Monday, July 07, 2008

"Nail Soup" Arena: How wise an investment? 

One nice thing about the WEA meetings each year is the high number and high quality of its sessions on the economics of sports. I was happy to catch a beer and a couple of these sessions while there. One (which I missed because of a conflicting session I was involved with) was on the economics of sports facilities. I don't recall if we covered any college facilities in this discussion.

SCSU announced last week that it was going to redesign the National Hockey Center, the building that houses our only Division I program.

St. Cloud State University President Earl H. Potter III last week discussed the preliminary details of a renovation that is scheduled to be completed in the next four years without forcing the university�s hockey team to play elsewhere during the construction.

The Legislature this session allocated $6.5 million for a $14 million renovation. The university then revised its plans to create a more ambitious facility that will �give Central Minnesota something it�s never had before,� Potter said.

He is convening a leadership team to begin raising the $22 million in private dollars needed to complete the project, he said. ...

�It will dramatically change the fan experience and the experience for our student-athletes,� Potter said of the post-renovation building. �We will reposition St. Cloud State in the WCHA, in terms of our ability to attract and compete for the best student-athletes. And it will offer Central Minnesota an entertainment venue and a series of activities that it�s never had before.� ...

He described a facility that would be a small-scale Xcel Energy Center, a complex that puts fans first, emphasizes the history and tradition of St. Cloud State hockey and �reeks of Husky hockey,� he said. A team store would carry Husky merchandise.

The renovation will include accommodations and acoustics to host concerts and other events that require facilities larger than what the St. Cloud area has, he said.

The local newspaper, which has yet to find a public spending project it didn't like, of course gushed over it but with one caveat,

How does such a vision complement (not compete with) plans to expand the St. Cloud Civic Center?

Remember, city officials are making steady (albeit slow) progress on a publicly funded $30 million expansion there. So how will these separate plans work in concert (no pun intended) and bolster the area�s appeal not just to hockey fans, but other venues in need of large spaces?

You might think that perhaps we could choose between them, since expanding the Civic Center is not expected to use private dollars. Those folks have been campaigning hard for more state bonding money and are likely to come back to the local government to get tax dollars as well. If SCSU can raise the money privately, isn't that better? My guess is that you'd have all three venues for concerts -- the Paramount Theater (under 1000 seats); the Civic Center, which I think will come in at no more than 2500 and for which even at that size parking will be very tight; and the NHC which has ample parking used during the daytime for students, and which as expanded might hold 7000. Does a metro area of 100,000 (160,000 if you count everything in Stearns County out to Sauk Center and everything in Benton County past Foley) need three such venues?

But the more basic question for St. Cloud State is what the value is in this investment. This week's Chronicle of Higher Education (temp link for non subscribers) highlights the questionable nature of investment small schools make in athletic facilities by studying a set of D-III schools in Pennsylvania that are shelling out more than $20 million each for new facilities.

Mr. [John A.] Fry, president of Franklin & Marshall, says the building frenzy has made all levels of college sports more professional, though he expressed concern that money is sometimes siphoned away from academic projects for sports.

"It's fair to say there is a bit of an arms race in Division III," he says. "You see a lot more spending on athletics, and you wonder if that's the highest and best use of those dollars."

The competition is for athletes, and many of the donors we are seeking for the NHC will be people who support athletics first and foremost. More money brings better student-athletes, and given the competitive nature of the NHC, those donors are going to want to build something that they think will attract better players than other arenas in the WCHA.

Does it help academics at the university? There the evidence is less clear. The most important item in driving academic donations appears to be television appearances, not winning championships. (Grimes and Chressanthis [1994]) Given the low viewership of college hockey, I would think it more likely a donor campaign for NHC construction works as a substitute rather than a complement to academic fundraising. All the results that suggest complementary focus on D-I basketball and football. There's a case to be made for the uniqueness of college hockey in Minnesota (the state of hockey! we're told) but I don't believe it.

BTW, nail soup. It's a variation of the stone soup story that progressives have now turned into some fable. (There's a lunch group on campus that uses this name. Or at least used to be.) I like the Swedish version better. This is the second time the university has dared to think bigger about a facility on campus. If the administration succeeds in both fundraising efforts, it's a big deal for us -- we haven't seen that around here since the first building of NHC.

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