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Report on Athletics Facilities Financing

The following are quarterly financial statements on the progress of Athletics Facilities Financing to date that are meant to ensure transparency and support clear communications on ESP sales progress and other forms of revenue to support the financing plan for the Simpson Center for Student-Athlete High Performance and a renovated California Memorial Stadium.

Through June 30, 2014

Facilities Financing Revnue Increases 26.4% in FY14

This report for fiscal year 2014 (July 1, 2013 – June 30, 2014) shows a summary of revenues collected from various streams to support the funding model for Intercollegiate Athletics’ facilities, as well as Fund Functioning as an Endowment (FFE) balance. Overall, FY14 aggregate model revenues totaled $29.4 million, a 26.4% increase over FY13. IA met its debt service payment of $16.16 million for FY14, and the FFE balance at the end of the fiscal year was $63.4 million. This is $7.9 million ahead of previously forecast base-case expected value as shown in the current financial model. If the FFE balance was to track the base case forecast then all debt service payments would be made up to 2053, when there would be a balance of $394.1 million in the FFE against an outstanding principal balance of debt of $75 million, which would fall due in 2112.

Beginning this fall, the report will be produced on an annual basis to allow for truer comparisons of annual progress and to continue to capture the end of fiscal year FFE balance.

A category by category re-cap during the period is as follows:

Pledge Seat Revenue: During FY14, IA collected $9.90 million in pledge payments, a decline of 11.6% over the comparison period in FY13. For the year-end period, total pledge seats sold were 1,664 at the close of FY14, a drop from the 1,780 sold at the close of FY13, with 113 seats in progress. A total of 116 new seats were sold during the FY14 fiscal year; however the aggregate total seats sold dropped due to seat attrition. As of August 31, 2014, after the fiscal year close, but before the start of the 2014 home Cal football season, total pledge seats sold totaled 1,737 due to additional collections of previously in progress seats.

Premium Seat Revenue (non-pledge): During FY14, IA collected $885,166 from non-pledge premium seat revenue, a 27% increase over the previous fiscal year. At the end of FY14, 1,951 full-season equivalent (FSE) seats were sold for the 2014 Cal football season, comprised of 1,664 pledge seats, 112 perk season tickets, an average of 40 premium group tickets sold per game, 101 University Club bundle seats, and 24 Field Club bundle seats. We anticipate that this method of selling seats will continue to grow to supplement pledge seats sales.

Category Revenue Collected in FY13 Revenue Collected in FY14
Pledge Seat Revenue $11,213,050 $9,898,152
Premium Seat Revenue (non-pledge seats) $694,994 $885,166
Philanthropy and Other Commercial Revenue $4,349,885 $7,759,936
Leasing & Rental Revenue1 $190,068 $540,477
Investment Earnings $6,783,506 $10,285,049
Total FY14 Model Related Revenues $23,231,503 $29,368,780

1 Includes revenues from special events held at the stadium, and revenues from partner tenant leases at the stadium 

Philanthropy and Partnership Revenue: IA collected $7.8 million in philanthropy and partnership revenues during FY14, a 78% increase over FY13. This includes revenue related to the Kabam Field at California Memorial Stadium partnership, as well as revenues collected from other gifts and donor recognition elements at both California Memorial Stadium and the Simpson Center for Student-Athlete High Performance.

Rental Revenue: During FY14, IA collected $84,558 from tenant rental revenues at the stadium and $455,919 from event marketing revenues, bringing the total rental revenues collected during the period to $540,477, more than doubling the amount from FY13. Tenant rental revenues collected during the period came primarily from the previously announced agreements with the Haas School of Business and the satellite Recreation Sports fitness facility, which opened in November 2013. Construction continues to progress on the parking structure at Maxwell Family Field, which is expected to open during FY15, and help facilitate the hosting of new revenue-generating events at the stadium. The Real Madrid vs. FC Inter soccer friendly was held in July 2014. Certain revenues and expenses from the event (netting $.21 million) are reflected in the FY14 report, and the balance will be recognized in FY15. Additional leases are being signed, including the Center for Executive Education, the College of Engineering, the Goldman School of Public Policy, with the new tenants expected to move into the stadium during 2015. This will generate additional rental revenue.

Investment Earnings: During FY14, due to strong returns in the equities markets, investment earnings totaled $10.3 million, which helped lift the end of year FFE balance to $63.4 million.

2014 Cal Football Season (F14) – Premium Full Season Equivalents 
Pledge Seats 1,664 (1,7375)
Perk Season Ticket Seats Sold 112
Premium Group Tickets Sold  402
University Club Bundle Seats Sold 101
Field Club Bundle Seats Sold 24
Total F14 Premium Full Season Equivalents Sold by End of FY14 1,941
Other Metrics
FY 14 Number of Event Rentals Held (through Q4) 813
FY 14 Total Square Footage Leased (through Q4) 8,006 sq. ft.4
Previous Fiscal Years Cash Received
Total Cash Received through June 30, 2014 $76,985,3326

2) Premium Group Tickets are sold on an individual-game basis. As of the June 2014 close, 240 group tickets had been sold for an average of 40 seats per game for the 2014 football season.

3) Number of Event Rentals Held represents the number of events held at California Memorial Stadium and the Simpson Center for Student-Athlete High Performance during the specified period that are scheduled to yield gross rental revenues to IA during the period or at a future date.

4) Total Square Footage Leased represents the total square footage leased at California Memorial Stadium and the Simpson Center for Student-Athlete High Performance during the specified period that is scheduled to yield gross rental revenues to IA during the period or at a future date.

5) Represents total number of seats sold as of August 31, 2014 due to additional collections of previously in progress seats after the June 30, 2014 close.

6) Sum of all revenue (since FY10) flowing into financing model, excluding investment returns.

Through December 31, 2013

New Revenue Streams Make Impact on Financing Plan

This quarterly report covers the progress made through the first two quarters of FY14 (July 1through Dec. 31, 2013), and shows a summary of revenues collected from various streams to support the more diverse approach for funding the new Intercollegiate Athletics facilities. As described last quarter, the report has been reconfigured to align with the important metrics that underpin the updated strategy and will next be updated at the close of FY14. Overall, FY14 aggregate model revenues through the first two quarters have totaled $2,743,154, a 20.5% increase over the first two quarters of FY13.

A category by category recap during the period is as follows:

Pledge Seat Revenue: During the first two quarters of the fiscal year, IA collected $2,108,001 in pledge payments, an increase of 2.1% over the comparison period in FY13. As is typical from previous fiscal years, the bulk of revenues are not scheduled to be collected until the third and fourth quarters, as payments are due in April each year. Total pledge seats sold rose during the quarter to 1,867 seats at the end of the 2013 Cal football season in November. It is best to view this metric annually over time. 

