SOUTH DAKOTA BOARD OF REGENTS ******************************************************************************

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1 SOUTH DAKOTA BOARD OF REGENTS Full Board REVISED II AGENDA ITEM: 14 DATE: December 4-5, 2013 ****************************************************************************** SUBJECT: SDSU Football Stadium The replacement of the SDSU football stadium was first identified in SDSU s 2025 Master Plan for Athletic Facilities reviewed by the Board in October The Board approved SDSU s Preliminary Facility Statement for the new football stadium in June In October, the Board approved SDSU s Facility Program Plan for a new Football Stadium project at an estimated cost of $60,000,000 to $65,000,000. The approval was contingent upon an acceptable pro forma that would have an appropriate mix of private fundraising and acceptable debt coverage from operations. In November 2013, the building committee retained the team of Henry Carlson Company and JE Dunn as the Construction Manager at Risk for the project. The attached document from SDSU provides an overview of the project planning to date and includes a pro forma for the project. The pro forma assumes a $65,000,000 project cost and meets the 1.2 coverage ratio (ratio of excess revenue over expenses to annual debt service) which is the same minimum that is used for all of our revenue bonds. The pro forma also meets the Board s maintenance and repair requirement of 2% annual investment. Funding for this construction project will be from operating revenues, proceeds from revenue bonds, private donations, a guarantee from the Foundation, and university cash. At this time, the pro forma identifies a target of $36,000,000 in revenue bond sales debt serviced with revenues from amenity seat agreements, season ticket sales, sponsorships, concessions, parking and miscellaneous revenues. To date there is $19,800,000 in private commitments to the project which will be available at the time of construction. The Foundation will guarantee $7,200,000 to the project. SDSU will also invest $2,000,000 of unrestricted university funds to cover the cost of (Continued) ****************************************************************************** RECOMMENDED ACTION OF THE EXECUTIVE DIRECTOR Accept the SDSU Stadium Project funding pro forma and include an authorization bill in the 2014 legislative package. The cost of the project is not to exceed $65M and the portion to be bonded shall not exceed $39.6M including capitalized interest and issuance costs. SDSU is to setaside a reserve specifically for this project that is equivalent to one year s debt service payment. The project scope and related funding is to include all necessary parking improvements, and infrastructure (HVAC, Electrical, etc.) needed to support the facility operations. There shall be an annual report to the Board after each fiscal year comparing actuals to the pro forma.

2 SDSU Football Stadium December 4-5, 2013 Page 2 of 5 building out the university police and the retail space. The Foundation will provide the Board with a guarantee letter for the $7,200,000 as well as addressing the private funds raised to date. Project Funding Summary Bond Sale Proceeds $36,000,000 Private Donations $19,800,000 Foundation Guarantee $7,200,000 University Funds for UPD and Retail Space $2,000,000 Total $65,000,000 The project will be bonded through the South Dakota Building Authority. The anticipated interest rate used in the pro forma is 4.55% which is in-line with current borrowing rates. Since the first two years of the interest only payment will be capitalized, the bond issue will be approximately $39,600,000, resulting in total principal, interest and SDBA administrative costs of about $69.1M over the life of the bonds. Conversations are being initiated with student leadership on their possible involvement in supporting operations and maintenance through a student fee. The latest dialogue is a request of $1.75 per credit which would generate $487,000 per year. The addition of the student fee revenue to the pro forma would improve the coverage ratio by 15 basis points to an estimated 1.49 in 2017 and keeps it above 1.46 throughout the 10 years of the pro forma. A letter from the student association supporting the project is included as Attachment II. There has been no financial commitment garnered from the students as of this date. The pro forma does not reflect a student commitment. The debt service will come from the incremental revenue related to the expanded and improved facility. The pro forma identifies key revenue sources as ticket sales, advertising and sponsorships, concessions, catering, parking and other revenue. The revenue from ticket sales from football games, including all premium seating and the facility fee, accounts for around 80% of the revenue needed to meet the pro forma projections. The tickets sold number does not include free tickets to students, band members and parents. Attachment III provides a summary of ticket sales for (2013 is not yet available). The average number of tickets sold over the three-year period was 6,573 per game, out of a total of 7,526 available. This equates to total average tickets sold for a five-game period of 32,865. The pro forma uses 51,293 tickets sold for a comparable five-game season. This would be a 56% lift on tickets sold over the three-year average (32,864) or 40% over 2012 tickets sold (36,638). The new stadium offers a number of amenities including the suites and premium seating that are not currently offered in Coughlin Stadium which should attract new attendees. If you compare only the general ticket sales and exclude the premium seating, assuming these seats

