Dr. Richard Swadron, president of Stephenville University (SU) has contracted Fanshawe Consulting Advisors (FCA) to submit a report involving six elements of the SU operations. While president Swadron has asked his vice-presidents to prepare an analysis of each of their operational areas, Dr Swadron seeks an independent evaluation of these operational elements from FCA. Of particular concern to Dr Swadron is a decision to maintain the current stadium or expand, build, or rent a football stadium. Another concern of Dr Swadron is the high staffing costs of the SU Police Department and a possible request to hire more campus police. Additionally, Dr Swadron seeks to recommendations for the staffing cost for the football game security and parking. FCA has sent your team of consultants to SU to meet Dr Swadron and his vice presidents to gather information toward a final report which is due several weeks from now as a contract “deliverable”.

Background:

Stephenville University (SU) is a large state college located in Stephenville, Texas which is about 40 miles southwest of the Dallas/Fort Worth metropolitan area with an enrollment of close to 20,000 students. In a typical town-gown relationship, SU is a dominant force in the small city resulting in more students in the fall and spring then there are permanent residents.

SU occupies over 700 acres in the Stephenville area, and originally chartered as an educational institution by the Republic of Texas in 1840. In the beginning this liberal arts college had strong affiliations with the Methodist church; it currently offers programs in Liberal Arts, Sciences, and pre-professional programs in business, engineering, medicine, law and theology.

Football is a Lifeline:

This case will revolve around the Football program at Stephenville.

Stephenville University has longed to be a powerhouse in football, as a member of the “Big Eleven” football conference; it usually ranks in the top twenty teams in the nation. This strength in athletics has allowed Stephenville to expand and attract a top quality collection of athletes and coaches.

In 2010 the university determined to maintain its high rankings in football hired legendary head coach Robert “Bo” Posten to head the program and lead the team to its long desired number one ranking in both conference and national rankings, hoping to be placed in the top ten.

Support and attendance for the games has not been a problem, in fact attendance for the five home games has increased steadily. Posten knew however to be a top ranked team, he needed the support of the school, alumni, community and players. Posten also knew that the current stadium was not the problem as it should be sufficient to meet the needs he expected there would be over the next five years. Currently the stadium can accommodate 54,000 fans, but it was built in 1953 and probably would need to be upgraded or replaced over the next five years. The season ticket holders number about one fifth of the total capacity, and the average for a game is about half the capacity of the stadium.

Game two of every season is the Homecoming Game, where the alumni and friends of the university come to enjoy not only the football game but many other planned activities over the weekend, fundraising being one of the major activities? Also during the fourth week of every season, the town of Stephenville hosts the very popular Southwestern Texas Crafts Festival which attracts tens of thousands of people to the area for the weekend. This festival has traditionally taken attendance away from the football games, but has been very beneficial to growth of the town.

One of the conditions of Posten being hired at SU was the development of a plan for stadium expansion, with possibly a new stadium being constructed. With attendance increasing since he joined the university, the administration needed to face this condition head on, and look at a myriad of possibilities including a dream that Posten was putting forth – dormitories in the stadium complex exclusively for the use of his athletes.

As the football program grew and was successful, Dr. Richard Swadron, president of Stephenville realized it was time for his vice-president of development to forecast when the current stadium facility will reach its maximum abilities, and as this would mean increased revenue, he asked the vice-president to provide a revenue projection in his report. He asked the vice-president to base his financial projection on the average ticket price of 20.00 with a projected increase of 5% per year. Dr. Swadron asked Posten to provide the historical data to the FCA team.

While the vice-president was off developing his report on the maximum abilities of the current stadium, and 2015 entered in 2016 SU was in the battle for football supremacy in Texas, having just accomplishing a phenomenal upset victory over arch-rival University of Texas during the annual homecoming game would you would think would make Dr. Swadron and the rest of the administration very happy, but there was no happiness at SU as all Dr. Swadron and his staff heard were complaints from the staff, alumni, students and faculty about long concession lines, poor parking, parking to far away, uncomfortable seating, traffic delays and tie-ups just to name a few. Dr. Swadron was upset and was heard muttering to himself “A college president just cannot win”

At the regular staff meeting on Monday morning after the game Dr. Swadron turned to his vice-president of Administration, Monica McCallum and said to her “I wish you would take care of these football complaints and see what the real problems are and let me know how you have resolved them”

McCallum was surprised with the request, but replied “I’ve already got a handle on it sir, we have been randomly surveying fifty fans per game for the past year to see what’s on their minds. It’s all part of my campus wide TQM effort. Let me tally up the results to date and get back to you at this meeting next week”

McCallum now had an additional project on her plate, but she knew this was important to Dr. Swadron and also was part of the overall plan in hiring Bo Posten back in 2000. Upon returning to her office, she asked her assistant for the files and compiled statistics from the survey, glancing over it she sad to herself “there is a lot of information here” (see Appendix 2 for the results). Dr. Swadron asked McCallum to provide the data to the FCA team.