Premium Seat Revenue (non-pledge): During the first two quarters, IA collected $547,963 from non-pledge premium seat revenue. This marks a doubling of revenue in this category from the comparison period in FY13. For the end of 2013 season totals, 2,225 full-season equivalent (FSE) seats were sold, which were comprised of 1,867 pledge seats, 183 perk season tickets, an average of 79 premium group tickets sold per game, 66 University Club bundle seats, and 30 Field Club bundle seats.

Category Revenue Collected Through Q2 of FY14 Revenue Collected Through Q2 of FY13
Pledge Seat Revenue $2,108,001 $2,064,874
Premium Seat Revenue (non-pledge seats) $547,963 $210,755
Philanthropy and Partnership Revenue $20,650 $0
Rental Revenue $66,540 $0
Investment Earnings N/A1 N/A1
Operating Support N/A2 N/A2
Total FY14 Model Related Revenues $2,743,154 $2,275,629

1 Due to fluctuations in the equities market, IA will report investment earnings at the end of fiscal year, once true numbers can be reconciled.

2 Due to operating support being determined on an annual and not quarterly basis, IA will update this number at the end of fiscal year, once true numbers can be reconciled.

Philanthropy and Partnership Revenue: IA collected $20,650 in philanthropy and partnership category revenues through the second quarter.

Rental Revenue: Through the second quarter, IA collected $16,900 from tenant rental revenues at the stadium and $49,640 from event marketing revenues, bringing the total rental revenues collected during the period to $66,540. Tenant rental revenues collected during the period came primarily from the previously announced agreement with the Haas School of Business for its Innovation Lab at the stadium. During November 2013, the new satellite Recreation Sports fitness facility officially opened to the campus community. This facility rental, which is scheduled to yield additional revenues at a later date, brought total leased square footage up to 8,006 square feet. During this period, conversations were held with other prospective campus partners, and lease agreements are currently being drafted to bring four new tenants into the stadium during FY15. These new partnerships (expected to be announced at a later date) will also yield new revenues in future fiscal years.

2013 Cal Football Season (F13) – Premium Full Season Equivalents 
Pledge Seats 1,8676
Perk Season Ticket Seats Sold 183
Premium Group Tickets Sold 793
University Club Bundle Seats Sold 66
Field Club Bundle Seats Sold 30
Total F13 Premium Full Season Equivalents Sold by End of Season 2,225

 

Other Metrics  
FY 14 Number of Event Rentals Held (through Q2) 164
FY 14 Total Square Footage Leased (through Q2) 8,006 sq. ft.5
     
Previous Fiscal Years Cash Received  
FY 10 ESP Revenue (Full Year) $14,367,534
FY 11 ESP Revenue (Full Year) $13,461,021
FY 12 ESP Revenue (Full Year) $12,910,763
FY 12 Donor Recognition Revenue (Full Year) $714,286
FY 13 ESP Revenue (Full Year) $11,213,050
FY 13 Donor Recognition Revenue (Full Year) $4,349,885
FY 13 Premium Seat Revenue (non-ESP) (Full Year) $694,994
FY 13 Event Marketing Revenue (Full Year) $190,068
Total Cash Received through December 31, 2013 $60,644,755

3) Premium Group Tickets are sold on an individual-game basis. As of the November 2013 close (which mirrors the timing of the end of the 2013 football season), 556 group tickets had been sold for an average of 79 seats per game for the 2013 football season.

4) Number of Event Rentals Held represents the number of events held at California Memorial Stadium and the Simpson Center for Student-Athlete High Performance during the specified period that are scheduled to yield gross rental revenues to IA during the period or at a future date.

5) Total Square Footage Leased represents the total square footage leased at California Memorial Stadium and the Simpson Center for Student-Athlete High Performance during the specified period that is scheduled to yield gross rental revenues to IA during the period or at a future date.

6) Total pledge seats sold as of November 2013 close, which mirrors the timing of the end of the 2013 Cal football season. Due to seat drops after the conclusion of the 2013 Cal Football season, but before the end of the fiscal year close, total pledge seats sold stood at 1,844 as of December 31, 2013. It is best to view this metric annually over time.

Through September 30, 2013 

Facilities Financing Revenues Continue to Grow

This quarterly report has been reconfigured to align with the important metrics that underpin the more diverse revenue approach of the financial model for the new facilities. It shows a comparison of our results during the first quarter of FY14 to those of FY13. Moving forward, we will report results biannually (during Q2 and Q4), and will publish our next release at the conclusion of the FY14 Q2 (results through December 31, 2013). We expect that we will continue to adapt the way we report results to make the information a more useful management tool.

As a recap, the FY13 close Fund Functioning as an Endowment (FFE) balance totaled $54,713,901, a figure more than $2 million above the base-case expected value embodied in the updated financial model. The first-quarter report of FY14 shows a summary of revenues collected from various revenue streams, related to our new approach. A category-by-category re-cap during the period is as follows:

Pledge Seat Revenue: During the first quarter, IA collected $797,739 in pledge payments during the period. As is typical from previous fiscal years, the bulk of revenues are not scheduled to be collected until the third and fourth quarters, as payments are due in April each year. Total pledge seats sold rose during the quarter to 1,856 seats, an increase of 76 seats since the close of FY13. Despite this increase the revenue collected declined in the reported quarter because payments are lumpy and linked to the specific timeline associated with previous pledge agreements. It is best to view this metric annually over time. 

Premium Seat Revenue (non-pledge): During the first quarter, IA collected $422,298 from non-pledge premium seat revenue. This set a new high for one single quarter of sales activity. Highlights included an increase of 30 bundle seats sold during the last quarter, and a total count of 2,204 full season equivalents (FSE) sold towards the 2013 season through the end of the first quarter. The 2,204 FSE are comprised of 1,856 pledge seats, 183 perk season tickets, an average of 69 premium group tickets sold per game, 66 University Club bundle seats, and 30 Field Club bundle seats.

Category  Revenue Collected in Q1 of FY14 Revenue Collected in Q1 of FY13
Pledge Seat Revenue $797,739 $1,346,922
Premium Seat Revenue (non-pledge seats) $422,298 $236,600
Philanthropy and Partnership Revenue $15,800 $0
Rental Revenue $0 $0
Investment Earnings N/A1 N/A1
Operating Support N/A2 N/A2
Total FY14 Model Related Revenues $1,235,837 $1,583,522

 1-Due to fluctuations in the equities market, IA will report investment earnings at the end of fiscal year, once true numbers can be reconciled.

