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Archive for Friday, November 27, 2009

Kansas Athletics seeks football fans to invest $34M for Gridiron Club

This view of Memorial Stadium, taken from the top floor of The Oread, shows the east side of Memorial Stadium in the foreground. KU’s season ticket seats for sporting events are organized on a points-based priority system based on donations, and a new “junior” fund allows students to contribute as well.

This view of Memorial Stadium, taken from the top floor of The Oread, shows the east side of Memorial Stadium in the foreground. KU’s season ticket seats for sporting events are organized on a points-based priority system based on donations, and a new “junior” fund allows students to contribute as well.

November 27, 2009

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Timeline to come

Kansas Athletics Inc. is sticking with its original schedule for opening its new Gridiron Club at Memorial Stadium. That would be to have the 3,000 seats and lounge added in time for the 2010 football season.

The department also plans to use money generated from Gridiron Club memberships — “ideally you’re talking over $200 million,” said Jim Marchiony, an associate athletics director — to finance construction of an “Olympic Village” for nonrevenue sports, south of Allen Fieldhouse.

The department also would send $40 million to the chancellor’s office, to address academic needs at her discretion.

The precise timeline for those last two components remains undetermined.

“We can’t answer that now, because we’re still in the process of selling the project,” Marchiony said. “As soon as possible. If we could do the whole thing in the next couple of years, it would be terrific.”

Kansas football stock is taking a beating this season, just as its top officials ask fans to invest in what could amount to more than a $200 million Initial Public Offering.

The prospectus offers individual memberships in the Gridiron Club, whose seats and amenities will be limited to no more than 3,000 people considered loyal, committed and long-term supporters of all things crimson and blue.

The complication: Since Kansas Athletics Inc. unveiled the donor program at the beginning of the 2009 football season, the team followed a 5-0 start by losing five consecutive games, falling into last place in the Big 12 North and watching its coach come under investigation by the parent company’s CEO regarding treatment of players.

Such adversity hasn’t persuaded officials to pull back on the Gridiron Club plan — at least not yet.

“From what we’re hearing, people are thinking much more long-term than a five-week term,” said Jim Marchiony, an associate athletics director. “They understand our commitment to football, and so they’re looking at it from that perspective — a long-term perspective.”

But in the short term, decision time is fast approaching on the project that has been hailed as a way to address a variety of KU needs — both in athletics and academics — without relying on the use of increasingly scarce tax dollars during the worst economic downturn since the Great Depression.

Marchiony remains confident that Kansas Athletics will secure the $34 million it needs, up front, to build the Gridiron Club, the cornerstone of a larger program intended to also finance construction of a $25 million “Olympic Village” for track, soccer and other so-called nonrevenue sports, and to contribute $40 million toward KU’s overall academic programs.

The Gridiron Club remains slated to open in time for next football season, and officials with the Williams Educational Fund continue working to attract donors to buy into the plan for anywhere from $25,000 per seat for a five-year membership to $105,000 per seat for a 30-year membership.

Buy, sell, trade

Officials emphasize that donors, in the future, will be able to sell their memberships to anyone at any time for any price, much like stocks. Each Gridiron Club membership includes a ticket, food, drink and other amenities as part of the initial membership price.

Those costs cannot increase, although ticket prices, concessions costs, parking fees and other expenses could continue to rise for everyone else.

“It gives the fan a real asset that they can sell, that they can trade,” said Lou Weisbach, CEO of Stadium Capital Financing Group, a Chicago-based division of Morgan Stanley Principal Investments that put together KU’s financing plan. “You have a hard asset on your books that escalates in value as ticket prices escalate in value.”

Kansas Athletics’ initial plans called for donors to pay for all of each membership up front, but in recent weeks prospective donors have been offered the ability to pay memberships in interest-free installments. Buyers of memberships also accumulate points to apply toward basketball seat assignments at Allen Fieldhouse.

Marchiony declined to disclose how many people have signed up thus far, but he acknowledged that time was getting short.

“If we want it ready this fall, we have to make a decision before the end of the year that we’re going to start construction,” he said, confirming that Kansas Athletics needs at least $34 million to move the project forward. “I can tell you that the new payment structure has resulted in a dramatic increase in interest.”

