Photo courtesy of: Greg Land

Revitalize Your Facilities Through Capital Planning: for Pro Teams, Municipalities, and Higher Education Institutions

April 10, 2019

As sports fans become more focused on social interaction, unique experiences, and getting value for their money, it can be a challenge to create spaces and cultures that appeal. A further challenge is that this same fanbase is shrinking; McKinsey reports that just 38% of Millennials are committed sports fans, down from 45% of Gen Xers. Some forward-leaning pro teams and municipalities have already begun addressing these challenges through proactive Capital Planning—the process of strategizing around market shifts and the long-term financial exposure of a facility. However, in the college and university space, it’s almost unheard of. Athletics master plans can be successful in generating donor excitement, but are they successful in adapting to market shifts or managing future financial exposures? This critical activity should be on every organization’s mind.

Why? Capital Planning reduces risk of deterioration or malfunction and maximizes returns on market, fan, or student preference changes. Things break, which makes Capital Planning useful in proactively addressing physical obsolescence, from annual wear-and-tear to life cycle replacements. Things also change, which makes Capital Planning useful in proactively addressing functional and experiential obsolescence, from shifts in operations, technology, and market demand. Capital Planning is also useful in capturing new or incremental revenue opportunities, for example from maximizing premium and ticketing sales, per caps, ancillary revenues, or donor giving.

A solid Capital Planning approach might look like this:

  1. Facility assessment. Ensure all parties have a complete understanding of the facility as it exists today and a vision for future operations. This is accomplished through visioning exercises that establish shared goals and objectives for the plan, interviews with subject matter experts, and an existing conditions assessment.
  2. Baseline documentation. Look back at previous investments to understand where improvements have and have not been made in order to identify trends for improvement needs and costs, and to manage expectations for future spending.
  3. Necessary & upgrade improvements. Identify improvements needed to address physical obsolescence over time (necessary improvements) and opportunities to maximize a competitive advantage in the market or incremental revenue (upgrade improvements). Ideally upgrade improvements will pay for themselves or at least help contribute to the facility’s bottom line.
  4. Financial outcomes. Apply annual cost escalation and contingencies, and forecast necessary and upgrade improvement phasing and cost over time in order to understand annual and overall costs. Then, make adjustments as needed to align with financial capacity and goals.
  5. Implement the plan. Document the findings and recommendations of the plan, identify actions necessary to implement the plan (e.g., approvals, funding sources, permitting, etc.), and develop a tool that can be used to track and readily update the plan. A strong Capital Plan is not only implementable in the short-term, but adaptable to complexities for long-term changes.

What are the ways your facility or institution is adapting to change? How are you planning for Capital Improvements?

"The leadership and information from B&D, and the clarity with which they provide it, brings added credibility to the process and ensures that a range of university stakeholders, including senior leadership and our board, are fully informed for – and confident in – their required decision making.”

B.J. Crain, Former Interim Vice President for Finance and Administration
Texas Woman’s University

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