Quick Summary: PSU Board of Trustees Meeting 5/2/2019

Quick Summary of some of the PSU BOT Actions of 5/2/2019, the day of the PSU BOT Committee Meetings.

First, let me just say that when attending these BOT Meetings, I feel like the guy in this commercial:

https://www.youtube.com/watch?v=M1owcncKCHg&feature=youtu.be&fbclid=IwAR2Q38IqBT8_WRqpJiA4v5jKWDUBE0YZG1R-uhLiT_jlXmpZsWR_tXqWues

 

Most of the most impactful actions came during the FINANCE Committee Meeting.  Some of the highlights:

1) The Board approved moving forward on PSU President Eric Barron’s plans for a Museum Complex.

The projected costs of the Museum (which will be built along Park Avenue, in the area in front of the Arboretum) is $71,000,000.

Barron’s plans call for taking $4,000,000 from the revenue sent to PSU by the BigTen – for the TV rights deal for BigTen Football – to pay for the design work.

The other $67,000,000?  Who knows?  But PSU Trustee Brandon Short praised Barron for his “creative financing” in using the Football revenue…. even though that only covered $4 Million of the $71,000,000 + cost.

Not only do we not know where the other $67,000,000+ will come from, we also don’t know:

– What the need is for a new Museum complex
– What will happen to the existing Palmer Museum, once this new project makes it obsolete

I will link in some video clips from the meeting when time permits – but Barron’s “justifications” for the new project were humorous…. if not for the fact that the $70,000,000 expense was quite serious.

Barron’s justifications?

A) There is not enough parking around the Palmer Museum.

What Barron didn’t say was that the new museum will be about 200 yards from the existing one – and any where someone parked to visit the new museum would be a short walk from the existing Palmer Museum.

B) Barron claimed that the new museum would bring in 400,000 visitors per year from outside of the Centre Region… about 1,500 per day.

No one questioned how Barron came up with the figure (which is greater than the number of out-of-region visitors who attend PSU football games in a year), nor did anyone ask how many people currently visit the Palmer Museum.

Barron said he got that estimate from an (unnamed) consultant.   Barron didn’t provide any information on how much revenue that would bring to the University – and no one asked – but the likely answer is $0.00

We do know that Eric and Molly Barron appear to become highly stimulated by the implementation of the Arboretum and Museum projects on their “front porch” (those projects essentially form the “front porch” to the President’s Mansion off of Park Avenue).

No one on the Board of Trustees questioned the expense in any way – – – and the proposal was passed unanimously. 

 

 

2) The Board approved moving forward with three projects for the Football Program.

The projected costs of the projects is approximately $70,000,000

The three football projects are:

– Renovations to Lasch Building (the football complex)

– Maintenance to Holuba Hall (indoor practice facility)

– Maintenance to Outdoor Football Practice Fields.

 

The most expensive of these is the Lasch Building renovations…. $49,000,000… so lets take a closer look:

The Lasch Building is an existing 90,000 square foot complex that holds Locker Rooms, Offices, Strength Training facilities, etc.

Lasch was just renovated in 2016 – at a cost of $15,000,000 – $20,000,000

https://populous.com/project/pennsylvania-state-university-lasch-football-building

And is now going to be renovated again for $49,000,000.

Two questions that were NOT raised by any of the members of the Board (who approved the proposal unanimously, with no questions asked)

1) Why does it cost so much?

2) How will it be paid for?

1) Why does it cost so much?

To place some perspective on the project:

Clemson University recently built their own Football Facility (similar purposes to the Lasch Building), and it has become the “Gold Standard” – for better and for worse – in the escalating arms race in over-indulgent College Athletics spending:

https://nesn.com/2016/12/clemsons-absurd-new-football-facility-will-have-a-slide-because-why-not/

Clemson’s building – widely criticized as a ridiculously over-the-top pimped-out Taj Mahal of athletics extravagance – is a 142,000 square foot building (nearly 50% larger than Lasch) …. and was built from the ground up as a completely new building, for $55,000,000.

Penn State has now approved spending MORE than that for RENOVATIONS to an existing building.  An existing building only 2/3 the size of Clemson’s Taj Mahal.

Let that sink in for a moment.

Where is all that money REALLY going?

 

2) How is it going to be paid for?

Penn State issued a disingenuous (that is a nice word for “lying”) press release that was clearly intended to mislead people into thinking the projects would be paid for via donations they have received.

https://news.psu.edu/story/572798/2019/05/02/athletics/trustees-committee-endorses-design-team-football-facilities

That is – to put it mildly – pure bullshit.
(And none of the 38 trustees who approved the project ever so much as raised a question)

The Penn State press release stated that “Since the first Lasch Building renovation project was announced in January 2015, a total of $28.1 million has been raised for the Football Excellence Fund to finance the upgrades.”

What they didn’t say:
Aside from the fact that $28 Million won’t pay for $70,000,000 of expenses (Math is hard for some folks), they also didn’t say that the $28,000,000 they claim to have raised over the last 4 years ($7 Million per year) has already been spent – primarily on the Lasch Renovations of 2016.

FWIW: We know how PSU gets “creative” with their supposed fund-raising numbers: https://barryfenchak4trustee.wordpress.com/2019/02/13/financial-phone-in/

And the truth is that they currently don’t have $$$ to fund projects anywhere near the scope of this one.  Not even a small fraction of it.
We know this from when we examined PSU’s financial statements:

https://barryfenchak4trustee.wordpress.com/2019/02/12/penn-state-intercollegiate-athletics-financial-data-pro-formas/

We know – from PSU’s financial statements – that PSU ICA has, in actuality, less than $5,000,000 available.

We also know that – even over the next several years – PSU ICA won’t generate anywhere near the required funds for these projects…
And that is without even considering Sandy Barbour’s $200 Million Phase 1 Proposals of her Master Plan (which we outlined in an earlier Blog).

So, where is the $$$$ going to come from?

Sadly, I think we all know.

Again, this is just a quick, brief summary of a couple of the high points.

There were also very significant approvals given wrt the Penn State Health divestiture, the interim operating budget, additional capital projects, etc.

I will provide more details on all of the topics as time permits – – – – and will link in the videos from the meetings that I referenced earlier.

 

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