The Atlanta Journal-Constitution
Cash is king for $63 million stadium project
UGA won’t increase debt to pay for locker rooms, recruiting area.
ATHENS — At the west side of Sanford Stadium on Monday afternoon, students walked by in droves. They walked by two workers in hard hats, looking down and adjusting a measuring instrument. Below them work continued on the most expensive athletic facility project in years at the University of Georgia.
Finally, UGA’s football teams will get new game-day locker rooms after using the same ones for decades. Kirby Smart, who dressed in those locker rooms as a player in 1995, will be the head coach to benefit from new ones.
Smart’s team also will get a recruiting area next to those locker rooms, one which former coach Mark Richt had lobbied for privately. There will be updated restrooms and concessions stands on the west end. For all this, UGA has budgeted $63 million, more than twice what
it cost to build the muchawaited indoor facility.
Georgia isn’t the only SEC East school undertaking a major facility project right now. Florida and South Carolina are, too. And why shouldn’t other SEC schools? They’re still flush with cash, thanks to those annual conference payouts, which numbered around $40 million for each school this year. The third anniversary of the SEC Network was Monday.
But Georgia, Florida and South Carolina have chosen different ways to go about paying for those projects.
UGA announced that it would raise $53 million for the west end zone project, with the rest coming out of reserves. So in pure financial terms, it’s paying cash for all of it.
So far, UGA has raised $20 million toward the project, Associate Athletic Director Matt Borman said. And at least $6 million of that is an overrun from fundraising for the indoor facility.
When it set out to build the $30.2 million indoor facility, the stated goal was to raise funds for half of it. But the donors ended up paying for all of it and then some.
When the $15.1 million fundraising goal was reached, UGA didn’t stop the fundraising. It had started the Magill Society, a fundraising entity, and the overflow from the indoor facility ended up also going toward the west end zone project. That project was announced in February on the same day the indoor facility was dedicated.
UGA is relying a lot on fundraising, perhaps for the simple reason that Georgia’s fan base has already shown it will pony up money. But other schools are taking a different strategy.
Florida, which is building a $100 million facility, is aiming to raise funds for half of that project but will take out a bond for the rest.
South Carolina, which is building a $50 million facility, was aiming to raise $20 million for that project. The rest would be paid for by bonds.
The current climate is very good for bonds, with low interest rates and low fixed rates.
But UGA is worried about adding to its debt. It has around $85 million in debt from leftover facility projects and says that the covenants of those bonds requires a certain amount of reserves to back them up. If the school took out more debt or reached too far into the reserves, the sterling credit rating of UGA’s athletic association would go down.
The total available reserve fund, as of early this summer, was around $81 million.
At last Saturday’s preseason scrimmage, which was closed to the media and the general public, seats were occupied by interested fans who had been admitted as a result of their generous donations. Many of those donations had gone to the indoor facility or the west end zone project.
Georgia, as is its wont, is asking donors to pay for these new facilities rather than taking on debt (via low-interest bonds) or dipping into the reserve fund.
And a big reason for that is it can: Georgia fans are eager to help and while they want their school to be financially sound, they ultimately care less about the financial ledger than the recruiting ledger. They may grumble about it taking too long for these projects to start, but they’re glad they are now. They just want to win. Badly.