Monday, August 17, 2009

Latest on Money

and the House That Bob Built

As OurLeader's favorite philosopher and management role model once said:

"Prediction is very hard,

especially about the future."

Somehow, what is reported below is unsurprising to this observer. There has been a hubris - e.g., ten million scoreboard - about this project from the very beginning that is breathtaking. Maybe we'll squeak by. I hope so. But the lack of appropriate priorities of the current administration is stunning. Education, research, panem et circensa - in that order - should be our priorities. And of course we do have a land grant mission that is woefully misunderstood by the current occupants of Morrill Hall.

From the Pioneer-Planet

Recession and alcohol ban crimp revenue from luxury seating at U's new TCF Bank Stadium

U officials are saying the new TCF Bank Stadium could bring in about $2 million less its first year than initially forecast.

They blame a slumping economy that stalled sales of the priciest luxury seats and a Legislature-induced decision to ban alcohol, which drove more people away and prompted price reductions for those who remained.

With a month to go till Opening Day, about half the indoor club seats at TCF Bank Stadium and a quarter of the private suites are unsold, and both have now been made available for single-game purchase.

The luxury seats are a key part of the overall stadium revenue picture.

Along with the desirable but less-pricey "preferred" seats, they are supposed to generate 40 percent of overall revenue at the new facility, according to Elizabeth Eull, the U's senior associate director and chief financial officer for athletics.

"I believe this is manageable," Eull said. "It's difficult, to say the least."

The university's Board of Regents approved the sale of liquor in premium seating areas in December, and as the new year began, the sales staff was confident of moving most or all of the premium packages, said David Crum, the U's associate athletics director for development.

But then the worsening economy slowed things down, and in May, state lawmakers passed a provision that forbade selling alcohol in any part of the stadium unless it was sold throughout.

Complaining that their hands were tied, regents banned liquor in June.

"Everything came to a screeching halt" once legislators became involved in the alcohol issue, Crum said. The Legislature's action "put a real, real challenge toward us," said athletics director Joel Maturi.

Before the economy went south and alcohol was banned, they were planning for 95 percent. That would have brought in about $5 million.

As of late May, when the athletics department budget was finalized, it was clear sales were lagging, and projected revenues from premium seat sales were just under $4 million, Eull said.

But that was before alcohol was taken away and customers were offered 10 percent refunds. The givebacks, plus potential additional cancellations related to the alcohol decision, could create an additional $1 million in lost revenue for the department this year, Eull said, adding that the exact financial hit this year is by no means certain.

But there is still another shoe to drop.

Mariucci and Williams arenas — where the Gophers play hockey and basketball — are also included in the alcohol ban. Both had areas where premium customers could drink alcohol, and losses are expected from cancellations and/or discounts at those facilities as well, but the impact is not yet known.

Maturi says he intends to protect athletics program budgets initially while waiting to see if revenues come in higher, but he said it might mean the department seeks university permission to finish this year in the red.

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