Greg Armstrong, Nicole Birsner, Howard Cole Jr.

, Taulie Frierson

SPM466-601

Dr. Mahoney

2 March 2017

Syracuse University Financing Proposal

Recommended Decision

It is in the best interest of Syracuse University to relocate the Carrier Dome to

Loguen Crossing for an estimated total cost of $500 million. The facility will only cost

the University $312.5 million with a projected timeline of four years. This project already

has a prime location of land that would not have to be purchased by the University, will

be cost efficient, and will enhance the connection between the Dome and the community.

Decision Criteria

Based on a variety of factors, it is in Syracuse Universitys best interest to relocate

and rebuild the Carrier Dome. Between being able to split the cost of a new Dome, not

having to purchase land, and making the Dome more for the community rather than the

University it allows for a better product to be associated with the city. The Carrier Dome

was opened in 1980 and has had minimal renovations since. With a myriad of

technological advances, an upgrade is needed to keep Syracuse competitive with its

conference.

With COR Development Co. already owning Loguen Crossing, the land does not

have to be purchased. Syracuse University plans to help finance the proposed $500
million dollar stadium by paying for half of the cost (Moriarty, 2016a). Hotel and parking

revenue streams would be shared between Syracuse University and COR Development

Co. These factors make Loguen Crossing the most beneficial off-campus option for

Syracuse University.

Spending $312.5 million on a brand-new dome for Syracuse Athletics would be

more cost efficient than spending money on renovations. It is estimated that it will cost

Syracuse University $205 million for a new roof and to meet the requirements set forth

by the Americans With Disabilities Act (ADA) (Carlson, 2016b). This would not include

bathroom, air conditioning, or luxury box renovations. Building 70 brand-new luxury

boxes is something that cannot be done with just renovations. Therefore, spending $312.5

million towards a completely new, state-of-the-art facility is the simple choice because it

will create a large return on investment that exemplifies the quality of Syracuse Athletics.

Moving the stadium off-campus to Loguen Crossing brings the new Carrier Dome

into the community and not just the University. Concerts and other community events can

be held here, and the other amenities proposed by COR can be beneficial to Syracuse

residents. The proposed developmental plans from COR include retail, parking, office

space, and a hotel for the community to enjoy (Moriarty, 2014a). This allows the Carrier

Dome to be more of a destination than just a dome.

Proof of Recommendation

Moving the Carrier Dome to an off-campus location allows for Syracuse athletics

to be immersed into the community. With COR Development Co. contributing the

construction of a Hilton hotel, retail, and restaurants it allows for a Syracuse basketball or
football game to become a day event. Community members, students, and tourists can

explore the areas surrounding the Dome leading up to the game. The LA Kings are doing

something similar by building a hotel and Downtown Plaza shopping center. The LA

Kings are looking to create a lively and engaged urban atmosphere that can also be

replicated at the new Carrier Dome (Bizjak & Kasler, 2016). With the addition of a hotel

next to the Dome and retail sites, a mini-city atmosphere can be created in Syracuse like

in Sacramento, California.

The partnership with COR Development Co. allows for Syracuse University to

split the cost of a brand-new Dome with them. Splitting the proposed $500 million

facility will cost Syracuse University $250 million. A five percent contingency budget

will also be implemented, raising the project expense to 312.5 million. With the plan to

buyout Carrier from their naming rights contract, the final projected expenses would be

$565,250,000.

At the moment, Carrier is not paying for the naming rights to the Dome. Carriers

contract with Syracuse University included a one-time payment of $2.75 million when it

was being built. It is estimated that the naming rights are worth around two million

dollars annually (Carson, 2016d). At the University of Louisville, Papa Johns attained the

naming rights to their football stadium for $5 million through 2040 while also donating

more than $22 million toward the stadium overall (Dosh, 2012). Syracuse University will

buyout the $2.75 million contract it currently has with Carrier while offering them a new

contract. The proposed contract will be $2 million annually through 2042 and a one-time,

$20 million donation to the construction of the new Carrier Dome. This is much cheaper

than Louisvilles stadium and includes five different sports teams (football, mens
basketball, womens basketball, mens lacrosse, womens lacrosse). For the first four

years of the contract, Carrier Domes annual payment of $2 million for the naming rights

will go towards the construction of the Dome. Excluding the cost of the buyout, this will

earn Syracuse University about $80 million in revenue, with $30 million going towards

the construction of the new Dome.

There is currently no student activity fee in place for students attending Syracuse

University. Implementing a fee is a simple way for Syracuse University to finance the

new dome. A student activity fee of $150 per year is a reasonable fee to pay compared to

Boston Colleges $330 fee (The Trustees of Boston College, 2017). Over four years, this

allocates around $12.6 million dollars towards the construction of the new Carrier Dome.