3 SDSU Football Stadium December 4-5, 2013 Page 3 of 5 will draw new fans, the lift on general ticket sales (42,913) compared to the three-year average (32,864) is 31%. Comparing it to the 2012 season sales (36,638) it would be 17% lift. A recap of the three-year historical sales and the projections for the first year of the new facility, , are provided in the below table. Following that table is a table provided by the consultant that shows what has happened with ticket sales at other locations that have opened new stadiums. Ticket Sales and Revenue - Historical and Projected 3-Year Type of Tickets Average Season & Gameday Tickets Sold 29, ,638 32,864 42,913 Average Price $13.06 $14.29 $17.09 $14.97 $37.35 Subtotal Season & Gameday $387,748 $475,140 $636,542 $499,810 $1,602,840 (1) Premium Seating Seats Revenue Suites 2,240 $1,110,000 (2) Loge Seating 630 $314,500 (3) Club Seating 5,510 $826,200 (4) Subtotal Premium Seating $2,250,700 TOTAL Tickets + Premium Seating 51,293 Total Revenue $3,853,540 Sixth Game ($25 per Ticket) $136,750 Facility Fee $96,764 (5) 1) 3 games at 5,470 x $25; 2 games at 13,251 x $45 2) 448 seats x 5 games; annual lease amount 3) 126 seats x 5 games; annual lease amount 4) 1,102 Seats x 5 games; annual lease amount 5) 4 games at 5,470 x $2; 2 games at 13,251 x $2

4 SDSU Football Stadium December 4-5, 2013 Page 4 of 5 University Stadium Opening Attendance Comparison Year Facility Opened / Expanded Prior Stadium Annual Attendance Prior Stadium Average Attendance New Stadium Annual Attendance New Stadium Average Attendance Percent Change Alabama State University ,655 12,131 77,568 15,514 28% North Texas ,306 17, ,186 18,864 6% Florida Atlantic University ,098 14,025 87,824 17,565 57% University of Minnesota ,705 48, ,635 50,805 4% Florida International University ,909 7,982 69,261 13,852 74% University of Central Florida ,908 31, ,129 44,018 39% University of Connecticut ,843 15, ,356 37, % Southern Methodist University ,127 19, ,888 21,815 33% University of Louisville 1997 (est) 168,000 28, ,017 39,679 42% Average 46% Source: NCAA, Johnson Consulting The cost of tickets will also increase with the new facility. The current cost for a game day ticket is $20.00, which will be increased to $27.00, including the $2.00 per ticket facility fee. The cost for a demand game ticket will be increased from $40 to $47.00, including the facility fee. The average weighted cost of a ticket for the three year historical period was $14.97, reflecting various discounts. The average cost moving forward will be $39.35, including the facility fee. This represents a 162% increase in the average cost of regular and demand/game day tickets. The following table is a summary of ticket costs for FY2013 to FY2026, including the facility fee. Regular Demand $20.00 $ $20.00 $ $20.00 $ $27.00 $ $27.00 $ $29.00 $ $29.00 $ $29.00 $ $31.00 $ $31.00 $ $31.00 $ $33.00 $ $33.00 $59.00

5 SDSU Football Stadium December 4-5, 2013 Page 5 of 5 The current pro forma represents a realistic scenario for the number of games that will be held each year in the facility as well as the planned pricing for tickets. The major assumption is the number of tickets sold and revenue generated. SDSU is requesting approval of the financing plan by the Board and submission of the project to the 2014 legislative session. SDSU is requesting emergency approval of the project such that construction would being in summer 2014 and continue in stages through the 2014 and 2015 football seasons with the proposed new stadium completed for the 2016 football season.

