Penn State Athletics: Bewildering Rationales – and even more Bewildering Costs – of Football Building Renovations

Among the items on the agenda for the Penn State Board of Trustees meetings of 2/18/21 was the approval of expenditures for renovations to the Lasch Building.
The Lasch Building is Penn State Athletics’ football building – housing locker rooms, offices, training facilities, etc.

The Board of Trustees approved another round of funding – for $50 Million (of a total cost of $106 Million for the entire project) – for renovations to that building.
Penn State Athletics doesn’t have any money – and this action is based upon the University, collateralized by its General Fund (ie Tuition Revenue), taking on long-term debt to finance the project.

There are two HUGE questions regarding this expenditure – neither of which have been answered, or even addressed, by the Penn State Trustees:

1) What Penn State Mission would be served by these expenditures?
2) Why should this project cost so much?

A little background on the Lasch Building:

Lasch was built in 1999 (with Donations paying for the construction)
Since 2015 – $36 million have already been spent on renovations. This new chunk, of $50 million is in addition to those expenditures, with another $20 million to be approved in the coming months – – – for a total of $106 Million in total renovation expenditures.

1) What Penn State Mission would be served by spending $100+ Million to renovate the football building?

We can look at the various “rationales” given by certain members of the Board – some of them absolutely ludicrous – and see if any of them hold water:

BEWILDERING RATIONALE #1: The Expenditures are necessary to make Penn State Football more competitive (ie “Win More Games”):

Lets look at the facts:

If we accept for a moment that “winning more football games” is a legitimate Mission of the University (a specious assumption at best), lets take a look at the facts:

Clemson built a new $55 Million football facility in 2017. That was AFTER winning three straight ACC Championships, two playoff appearances, and a National Championship.
It was NOT “spending piles of money” that led to their success.

Florida is in the midst of building a new football facility, AFTER winning seven division titles, and two National Championships.
It was NOT “spending piles of money” that led to their success.

LSU renovated their football facility, AFTER appearing in three National Championship games, winning two of them.
It was NOT “spending piles of money” that led to their success.

Alabama renovated their football facility in 2020, AFTER appearing in seven National Championship games, winning five of them.
Is was NOT “spending piles of money” that led to their success.

On the other hand, many athletics programs throughout the nation have tried to “Spend Their Way to Greatness”.
One need look no further than the University of California.

Early in the 21st century, Cal had a mediocre football program – winning 46 PAC12 Games throughout the 2000’s, with five winning seasons in 10 years – but embarked on a huge “facilities spending program” to elevate the athletics programs. Fifteen years later, Cal has an awful football program – winning just 28 PAC12 games through the 2010’s, without a single winning season – and a crippling debt burden:

“For the stadium’s $321 million renovation and a new $153 million Student-Athlete High Performance Center, the university incurred a controversial $445 million of debt which it planned to finance with the sale of special stadium seats in the Endowment Seating Program. Before the start of the stadium reconstruction, Professor Brian Barsky showed that the financial plan was unrealistic and calculated that although $215 million had been claimed to have been raised as of Jan. 15, 2010, the true figure was closer to only about $20 million as of Dec. 2010, and that the total financial obligation including interest would exceed a billion dollars. His calculations were subsequently corroborated by the Wall Street Journal which reported in April 2012 that only $31 million had been received as of the end of Dec. 2011; this was followed by further reporting of poor seat sales in the Endowment Seating Program. As of June 30, 2016, the fund balance was $60.98 million, far short of the $215 million that had been claimed five years earlier. The roughly $18 million interest-only annual payments on the debt consumes 20% of Cal’s athletics’ budget and 15% of the campus structural deficit; principal repayment begins in 2032 when the annual debt payment will rise to about $26 million per year, about $28 million in 2033, about $30 million per year for 2034-2038, and about $37 million per year for 2039-2044. The debt payments are scheduled to continue for one hundred years from its 2013 inception, concluding in 2113.”

We have seen that same “Spend to Greatness” philosophy fail at the University of Tennessee, University of Arkansas, Georgia Tech, UCLA, and others.

The dogma that it is “Spending Piles of Money” that leads to on-field success simply doesn’t hold water.

BEWILDERING RATIONALE #2: The Expenditures will make PSU Football “win more”, and thus elevate all aspects of the University.

Lets look at the facts:

The most successful collegiate football programs of recent years are:
Alabama (SEC), Clemson (ACC), Ohio State (BigTen), Oklahoma (Big12) and Oregon (Pac12).
So, they have certainly elevated to the top as academic institutions, right?

US News Rankings of Universities
Alabama: 143rd in the nation, 10th in the SEC
Clemson: 74th in the nation, 10th in the ACC
Ohio State: 53rd in the nation, 6th in the BigTen
Oklahoma: 133rd in the nation, 6th in the Big12
Oregon: 103rd in the nation, 10th in the Pac12

Meanwhile, which Universities lead the way in each conference from an academic standpoint – and how helpful was “football success” in helping them get there?