Syracuse University has a wide variety of dedicated alumni looking to help out

the school whenever possible. With the athletic program being a major tie to the

university for many of these alumni, donations are expected to help diminish the cost of

the stadium. The University of Central Florida (UCF) is currently undergoing athletic

renovations and accepting donations to help cover the cost. UCF currently has over $10

million in donations for the $25 million project (McGuire, 2017). Using this number,

Syracuse University can expect at least $8 million in donations from various alumni.

Parking is an immense revenue generator for Syracuse athletics. Assuming about

5,000 people park on campus for both mens basketball and football home games, an

average profit of $1.5 million dollars per year can be expected. Multiplying these profits

by five years, it is expected a minimum of $7.5 million will come from parking passes.

Additionally, special events will be held at the new Carrier Dome. If the Carrier Dome

averages three special events per year, this will give Syracuse University an extra
$225,000 in parking revenue. By using special event parking revenue over the next five

years for the Dome, it will bring in an additional $1.125 million for Carrier Dome

construction.

Net income from mens basketball, womens basketball, and football can be used to

assist in financing the new dome. According to The U.S. Department of Education, the

men and womens basketball team garnered $17,700,714 in revenue while football

garnered $19,809,300 in revenue out of a grand total of $87,174,761 (Weinheimer, 2016).

Based off these numbers, the three teams earn 43.028% of the universitys $19,784,567

profit (after deducting $67,391,194 of expenses). Therefore, Syracuses varsity basketball

and football teams earn $8,512,903.49 to put towards the new Carrier Dome. For the four

years the revenue will be used, it will give the university $34,051,613.96 to finance the

new Carrier Dome.

In addition to using basketball and football profits, Syracuse University will also

implement a two-dollar ticket tax. These taxes will be added to mens basketball and

football only, no other sports will be affected by the tax. At the University of Louisville,

they are increasing football ticket prices by three dollars per game (Jones, 2017). This

ticket tax will stay on ticket prices for 12 years. The average attendance at a mens

basketball game for the 2017 season is 20,705 (Carlson, 2017). This gives Syracuse

University $828,200 dollars annually (based off of twenty home games) in mens

basketball ticket tax revenue. For football, their average attendance for the 2016 season

was 32,805 people (Carlson, 2016d). Based off their seven home games last season, this

would bring in an extra $459,270 annually. With the tax being in place for 12 years,
Syracuse University would have $15,449,640 in revenue to allocate to the new Carrier

Dome.

Construction of a brand new Carrier Dome would allow for 70 new luxury suites to

be built. Syracuse University will share 12% of the revenue earned from luxury suites

with COR Development Co. At the University of Louisville, the KFC Yum! Center

features 72 luxury suites ranging from $85,000 to $92,000 in price (Dosh, 2014). At the

new Carrier Dome, there will be 70 luxury suites, 40 being priced at $85,000 and 30

being priced at $92,000. This would bring in $6,160,000 of additional revenue for the

Carrier Dome. COR Development Co. would receive $739,200 of the $6,160,000

annually, leaving Syracuse University with $5,420,800 from luxury suites every year.

Syracuse University would use this revenue for five years to finance the Carrier Dome,

bringing in $27,104,000.

Media rights is a huge revenue generator for Division I athletics. In 2014, Syracuse

University athletics department announced a new contract with IMG that covers both

broadcasting and multimedia rights. Although the specifics of the contract were not

released, it is expected to be between Rutgers ($5.9 million) and Connecticut ($8 million)

(Carlson, 2014). If Syracuse University receives seven million dollars annually from

IMG for broadcasting and multimedia rights and they use the revenue for five years

towards the new facility, the University then has $35 million to put towards the project.

Syracuse University also receives money from the Atlantic Coast Conference

(ACC). Last year, Syracuse University received $24 million from the ACC (Carlson,

2016a). If the University puts five years worth of ACC revenue to the new Carrier Dome,
$120 million will be put towards the facility. This puts a grand total of $155 million of

media rights revenue for the Carrier Dome.

Finally, advertising revenue within the Carrier Dome will be used to cover the

new facility. Syracuse has had an advertising contract with Turning Stone Casino, which

allows them to display advertisements within the Carrier Dome. Although specifics of the

contract were never released, there have been similar scenarios in college athletics. The

University of New Mexico agreed to a $2.5 million, five-year deal with the Route 66

Casino Hotel (Waters, 2009). Basing Syracuses contract with Turning Stone off of the

University of New Mexicos contract, this brings in $12.5 million in revenue. The Carrier

Dome also has a myriad of other sponsorship deals within the Carrier Dome. Companies

such as Nissan, Toyota, McDonalds, Delta, Bud Light, Dunkin Donuts, Geico, and more

advertise within the Dome. If the remaining sponsors average $1.4 million a year, that

would give Syracuse University an additional $7 million a year, totaling to $19.5 million

in advertising revenue.