6 ATTACHMENT I 6 Overview and Summary of the Financial Plan for the Proposed Football Stadium South Dakota State University November 27, 2013 Rendering of Proposed New Football Stadium at South Dakota State University Introduction and Background At its October 2013 meeting the Board of Regents (BOR) approved the Facility Program Plan (FPP) for the proposed football stadium at South Dakota State University, as recommended by the project s Building Committee. The approval was contingent on the subsequent approval of a viable financial plan to construct the stadium and to operate the stadium. The financial plan for the project is presented. The BOR is requested, at the December 2013 meeting, to approve the submission of the stadium project to the 2014 South Dakota Legislature. If the project is submitted to the 2014 Legislature for consideration and is approved, design and financial planning will continue following the BOR capital project process. Only a financially viable project will be considered by the BOR per the recommendation of the project s Building Committee, again following the BOR capital project process. Background. A new football stadium at South Dakota State University, to replace the 11,000-seat Coughlin Alumni Stadium first used in 1962, was identified in the October Master Plan for Athletic Facilities. The plan was presented to the BOR and includes a new football stadium. In June 2011 the BOR approved the Preliminary Facility Statement (PFS) for the proposed stadium and the appointment of a project building committee. Subsequently, the design and financial team of Architecture, Inc., JE Dunn Construction and Johnson Consulting was retained. In October 2013 the BOR approved the Building Committee-recommended Facility Program

7 ATTACHMENT I 7 Plan (FPP). The approval for the $60,000,000 to $65,000,000 stadium was contingent on the development and approval of a viable financial plan for $50,000,000 bonded debt [no more than] serviced with revenues from amenity-seat agreements, season-ticket sales, sponsorships, concessions, and facility-use fees and the approval of an associated viable annual operating financial plan. Funding for the difference between total project costs and the bonded debt will be from private funds raised through the SDSU Foundation and from institutional funds for the University Police Department and retail space described in the next section. In November, 2013 the Building Committee retained the team of Henry Carlson Company and JE Dunn as the Construction Manager at Risk (CMR) for the project. Stadium Overview. The current rendering for the proposed stadium, which will be constructed on the site of Coughlin Alumni Stadium, is Attachment 1. The Johnson Consulting market study estimated demand for a stadium with 18,500 to 20,000 seats. The stadium design calls for 19,340 total seats 13,948 seats for season-ticket and gameday ticket sales, 448 seats in 27 suites (eight executive, 18 community and one university) and 1,444 premium seats (148 loge and 1,296 club). These categories comprise 15,840 revenuegenerating seats. The remaining 3,500 non-revenue seats are designated for students, band members and parents. The design includes 105,000 square feet of grandstands and 62,000 square feet of enclosed space for suites and community and club area. The club area provides year-round hospitality and meeting space that can accommodate up to 600 people and is similar in size and purpose to the very heavily used Volstorff Ballroom in the University Student Union. The University Police Department (UPD) will be relocated into modern facilities on the east side of the stadium (about 5,700 square feet), and auxiliary retail space will provide a sales outlet for campus visitors to stadium events, including football games. The University Police Department and auxiliary retail space is estimated to cost $2,000,000 and is included in the $60,000,000 to $65,000,000 project estimate. The estimated cost of the 5,700 square feet for UPD is $1,500,000. This cost is planned to be covered in annual tranches beginning in FY14 from University Support Fee revenues. The estimated cost of the retail space, $500,000, will be funded from University Bookstore net revenues over three years, as well, in annual tranches beginning in FY14. The resources for the project include: Financial commitments to date $19,800,000 Foundation commitment $ 7,200,000 Building Authority bond sale proceeds $36,000,000 University Funds for UPD space and auxiliary retail space $ 2,000,000 Total project resources $65,000,000 Contingent on an acceptable financial plan that is successfully implemented and subsequent BOR approvals in December 2013 and spring 2014, along with approval during the 2014 legislative session, the expectation is that construction will begin in summer 2014 and continue in planned stages through the 2014 and 2015 football seasons with the proposed new stadium completed for the 2016 football season. The legislation will include an emergency clause so 2