Joe B. Jones, a longtime KU booster, is among prospects Kansas Athletics would consider interested. He has 10 season tickets for football. He buys season tickets for basketball. He’s previously held one of the Hall Family Scholarship Suites on the west side of the stadium.

Jones also is president of the Executive Benefits Network in Lawrence, managing financial products for financial institutions and corporations, including many that support Kansas athletics.

But he’s yet to come across anyone who has agreed to buy into the Gridiron Club, which he regards as an untested investment product in a volatile market.

Sure, he said, KU recorded its best season in history just two years ago, posting a 12-1 record and an Orange Bowl victory. But as investment professionals often remind clients, past results offer no guarantee of future performance.

“The product on the field is a relatively new product,” said Jones, who has heard the formal Gridiron Club pitch twice and expects a third soon. “My business is looking at performance. This would be like me selling a stock on its last six months’ return, when it ran up 40 percent. But what about when it’s down? What they’re trying to do is sell it on the high, and it hasn’t panned out like they thought it would.”

Long-term support

Jones already has translated his prospects into dollars and cents. Even buying in at the lowest membership level for him and his wife, and accounting for not having to “buy” season tickets anymore or to pay for parking, Jones figures he’d need to be mighty hungry and thirsty for the arrangement to pencil out.

“I’d have to eat $7,900 worth of food and drink” each season, he said, noting that he’d rather use the money to help hire a new employee or invest in new equipment. “That’s basically $1,000 a game. There’s just no way. It just doesn’t make sense for me right now, no matter how much I love KU.”

Craig Richardson, executive vice president for Stadium Capital Financing Group, said the financing plan wasn’t designed with everybody in mind. Kansas will continue to sell season tickets. Others can opt for lounge seats in the south end zone, or to occupy suites on the west side.

“The reality is, we’re not trying to appeal to 10,000 Kansas fans,” Richardson said. “We’re trying to appeal to the fan who says, ‘Whether it’s this year or next year or any year, we’re going to support Kansas, through the good times and the bad times.’ …

“This is for committed fans. It’s not always the wealthiest fans we’re looking for. It’s whoever is the most loyal.”

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Comments

KEITHMILES05 5 years ago

The events of the past 2 weeks has shown Lew screwed the pooch. He has created a PR nightmare which will be difficult to recover.

Robert Rauktis 5 years ago

Now is (are) Kansas Athletics, Inc. associated with Kansas University? Are they what used to be called "the athletic department"? Do they pay taxes?

jvinland 5 years ago

The Kansas Athletics Department is asking KU football fans for more money; after the biggest public relation nightmares in the existence of that department. Perkins has a very unrealistic view of himself and how his actions have been perceived. I a former football letterman and starter will not invest one cent! Mr. Perkins has alienated too many of us over his reprehensible timing of the Mangino Incident.

Frightwig 5 years ago

KU needs a winning football team in order to make this work. This isn't about Lew. Think about it. Even if Lew had chosen to ignore the allegations of abuse, the fans would still have a football team that lost six games in a row. I like Mangino, but his coaching record is poor. KU needs a better coach.

greenworld 5 years ago

Make Ou a trade, lets get Brent Venables and send Mangino to Ou. Venables is one of the most wanted coaches right now. He is def coor/asst coach but would make a great head coach I think. Really you wouldnt even have to make a trade if Mangino is fired just hire Venables. The problem is Lew doesnt have the balls to hire anybody like that and he probably already has some Uconn coach or some coach from back east in mind.

skinny 5 years ago

"Officials emphasize that donors, in the future, will be able to sell their memberships to anyone at any time for any price, much like stocks".

Yup, just like you can the regular football season tickets, RIGHT????

garyr 5 years ago

Not too sure about UConn, but a coach from, let's say.....I don't know.......Buffalo. I could see that.

sourpuss 5 years ago

It would be nicer if people would donate money to support education, not athletics. Athletics has more avenues to earn money - academics, especially humanities, has fewer opportunities.

greenworld 5 years ago

What makes you more money in the real world? A doctor, lawyer or professor or a professional athlete.

babyjontheway 5 years ago

This is LOLtasitc, I wouldn't bother donating a dime to that school. They are bassakwards on the way their sports are funded. I used to go to every women's basketball game to support them but then after going to 2 away games and seeing how other schools split up money I decided not to pay for the football and basketball (men's) to have new stuff, while the women get very little. I think they need to re evaluate the money situation and stop fattening the already fat pockets of certain coaches and AD's. If they fire mangino they better have a better reason than the one's listed so far or ticket prices will plumet along with attendance to the games. Students are mad, fans are mad, other teams are mad. Big Mistake, Perkin's, Big Mistake!