2-Due to operating support being determined on an annual and not quarterly basis, IA will update this number at the end of fiscal year, once true numbers can be reconciled.

Philanthropy and Partnership Revenue: IA collected $15,800 in philanthropy category revenues during the first quarter. Similar to pledge seat revenue, the bulk of forecasted funds are expected to be collected in the second half of the fiscal year. The recent announcement of Kabam Field at California Memorial Stadium in December 2013 will yield $1M of gross revenues towards this category during FY14. Those revenues are expected to be collected in upcoming quarters this year.

Rental Revenue: While IA did not collect any rental revenues during the first quarter, revenues are scheduled to start being recognized next quarter. This will be comprised of rental revenues from events held at the stadium, as well as lease revenue from the new partners at California Memorial Stadium. The satellite Recreation Sports fitness facility at California Memorial Stadium officially opened for use on November 4, 2013. This facility joins the Haas School of Business Innovation Lab (iLab) as a second facility that will yield lease revenues to IA in this category.

2013 Cal Football Season (F13) – Premium Full Season Equivalents   
Pledge Seats 1,856
Perk Season Ticket Seats Sold 183
Premium Group Tickets Sold  693
University Club Bundle Seats Sold 66
Field Club Bundle Seats Sold 30
Total F13 Premium Full Season Equivalents Sold through September 30, 2013 2,204
   
Other Metrics  
FY 14 Number of Event Rentals Held (through Q1) 24
FY 14 Total Square Footage Leased (through Q1) 2,931 sq. ft.5
   
Previous Fiscal Years Cash Received  
FY 10 ESP Revenue (Full Year) $14,367,534
FY 11 ESP Revenue (Full Year) $13,461,021
FY 12 ESP Revenue (Full Year) $12,910,763
FY 12 Donor Recognition Revenue (Full Year) $714,286
FY 13 ESP Revenue (Full Year) $11,213,050
FY 13 Donor Recognition Revenue (Full Year) $4,349,885
FY 13 Premium Seat Revenue (non-ESP) (Full Year) $694,994
FY 13 Event Marketing Revenue (Full Year) $190,068
Total Cash Received through September 30, 2013 $59,137,438

3-Premium Group Tickets are sold on an individual-game basis. As of September 30, 2013, 486 group tickets had been sold for an average of 69 seats per game for the 2013 football season.

4-Number of Event Rentals Held represents the number of events held at California Memorial Stadium and the Simpson Center for Student-Athlete High Performance during the specified period that are scheduled to yield gross rental revenues to IA at a future date.

5-Total Square Footage Leased represents the total square footage leased at California Memorial Stadium and the Simpson Center for Student-Athlete High Performance during the specified period that is scheduled to yield gross rental revenues to IA at a future date.

Through June 30, 2013

  Field Club Seats Stadium Club Seats Univ. Club Seats Total FY 13
Total Seat Inventory for Sale 1,426 1,051 425 2,902
Seats Sold to Date 1,010 656 114 1,780 (1,8121)
Seat Sales in Progress 20 28 2 50
Dollar Value of Seats Sold $53.8 million $68.0 million $23.7 million $145.5 million
FY 13 Cash Received Summary  
FY 13 ESP Revenue (Through 4th Quarter) $11,213,050
FY 13 Donor Recognition Revenue (Through 4th Quarter) $4,349,885
FY 13 Premium Seat Revenue (non-ESP) (Through 4th Quarter) $694,994
FY 13 Event Marketing Revenue (Through 4th Quarter) $190,068
Total FY 13 Cash Received through June 30, 2013 $16,447,997
Previous Fiscal Years Cash Received  
FY 10 ESP Revenue (Full Year) $14,367,534
FY 11 ESP Revenue (Full Year) $13,461,021
FY 12 ESP Revenue (Full Year) $12,910,763
FY 12 Donor Recognition Revenue (Full Year) $714,286
Total Cash Received through June 30, 2013 $57,901,601
2013 Cal Football Season (F13) – Premium Full-Season Equivalents  
Pledge Seats 1,780
Perk Season-Ticket Seats Sold 136
Premium Group Tickets Sold 422
University Club Bundle Seats Sold 42
Field Club Bundle Seats Sold 24
Total F13 Premium Full-Season Equivalents Sold through June 30, 2013 2,024

1- Represents total number of seats sold as of August 30, 2013 due to additional collections of previously in progress seats after the June 30, 2013 close.

2- Premium Group Tickets are sold on an individual-game basis. As of June 30, 2013, 295 group tickets had been sold for an average of 42 seats per game for the 2013 football season.

The fourth-quarter report for the Endowment Seating Program (ESP) shows 1,780 seats sold as of June 30, 2013, with an additional 50 pledge seats in progress. Between the close of the fiscal year and Aug. 30, 2013, 32 of those 50 seats have been finalized. Total cash received from pledge seats for FY13 is $11,213,050, an increase of $6.1 million since the end of the third quarter. For the entire fiscal year, 124 new seats were sold within the ESP sections, and account holders for 23 seats chose to upgrade to a higher club level (or higher price point within a club level), resulting in a corresponding increase in commitment to the program. The 124 seats ranked above IA's projection of 110 seats sold during the fiscal year. When taking into account seats lost through attrition, it resulted in a net gain of 35 seats sold for the full fiscal year. Donor recognition revenues during FY13 totaled $4,349,885.

In addition, Intercollegiate Athletics (IA) recently completed its first fiscal year of generating revenues from four new categories - perks, corporate bundles, premium groups and Memorial Stadium rentals. As shown in the table above, these new streams combined to generate $885,062 in additional funds during FY13 to support IA's financial plan to meet its obligations. The combined sales of groups, perks and bundles resulted in a total of 244 premium-seat full-season equivalents sold in FY13 for the 2013 Cal football season.

In FY13, total cash received from pledge seats, donor recognition revenue, premium seat revenue and event marketing revenue totaled $16,447,997. As of June 30, 2013, the Fund Functioning as an Endowment (FFE) balance totaled $54,713,901, a figure more than $2 million above the base-case expected value as shown in the current financial plan model.

The Haas School of Business Innovation Lab at Memorial Stadium (iLab) officially opened for student use on Aug. 12, 2013, and a satellite Recreation Sports fitness facility is in the final stages of construction and expected to officially open later this fall. These campus partnerships are now scheduled to yield additional rental revenues to IA starting in FY14. Those revenues will be reported in future quarterly releases on this site as they are recorded as received. A broad-based committee is working on other proposals intended to achieve the goal of making the new Memorial Stadium a truly multi-use year-round facility for the benefit of the entire campus.