8 ATTACHMENT I 8 construction contracts can be issued, enabling site work and foundation construction, such as the concrete footings, to be completed by late summer 2014 before the fall 2014 season. Financial Plan, through The projected stadium cost is between $60,000,000 and $65,000,000. The Guaranteed Maximum Price (GMP) from JE Dunn, the CMR, is expected to be finalized in spring 2014 for consideration by the BOR, assuming a financially viable project. The goal is to have a GMP as close to $60,000,000 as possible. However, it is proposed that $65,000,000 in legislated spending authority be requested. The financial pro forma is based on the upper end of the estimated cost range, or $65,000,000, and assumes a bond issue with net proceeds of $36,000,000 for project costs. The actual bond issue will be approximately $39,600,000, including issuance costs and the first two years of capitalized interest-only payments. Other key variables in the pro forma are cost of capital at 4.55 percent using 25-year bonds issued by the South Dakota Building Authority, the inflation on operating costs, and marginal revenue streams above current streams committed to funding the ongoing athletic budget from ticket and concession sales, suites and premium seating, advertising and sponsorship, and rental income. The project s pro forma assumes a third-quarter 2014 bond sale with net proceeds of $36,000,000. The annual debt payment is sensitive to the long-term market interest rate. Slight upward pressure on interest rates since first quarter 2013 determined the 4.55 rate assumption used in the pro forma. In the event upward movement in rates results in a third-quarter rate that materially affects the financial feasibility of the project because of the increased debt-service requirement, the financial plan and the project scope will have to be modified and adjusted, respectively, to match the cost of the project with available resources. An important indicator of the viability of the financial plan is the debt-service coverage ratio of 1.2. This ratio is used as the threshold for all BOR auxiliary revenue-based capital projects such as residence halls. The debt-service coverage ratio is the ratio of cash available for debt servicing to interest and principal payments. It is a common benchmark that measures the ability to produce enough cash to cover debt payments. The higher this ratio, the more robust the financial plan. In commercial real estate finance, the debt-service coverage ratio is the primary measure used to determine if a project will be able to sustain its debt, based on cash flow. A ratio of 1.0 or greater, in theory, means the financial plan for the project generates sufficient cash flow to pay its debt obligations. Financial markets typically judge a ratio of 1.2 or greater to represent a viable financial plan. The viability of the financial plan is judged against this indicator. BOR Policy 6:6:7 requires new building projects have 2 percent of the capital cost of the project available annually for maintenance and repair purposes. This policy assures an appropriate maintenance and repair program for all building projects going forward. Resources available for maintenance and repair for new buildings or major renovations may be phased in over the first five years after construction at one-fifth of the 2 percent per year so that 2 percent of the building cost is available to spend in Year 5. The financial plan complies with BOR Policy 6:6:7. 3

