Penn State’s Board of Trustees on Tuesday approved authorizing the remaining $630 million in funding for major renovations to Beaver Stadium, but not all members were sold on the project.
Following a sometimes contentious meeting, trustees voted 26-2 to approve, with three others abstaining. The project, including $70 million approved last year for preliminary work, is not to exceed $700 million, and the current budget is $664 million, Senior Vice President for Finance and Business Sara Thorndike said. It is tentatively expected to be completed by the start of the 2027 season.
Though all agreed some renovations are needed, several trustees voiced concerns, before and during the meeting, about the total cost and whether the project was being rushed without sufficient public deliberation.
Alumni-elected trustees Barry Fenchak and Anthony Lubrano cast the two no votes, while Ted Brown, Alvin de Levie and Jay Paterno abstained.
“The stadium needs work and we want to be supportive of athletics,” Fenchak said. “But if we take actions that are unwise actions that lead to debt load draining the lifeblood of athletics, to service that as opposed to being able to feed the growth of all of our sports, that’s not being supportive of athletics. That’s hindering athletics. Just spending money isn’t supportive, especially when it’s debt.”
The project is slated to include a significant overhaul of the stadium’s west side with new club seats and loge boxes and suites; improved concourses and additional concessions and restrooms throughout the stadium; a new press box; improved wifi and cellular service; and a 21,000-square-foot welcome center to be used for a multitude of events, among other upgrades. Initial work including winterization has already begun.
President Neeli Bendapudi pitched the renovations as being about much more than football. They will, she said, enhance recruitment of athletes – for football and other sports — and the general student population, allow for year-round events at the stadium and boost an economic driver that generates an estimated $16 million in regional economic impact each home football game.
The stadium already has nearly $200 million worth of deferred maintenance and repair needs — Trustee Lynn Dietrich said he was “embarrassed” by its condition during a recent tour — and university administrators considered three options.
Simply addressing deferred maintenance and repairs would be cheaper but would generate no additional revenue, which will be needed to pay for the work, Thorndike said. Building new would mean a smaller stadium at a $2 billion price tag and would not result in enough revenue to offset costs.
Conservative projections have the renovate option generating at least $44 million profit over 30 years in large part through incremental ticket revenue, the university found in consultation with Goldman Sachs and PFM.
In an analysis published on his website last week, Fenchak wrote that taking on the full freight of the project debt load would saddle Penn State’s athletic department with the largest debt-to-income ratio, 434%, of any program in the nation.
The debt will be issued by the university and paid for by the athletic department. Like Fenchak, Lubrano expressed concerns about what the impact would be on the university’s central budget if revenue and operating cost projections were not met.
“I want to support this project, but I want to feel comfortable we have the wherewithal financially to make this happen without any ramifications to our [education and general] budget,” Lubrano said.
Thorndike, though, said debt will be issued as needed over the next three years, and administrators do not expect the entire project will be bond-financed or take the full 30 years of loan terms to pay. Philanthropy, naming rights and other ticket revenue will reduce the total debt by a projected $134.3 million, she said, noting that the total cost and revenue projections have been “stress-tested” and involve a number of future variables, including potential outlays for player compensation.
“We are determined that this will be an athletic self-sustaining project,” Thorndike said. “Our pro formas are very conservative. We believe that there is more upside on the revenues, and if we need to we can reduce expenses. We do not intend, even though the pro forma has us borrowing debt, for the entire 30 years, we do not actually intend to borrow debt for that long or for that amount of money, so there is also expense savings in our pro forma there as well.”
Fenchak wrote that he also believes Penn State Athletics does not have the philanthropic support necessary for the project, noting it had garnered only $14.2 million in donations in 2022, compared to $55 million at Ohio State and $115 million at Alabama.
Responding to a question about how other athletic projects have fared with philanthropy, Thorndike said each that has been brought to the board for approval has met its goals.
Lubrano said he was “really disappointed” the university did not consider a public-private option that was brought to the board in 2022 and which he said “most” members favored during a retreat in August of that year.
According to a document submitted for dissemination to the board by Paterno and obtained by StateCollege.com, Paterno pitched the concept to Bendapudi and Athletic Director Patrick Kraft in 2022. (Editor’s note: Jay Paterno is a freelance columnist for StateCollege.com. He did not provide the document and had no involvement in this story.)
The proposal, he wrote, would have brought in $150 million to $200 million in private investor money “to enclose the entire length of the west side of the stadium with a new building and gift the top four levels overlooking then stadium to Penn State to outfit for suites, new premium seating, a press box and a new broadcast and media area.”
The structure would not have impacted existing seats, he wrote, and the lower level would have a “restaurant and retail space as well as a faculty staff club,” along with the addition of underground parking.
Bendapudi expressed enthusiasm for the project, Paterno wrote, but when an RFP was issued in 2023, there was no mention of the partnership.
“We have shared with the trustees that the university worked with Goldman Sachs and with PFM to evaluate multiple financing options,” Thorndike said on Tuesday. “They each had their own plusses and minuses. The traditional bond financing pact was determined to be the best option compared to any other public-private partnership.
“It is my understanding that there was a high level marketing pitch for a public-private partnership, without financial considerations, that was brought forward by a trustee. This idea was determined by [project consultant] Nations Group to not be a financially viable approach and it was not solely focused on the stadium but also other ancillary development like condos, so we did not pursue that.”
A few trustees also showed frustration with the limited amount of public discussion by the board about the project.
Trustee Alvin de Levie objected to Chair Matt Schuyler’s two-minute time limit on statements during Tuesday’s meeting, setting off the first of several testy exchanges. De Levie said the board was being “rushed” into the decision and noted that it had until July 10 to approve the project in order to keep the current timeline.
“It’s been admitted that we are rushing the decision and the public should know that a $700 million item is being rushed for no good reason,” de Levie said.
“We’ve had months and months and months of dialogue on this and years of discussion,” Schuyler responded.
Schuyler also ruled a motion by Fenchak to postpone the meeting to July 8 as out of order. The motion eventually went to a vote but failed.
Trustee Ted Brown, meanwhile, said coach James Franklin and Kraft have cited the stadium’s size as an an advantage and he was concerned about the loss of seats associated with the project. Several hundred seats are expected to be lost in the renovation, though Beaver Stadium’s status as the second largest in North America will remain unchanged.
“I want to arm Coach Franklin with the ability to recruit players to play in the largest stadium in the country, not reduce it by 900,” Brown said. “I’m also concerned that loyal season ticket holders are going to lose their seats as part of the reconstruction.”
Faculty Trustee Nicholas Rowland, who voted in favor of the project, asked administrators to “square” the impending budget cuts elsewhere in the university, especially at the Commonwealth Campuses, with taking on hundreds of millions of dollars in debt for the stadium renovations.
“We know that there is at least $200 million of work that needs to be done on the stadium,” Thorndike said. “We don’t have the money within athletics to do that work without generating new revenues. In addition to the work we are doing on the general funded budgets, we also need to respond to the ongoing maintenance to the stadium. This renovation plan responds to those needs by generating more revenues that will pay for the maintenance that is needed on the stadium.”
Thorndike also said that delaying the project would only cause costs to balloon, to the tune of an estimated $40 million a year.
“We were conservative in our modeling and could actually experience upside related to construction costs and interest rates,” she said. “The time to act is now. With every delay, major maintenance expenses for Beaver Stadium continue to rise. There’s no denying that immediate maintenance is needed and every day that we wait the cost gets higher.”