Now things are starting to get heated, the requirements/demands for a new stadium from Head Football Coach Bo Posten, and the results of a survey complaining about many items has President Dr. Swadron concerned over several things regarding the stadium. Not only was the cost of new stadium a concern, but the ancillary activities associated with the stadium requiring addressing.

Swadron wanted to be sure that these various support activities generate revenue adequate to pay for themselves. Consequently he wants the parking lots, game programs and food service to be handled as profit centres. At a recent meeting with Stadium Manager, Harvey “Harve” Wilson, he told Wilson to develop a break-even chart for each of these profit centres, he also instructed Wilson to have the break-even chart for food services ready and available for the next meeting. After Dr. Swadron left Harvey met with the members of his team and other facilities managers to explain what was needed. He developed the information shown in Appendix 3, which shows the expected revenue by item and the suggested selling prices as well as his estimate of variable costs.

The fixed costs for Maddox’s operations are even more interesting, as he estimates the prorated portion of the stadium cost for the five-game home season would be:

Salaries – Food Services 125,000.00

Website costs (online menu) 7500.00

Stadium Rental 27,500.00

(Based on $10.00 per square foot rental fee)

Wilson wanted to be sure he has a number of things for President Swadron when they meet again

1. Break even point in dollars for all food sales.
2. What sales per attendee would be from 25,000 to 75,000 attendees, in increments of 5000.
3. What his unit sales would be at break-even,

(That is - what are his sales of soft drinks, coffee, hotdogs and hamburgers)

Wilson felt this latter information would be helpful to understand how realistic the assumptions of his model are. He also wanted to be prepared for any questions that the president or others may bring up at the meeting. Dr. Swadron asked Wilson to provide the data to the FCA team

With the increasing interest in the football program, and the desire of President Swadron to have a successful football program and stadium capacity for the future he has embarked on program of information gathering and projections from his staff regarding costs, revenues which was presently reviewing.

The Vice President of Development, Monica McCallum had presented 3 options to him for consideration:

1. Expand the existing facility to 75,000 seats by adding skyboxes, upgrading existing yard-line seating to include comfortable backs. Construction costs are estimated at $12,000,000 plus $1,000,000 to upgrade the seats.
2. Build a brand new stadium off campus about three miles where the land was to be donated by a booster. The construction costs for this option were estimated at $25,000,000
3. Sign a long term deal with the Dallas Cowboys to rent their stadium at a cost of 245,000.00 per game.

Swadron realized that each of these options had clear benefits, yet each had at least one strong negative attached as well. Expansion of the current facility carried a twelve million price tag and had annual debt payments of 1,029,500.00. Also to be considered was the fact that if the construction of a new facility could not be completed in the nine-months available between football seasons, the team would not have a home field for the upcoming season. This would put them in contract violation with the other teams, some of whom have agreed upon playing dates and locations several years in advance, not to mention the fines and penalties that would be associated with contract violations, which are not taken lightly by the NCAA or the Big Eleven Football Conference.

Building a brand new stadium off campus would yield a plus, state of the art facility, but it had to be named after the donor of the land. It also meant a very large fundraising drive in order of twenty-five million dollars by Dr. Swadron, as well as likely twenty year debt burden on the universities’ balance sheet. The president estimated the annual debt payments would be 1,980,000.00 based upon monthly payments at 5% interest. The variable cost would be about 2.00 per year per attendee, which applies to all of the options considered.