9 ATTACHMENT I 9 Fund-Raising Status. Major gifts totaling $19,800,000 have been committed to the stadium project, including the lead gifts of $12,800,000 announced in October. Through Monday, November 25, 2013: $505,000 has been raised for the project through one-time gift commitments (from 14 suiteholders); A corresponding $505,000 has been committed annually from these 14 suite-holders; All executive suites and six of the 18 community suites have commitments; Commitments pending and expected on eight of the remaining 12 community suites (upon commitment there will be $240,000 in gifts and a corresponding annual $240,000); Sales calls on donor prospects, sponsors and customers for the remaining community suites and premium (loge and club) seating continue; There was a very strong response from an October 30, 2013, mailing and to alumni, boosters and season ticketholders that to date has not had any follow-up; and The Students Association passed a resolution endorsing the project. Pro forma. The pro forma, assuming $36,000,000 in bonded debt, is presented in Table 1. The pro forma covers 10 years beginning with , the first year for the stadium s operation. The operating revenue details are presented in the upper part of the table. Line 6 is up-front gift revenue through the SDSU Foundation from the premium seat multi-year license agreements. Net Resources Available to Stadium is line 20. Operating expenses are detailed in the lower part of Table 1. Total Operating Expenses are line 33. Annual Debt Service for each year of the pro forma is line 37. The debt service coverage ratio for each year, Coverage Ratio, is line 39. The maintenance and repair funds that reflect compliance with BOR Policy 6:6:7 are shown on line 41, and the required amount, according to policy, is on line 42. The major assumptions for the pro forma are: $39,600,000 debt to be serviced which includes $36,000,000 for project costs through 25- year bonds and $3,600,000 to cover issuance costs and the first two years of interest capitalized; 4.55 percent cost of capital (at this rate of interest each $1,000,000 in debt is served by an annual payment of $78,000 in interest and principal), a rate that assumes a blend of nontaxable and taxable bonds issued by the South Dakota Building Authority; 2- to 3-percent annual inflation on salary and most other expenses; Eight executive and 18 community suites sold at $40,000 per year and $30,000 per year, respectively, assuming 10-year license agreements with no price adjustments over the 10 years; 85 percent of the loge and club seating sold at $2,500 and $750 per seat, respectively, in Year 1 with 2-percent volume and price adjustment per year; Premium pricing of $45 per seat for season and game-day tickets for two high-demand games per season (Hobo Day and a signature opponent, North Dakota State University or University of South Dakota); Season and game-day tickets for two high-demand games sold at 95 percent of available inventory at $45 per seat with price increases in Year 3 to $49 and adjusted $4 every third year thereafter; Season and game-day tickets for three non-demand games sold at $25 per seat with price increases in Year 3 to $27 and adjusted $2 ever third year thereafter; 4

10 ATTACHMENT I 10 $2 facility fee per seat for season and game-day tickets with no fee increase over the 10 years; Six total home games for seven of the 10 years covered in the pro forma (six home games are scheduled for the 2014 and 2015 seasons); No premium seat designations for prime seats in the east stands; No revenues assumed from agreements with the Brookings school district and other local high schools for use of the stadium; and No student fee (GAF) for operations and maintenance (no student fee for construction per BOR action). The details on the ticket sales assumptions in the pro forma are discussed in a later section. Results The Coverage Ratio exceeds the 1.2 threshold in all years simulated, beginning with (see line 39, Table 1). The resources available for maintenance and repair, line 41, Table 1, comply with BOR Policy 6:6:7. Discussion on Ticket Sales: Looking Back and Looking Forward Major revenue streams for the project include revenues from suites and premium (loge and club) seating (line 5, Table 1), revenues from the sale of season and game-day tickets (lines 1, 2 and 3) and revenues from the facility fee on each season and game-day ticket sold (line 4). The discussion on ticket sales first requires a review of sales for fall 2012, the most recent season with complete data. The 2012 season included five home games, two of which are classified as demand games (Hobo Day and the University of South Dakota), as defined in the pro forma assumptions. Jackrabbit Athletics sold 36,638 tickets for five home games in 2012, including the two demand games. Assuming a 40-percent increase in ticket sales in a new stadium, the projected number of tickets sold becomes 51,292 for a five-game schedule. The projected increase is 14,654 tickets, or 2,931 per game. The 40-percent increase is based on the changes in attendance that other universities have reported from the first seasons playing in new stadiums. The July 2012 Johnson Consulting report listed percentage increases for eight universities in Table 5-4 (page 11). Excluding the highest and lowest percentages from the table, the mean of the remaining six examples is 41.8 percent; the median from the same six examples is 41.5 percent. Similarly, when comparable new Division I Football Championship Subdivision (FCS) stadiums have increased the supply of value seats to accommodate unmet demand, the result has been increased attendance in the new stadiums. The range of increased attendance in the new stadiums at Alabama State, Cal Poly, UC Davis and Southern Illinois and a significantly renovated stadium at Montana State is 10 percent to 61 percent more than the average number of seats sold in their old stadiums. 5