Top Academic Universities:
SEC: Vanderbilt (14th in nation academically)…. Football Program: Bottom of the conference
ACC: Duke (12th in nation academically)…. Football Program: Bottom of the conference
BigTen: Northwestern (9th in nation academically)…. Football Program: Recently OK, but historically bottom of the conference
Big12: Texas (42nd in nation academically)…. Football Program: Solid, far from great
Pac12: Stanford (6th in nation academically)…. Football program: Lousy with occasional periods of “solid”

The facts show that highly successful on-field football teams do NOTHING to elevate the missions of the University. If anything they show that the two are inversely related – and emphasis on “Football” holds back academic success.

The dogma that it is “Spending Piles of Money” – even if it did lead to on-field success – “elevates” the University simply doesn’t hold water.



BEWILDERING RATIONAL #3: The Expenditures will make PSU Football “win more”, and thus elevate all aspects of the University – AND Penn State University is “underleveraged”, and needs to take on more debt.

(For those unfamiliar with the term, “underleveraged” is finance-speak for “not having enough long-term debt” on their balance sheet)

Lets look at the facts:

A) Over the last five years, Penn State’s debt has already mushroomed from $1 Billion to $4 billion – QUADRUPLING over the space of just FIVE YEARS.
B) And that is through the 2019-2020 Fiscal Year – BEFORE we see what effects COVID may have on the finances.
C) This has occurred despite the Commonwealth of Pennsylvania giving Penn State (through the GSA budget) over $1 Billion dollars of taxpayer funds – to pay for many of the Capital Projects undertaken in the last two years. Far larger gifts than to any other state-affiliated University.
D) ALL of that debt – every penny of it – is an obligation taken on by the University, and collateralized by its General Funds revenue (Tuition dollars). Penn State Athletics is NOT a legal entity responsible for repayment of that debt.

Being more “leveraged” (having more long-term debt that one is obligated to pay off) is not a “good thing” for a University. The people who are being burdened with paying off that debt are current and future Penn State students (likely for several generations). That, at its core, is fiduciary negligence and malfeasance.

2) Why does it cost $100+ million to renovate the PSU football building?

After diving through the rationales put forward by members of the PSU Administration and Board, there remains one gigantic question that supersedes them all:

Why does it cost so much?
Or, more to the point:
Why does it cost so much MORE for Penn State to take on a project than it costs similar institutions to take on similar projects?

As shown above, several highly-successful collegiate football programs who recently undertook new construction / renovations to their football facilities. Let’s take a look at the costs:

For context, this is the scope of the Lasch Building project: Renovation of the 89,000 square foot facility, and the addition of a new 18,000 square foot strength training room.
At $106 Million, that is a cost of $990 per square foot.

The most similar project undertaken by another football program was LSU’s. Their project is the renovation of a 112,000 square foot facility, originally built in 2005, and the addition of an 18,000 square foot strength training room.
If fact, this project is nearly identical to the Lasch Building project.
The cost? $28 Million, $215 per square foot – less than 1/4th of the cost of the Lasch Project.

And, at that, the lavish project – and its cost – have caused much consternation in Baton Rouge:
https://www.theadvocate.com/baton_rouge/sports/lsu/article_116f4336-acd2-11e9-9b43-43677be4c82c.html

Why does the Lasch project cost four times as much? No one knows – more importantly, no one even asks. In fact, there is no indication that those people responsible for the project (Penn State Administration and Trustees) are even aware of the tremendous differential between Lasch costs, and the costs for similar projects undertaken by collegiate athletics programs throughout the country..

Alabama – the bell-cow of collegiate football – their renovations cost $16 million.
https://www.insider.com/photos-alabama-new-locker-room-mal-moore-renovation-2020-7#the-finished-product-features-stunning-attention-to-detail-3

The projects at Clemson and Florida were not “renovations” – they were completely new “from-the-ground-up” projects…. which should cost significantly more than a renovation of an existing building.

The costs at Clemson? $55 Million for a 145,000 square foot facility. $417 per square foot for a NEW facility – less than 1/2 what PSU is spending on a RENOVATION.
http://news.gmcnetwork.com/news/2017/02/clemson-unveils-new-55-million-football-operations-complex/
Florida’s costs? $85 million for a 140,000 square foot facility. $607 per square foot for a NEW facility – Penn State is spending at a rate 60% HIGHER, for a RENOVATION.
https://www.gainesville.com/story/sports/college/football/2021/01/29/florida-gators-laying-foundation-new-football-facility/4297697001/

Something, obviously, smells like week-old fish with regard to the costs being incurred by Penn State. As we have seen time and again with Penn State sponsored capital projects, the costs are grotesquely out-of-line relative to every peer institution (and we have discussed the strong indications of graft, corruption, waste, and mismanagement wrt several other non-athletics capital projects).
Even IF the project was a reasonable target for expenditures (and, as we have seen above, that is a very specious assumption, at best) how much MORE effective could that spending be if it wasn’t so grotesquely over-priced relative to its peers?
How much more “competitive” could Penn State be if its costs were in line with its peers – and they could redirect the additional $50-80 million dollars to other purposes (staffing, etc)?

The entire project stinks to high heaven – from a “Mission” standpoint, from a cost standpoint, and, maybe most of all, from the standpoint of the inane defenses put forth by Penn State Administration and Trustees to try to justify the project.

It is, in many ways, Exhibit A with regard to the issues fouling the University as a whole.

 

 

 

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