Pac-12 USC at $60 million).

The bond coverage ratio (by annual revenues) on the stadium bonds could indicate a slight squeeze, depending on revenue projections in the new Aztec venue.

The debt service on a $250 million bond issue is about $12.8 million annually over 20 years at rate of 3 percent. This is slightly less than all of the $13.7 million current reported annual football 2017-18 revenues of SDSU in the Mountain West Conference.