11 ATTACHMENT I 11 From the forecasted 51,292 total, 8,380 tickets will be attributed to the premium seats over the five games (1,676 x 5), assumed at 100 percent of the suite capacity (448) and 85 percent of the 148 loge seats and 1,296 club seats (or 1,228). Another 26,502, the projected number of tickets sold for the demand games (based on 95 percent of available inventory), also is subtracted out, leaving a projection of 16,410 tickets sold for three non-demand games, or 5,470 on average. The ticket sales on lines 1 and 2 of the pro forma reflect 5,470 seats per game sold at $25 each seat. Line 2 adds the sixth home game in seven of the 10 seasons, as noted in the assumptions in the pro forma. Therefore, expected ticket sales for non-demand games are 7,146, adding together the 5,470 in season and game-day ticket sales and the 1,676 premium seats for each game. The revenue projection for two demand games, as noted in line 3, assumes 13,251 tickets sold per game 95 percent of available inventory at $45 each. The expected ticket sales for those demand games are 14,927, adding together the 13,251 in season and game-day sales and the 1,676 in premium seats for each game. The pro forma, as noted earlier, works from the architect s fall 2013 design that calls for 19,340 total seats. Of those, 15,840 seats provide revenue (448 in suites, 148 loge, 1,296 club and 13,948 general). The stadium plans, as of fall 2013, accommodate 3,500 non-revenue seats, primarily for students. Using 15,840 as the available inventory of tickets each game, the pro forma assumes 94 percent of available tickets (14,927) will be sold for demand games and 45 percent of available tickets (7,146) will be sold for non-demand games. A base schedule starts with two demand games and three non-demand games each season. Based on the noted projections, the ticket sales are expected to be 29,854 for the two demand games and 21,438 for the three non-demand games. Therefore, the average number of tickets sold, across five games, is projected at 10,259, or 65 percent of available inventory. The pro forma only takes into account ticket sales; it does not work from expected attendance numbers. Overall attendance includes the game admissions that do not generate ticket revenue at the event, i.e. students, band members and football parents. For the past several seasons, there is a very, very limited inventory of reserved seats, especially on the west side, the most valued seating in the 1962 Coughlin Alumni Stadium. Johnson Consulting s survey of current and potential season-ticket holders conducted as part of its market assessment (South Dakota State University New Football Stadium & Indoor Practice Study, Johnson Consulting, July 2012), affirmed the university s athletic ticket office observations that, because of the limited inventory (supply of reserved seats), there is substantial unmet demand for season and value game-day tickets. The Johnson Consulting market assessment reported 22 percent of 3,200 survey respondents indicated quality of the stadium as a factor for not attending football games; 24 percent cited the lack of comfortable seats as a factor for not attending football games. 6