Finally, to support public inquiries for the data that was used in the current financial model, as referred to in the "Through December 31, 2012" release, a link to the data set can be found here. Included in this worksheet are tabs that show model assumptions, forecasted long-term revenues and debt payment tables that formulated the base-case scenario used in that version of the model. IA will respond to individual inquiries related to the model as it is able and expects to answer the most frequent questions received, if applicable, in future quarterly releases.

Through March 31, 2013

  Field Club Seats Stadium Club Seats Univ. Club Seats Total FY 13
Total Seat Inventory for Sale 1,426 1,051 425 2,902
Seats Sold to Date 1,057 688 112 1,857
Seat Sales in Progress 12 6 4 22
Dollar Value of Seats Sold $56.4 million $71.7 million $23.3 million $151.4 million
FY 13 Cash Received Summary  
FY 13 ESP Revenue (Through 3rd Quarter) $5,093,768
FY 13 Donor Recognition Revenue (Through 3rd Quarter) $1,714,286
FY 13 Premium Seat Revenue (non-ESP) (Through 3rd Quarter) $380,431
FY 13 Event Marketing Revenue (Through 3rd Quarter) $134,383
Total FY 13 Cash Received through March 31, 2013 $7,322,868
Previous Fiscal Years Cash Received  
FY 10 ESP Revenue (Full Year) $14,367,534
FY 11 ESP Revenue (Full Year) $13,461,021
FY 12 ESP Revenue (Full Year) $12,910,763
FY 12 Donor Recognition Revenue (Full Year) $714,286
Total Cash Received through March 31, 2013 $48,776,472

 

The FY 2013 third-quarter report for the Endowment Seating Program (ESP) shows 1,857 seats sold as of March 31, 2013, with an additional 22 seat pledges in progress. Total cash received is $48,776,472. Notable is a net gain of nine University Club seats sold during the last quarter, while net Field Club and Stadium Club seats sold have both shown slight reductions since last quarter's close. This is due to a net effect of seat drops and upgrades during the period. A percentage of seat-pledge cancellations will be expected near April on an annual basis due to a number of factors, including but not limited to seat-holder financial hardship, family status, death, etc. With pledge payments due in April each year, a significant portion of "FY 13 ESP Revenue" is projected to be collected in the fourth quarter, consistent with previous fiscal years.

As previously described in last quarter's release, we have recently made significant changes to our financial model, greatly diversifying the potential revenue sources. As a consequence, we have adjusted the way we present data so as to provide greater insight into the variables that need to be monitored. Beginning this quarter, sales from our perk seat sales, corporate bundle sales and premium group sales will start being classified as "Premium Seat Revenue (non-ESP)." Cumulative results as of the third-quarter close in this category have led to:

  • Reservation of 36 University Club Corporate bundle season tickets for the 2013 football season
  • Sale of 100 Stadium Club group tickets and 20 University Club group tickets for the Cal vs. Ohio State football game
  • Sales of 75 "perk" season tickets for the 2013 season
Another new category is "Event Marketing Revenue," which will represent revenues earned from non-IA events held at the stadium. This category is off to a strong start compared to projections, with 20 events to date already generating new revenue. This category will continue to be updated on a quarterly basis, as well.

Through December 31, 2012

Introduction

Over the course of the past six months we have been engaged in a significant revision of the financing plan for the Simpson Center for Student-Athlete High Performance and the renovated California Memorial Stadium. The challenge was as complex as the goal is simple: Ensure we have a strong, responsive and reliable financial foundation for the facilities that will secure Intercollegiate Athletics' long-term ability to meet debt and principal obligations without drawing on central campus funds. While we cannot provide absolute certainty with respect to the future, we are pleased to announce that as a result of revisions and additions to the plan, we are now in a much better position to meet that goal.

At the same time, however, experience indicates that uncertainty is unavoidable with respect to capital projects where both expenses and revenues must be projected over a 40-year time frame. Our crystal ball is no better than anyone else's. Thus, there is no doubt that some of what is written below will prove to be inaccurate. So, we must and will continue to constantly monitor data, forecasts and assumptions, tap into the right expertise and remain constantly ready to adapt as best we can. Such is the nature of the enterprise.

Background

Before we go in to the details of the revisions, a bit of background is necessary. Most capital projects, whether in the private or public sector, are financed by long term debt. That is, the total amount of debt owed does not fall due in any one year. While one can express the total of the future debt service payments in terms of its current "net present value," the owner of the building only has to meet the debt service falling due in any given year to remain current. That is why most of us buy houses using long-term mortgages offset by expected future earnings. Consequently, when thinking about the financial feasibility of a particular capital project one should focus on the probability of meeting the debt service falling due each year, not the total outstanding.

When we talk about this sort of financial planning we often refer to a "financial model." Financial modeling is an approach that allows one to explore different outcomes within a well-defined interconnected framework that incorporates, among other things, projected revenues, costs and rates of returns on investments. The model allows decision-makers to examine a wide variety of scenarios to test the strength of a financial plan by plugging in different values for a wide range of variables.

In this case we have good information on our annual future costs in terms of debt service and principal repayment. The new athletic facilities were financed using philanthropy received before construction and fixed-rate 30-, 40- and 100-year debt issued at historically low interest rates. Both the long maturity and low interest rates help to lower the debt payments due in any one year. We have issued $276m in long-term debt for Memorial Stadium and $124m for the Simpson Center and there is approximately $45m that remains to be issued. On the 30- and 40-year debt, interest-only payments are due until 2032, 2033 or 2038 depending on the bond issuances, at which point we will begin to pay down the principal. The 100-year debt will be paid off with a single payment in the last year. For modeling purposes we have assumed that the unissued debt is financed on the same terms as the existing 40-year debt. The long maturity structure of the debt affords us time to respond if we perceive a problem in the future in terms of how we raise revenue to meet our obligations - hence the need to be vigilant and adapt.

With predictable annual costs, we are well-positioned to anticipate if the resources available to Intercollegiate Athletics are likely to fall short of need in the years ahead. And that is where the additional revenues incorporated into the model come into play. It is misleading to look at one side of the ledger (costs) without simultaneously looking at the other side of the ledger (revenues). Before it was revised, the original financial model for the new athletics facilities relied on only three sources of revenue: philanthropy, naming rights, and the Endowment Seating Program (ESP), with the last source accounting for the bulk of anticipated revenue.

