The official minutes of the University of South Carolina Board of Trustees are maintained by the Secretary of the Board. Certified copies of minutes may be requested by contacting the Board of Trustees’ Office. Electronic or other copies of original minutes are not official Board of Trustees' documents.
The Intercollegiate Activities Committee of the University of South Carolina Board of Trustees met on Thursday, February 13, 2003, at 10:35 a.m. in the Carolina Plaza Board Room.
Members present were: Mr. Samuel R. Foster II, Chairman; Mr. Arthur S. Bahnmuller; Mr. Miles Loadholt; Mr. Michael J. Mungo; Mr. M. Wayne Staton; Mr. Othniel H. Wienges, Jr.; Mr. Mack I. Whittle, Jr., Board Chairman and Mr. Herbert C. Adams, Board Vice Chairman. Mr. Toney J. Lister was absent. Other Trustees present were: Mr. James Bradley; Mrs. Helen C. Harvey; Mr. William C. Hubbard; Mr. Robert N. McLellan; and Mr. James A. Shuford, III.
Others present were: President Andrew A. Sorensen; Secretary Thomas L. Stepp; Executive Vice President for Academic Affairs and Provost Jerome D. Odom; Vice President and Chief Financial Officer Richard W. Kelly; Vice President for Information Technology and Chief Information Officer William F. Hogue; Vice President for Human Resources Jane M. Jameson; Vice President for Student and Alumni Services and Interim Vice President for Development Dennis A. Pruitt; Vice Provost and Executive Dean for Regional Campuses and Continuing Education Chris P. Plyler; Chancellor of USC Aiken Thomas L. Hallman; Dean of USC Lancaster John Catalano; Legal Counsel Walter (Terry) H. Parham; Director of Athletics Michael B. McGee; Assistant Athletics Director for Development, Department of Athletics, Brad Edwards; Director of the Department of Student Life, Division of Student and Alumni Services, Jerry T. Brewer; President of the USC Letterman's Association Clyde Jones; Director of the Office of Public Affairs Russell McKinney; and a member of the media.
Chairman Foster called the meeting to order and invited those present to introduce themselves. Mr. McKinney introduced a member of the media who was in attendance. Chairman Foster stated that notice of the meeting had been posted and the press notified as required by the Freedom of Information Act; the agenda and supporting materials had been circulated to members of the Committee; and a quorum was present to conduct business.
Open Session
Chairman Foster directed the Committee's attention to the agenda and called on Dr. McGee.
Dr. McGee explained that the academic performance of student athletes during the fall semester had been very solid; as in previous semesters, female athletes had achieved a higher gpa (grade point average). He also remarked that those football players who had completed their eligibility in 2002 were scheduled to graduate no later than December 2003; continuing updates will be provided during subsequent meetings.
Dr. McGee addressed the Carolina Center, initially commenting that Global Spectrum, Inc. (the management company for the arena) had scheduled several successful events since the November 2002 opening. Of the yearly projected scheduling goal of seven major conferences and eight minor conferences, to date scheduled or completed had been five major and five minor conferences; Dr. McGee was confident that this fiscal year goal would be easily achieved.
Carolina Center utility costs were considerably higher than originally anticipated. Numerous problems had occurred with a computer which controlled the building energy systems; progress had been made toward resolving this situation. General maintenance costs, on the other hand, had been less. Significant savings would be realized in the area of operations because of cross training and the allocation of various Athletics' Department staff to the Carolina Center.
Dr. McGee remarked that group sales for the programs had been somewhat disappointing. He believed that the subsequent early loss of the individual responsible for group sales had hindered the success of this marketing tool. Dr. McGee also believed that the breadth of program offerings had adequately responded to community interests.
Six suites remained to lease on an annual basis; one had been reserved for naming rights and two others would be sold "upfront" (the Athletics Department would receive the revenue from the sale of these boxes for a certain number of years with a guaranteed usage which exceeded the sales time frame). Several of the suites had been leased on a "per event" basis which had generated unexpected additional revenue. Dr. McGee was confident that this technique would cover any shortfall of suite sales revenues. Because recent sales had averaged one suite lease per week, he fully anticipated the leasing of all of the suites by the end of the current fiscal year.
Dr. McGee stated that the Athletics Department had received two Carolina Center naming rights offers which had been below an appropriate level.
Recently, newspaper articles had been published regarding the location of the marquis at the corner of Assembly and Blossom Streets. Strong consideration was being given to the possibility of moving the sign to Williams-Brice Stadium in order to resolve the dispute.
Responding to Mr. Mungo's inquiry about the arena operation relative to the pro forma, Dr. McGee indicated that building rental and concession revenues had exceeded the original projection; staffing costs were also significantly lower. If the naming rights were established before the conclusion of the current fiscal year, at a minimum, the Carolina Center would break even; if not, Dr. McGee anticipated a deficit of approximately $250,000. Since the September 11 tragedy, large assembly venues in this country had experienced significant revenue losses. Dr. McGee further remarked that advertising revenues (excluding naming rights) were within five percent of the pro forma projection; other costs, with the exception of utilities, were below the pro forma.