The combination of all the different revenue streams allows for the revenue bond

total to equal $286,243,157.45. This leaves Syracuse University with an extra

$6,743,157.45 in revenue, totaling their financing capabilities to $334,996,173.49 (see

Appendix). Syracuse University is more than capable of financing a new, state-of-the-art

Carrier Dome for their varsity athletic teams and the community.

Critique of Options

There were several options for the University to choose from when evaluating what

action to take in regards to Carrier Dome improvements. Syracuse University could have
relocated the facility on University property. Rather than relocation the current facility

could have undergone renovations. Lastly, the University could have torn down the old

facility and built the new one in the same location

1. Why not relocate the facility on campus?

Syracuse University could have relocated the new facility to property owned by

the University. Syracuse University would like to welcome all community members into

the new facility. Having a facility on campus sends the message that it is for the college

and benefit of the students rather than the community. The University would like to rent

the facility for high school and community events in addition to concerts,

commencement, convocation, and athletic events. An off-campus facility should increase

community engagement, allowing the new facility to benefit both the University and the

city of Syracuse.

2. Why not renovate the current Carrier Dome?

Syracuse opted out of renovating the Carrier Dome because of costly renovations.

The renovation of the current Carrier Dome would exceed $200 million just to build a

new roof and meet ADA accommodations (Carlson, 2016a). In addition to these costs,

Syracuse University would have to factor in the cost of new luxury boxes, air

conditioning, Wi-Fi and other amenities. From a financial perspective, this decision

would not be in the best interest of Syracuse University. The University is paying $312.5

million for a new facility in a new location. Renovation costs of the current Carrier

Dome would have been equal to or exceeded $312.5 million. In addition to cost,

renovations are limited due to the current architecture of the Carrier Dome (Carlson,

2016b). Relocating the facility allows an infinite amount of architectural options.

Relocation allows growth opportunity for the University and local businesses without

architectural restrictions.

3. Why not take down the Carrier Dome and rebuild on the same acreage?

Relocating the Carrier Dome offers increased revenue streaming, specifically

from hotels and additional parking. Rebuilding the Carrier Dome in its current location

does not offer these opportunities. The Universitys proposed location, Loguen Crossing,

provides a hotel within a close proximity of the Carrier Dome (Moriarty, 2014a). With

that being said, Syracuse University plans to contract with the hotel receiving revenue

from hotel parking. In exchange for parking revenue Syracuse University will provide the

hotel with customers. The new location allows constant business for the hotels throughout

the year. Another stream of revenue is spectator parking. Syracuse University plans to

tear down the Carrier Dome once the new facility has been built. The old facility space

will be used for spectator parking. The Carrier Dome is approximately 7.7 acres (History

of the Carrier Dome, 2017). The average parking space is about 10 by 18 feet (Hilland,

2014). Creating a diagonal parking lot with one-way lanes creates about 162 parking

spaces per acre (Holland, 2014). An estimate of 1,247 additional parking spaces will be

created. Syracuse University plans to charge $15 per car, if the parking lot reaches

maximum capacity the University has the opportunity to generate an additional $19,110

per game. If the basketball team has 16 home games with an average of 1,000 cars per

game an estimate $240,000 of additional revenue is generated from parking in one

season. Syracuse basketball team averaged 21,245 fans in the 2016 season (Waters,

2016). With the new facility and projected increased attendance, the additional parking

offers an astronomical increase in parking revenue alone.

Major Disadvantage of Recommendation

One major disadvantage to the recommendation is the weather patterns in the

Syracuse area. The weather can hit two extremes in the same day during the year. This

unpredictable weather could have a traumatic impact on the Universitys construction

timeline. As of now Syracuse University has projected four years of construction. Severe

winter storms can easily delay construction by months. The University is building the

stadium from scratch; therefore, the initial construction is going to be done outdoors.

Weather and the budget have a direct correlation; an increase in the construction timeline

increase expenses, ultimately increasing the overall budget. Weather can have an

immense impact on facility structure as well. The University has to build a sporting

complex that is acclimated to Central New York weather.

In addition to the construction budget, weather can impact the Universitys long

term budget. The University plans to add several parking lots. When budgeting for the

future the University has to factor in maintenance fees of each parking lot. Snow removal

would be included in these maintenance fees. The University should be aware of the

uncontrollable external factor of weather. Therefore, projected construction and long term

budget should factor in possible weather expenses.