ESP is based on selling long-terms rights to premium seats at three different service levels, with escalating amounts of philanthropy built into the price. Buyers can opt to pay in full upfront or pay over time; a decision that is documented through a signed pledge agreement. If, for whatever the reason, a buyer stops payments, the seat returns to the available inventory to be re-sold.

Under both the original and revised financial plan, revenue raised through ESP sales, philanthropy, naming rights and other sources is deposited into investment accounts. These investment accounts are conservatively invested, generating additional revenue along the way. This, in turn, means that our financial model must also incorporate a range of possible future annual returns on investment so we can assess the model's strength under a variety of scenarios.

For the past year, we have posted on our website, on a quarterly basis, all of the financial information we have on total revenue received, seats sold, naming rights, and philanthropy. The first table below shows where we are, as of 12/31/12, in terms of ESP seat sales relative to the goals in the original financial model. The second table shows the original financial model with a range of possible scenarios and outcomes.

Table 1: Summary of ESP Seats Secured through 12/31/12

  Field Club Seats Stadium Club Seats Univ. Club Seats Total FY 13
Total Seat Inventory for Sale* 1,426 1,051 425 2,902

Seats Sold to Date

1,073 697 103 1,873
Seat Sales in Progress 12 3 4 19
Percent of Goal -
Number of Seats Sold
75% 66% 24% 65%
Percent of Goal - Number
of Seats Sold and Sales in Progress
76% 67% 25% 65%
         
Total Dollar Value of
Seat Inventory for Sale
$84 million $126 million $63 million $273 million
Dollar Value of Seats Sold* $57.1 million $72.6 million $21.6 million $151.3 million

*Based upon upfront price (a majority of the completed pledge agreements to date provide for payment over time).

Table 2: Summary of Original Model Scenarios

Scenario Total Philanthropy ($M) Seats Sold Relative to Goal Seats Sold Relative to Total Inventory Incremental Simpson Center Revenue ($M) Market Return on investments Projection of when combined balance becomes < 0
1 60 100% 90% 3 8.0% Never
2 50 94% 84.6% 3 7.5% Never
3 40 88% 79.2% 3 7.0% Never
4 30 82% 73.8% 0 6.5% 2044
5 20 76% 68.4% 0 6.0% 2038

Revising the financial model

So, what led us to embark on a re-evaluation of the original financial model? First and foremost, it is our assessment there is an increasing probability that we will not reach the original fund raising/ESP sales targets by the anticipated date of June 2013. If we did not take corrective steps, this could result in a cash flow problem in future years. Given how different variables are interconnected this is best explained by looking at different "scenarios."

Table 2 above does this by showing a range of possible outcomes, with scenario 1 representing the "best" outcome and scenario 5 the "worst." Thus, what the old model was telling us was that if we were in scenario 5 (i.e. we sold 76% of the ESP seats relative to goal, philanthropy was $20m over the next 10 years, and the return on the investments averaged 6%) then IA could not meet its debt related financial obligation from this source in 2038.

Even though ESP sales have reached a value of over $150 million to date and new philanthropy is running ahead of projections, the tempo of sales and rate of return on investments have not kept pace with the original projections. Whether the sales figures are due to the economic recession, the football team's challenging season, or other factors is unclear. And, obviously, the return on the investment cannot be viewed over such a short period. However, what is clear is that the original model is over reliant on ESP seat sales. For that reason, it seemed prudent to develop a much more diversified financial model that was less susceptible to the vagaries of economic conditions and team performance.

New strategy, new tactics, new sources of revenue

The new financing plan reflects the work Intercollegiate Athletics has done over the past year on developing a more diversified and robust approach to revenue generation. This work was undertaken in close consultation with both potential partners and our stakeholders, and is based on relevant market research. While the same three revenue sources remain important, we have fundamentally revised our approach to enable us to reach a wider group of buyers and add new revenue sources.

Our first steps, in the fall of 2012, were designed to strengthen and expand the ESP program. Whereas in the past ESP had been handled solely by Intercollegiate Athletics' Development Office, they have now been joined by a dedicated sales staff that is focused on expanding our outreach beyond donors to a corporate market with significant potential. The corporate strategy for premium seating relies on offering to corporations and specific groups associated with the university shorter, two-year contracts for seat "bundles."
In the short time the corporate bundle program has been in effect we have already generated reservations for 26 University Club seats for the 2013 season from these customers. At the same time, the new sales team has also launched an ESP "perk pricing" program, which offers a very limited number of discounted, short-term seat contracts for purchase by current ESP participants as a way to let prospective buyers of long-term contracts get a first-hand feel for the program's amenities and benefits. The perk pricing initiative has already generated over $200,000 in new revenue, and we anticipate that there will be strong demand for this product in the future.
In terms of the original ESP seat program, we have adjusted the number of seats we anticipate selling to individual buyers, the only mode of selling under the previous approach. Whereas the original model anticipated we would sell all of the ESP seats by June 2013 we are now projecting that sales will continue at a rate of 70-120 per year until all available seats are sold. Based on the pace of sales to date, we believe this to be a very conservative and attainable estimate.
Another new source of revenue now incorporated into the model comes as a result of the recently revised post-season system that will be implemented in 2014. Proceeds from the sale of media rights for the new system are being shared by all of the FBS member institutions, resulting in an estimated $2.5m annual uplift as a result of changes in post-season football.

We have also added to the model new revenue we expect to generate from the sale of additional new media revenue once our existing, campus-specific contract expires in 2017. We expect this to result in a multi-million dollar increase payment to athletics as a result. As with the postseason revenue, we have now earmarked a portion of these funds to pay for the new facilities.

While rental of the facilities was always envisioned, we have taken additional steps to enhance this source of revenue. Due to budget constraints, some of the space in the new facilities was left unfinished and is now being repurposed and improved as space available for lease or rent to third parties. We already have use agreements with a number of campus-based units, and welcome not only the new revenue, but also the increased usage of the buildings by a broader range of our campus community. In addition to these long-term use agreements, Intercollegiate Athletics will continue its successful efforts to rent space in the new facilities for events held by the university, corporations and individuals. Based on our experience to date, we are projecting a steady increase in this source of revenue.

In terms of other commercial revenue, we are incorporating a new, professionalized outreach to the corporate sector. Intercollegiate Athletics is already in the process of reviewing opportunities with a number of interested parties. One of the benefits of working with the corporate sector on other commercial revenue is that commercial agreements are usually time-bound, creating opportunities to re-sell these opportunities in the future.

Lastly, we will continue to pursue philanthropy specifically designated for the facilities. The last 12 months have yielded commitments of $15m and we are working on a number of additional prospects.