Dr. Swadron felt the third option proposed had definite advantages from the perspective of many, if not most of the fans who attended the games. A large number of the regular attendees presently lived in the Dallas/Fort Worth area and would be spared the long commute and traffic jams that always seemed to occur in Stephenville on game days. Clearly however the students would be upset and buses would have to be provided by SU, probably for free to transport students to and from the games in Dallas. While the rental cost per year of 245,000.00 per game seemed high on the surface, the $1,225,000 cost per year (there are five home games) was a drop in the bucket compared to the other options. Swadron had asked the Dean of Students for an estimate on the number students who attended games and what the expected transportation costs would be. The Dean responded that the transportation cost for the 15,000 students who attended the games would likely be twelve dollars per student for each game.

As your team was gathering information you worked up a chart with some key figures (to be completed once your team returns from your visit to SU):

Revenue = $20 per ticket current X 5% increase per year	= $21.00
Stadium Options	Current (no expansion)	Expand Current to 75000 seats	New Stadium (off campus)	Rent Dallas Cowboy's Stadium
Seats	54000	75000	75000	75000
Revenue Ticket Sales
Revenue Sky Box Sales		$100,000	$100,000	$100,000
Revenue Total
Variable cost per attendee ($2 per attendee)
Debt Cost/yr loaned at 5% financing cost	0	$1,029,500	$1,980,000	0
Rent (5 games X $245,000)
Bus service to stadiums (5 games X $12 X 15000)
Total Expenses
Net
Construction Cost (loaned at 20 year term)	0	$13,000,000	$25,000,000

Now Dr. Swadron had something to consider and discuss, but before he asked the Vice-President of Finance to begin the detailed analysis he decided to ask McCallum to survey three specific groups that held personal stakes in the project:

• Students
• Booster Club Members
• Faculty and Staff

McCallum randomly selected 50 people from each of the three groups and asked them to grade each possible location based on five factors, again using letter grades. The questions and results are shown in Appendix 4.

Monica decided to give equal weighting of .20 to the grading of each of the elements of the “Students’ Rating of Locations” & the “Boosters’ Ratings of Locations”; for the “College Faculty/Staff Ratings,” the administration used weights of:

Convenience	0.20
Guaranteed Availability for New Season	0.30
Comfort	0.15
Cost	0.30
National Image	0.05

Not since the losing era in the early nineties has Dr. Swadron had concerns with the football program at SU. Increasing game attendance was putting a strain on the current facilities and town of Stephenville, the complaints over parking, seating, concession pricing and printed program shortages have increase in the past several years, and with the success of the football program since the hiring of Head Coach Bo Posten in 2000 the chances of the problems disappearing over the next five to ten years are highly unlikely. Swadron needs to make a decision regarding the stadium, and the related activities.

Turning again to Harvey “Harve” Wilson, who had presented some excellent projections and he knows the information Wilson will supply with this request will assist him in determining if he has enough revenue stream to assist in the stadium expansion or replacement. Dr. Swadron was happy that they had dealt with the stadium concession pricing points, but was concerned over the continual complaints over parking, which is a difficult issue in its own right, but right now he wanted to focus on the shortage of programs complaint, and this is why he needs the assistance of Harve Wilson.

Dr. Swadron feels that the sales of programs could be a steady and consistent revenue stream, but has no idea on the costs of the programs, or the potential revenue stream that could be generated. This is where the stadium manager comes in, as he has had control of the production and distribution of the programs in the past, therefore he has the best records from which to get this information.

Selling programs is a tricky business, SU sells their program currently for 10.00 each and Wilson knows he has to purchase the program economically. He has inquired with two printers; one is Stephenville and another in Dallas, which is owned by an alumnus. The results are as follows:

Quantity	Quality Printers	First Printing
Programs
10,000 – 30,000	2.80	2.62
30,000 – 60,000	2.20	2.53
60,000 to 250,000	2.60	2.44
250,000 plus	2.40	2.20
Inserts
10,000 – 30,000	.95	.85
30,000 – 60,000	.90	.78
60,000 to 250,000	.85	.75
250,000 plus	.80	.65

First Printing, owned by alumnus Michael Shader will do the job for ten percent less than Quality, as a favour to help out the athletic department. This option however, means that a truck will have to be sent to Fort Worth to pickup each order. Wilson estimates that the cost for each trip to Fort Worth will cost 300.00.

Harve also figures the university ordering/cheque-writing cost is about 175.00, His carrying cost is high because he lacks a good place to store the programs, he cannot put them in the office, or store them down in the maintenance department where they may get dirty or damaged. This means he had to find space in a storage area off-campus and transport the programs to and from the campus.