In response to Mr. Adams' question about the monthly utility charge for the arena, Dr. McGee quoted the figures for the preceding three months noting that utility usage fluctuated according to the particular event. The concert/event season extended from the middle of February until April. A major utility decrease would occur following the end of the season.
Dr. McGee thanked various individuals who had been involved in the operation of the arena, particularly Tom Paquette and his Global Spectrum, Inc. staff and Brad Edwards, John Moore, and Jeff Davis of the Athletics Department who "had been working day and night."
Most of the concert promoters and artists who had performed in the Carolina Center had been very positive about the experience. Dr. McGee hoped that various artists who had received incredible responses from the audiences would consider returning to the arena for yearly performances.
Dr. McGee was also pleased to announce that only 39 individuals who had reserved seating in the Coliseum had requested ticket refunds because of seat location in the Carolina Center. "Our goal and objective is to get all 39 of those people satisfied and back as purchasers next year."
Mr. Mungo asked for information regarding the status of the Athletics Department's budget. Dr. McGee stated that at the conclusion of January the balance sheet had indicated a net amount of approximately $650,000; he invited Mr. Brad Edwards to briefly review the figures with the Committee. At this time, the Athletics Department's budget summary report for the month ending January 31, 2003 was distributed.
Mr. Edwards explained that the overall revenue projection for the Athletics Department during the current fiscal year was $34 million; of that amount, approximately $21 million had been achieved, or 63 percent of budgeted revenues. Fiscal year expenses had been projected in the amount of $30 million; of that amount, approximately $20 million had been expended, or 62 percent of projected expenditures. Nearly $1 million will be transferred into an account to cover the arena's furniture, fixtures, and equipment costs. And, Global Spectrum, Inc. pre-opening service charges had cost approximately $430,000.
In addition, Mr. Edwards advised that the Athletics Department was on schedule to service the debt for this particular fiscal year; $600,000 would be extracted from the arena operations to cover its debt service. The Athletics Department will also pay another $200,000 to cover the annual defeaseance of the stadium BANS.
Mr. Edwards referenced the "strict spending policy" within the various sports areas of the Athletics Department. Requests for expenditures in excess of $1,000 required Mr. Edward's approval. "We have asked everyone to show the utmost of due diligence as it relates to spending money for the rest of this fiscal year.
Mr. Mungo asked if the University had received additional money from the SEC (Southeastern Conference) other than initially anticipated; Mr. Edwards had not received notification from the SEC regarding that possibility. Dr. McGee commented that the Athletics Department was not anticipating a surplus this year. President Sorensen explained that a decision regarding the distribution of additional funding would be made during the SEC Presidents' Meeting scheduled for the last weekend in May.
Mr. Whittle asked whether arena construction was totally completed to date and a settlement had been reached with the contractor. Dr. McGee indicated that the Athletics Department was in the process of working with the contractor. He referenced a previous discussion with the Committee concerning the contractor's dispute about the rock which had been encountered during construction; that claim was $973,000. "That, along with some other information which has come forward, we believe right now that there is not any area that we have any exposure on. As I described in the last meeting that we were in, we are still in pretty much the same situation. Nothing has been determined. That will be determined by the State Engineer in a hearing sometime in the near future."
Mr. Mungo commented that he had examined the Athletics Department indebtedness which, he noted, was on schedule; he encouraged a Committee review of this information frequently. To date, the original $13 million stadium BANS had been reduced to $9 million; the original $7 million arena BANS had been reduced to $6.1 million. The $21 million long term bonds had been lowered to $20.6 million with a total indebtedness of approximately $36 million. Dr. McGee also noted that another $2 million payment was due in the near future which would reduce the amount of the BANS further.
Mr. Bahnmuller observed that in order to provide sufficient funding for new building construction, an additional 20 percent above the projected cost was needed to cover those unknown charges which frequently occurred.
Mr. Bahnmuller also remarked that 2003 season football tickets sales had been brisk; tickets for any of the games were difficult to find. He believed that a portion of the revenue generated from the additional 2003 home football game could facilitate the Athletic Department's indebtedness, as well as the possible consideration of increasing the per game ticket price.
Dr. McGee responded that preserving the relationship between this institution and "its faithful" (athletics fans) was a very important University policy; ticket prices would not be raised unless the previous year's team performance warranted that action. He was also concerned about Carolina fans purchasing 2003 season tickets which included the price of an additional home game. One of his recommendations to President Sorensen had been to "hold the line" during this year. Mr. Mungo suggested that a ticket price increase be considered when the economy improved.
President Sorensen offered compliments to Dr. McGee in three specific areas: (1) sensitivity to athletes' academic excellence; (2) a successful opening season for the Carolina Center; and, (3) a successful football recruiting season. Dr. McGee thanked President Sorensen and the University community for their continued support of the Athletics Department.
There were no other matters to come before the Committee, and Chairman Foster declared the meeting adjourned at 11:10 a.m.
Respectfully submitted,
Thomas L. Stepp
Secretary