The New Model

While adding new sources of revenue and implementing a new approach to sales is clearly beneficial, it would all be for naught if we are failing to model outcomes correctly. For that reason we have been working closely with Professors Stanton, Wallace and Fuchs from the Haas School of Business, who all have a very high degree of experience and expertise in financial modeling. Initially we wanted to have them simply validate the original financial model, which they did. However, as it became clear that we needed to rewrite the model to capture the more diversified approach to revenue generation and the inherent uncertainty around both revenues and returns, we asked them to increase their involvement and help us build a new financial model from the ground up. We are very thankful to them for doing so. Obviously, the assumptions remain our responsibility, as does the implementation of the plan. At the same time, we believe that their independent analysis will help ensure we are being realistic with respect to our assumptions, projections and forecasts. We will also continue to be fully transparent through comprehensive quarterly reports on the Cal Athletics website.

Lastly, we have continued to work with Professor Calvin Moore, who has been involved in the estimation of the financial outlook from the beginning of the project several years ago, and Professor Alex Bell, who has kindly agreed to be our liaison to the wider faculty audience. They have both been very generous with their time and unstinting in sharing their insights and questions.

The result of everything described above is captured in the graph provided below. In contrast to the old approach, which showed there was a risk that Intercollegiate Athletics could face financing difficulties under some scenarios in the 2030's, the new approach indicates that the department will be able to meet its financial obligations under a range of scenarios. For example, under the new base case, which assumes that the invested funds have an annual return of 6%, the financial projections show a modest surplus, where available funds exceed obligations every year until the debt and principal is paid off.

Base Case Scenario

Best Case Scenario

Note: In 2053, Cal will still have $75M in bonds outstanding, which are due to be paid in 2112. if we choose to pay off this debt, the balance in the investment fund would decline from $400M to $325M under the base case scenario.

But, we did more than examine the model under a single, base case scenario. Using input and guidance from the aforementioned faculty, we tested the model against other plausible, but more challenging scenarios that, for example, incorporated lower rates of return on investments. As the table below indicates, under these more pessimistic scenarios Intercollegiate Athletics will be able to meet its financial obligations under most circumstances. For example, even if we pay-off the $75m in outstanding bonds in 2053, which is not a requirement, we would face a deficit only under the 4% scenario, a rate well below historical averages.

Assumed Earnings Rate 4% 5% 6% 7%
Ending balance $(-6,012,716) $123,013,918 $319,141,487 $612,019,346
When balance goes negative 2053 Never Never Never

If we are in the upper end of the range of outcomes we will retire the debt early and use that debt capacity for other campus-wide priorities. If we are at the low end of the range of outcomes, IA will adopt new revenue measures to protect campus. However, these positive outcomes are likely only if we remain vigilant in terms of monitoring actual outcomes and adapting to new opportunities and/or challenges. We are committed to do exactly that and will not lose sight of the fact that reality will, in one way or another, certainly differ from these projections.

Appendix

Bond Cash Flows

Bond Cash Flows

Debt Assumption Notes: 1) In 2053, Cal will still have $75M in bonds outstanding, which are due to be paid back in 2112. 2) There is approximately $45M in debt that remains to be issued. For modeling purposes, we assume this will be issued as 40 year debt, with 20 year delayed amortization at 4%.

Cash Received Summary

Cash Received Summary  
FY 10 ESP Revenue $14,367,534
FY 11 ESP Revenue $13,461,021
FY 12 ESP Revenue $12,910,763
FY 12 Naming Rights Revenue $714,286
FY 13 ESP Revenue $2,064,874
FY 13 ESP "Perk Sales" Revenue $210,755
FY 13 Philanthropic Naming Revenue $0
Total Cash Received through December 31, 2012 $43,729,233

**Annual ESP payments are due on April 1st.

 


 

Endowment Seating Program Quarterly Reports

The Endowment Seating Program (ESP) is an innovative program designed to provide Intercollegiate Athletics with the resources necessary to build and sustain its teams. The program includes just over 3,000 seats (or less than five percent of the stadium capacity) at California Memorial Stadium, and its participants receive long-term, all-encompassing access to selected seats, along with tickets, parking and benefits associated with the various ESP club levels.

Summary of ESP Seats Secured
Through September 30, 2012

  Field Club Seats Stadium Club Seats Univ. Club Seats Total FY 13
Total Seat Inventory for Sale* 1,426 1,051 425 2,902

Seats Sold to Date

1,067 688 103 1,858
Seat Sales in Progress 4 2 4 10
Percent of Goal -
Number of Seats Sold
75% 65% 24% 64%
Percent of Goal - Number
of Seats Sold and Sales in Progress
75% 66% 25% 64%
         
Total Dollar Value of
Seat Inventory for Sale*
$84 million $126 million $63 million $273 million
Dollar Value of Seats Sold** $56.7 million $71.3 million $21.6 million $150.1 million
Percent of Goal - Dollar
Value of Seats Sold
68% 56% 34% 55%

 

Cash Received Summary  
FY 10 ESP Revenue $14,367,534
FY 11 ESP Revenue $13,461,021
FY 12 ESP Revenue $12,910,763
FY 12 Naming Rights Revenue $714,286
FY 13 ESP Revenue $1,346,922
FY 13 ESP "Perk Sales" Revenue $236,600
Total Cash Received through September 30, 2012 $43,037,126
* The construction design documents estimated the total ESP inventory at 3,198 seats. The as-built condition yielded 3,224 seats; therefore, both the total seats and the number of seats for sale have been adjusted in this posting. The assumption is that approximately 10% of the seats remains unsold or is allocated pro bono. Therefore, the number of seats for sale is 90% of total inventory or 2,902 seats. In addition, during a review of the data during the latest quarter, an error was discovered in the listed dollar value of the seat inventory for sale that does not affect the overall goal (a net zero impact). The value for Field Club should have been $83 million (a reduction of $5 million), while the value for University Club should have been $63 million (up from $58 million).
**Based upon upfront price (a majority of the completed pledge agreements to date provide for payment over time)

The 2013 fiscal year first-quarter report for the Endowment Seating Program (ESP) shows 1,858 seats sold as of September 30, 2012, with an additional 10 seat pledges in progress. This is an increase of 113 seats from last quarter, which includes 26 new seat sales and 87 seats that have moved from previously being "in progress" to now being officially sold.

Two additional ESP-related sources of revenue have been added to the "Cash Received Summary" table above - naming rights revenue and "perk sales" revenue. Both will be explained in further detail below. Total cash received is $43,037,126.

