The price tag on Oregon’s new basketball arena has increased to nearly $180 million, requiring the University Athletics Department to take on substantial debt if it still plans to build the structure.
Oregon Vice President for Administration Dan Williams said this week that as the project has progressed, the cost of the new arena has doubled compared to initial estimates shown in a financial study.
“With the fact that, as they got into greater detail, the architects and design of projected costs, we find ourselves much closer to about $180 (million) now,” Williams said. “The complication with that is that that’s well beyond what we believe we can raise through private giving. That’s a big change in the project.”
In a study for the University conducted in 2003 by Convention, Sports & Leisure International, initial estimates showed projected costs of $90 to $130 million. In mid-December, the projection had been raised to $160 million.
“Like most projects, when you get into the details, when you begin to spell out more carefully exactly what’s going to go under the roof, your costs will either go up or go down,” Williams said. “My experience with this project is the same as it is with any facility project I’ve worked on — the more you know, the more cost.”
Williams and athletics director Bill Moos have been involved in several discussions trying to determine whether costs will continue to increase. Williams said he is worried “very much so” about the continuing increase in the arena’s price, but added he doesn’t have an answer on how much money is too much.
“The only thing I’m very sure about is what’s affordable and what we want aren’t the same anymore,” Williams said.
The original estimate of $130 million was going to allow private gifts to entirely fund the arena. Williams has said anything beyond $130 million will be debt financed by the Athletics Department.
“We’re not going to commit ourselves to a level of debt beyond that which we think is prudent,” Williams said.
Williams said he soon expects to know what is affordable, and it is likely the amount of debt the Athletics Department can accept is going to determine the price of the new arena.
The amount of debt depends largely on whether the Athletics Department can continue to be successful in raising money through private donors and the ability of men’s football and men’s basketball to consistently generate large amounts of revenue.
Men’s football and men’s basketball are the only two sports at the University that bring in more money than they cost to fund. The two sports help fund all other sports at the University.
The reasoning behind the additional costs is diversified. Relocation costs of moving the softball field, among other things in the area, is estimated at $10 to $12 million. Understanding the design more precisely and what is wanted has also added significant amounts.
Williams said the University is not prepared to re-evaluate the selection of the new arena site at this time, adding that Howe Field is still the least expensive site when compared to land proposed for the new federal courthouse and the Autzen Stadium location. Those sites would have required $20 to $25 million for purchasing and land reconstruction.
Campus Planning Committee Chairwoman Carole Daly said the Howe Field site does not violate any of the guidelines set forth by the Long Range Campus Plan except for density issues. The committee is vocal in the arena’s development because it oversees new projects at the University and ensures certain guidelines are followed in how the campus will be developed in the future.
“There’s not a site anywhere on campus that you could build this — whether you built it at Autzen Stadium, whether you built it here — that would not exceed the density and you would have to do the same thing,” Daly said.
English Professor James Earl has a different opinion. Earl has expressed his concern regarding the new arena from the beginning, saying he doesn’t see the need for a new facility at all.
“I have a hard time getting comfortable with the idea that we are going to be the school that has two arenas,” Earl said. “That’s a level of excess already, even before we even talk about the nature of the new arena.”
Earl also has said that when the University originally went public about the new arena, the cost was $90 million, or at the low end of the original range. Now that the cost has doubled, Earl believes the $180 million figure is at the low end of another range.
“What you’re watching is the tip of the iceberg,” Earl said. “You’re just watching the arms race at work. Nothing is surprising in what’s happening here. Expansion is the name of the game.”
Earl said he recognizes there is strong commercial pressure for Oregon to have an arena right now, and he expects there is a 50 percent chance of the arena being built.
Williams said the opening of the arena — slated for the start of the 2006-07 basketball season — is in jeopardy because of delays in dealing with debt financing.
“I don’t think we’re at the point where we know there is going to be a delay but we’re certainly getting close,” Williams said. “There’s a certain reality setting in here in terms of revenue and cost that’s causing us to sharpen our pencils.”