Wilson’s other major problem is he is never sure what the demand for programs will be. Sales vary from opponent to opponent, and how well the team is doing that year. However, he does know that running out is a very bad idea. This football team was expected to make money for SU, but it is also entertainment. This means programs for all who want them. With the new facility, attendance could be 70,000 for each of the five home games, and two of every three people buy a program.

In addition to the programs, Wilson must purchase inserts for each game. The inserts have information about the opposing team, photos of the expected starters, and the recent game statistics and current standings. The purchasing issue is the same for the inserts, except inserts will be purchased separately for each game and are a total loss after the game. The other costs and the same discount schedule apply, but the inserts only cost half as much as they are much smaller. First Printing will give the same discount on the inserts.

FCA was provided with the bidder’s data and requested to report their recommendations.

With the rising demands of a successful football program, John Simpson, chief of campus police at SU feels it is time develop a longer range plan for his department, which may include the need to hire additional resources.

Currently the SU Police Department has 26 sworn officers, which has not changed in the past fifteen years. Simpson feels the following changes at SU have prompted his need to develop a plan and ask for additional resources:

• The size of the athletic program, especially football has increased
• The college has expanded geographically, with additional research facilities and laboratories now miles away from the main campus
• Traffic and Parking problems have increased
• More portable, expensive computers with high theft potential are dispersed across the campus
• Alcohol and Drug problems have increased
• The size of the surrounding community has doubles
• The Police need to spend more time on education and prevention programs

With the population of the university at 20,000 students in the fall, dropping to about 5,000 in the summer, the demand for the services of SU’s Police force fluctuate with the season, and most of the staff take their vacations and additional training in the lower peak times. There are other factors for the variance in demand for police services according to the statistics maintained by the department. These include the following:

• Time of Day (peak time is 10pm to 2am)
• Day of the week (weekends are the busiest)
• Weekend of the year (on football weekends, an extra 50,000 people come to campus)
• Special Events (check-in, check-out, commencement)

Of all the events football weekends are especially difficult on the staff. Extra police services are typically needed from 8:00am to 4:00pm on the five football Saturdays. All 26 officers are called in to work double shifts, and over 40 additional law enforcement officers on paid duty (paid for services on their own time) are also brought in. And when available at least six state troopers lend a hand without charge to the University. Simpson also pays 25 students and local residents to work traffic and parking. Over a nine month period in the last academic year the overtime payments to campus police officers totaled over 120,000.00

To put this figure in perspective, the following relevant information may be helpful.

• Average starting salary for a police officer is 32,000.00
• Work study and part-time students and local residents who help with traffic and parking are paid 14.00 per hour, and work a 8 hour day
• Overtime is paid at a rate of 22.00 per hour to officers who work over 40 hours per week
• Paid duty officers from surrounding forces are paid 25.00 per hour
• There seems to be an unlimited supply of officers from outside who will work for the college as needed for special events
• With time off, vacations and average sick leave considered, it takes five persons to cover on 24, 7 day a week position

Officers in the fall, winter and spring semesters are scheduled as follows:

Shift	Timing	Weekdays	Weekends
One	7 am – 3 pm	5	4
Two	3 pm – 11 pm	5	6
Three	11 pm – 7 am	6	8

Staffing for football weekends and special events is in addition to the preceding schedule, and summer staffing is on average half of that shown.

Chief Simpson feels that his present staff is being stretched to the limit, causing he feels an opportunity for officers to become fatigued and therefore become a risk to the department and the community, both on campus and off campus. Additionally he has not been able to set aside time or staff to completion of health & safety, crime prevention or other programs and training.

Interaction of the officers on the SU staff with students, faculty and staff are minimal and usually due to a Simpson would like to put in a staffing increase request for four officers, two he would assign to new programs and two would be used to alleviate the overload on his current 26 officers. He feels that this may allow him to limit the overtime to 10 hours per officer per week.

FCA was provided with the information for the game security and parking as well as the SU police staffing issues and costs. What are your team recommendations?

Appendix 1

Stephenville University Football Game Attendance

2010 – 2015

Game	Opponent	Attendance	Game	Opponent	Attendance	Game	Opponent	Attendance
2010			2011			2012
1	Baylor	34,200	1	Oklahoma	36,100	1	TCU	35,900

Answer rating: 100% (QA)

Report Presentation FCA Deliverables Stephenville University SU having sought help from the FCA the major concern being the major decisions on starting projects which would see the institution continu... View the full answer