As explained in the June 2012 posting above, Cal Athletics has secured $15 million in pledge commitments associated with naming rights in the new California Memorial Stadium. In the spirit of full transparency, this revenue category as been added to the quarterly reporting and will be updated regularly to reflect pledge payments made and the corresponding impact on overall cash received for ESP.

In addition, two new ESP-related sales options - "perk sales" and "corporate bundles" - are now being offered for the first time through a three-person premium sales team hired in mid-September. The sales representatives will focus on outreach for generating new, traditional seat sales, as well as on securing commitments for these innovative alternatives.

The ESP perk sales initiative is a unique program developed with multiple purposes in mind - rewarding current ESP participants, increasing interest and awareness of ESP amenities with first-hand experience, and leveraging available seating inventory to drive revenue.

The ESP perk program allows current ESP participants the opportunity to buy either full-season or single-game packages at their club level or below. Enrolled ESP customers are Cal Athletics' best ambassadors of the program, so the opportunity to invite friends or colleagues on a full-season or single-game basis is a prime source for referrals and prospective customers given these guests will now have the opportunity to experience the multiple benefits of the club levels for themselves.

By utilizing available inventory, therefore incurring minimal costs to execute, the ESP perk program yielded an additional $236,600 in revenue through the end of September. The ESP perk program may or may not continue in future football seasons depending on availability of seating inventory.

The corporate bundle strategy is aimed at generating interest in the traditional ESP seats by offering a short-term agreement on a customized number of University Club seats. Furthermore, these agreements are only available on a short-term basis (currently two years - football season 2013 and 2014), enabling Cal Athletics the flexibility to return these seats to the traditional inventory as demand increases, given the public has now had the opportunity to experience the newly renovated California Memorial Stadium for the first time in a game setting.

Three corporations have already committed to the program, reserving a total 20 seats for the 2013 and 2014 football seasons. The revenue associated with the corporate bundles will be reported after it is realized to avoid any misinterpretation of the cash received figures above.

The newly-formed premium sales team will continue to promote traditional seat sales as well as seating upgrades from existing ESP participants while leveraging the innovative corporate bundle packages.

 

Through June 30, 2012

  Field Club Seats Stadium Club Seats Univ. Club Seats Total FY 12
Total Seat Inventory for Sale* 1,411 1,042 425 2,878

Seats Sold to Date

1,015 623 107 1,745
Seat Sales in Progress 59 72 0 131
Percent of Goal -
Number of Seats Sold
72% 60% 25% 61%
Percent of Goal - Number
of Seats Sold and Sales in Progress
76% 67% 25% 65%
         
Total Dollar Value of
Seat Inventory for Sale*
$88,000,000 $126,000,000 $58,000,000 $272,000,000
Dollar Value of Seats Sold** $53,950,000 $64,150,000 $22,450,000 $140,550,000
Percent of Goal - Dollar
Value of Seats Sold
61% 51% 39% 52%

 

Cash Received Summary  
FY 10 $14,367,534
FY 11 $13,461,021
FY 12 $12,910,763
Total Cash Received through June 30, 2012 $40,739,318
*Total ESP inventory is 3,198 seats. The assumption is that 10% of the seats in each section remains unsold or is allocated pro bono. Therefore, the number of seats for sale is 90% of total inventory or 2,878 seats.
**Based upon upfront price (a majority of the completed pledge agreements to date provide for payment over time)

The fourth-quarter report for the Endowment Seating Program (ESP) shows 1,745 seats sold as of June 30, 2012, with an additional 131 seat pledges in progress. Between the close of the fiscal year and the posting of this report on Sept. 10, 2012, 71 of those 131 seats have been finalized, while 28 of the remaining 60 seats in progress belong to one account that is modifying its contract by one seat. Total cash received is $40,739,318, an increase of $5.5 million since the end of the third quarter on March 31, 2012. For the entire fiscal year, 201 new seats were sold within the ESP sections, and more than 15 accounts chose to upgrade their seats to a higher club level, resulting in a corresponding increase in commitment to the program.

In addition, Intercollegiate Athletics (IA) recently secured $15 million in donations related to naming rights. The Lisa and Douglas Goldman Plaza is named in recognition of a $10 million gift from the San Francisco philanthropists, and the Peter E. Haas Press Box is named in honor of a $5 million anonymous contribution. Additional philanthropy is anticipated to be raised to fund IA over the next 10 years and is an important component of the financial model. Members of the Haas School of Business faculty are evaluating the overall financial model for Vice Chancellor John Wilton, and those results will be posted on CalBears.com when they are available.

To capitalize on the momentum of the reopening of Memorial Stadium this fall, and because ESP seat sales are lower than targeted, IA has established a new distinct premium sales force under Chief Operating Officer Solly Fulp and Associate Athletic Director for Sales, Marketing and Service Ashwin Puri to conduct sales outreach now that prospects have access to the club levels following construction. The plan includes a corporate bundling strategy for premium seating contracts for local companies and the launch of ESP perk pricing, which offers a very limited number of seats for purchase in the ESP sections at a discount. Orders will be filled on a first-come, first-served basis and are only available to current ESP participants to yield incremental funding for the program.

 

Through March 31, 2012

  Field Club Seats Stadium Club Seats Univ. Club Seats Total FY 12
Total Seat Inventory 1,568 1,158 472 3,198

Sold to Date

1,023 672 101 1,796
Percent of Total
Inventory Sold
65% 58% 21% 56%
Percent Sold of Goal
(90% of Inventory)
72% 64% 24% 62%
         
Total $ Value of
Seat Inventory
$83,060,000 $129,450,000 $96,600,000 $309,110,000
Value of Sold Seats* $54,390,000 $69,800,000 $21,450,000 $145,640,000
Percent of Inventory
Value Sold (as $)
65% 54% 22% 47%
Percent Sold of Goal NA NA NA 54%

 

Cash Received Summary  
FY 10 $14,367,534
FY 11 $13,461,021
FY 12 $7,461,866
Total Cash Received through March 31, 2012 $35,290,421
*Based upon upfront price (a majority of the completed pledge agreements to date provide for payment over time)

The third quarter report for the Endowment Seating Program (ESP) records 1,796 seats sold as of March 31, 2012. This number includes 58 new seats that have been reserved since Jan. 1, 2012. There are 54 seat pledges in progress and we experienced 11 pledge cancellations resulting in the release of 27 seats back in to the bowl for resale. A percentage of seat pledge cancellations will be expected near April on an annual basis due to a number of factors, including but not limited to seat holder financial hardship, family status, death, etc.