Another major disadvantage to the recommendation is the Carrier Dome traffic.

As of now, the Carrier Dome traffic will not be a factor in the Interstate-81 decision

making process (Weaver, 2015). While there is no proposed plan so far, a plan could be in

place soon, which could lead to several problems with building the Universitys new

facility. Major construction projects in two high traffic areas at the same time are a major

disadvantage. This could pose significant delays on the Universitys projected

construction timeline. In addition to the timeline, the construction affects the people of

Syracuse. The community of Syracuse will be a main source of revenue once the facility

is completed. Construction nuisance could potentially hinder revenue. Construction is a

deterrent for many people; if they do not want to be around during the construction stage

they will most likely avoid coming to the facility on game day as well. The University

will have to be wary of local construction and future consequences.

Action Plan

First, the University will contract with COR Development Co. securing the land

in Loguen Crossing. The new facility is located approximately 1.3 miles away from the

original dome (Google Maps, 2017). As of now the University has projected a timeline of

four years, starting March of 2018. During the four-year construction process, the

University does not plan to relocate any of the sports team, convocations, commencement

and other events (Carlson, 2016e). This decision saves money on leasing facilities for the

duration of the construction process. The current Carrier Dome has 49,262 seats (History

of the Carrier Dome, 2017). It would be difficult for the University to finance and lease a

facility that would meet that capacity, especially during basketball season.

Construction will begin in March of 2018. The University expects to have the

foundation structured and poured by fall of 2018. Once the foundation has been poured

the next phase is steel structure and the welding process (Ellington, 2014). Then the

construction team will begin working on the outside of the building, including the roof.

The University has already factored weather into the timeline and this phase is expected

to be complete in the fall of 2020. Once the exterior has been completed the initial

interior assembly phase can begin.

 Interior assembly is a lengthy process therefore the estimated completion is spring

2021. The initial phase would include electrical, plumbing, HVAC and other elements

that will be hidden by walls. Once this has been completed the team can simultaneously

install seats and flooring. The University has allocated funding for 50,000 seats, including

70 luxury suites. During this process field turf should be installed along with kitchen

appliances for concession, LED televisions and scoreboards. If the construction project is

completed as planned the new facility will be open for the start of the 2022 football

season.

Once the University has opened the new facility, construction needs to take place

at the old Carrier Dome. As mentioned earlier, the University will demolish the old

facility and use it for parking spaces. The projected timeline of the parking lot is one year

and will be open to spectators in fall of 2023. This parking lot is projected to bring in

$240,000 of additional revenue in basketball season alone. To utilize this parking lot to its

maximum potential the University will open the lot to faculty and students. This option

will only be offered to faculty and students when there are no events taking place in the

new Carrier Dome. The University wants to make it an easy transition for its fans. As

mentioned early, the new location is 1.3 miles away from the old one. For this reason, a

shuttle to and from the dome will be included in the $15 parking fee. Syracuse has done

this in the past during football season when spectators park in Manley Field House.

Ultimately, the University projects to complete the new Dome within a four-year timeline

and open up a parking lot on the old Carrier Domes acreage the following year.

Major Risks and Responses

 The University is seeking partnership with the Hilton Garden Inn. This risky

business behavior has its pros and cons. Hilton could decide not to partner with the

University, which would lose a potential sponsor and revenue stream for the project. To

prevent the denial of partnership the University would like to create a contract with the

Hilton Garden Inn. Within the contract, the University would state how much revenue the

University will receive from the Hotel in exchange for the Universitys services.

University services would include recommending guests to stay in the hotel across from

the new facility. For example, the University could include staying at the Hilton Garden

Inn in the performers contract. As for away teams, the Hilton should offer hotel bundles

to incentivize them to stay at the Hilton versus local hotel competitors. In addition to

guests, the University will advertise employment opportunities. Thus, increasing the

number of jobs within the city, while increasing student employment. The University

wants to create a long-term partnership with the Hilton Garden Inn.

As of now COR Development Company has made plans to include a sports

facility for Syracuse University (Moriarty, 2014b). COR could change their mind and

reallocate the land to other companies. To contain the risk Syracuse University could sign

a non- binding memorandum of understanding (MOU). This document will contain

suggestive language asking COR to reserve the land until 2020 for participants who may

consider using the land for athletic purposes (Moriarty, 2014b). This agreement does not

reserve the space, but it limits the amount of competition against the University. It is

risky doing business with a company that has in the plans to build a facility, but it has not

yet been finalized. This MOU offers a sense of security for the University.
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Appendix