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Current Issues With Dr. Phillips

Current Issues With Dr. Phillips

May 9, 2006

Recently, The Greenville News and Charleston Post & Courier wrote articles concerning the costs of the West Zone Center. In the articles, some comparison was made between the West Zone Center and two earlier project concepts known as:

(1) The Heritage Center [football facility] and, (2) The Improvements for the West Stands.

The purpose of this column is to provide additional context to what was written in the articles and the reasoning for why the comprehensive development of the West End Zone was critical rather than building two stand-alone projects as initially conceived in the late 90’s and early 2000’s.

First, however, it is important for our people to understand the amount of debt currently owed by the Athletic Department before we began construction of the West End Zone – Total debt being approximately $31,000,000. This debt was incurred through financing the construction for the following projects:

Littlejohn Coliseum Annex for Men’s & Women’s Basketball.Replacing the Roof – Littlejohn Coliseum. Improvement of the North& South Memorial Stadium Concourses. Renovation of DougKingsmore Stadium. Building the Indoor Track/Practice Facility.

The total debt service (payments) for these projects cost the Athletic Department, from existing revenue sources, on the average of about $2,500,000 annually.

Secondly, upon arrival in the summer of 2002, there were two recognizable issues. One, we had to work with a sense of urgency on football facilities, [I did not know initially of Tommy’s efforts in this regard] and two, we had to find a way to minimize taking on additional debt, which would over encumber existing Athletic Department resources.

Thirdly, the following two projects were on the drawing boards when we arrived in July 2002. Each was yet to be started.

1. The Improvement to the West Stands area of Memorial Stadium. The improvements were to rectify significant deterioration of the West Stands, join the north/south concourses, improve concessions/restrooms, and build a restaurant to be run by a food service contractor. In 2001, construction and soft costs (A/E fees, equipment, testing, etc.) would have cost $22-23,000,000 plus. In 2005 (when we started construction on the West Zone Center) if we were to have done these improvements, costs now would be around $27,000,000.

Critical to our analysis whether to proceed dealt with revenue development, given the department’s debt. It was determined that any new revenue created from these improvements was projected to be negligible at best. Therefore, the improvements to correct the deficiencies of the west end of Memorial Stadium would need to be financed by debt and/or raising the needed funds.

These improvements were actually bid – but I’m very appreciative to Bobby Robinson for not awarding the bid. His foresight of not awarding the bid saved us from a lot of financial heartburn.

2. The football facility (Heritage Hall) was preliminary and just a concept. Design development had not yet begun; however, the initial estimates for construction and soft costs were approximately $25,000,000. Again, like the West End stadium improvements, no new revenue was being created. Like the West End improvements, this stand-alone project would have to be financed by debt and/or cash donations.

Both of these projects were very much needed–The West End stadium improvements to correct significant problems, provide for a more fan friendly stadium and the football facility (Heritage Hall) to address training and recruiting issues for football.

In 2005, (again, when the West Zone Center broke ground), the construction and soft costs of these two projects would have had a combined cost of about $59,000,000, without any new revenue. This is precisely why these projects did not go forward. We simply did not have the money and issuing additional debt would have overly encumbered the resources of the Athletic Department.

However, we were behind in our facilities and we had to find a way to get started, particularly when the ACC expanded. We are now in a very premier football conference. So, the West Zone Center concept was born. The strategy was to combine both projects into one comprehensive state of the art facility and create new revenue streams to support, in whole or in part, the project(s). Presently, funding has been secured in the following fashion for Component I of the West Zone Center.

Thanks to the support and vision of the IPTAY Board ofDirectors, IPTAY has invested approximately $15,000,000 in lifememberships and endowments. IPTAY’s present return on theirinvestment is 4% annually. As a result, IPTAY will receive paymentsof around $620,000 each year for scholarships. A win-win situation- IPTAY receives a return on their investment for scholarships andthe University/Athletics receives a great facility. And, inactuality, we’re paying ourselves through this investment. Bondissue of $15,000,000. The debt payments for this specific issuewill average about $800,000 annually for the first 10 years. Theapproximate remaining $9,000,000 has come from private funds, toinclude $3,000,000 from IPTAY.

New revenue created from the club seats and premium seats will be about $1,350,000 and will offset our obligations for the annual scholarship payments to IPTAY and payments on the bonds. In the meantime and in addition to taking care of critically-needed stadium improvements, the West Zone Center has created a football facility footprint for new offices, meeting rooms, strength & conditioning center, equipment room, training/aquatic rehab center, etc, while the recruiting area, new team locker room, and visitor’s locker room have already been completed in Component I.

Component II, the football day-to-day operations facility, will be finished when The Capital Campaign, co-chaired by Phil Prince and Joe Turner, is completed. The goal is to raise $27,000,000. Thanks to the leadership of Phil and Joe, $16,300,000 has been committed or pledged in less than two years – considering we’ve never had a capital campaign of this nature in our history – this is an excellent start. Unfortunately, we’ve had to use almost half of the amount raised in Component I (West Zone Center) or we’d be starting the total football facility as we speak. Recall, the bids came back about $9,000,000 over the initial budget. The initial budget was based upon the architect’s estimates plus an independent estimating firm. But, given the construction climate that existed at the time, the estimate numbers were considerably less than the actual bids received.

Nevertheless, we’re well within striking distance. We simply need to meet our Capital Campaign goals. And, we will. The other areas in the West Zone Center that will be built as funds become available are the Letter-Winners’ Room and widening the north concourse into the west end zone.

Component III, the Museum, has an opportunity to be a remarkable showcase for the University. Designed to be a three-level facility, the museum will depict the formation of the University, great leaders, accomplishments, and events as well as significant athletic accomplishments. Clemson is a great University – It deserves a great museum to tell its story.

All in all, we’ve made very significant progress in two years. Certainly, we have a lot of work to do to reach our goals. But, the glass is now most assuredly half full, not half empty.

In Solid Orange, Terry Don Phillips

P.S. In the 2006 NFL Draft, the ACC had 12 first-round picks-Most ever for any conference in NFL history. This fact speaks to the football excellence in the ACC and why we must continue to work with a sense of urgency.

Past Columns May 2, 2006April 10, 2006April 3, 2006March 20, 2006March 13, 2006March 3, 2006February 15, 2006February 3, 2006January 18, 2006January 10, 2006December 21, 2005December 13, 2005December 6, 2005November 30, 2005November 22, 2005November 16, 2005November 9, 2005November 1, 2005October 25, 2005October 19, 2005October 11, 2005October 4, 2005September 26, 2005September 21, 2005September 5, 2005August 23, 2005August 4, 2005July 26, 2005June 28, 2005May 23, 2005April 25, 2005April 4, 2005March 16, 2005February 23, 2005February 15, 2005February 9, 2005February 1, 2005January 25, 2005January 18, 2005January 11, 2005January 6, 2005December 15, 2004December 7, 2004November 30, 2004November 17, 2004November 10, 2004November 3, 2004October 26, 2004October 21, 2004October 11, 2004October 4, 2004