Beginning April 2, the Athletic Department began the seat-selection process (reseat) for upcoming football season in California Memorial Stadium. We have experienced an increase in inquiries into the ESP program during this time. We will continue to follow up with season-ticket holders, former season-ticket holders and new prospects to highlight the amenities and program benefits of ESP as we approach the September reopening. This reseat and our ability to begin private tours for potential purchasers in the stadium's ESP sections will greatly assist the sales team in its efforts to demonstrate such highlights as the view, seat comfort, sightlines and more. In addition, the newly reorganized Sales, Marketing and Customer Service team within Intercollegiate Athletics provides additional resources to market and sell ESP seats. Custom events are scheduled throughout the coming months leading up to the reopening and will continue once the club sections are complete in the autumn.

 

 

Through December 31, 2011

  Field Club Seats Stadium Club Seats Univ. Club Seats Total FY 12
Total Seat Inventory 1,568 1,158 472 3,198

Sold to Date

1,015 666 101 1,782
Percent of Total
Inventory Sold
65% 58% 21% 56%
Percent Sold of Goal
(90% of Inventory)
72% 64% 24% 62%
         
Total $ Value of
Seat Inventory
$83,060,000 $129,450,000 $96,600,000 $309,110,000
Value of Sold Seats* $53,920,000 $69,100,000 $21,450,000 $144,470,000
Percent of Inventory
Value Sold (as $)
65% 53% 22% 47%
Percent Sold of Goal NA NA NA 54%

 

Cash Received Summary  
FY 10 $14,367,534
FY 11 $13,461,021
FY 12 $3,070,277
Total Cash Received through Dec. 31, 2011 $30,898,832
*Based upon upfront price (a majority of the completed pledge agreements to date provide for payment over time)

In the second quarter of Fiscal Year 2012, ESP sales increased to a total of 1,782 seats, which represents 62% of IA's goal for seats sold. Another 58 seats are currently in progress, and new sales continue on a weekly basis.

Annual ESP payments are due on April 1, with a grace period until June. 30. Therefore, the majority of cash received in FY12 for ESP is expected to occur in the fourth quarter.

 

 

Through September 30, 2011

  Field Club Seats Stadium Club Seats Univ. Club Seats Total FY 12
Total Seat Inventory 1,568 1,158 472 3,198

Sold to Date

941 607 95 1,643
Percent of Total
Inventory Sold
60% 52% 20% 51%
Percent Sold of Goal
(90% of Inventory)
67% 59% 22% 57%
         
Total $ Value of
Seat Inventory
$83,060,000 $129,450,000 $96,600,000 $309,110,000
Value of Sold Seats* $49,720,000 $62,750,000 $20,100,000 $132,570,000
Percent of Inventory
Value Sold (as $)
60% 48% 21% 43%
Percent Sold of Goal NA NA NA 54%

 

Cash Received Summary  
FY 10 $14,367,534
FY 11 $13,461,021
FY 12 $1,637,722
Total Cash Received through Sept. 30, 2011 $29,466,277

*Based upon upfront price (a majority of the completed pledge agreements to date provide for payment over time)

At end of fiscal year 2011 (June 30, 2011), the number of ESP seats sold was 1,421, with another 336 seats in progress. It is important to note that the Athletic Department's definition of sold is 1) the seat holder is up-to-date in payments; and 2) the seat holder's paperwork is signed and on file in the IA office. If one or both of these items are missing, the seat is not considered sold, but only in progress.

By the end of the first quarter of fiscal year 2012 (Sept. 30, 2011), the number of seats sold had increased to 1,643, with another 123 in progress. During the first quarter, IA collected payments and paperwork for many in progress seats and also reserved a number of seats for new participants in the Endowment Seating Program.

As the down payments are made and paperwork for in progress seats is signed and mailed back by ESP donors, IA's seats sold number will increase. And as new seats are reserved for new customers, the in progress number will increase, as well. Those changes will be reflected in the next quarterly report.

 

Through June 30, 2011

  Field Club Seats Stadium Club Seats Univ. Club Seats Total FY 11
Total Seat Inventory 1,568 1,158 472 3,198

Sold Seats to Date

829 507 85 1,421
Percent of Total
Inventory Sold
53% 44% 18% 44%
Percent Sold of Goal
(90% of Inventory)
59% 49% 20% 49%
         
Total $ Value of
Seat Inventory
$83,060,000 $129,450,000 $96,600,000 $309,110,000
Value of Sold Seats* $43,800,000 $51,725,000 $17,950,000 $113,475,000
Percent of Inventory
Value Sold (as $)
53% 40% 19% 37%
Percent Sold of Goal NA NA NA 41%

 

Cash Received Summary  
FY 10 $14,367,534
FY 11 $13,461,021
Total Cash Received through June 30, 2011 $27,828,555

*Based upon upfront price (a majority of the completed pledge agreements to date provide for payment over time)

As of June 30, 2011, ESP participants had accounted for 1,851 seats, of which 1,421 were secured by signed agreement and the required payments through donor adherence to the established payment schedule.

The 1,421 fully secured seats (pledged and paid to date) accounted for 49.4% percent of IA's seat goal for ESP with more than 12 months to go before the stadium reopens in the fall of 2012.

The reason for the difference between the number of accounted seats and the number of secured seats is that at the close of the fiscal year, not all anticipated pledge payments had been collected for seat agreements signed in FY 2011.

While a 20% deposit was collected from participants at the time of the pledge, in some cases the remaining 80% of the first year's required payment had not yet been received. There were also some patrons who had made their required annual payments in FY 10 but were not current with their FY 11 payments. Additionally, there were some ESP seat holders who were current with their payments but had not submitted all of the signed paperwork. The IA Development Office understands that these sorts of complications are an inherent part of programs that require payments over time and by certain cut-off dates and is in the process of gathering these payments and finalizing outstanding pledge agreements. As a result of efforts over the last six weeks to obtain required paperwork and past due payments, As of August 4, 2011, 1644^ seats have been secured with current payments and signed paperwork, which equates to 57% of the ESP seat goal.

The difference between 1,851 seats accounted for and the 1,644 seats secured is 207 seats. Some of the 207 seats have been previously allocated for athletic department use; the remainder are in suspense until payment is remitted and/or agreements have been executed.

IA will continue to carefully monitor every aspect of this strategically designed program. The department remains confident that ESP will meet its objectives: providing Intercollegiate Athletics with the resources necessary for student athletes to excel in their athletics and academic pursuits.

^1644 excludes any new seats secured in FY12 (since July 1, 2011).


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