Steve Miller 5 years ago

I don't think it has anything to do with a bowl or not if he stays or not. I think there is something else learking behind the scenes. To come out with this stink with just 2 games left, pllllllease....It all calculates into diversion of some sort. Haven't got it figured out yet, let's hide and watch over the next few weeks.

grammaddy 5 years ago

In this economy, with all the cuts to education funding, I think that kind of money could be put to much better use.

puddleglum 5 years ago

wow, so lemme get this straight: $1000/game is not for the wealthy, but is for the most loyal ku fans?

Lew, you need to go. and take marchiony with you, please

greenworld 5 years ago

I think this gridiron club will help out the students tremoudously. (sarcasm) What happened Lew has all the Williams Fund money been absorbed? How come our football coaches havent made anything in the last 25 yrs and when you showed up their saleries doubled and tripled. Where did this money mysterious come from? NY or Vegas?

quantrellraider 5 years ago

Missouri will win on Saturday...............hoorah!!!! Does not matter who coaches KU............Missouri Tigers dominate!!! Border War!!!

greenworld 5 years ago

Yeah Mu will probably win Sat but just in case Ku does finally show up. Rock CHalk Jayhawk!!!!! For short term memory Mizzou people , who was suppose to win last yr when you guys had a great QB, Macklin and everything and laid the egg. Just cking on the memory factor there.

jumpin_catfish 5 years ago

I doubt that either Ku or Mizzu will every be consistent top 10 football school, just not in the cards. And big Lew lost me when he took the Kansas- Missouri game to Arrowhead, that decision has proven to be shortsighted and it screwed the local economy.

lwctown 5 years ago

Wow 34 million...and people say that casinos are a false economy. Dont get me wrong I follow KU sports but this is alot of money that will only benefit the rich, some contractors in the short term and thats it....all to watch a game. A game that that truly doesn't matter what the outcome is. I guess as long as no tax money or tax breaks at all goes to support it then why not..at least then its kind of like a tax on the ignorant rich.

TopJayhawk 5 years ago

Whine on all of you haters. I like Mangino too. But this is big stakes, and no sentimentality usually is expected. If Mangino is canned, I will miss him, tell him thanks for what he has done for the program. And to go and enjoy his millions. He'll be fine and never have to work again as long as he lives. It is the eventual and expected fate of all coaches.

brett conrad 5 years ago

After the recent embarassment to the football team and the university caused by BIG LEW, we need to start the GET RID OF LEW, which will be the only money I will donate to football for awhile. I bet G Sayer's is glad he walked into this mess. Coach Fam is right , the timing of this is inexcusable.

HogJiver 5 years ago

What a bunch of crap, a Gridiron Club. Donate more money to these blood suckers to waste on all their friends and relatives. Maybe they should give Bernie (Madoff) a call. KU fans wake up and stop this crap. Bring the games back to the residents and fans of Lawrence. Stop ripping off all the loyal fans.....WAKE UP people,

Linda Aikins 5 years ago

Quantrellraider, a little off the subject here but I notice you just joined our little newspaper and are so proud of being from Missouri. That is your choice. But I find it quite ironic that you are so proud of that, but you are mis-spelling your name if you are intending to associate yourself with the Quantrill Raiders.

smh

Eride 5 years ago

KU will never be a power in football and for that matter neither will Missouri... and K-State and Nebraska will never achieve the dominance they once had.

There is one major problem that won't change in even the long term.... the majority of the talent is not coming from this area and when your program doesn't draw it there it is very hard to build a program up without a local talent base.

PS - Monetarily this idea is stupid, but it isn't about that and this article is misleading. Donors give millions to the athletic fund every year... I am a graduate student and I give... probably more than I should. Sports transcends dollar and cents and in college athletics... at least the ideal of it transcends athletics. I feel proud to support KU Athletics with what meager means I can and I have no doubt that despite the performance of the football team there will be boosters who will donate to support KU Athletics.... they just might need to adjust the price a little more (the no interest payment plan was a good idea but it is not enough... the effective price of the donation needs to drop a little more).

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