CORVALLIS, Ore. — The renovation of Reser Stadium in Corvallis was supposed to kick off a new era for Oregon State athletics. The $162 million dollar remodel included demolition and rebuilding of the west side of the stadium, bringing total capacity to more than 43,000. School officials predicted the project would generate an additional $5 million in annual revenue for the athletics program.
But those estimates have become a bit murky after the realignment of college football, including Oregon and Washington bolting to the Big 10 conference. Oregon State athletics suddenly faces an uncertain future, with some hefty bills to pay.
“This is just a body blow. This is really the worst possible news at the worst possible time,” said sports economist Michael Leeds of Temple University.
The Reser Stadium remodel was funded through donor contributions totaling $100 million, along with $45 million in bonds. The remainder came from other funds, according to OSU athletics. The $45 million in bonds must be repaid over 35 years through revenue from football and other ventures associated with the stadium. Annual debt service or the money required to pay the principal and interest is projected to be $2.6 million a year, according to OSU athletics.
“The only good news for Oregon State is that the debt service is modest enough that it probably isn’t going to be debilitating to the program,” explained Robert Boland, who teaches sports law at Seton Hall Law School and has written about stadium finance.
“It’s a little like having an expensive coach on a buy-out for the next 30 years,” said Boland. “You’re going to have some money going out of your program that isn’t generating new money.”
Oregon State expected the $5 million in annual revenue generated from the stadium project to cover the debt service, as well as provide additional income to support all teams in the athletic department. Football drives 70% of all athletics revenue.
Without the Pac-12 and its multi-million-dollar media rights deal, Oregon State is likely to see considerably less revenue — no matter where it ends up. The stadium remodel was designed with the intention of hosting capacity crowds for traditional Pac-12 rivalry games.
If revenue from the stadium doesn’t meet expectations, funding for the project would have to come from other sources.
“This is an expense that has to be covered,” explained Leeds. “You can’t, at this point, not pay for a stadium that you’ve built or refurbished.”
In 2021, OSU’s chief financial officer Mike Green outlined alternatives to help fill any gaps in stadium funding, according to minutes from a Board of Trustees’ Finance and Administration committee meeting. Green suggested the university might use new athletics media rights revenues, anticipated to start in 2024 for debt service, restructuring athletics debt payments using the internal bank or utilizing general funds.
Additionally, Oregon State still has a $33 million deficit in athletics revenue because of the COVID-19 pandemic.
In the 2001 meeting, Green explained that without new revenue generated by the stadium remodel, it was possible that COVID-related deficits in the athletic budget would need to be covered by other university resources.
Earlier this summer, Oregon State indicated football season tickets sales were up nearly 20% over last year. The team is coming off a 10-win season for the third time ever. There was momentum and excitement surrounding the Beavs when suddenly Oregon State found itself on the wrong side of the realignment shuffle. The school’s athletic program now faces an uncertain future, trying to manage construction debt and massive expenses.
“It’s kind of a worst-case scenario, especially for Oregon State,” said Leeds. “After many down years — they seem to have righted the ship and were looking forward to considerable success in the coming years.”