12 ATTACHMENT I 12 Maintenance and Repair (M&R) Discussion The M&R in Table 1 that shows compliance with BOR Policy 6:6:7 is in line 41. The amounts in line 42 reflect the onboarding of one-fifth of the 2 percent of the project s estimated capital construction cost each year, in years through , yielding the 2 percent of capital costs in and each year thereafter. The estimated capital construction cost of the $65,000,000 project is $52,037,000. This base capital cost ($52,037,000) is inflated 3 percent annually, beginning in Year 2, when calculating the required 2 percent M&R in line 42. Finally, line 48 shows cumulative M&R resources above the requirement for the 10 years of the pro forma. The non-construction costs, $65,000,000 less $52,037,000, are $12,963,000. These estimated costs include design fees, contingency allowance, furnishings, kitchen equipment, video systems, broadcast systems, telecommunications systems, security systems, scoreboards, public art allowance, administrative costs and demolition of existing stands, buildings, fixed furnishings and equipment. On-going expenses for annual maintenance and routine repairs are separate from the BOR Policy 6:6:7 requirement of 2 percent of capital cost M&R for reserves. These estimates are line 27, Table 1. For the first three years after the project is constructed, , and , construction warranties are available for maintenance and repair, and the amounts in line 27 for these years reflect the availability of warranties. The stadium is comprised of enclosed and open-air components. Approximately 66.7 percent of the estimated construction cost of the proposed stadium is the enclosed with 33.3 percent being for open-air seating, the field, entrances, fencing and circulation areas. Observations on maintenance expenditures of like stadiums at similarly sized institutions in the Missouri Valley Football Conference and similar FCS programs in other conferences, including the Big Sky Conference, provide evidence that pro forma resources will be quite adequate for maintenance and repair, as required by BOR Policy 6:6:7. Additionally, the pro forma shows M&R resources, compliant with BOR Policy 6:6:7, that exceed the estimates of M&R expenditures determined by Johnson Consulting in its report. Summary The report and the accompanying table show the results of the pro forma for construction and operation of a new football stadium at South Dakota State University. The pro forma demonstrates compliance with the 1.2 debt-service coverage ratio policy and the 2-percent maintenance and repair reserve per BOR Policy 6:6:7. 7

13 ATTACHMENT I 13 SDSU Football Stadium Incremental Financial Projection (in $000's) $36M bonds (4.55% over 25 years with first two year's interest capitalized) Athletic Department Current Budget Incremental Funding Ref Operating Revenue 1 Ticket Sales - SDSU Football $410 $410 $443 $443 $443 $476 $476 $476 $509 $509 Ticket Sales - SDSU Football (Sixth 2 Game) $137 $148 $148 $159 $159 $170 $170 Ticket Sales SDSU Football- Demand Games $1,193 $1,193 $1,299 $1,299 $1,299 $1,405 $1,405 $1,405 $1,511 $1, Facility Fee ($2/ticket sold) Premium Seating Leases 2,251 2,296 2,342 2,389 2,437 2,485 2,535 2,586 2,637 2,690 6 Premium Seating Stadium Gifts Advertising & Sponsorship Ticket Sales - Other Events Gross Concessions Net Catering Net Novelties Gross Game Day Parking Other Revenue Total Revenue 5,072 4,990 5,396 5,460 5,355 5,772 5,433 5,307 5,738 5, Resources Designated for non football Athletic Operating Expenses 17 Existing Football Ticket Sales (649) (662) (675) (689) (702) (717) (731) (745) (760) (776) 18 Existing Football Concessions (40) (41) (42) (42) (43) (44) (45) (46) (47) (48) 19 Existing Football Event Parking (38) (39) (40) (40) (41) (42) (43) (44) (45) (45) 20 Net Resources Available to Stadium 4,345 4,248 4,640 4,688 4,568 4,970 4,614 4,472 4,887 4, Operating Expense 23 Salary - Permanent Staff $80 $82 $84 $86 $88 $91 $93 $95 $97 $ Benefits - Permanent Staff General & Administrative Utilities Annual Maintenance & Repairs (M&R) Event Insurance Advertising Miscellaneous Gameday Expenses Insurance/Service Fee (3% Bldg Authority) Total Operating Expenses , Excess of Operating Rev Over Operating Exp 3,711 3,598 3,933 3,824 3,704 4,058 3,680 3,542 3,907 3, Annual Debt Service 2,813 2,813 2,813 2,813 2,813 2,813 2,813 2,813 2,813 2, Coverage Ratio Excess of Op Rev Over Op Exp and Debt Service ,120 1, , ,094 1, M&R Requirement (Per BOR 6:6:7) ,171 1,206 1,242 1,279 1,317 1, Projected Avg Interest Earnings on Res Balance Amount Above (Below) Requirement (263) 56 (358) (533) (207) (228) Cumulative Above M&R Requirement 690 1,064 1,539 1,658 1,395 1,451 1, See Assumptions and Footnotes on next page. 8

