Financial Concerns Behind Memphis Rec Center Delay | Athletic Business

Financial Concerns Behind Memphis Rec Center Delay

In February, University of Memphis president Dr. M. David Rudd announced that the school would delay construction on its planned recreation center by 18 months, and that the facility would be redesigned.

Rudd blamed a financial model that failed to account for operational costs and overestimated student fee projections for the delay.

“The originally projected financial model was not adequate,” Rudd said in a phone interview. “Student growth at the university didn’t actually parallel the original model.”

Actual student enrollment did not match projections, and with a lower-than-expected pool to draw from, student fees that are supposed to pay for the facility’s construction have, to date, only generated an estimated $15 million according to the Memphis Business Journal. Operational costs — staffing, maintenance, electricity, etc. — are built into the broader university budget.

Rudd commented on the university’s financial situation, saying that tuition increases have been historically low over the past three years.

Initially the campus community reacted with disappointment to news of the delay, but Rudd said that through meetings with student government and the community, he was able to assure everyone that the move was made with their best interests in mind.

“Part of the difficulty with this was that if we left it in the existing structure, it would’ve had unintended consequences,” Rudd said. “Additional student fees and additional increases in tuition simply to pay for a facility where the financial model was not carefully and thoughtfully worked out.

“Once people have accurate information, they’re able to understand why I’ve made the decision that I’ve made,” he continued. “We’re going to be financially responsible and we’re going to take seriously the issue of student cost and student debt.”

In addition to the load on students, the financial burden of more debt on the university would have been unsustainable, according to Rudd.

“You can’t think of projects in isolation,” he said. “You have to look at how we do our building in relationship to the broader campus.”

Plans to tear down the existing rec center -- which still has $7 million in debt service -- have been scrapped. The existing facility will get some mechanical work so that it can be repurposed after the new facility is built.

Meanwhile, the university will revisit the design of the new facility to bring it more in line with the new financial plan. A new governing board, comprised of university trustees, student government and other campus community members will oversee the redesign effort. Rudd himself will respond to the group’s recommendations and suggestions.

Despite the delay, Rudd is confident about the project moving forward.

“I actually feel very good about it,” he said. “It’ll be a wonderful facility, it’ll be a very nice addition, and it’ll be done within a financially responsible model, one that doesn’t drive up overall higher education costs.”

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