Costs for KU stadium renovations expected to increase by $113M; project now totals $448 million
photo by: University of Kansas/HNTB
Story updated at 1:25 p.m. Nov. 1, 2023:
Costs to renovate the University of Kansas’ football stadium and add a conference center to its north bowl are likely to be more than $100 million greater than what KU leaders expected just a year ago.
Members of the Kansas Board of Regents have received word that KU now expects its first phase of renovations at David Booth Kansas Memorial Stadium to cost $448 million, which is up from a $335 million project maximum that the Regents approved late last year.
Information provided to the Regents also states that it is likely Kansas Athletics will need to take out more than $100 million worth of debt to get the project started, and that the funds of the general university will need to be used as collateral on that loan.
During a recent agenda-setting meeting for this month’s meeting of the Kansas Board of Regents, the Regents’ fiscal affairs committee was told that KU expects increasing project costs due to construction inflation and “additional scope of work” on the stadium project.
But according to a newly filed document from KU to the Regents — called a program statement — it appears construction inflation has a lot more to do with the cost increase than a big change in direction for the project. The new document did note that the project intends to build up to eight “Founder’s Club” suites, up from six in the previous plans. I didn’t notice other big additions to the plans, but KU likely will get more specific when it meets with Regents later this month.
The big changes appear to be related to construction costs, rather than new amenities. Basic construction is expected to increase from $252 million to $348 million. Additionally, infrastructure work for the site is now expected to cost about $40 million, up from $17 million.
As a reminder, the stadium renovation is a piece of a bigger project that aims to convert the area around the stadium at 11th and Mississippi streets into a new gateway district for the university. KU leaders envision the area being a hub for conferences and conventions, while also housing restaurants, retail and other uses that would appeal to visitors, residents or KU students and staff.
A big part of the overall project would be a hotel that would connect to the conference center that would be located in the stadium. The conference center is part of the Phase I project that KU is now estimating will cost $448 million. The hotel has not been part of the Phase I plans, and I still don’t think it is, although the new program statement is needed to confirm it. Rather, the hotel is part of a second phase that KU hopes to partner with private developers on. As we reported last month, KU has three development firms vying to be the lead developer of the gateway project. Those firms are submitting specific proposals, and KU likely will choose one of them by next spring.
The renovations to the stadium, though, are scheduled to get started much sooner. Work is set to begin shortly after KU’s home football season ends in late November. The work, in addition to the conference center, will include a complete rehabilitation of the seating, concessions, concourses and other areas on the west side of the stadium.
KU has said work is expected to be completed by August 2025. Thus far, KU is still sticking with that date, but Regents were notified that the project date will depend on “supply chain and other external issues.”
Indeed, I think the construction world is a little crazy currently in the Kansas City and Lawrence areas. Significant construction inflation has been happening across the country for a while, but I hear that our region is facing some real challenges with labor availability and timing issues due to the $4 billion Panasonic electric vehicle battery plant that is under construction. That is a historically large project and is sucking up lots of available construction crews, I’m told.
As for the debt details of the project, Regents were told KU envisions needing up to $115 million worth of new debt to get the stadium project started. It is not a surprise that debt might be needed. KU currently is doing fundraising for the stadium project, and I’m told the recent success of the football program is helping with those efforts. In the new program statement, KU said it is anticipating $248 million in private donations. The remainder of the project would be covered by $85 million in previously announced state economic development funds, and the aforementioned $115 million in debt.
While the debt is not a surprise, how the debt gets paid for will be an issue to watch. KU Chancellor Douglas Girod has said KU does not intend to use any of its general operating dollars from the state or any tuition dollars to pay for the stadium project. Instead, Kansas Athletics, which is a separate nonprofit entity controlled by the university, would be responsible for paying off the debt.
However, the information provided to the Regents does contemplate that KU — the general university, not Kansas Athletics — will have to sign an agreement that KU will commit its general funding to pay off the debt, if for some reason Kansas Athletics can’t do so on its own.
My understanding is such agreements are fairly common to ensure lower interest rates on such debt. I’m not taking the agreement as a sign that KU is changing its plans and now expects the general university to contribute to the project. The general university is a backstop, which really was always going to be the case. It was never realistic to think that KU would let Kansas Athletics default on its debt. Such a default could take down the athletic department.
I do have a message into a KU spokesperson, though, to get any additional information or context from the university on the new details related to the project. I’ll pass them along when I get them.
Regents at their Nov. 15 meeting likely will consider approving the new cost estimate for the stadium project, and also approving a resolution that gets the debt process started with the Kansas Development Finance Authority, which would issue the bonds.