Burdened with debt and now the loss of a multimillion-dollar sponsorship deal, Florida Atlantic University says it will not need to implement Obama-style budget sequester measures.
When FAU built its new on-campus football stadium, the university was saddled with $45 million of new debt and $400,000 of stadium-related annual interest payments. After years of courting GEO Group, FAU picked up the private-prison operator, which agreed to stadium-naming rights to the tune of $6 million.
But the deal hit turbulence, prompting the GEO gift to be withdrawn, and leaving FAU without a $500,000-per-year budget plug for the next 12 years.
Former FAU athletic director Craig Angelos, who ironically was fired last year for lack of fundraising, says the GEO Group sponsorship loss is impactful because of the university's budget concerns.
"The way I see it, at the end of the day, the university is severely underfunded," he said by email to Sunshine State News. "The athletic department is no different. We had to make a lot of sacrifices and mortgage the athletic department to make the stadium a reality. I think the whole university benefits by having it on campus but it cannot be a drain on the universitys budget."
Angelos says he had a superior stadium-rights deal on the table, before the first football game was ever played, involving one of South Florida's largest car dealership chains. That arrangement could have put $1 million of annual advertising money and straight-up sponsor gifts into the program each year for six years. But, hesays, the higher-ups in the school's chain of command wanted to hold off for a better deal with fast-food chain Chick-fil-A or, indeed, the GEO Group. After being put on hold, the automotive chain's interest cooled, and FAU ultimately landed GEO, whose chairman and CEO is an FAUalumnand former chairman of the university's board of trustees.
GEO's contribution was supposed to support not only the stadium itself, but also stream into the school's intercollegiate sports programs and unnamed "academic priorities." Now that the money is off the table, FAU will need to reassess its budget.
University spokeswoman Lisa Metcalf says that no one should expect FAU to sequester any cost centers to make up for this loss.
"FAU has been conservative in its financial plan and has other sources of revenue," she said in an email to SSN. "The gift withdrawal does not jeopardize the ability to pay for the stadium."
In addition, the college is looking for another stadium sponsor. That search is led by Sunrise Sports & Entertainment, which is a marketing and facilities offshoot of the Florida Panthers. But, the question looms over what company will want to put their name on a venue now associated with sponsorship scandals.
Could the car dealer be persuaded to come back to the negotiating table for a somewhat less generous deal? Chick-fil-A still doesn't sponsor any sports venues, though it does run the former Peach Bowl NCAA football game in Atlanta since 1998. And if the GEO deal was made on the back of founder and CEO George Zoley loving FAU as his alma mater, perhaps a call to Office Depot might be in order. The office supply chain dropped the right to the Panthers' home arena in Miami last year, and CFO Patricia McKay got her MBA from FAU in 1978.
The university says not to expect any kind of slash-and-burn sequester. But, as Angelos noted, "large gifts to FAU are very rare," so the question remains how the university, whichsaid Tuesday it does not plan to raise tuition rates, will get by.
Anders Bylund writes special to Sunshine State News.