14 ATTACHMENT I 14 Assumptions: $36M Debt Financed (annual debt service reduce $78,000 for each $1M reduction in financing) $2 Facility Fee on Non-Premium Tickets Sold Non-Premium Ticket Sales at $25 game x 3 x 5,470 per game (non-demand games) $2 Increase Yrs 3, 6, 9 Non-Premium Ticket Sales at $45 game x 2 x 13,251 per game (demand games) $4 increase Yrs 3, 6, 9 Total Non-Premium ticket sales for 5 games = 42,912 = 8,583 average Premium Seating assumes 100% of Community and Executive Suites and 85% of Loge and Club seats in year 1 Sixth game (non-demand) added in years 1, 3, 4, 6, 7, 9, 10 - Concessions, Parking revenues and Game Day Expenses also adjusted Repairs and Maintenance assumes annual maintenance only - major M&R from RRR reserves Facility cost assumed to increase by 3% each year for calculation of M&R requirement Footnotes: #1 $25 Ticket no volume increase; $2 ticket Yr 3,6,9 #2 Non-demand game #3 $45 Ticket no volume increase; $4 ticket Yr 3,6,9 #4 On non-premium ticket sales #5 2% annual growth #6 $2.4 M from Foundation seating agreements #7 Growth 10% initial, then 2-3% increase #8 HS events, concert, Growth 2-5% #9 Growth 4-7% thru Yr 5, then 4% #10 Growth 7-11% thru Yr 5, then 2-4% #12 Growth 1-3% with periodic rate increase #13 Club room and other rentals by non-university groups #23 2-3% inflation #24 3-4% inflation #25 1-3% inflation #26 2-3% inflation #27 Annual Maint Only - Major M&R from Reserves #29 11% Yr 2, then 2-4% inflation #31 2-6% inflation #32 SDBA 3% of Debt Service #35 Line 20 minus Line 33 #39 Line 35 divided by Line 37 #41 Line 35 minus Line 37 #42 5 Year Phase In to 2% - $52M Total Cost #44 Assuming Investment Council 3.3% Average Rate #46 Line 41 minus Line 42 plus Line 44 9

15 ATTACHMENT II 15

16 ATTACHMENT II 16

17 ATTACHMENT III 17 South Dakota State University Football Stadium Financial Plan Historical Ticket Sales Comparison 2010 Season % of Number of available Tickets Soldsellable seats Revenue Effective Price Per Ticket Illinois State % $85,569 $12.68 Western Illinois % $79,091 $13.43 Youngstown Stat % $118,905 $15.35 Missouri State % $55,634 $11.58 North Dakota % $48,549 $12.27 AVERAGE % $13.06 TOTAL REVENUE $387, Season % of Number of available Tickets Soldsellable seats Revenue Effective Price Per Ticket Southern Utah % $74,806 $13.14 Indiana State % $94,806 $14.04 Northern Iowa % $72,615 $12.78 NDSU % $136,795 $16.74 Southern Illinois % $96,118 $14.76 AVERAGE % $14.29 TOTAL REVENUE $475, Season % of Number of available Tickets Soldsellable seats Revenue Effective Price Per Ticket UC Davis % $91,784 $14.69 Missouri State % $115,463 $14.49 Western Illinois % $85,769 $13.83 Youngstown Stat % $141,658 $17.30 USD % $201,868 $25.15 AVERAGE % $17.09 TOTAL REVENUE $636,542 Assumptions: Number of available seats to sell is 7,526. This is derived from subtracting the following from 11,000: 1,000 endzone seats for band/overflow (not sellable), 1725 student seats, 64 Dance/Cheer, 110 Athletics, 200 Visiting Team, 300 football pass list, and 75 recruits. (11,00 3,474=7,526 "sellable" seats). If percetn sellable exceeds 100%, standing room only tickets would have been sold. Prepared by SDSU Finance and Business 11/27/2013