Oregon back to drawing board on privately financed arena

The University of Oregon, believing it was breaking new ground in collegiate sports facility construction by creating a nonprofit group to privatize the building of a new arena, has gone back to the drawing board because of the project's escalating costs, a school official said.

National Championship Properties — comprising Nike Chairman Phil Knight, Nike attorney Howard Slusher and William Swindell, president of the school's nonprofit foundation — was formed last summer to coordinate construction and financing of a privately funded 15,000-seat arena. The school was in charge of the project earlier this year before NCP took over.

But after recent discussions with architect Ellerbe Becket and potential contractor Hoffman Construction, the estimated cost of the project is now targeted at $160 million, or $30 million more than originally anticipated, said Dan Williams, the school's vice president.

The University of Oregon hopes to replace McArthur Court with a new, 15,000-seat arena.

Officials may dissolve NCP and have the university take back control of the project. Another option would be for NCP to raise more private money than it originally had expected, he said.

The problem, Williams said, is the university is limited by the amount of state bond money it can use for the project. He said the school and the athletic department will receive $15 million to $20 million from the state in debt financing to pay for a parking lot and build new softball fields to replace those facilities at the arena site.

"That money can't be used to pay for work done by the private corporation. You can't let state money flow into the private end. That was the value of having a private corporation to begin with, to be exempt from a number of state regulations," he said. "The donor money to NCP is being used to build the arena. The price tag right now is more expensive than we thought. We've got a gap that has to be accommodated. The question is how do we fill that gap if we can't use any more state bond proceeds?

"We have to revisit what we want in the facility. Do we want to go with the more expensive plan or find a way to reduce costs?"

The basic theory behind creating National Championship Properties was to save time and money, according to Williams.

"This gives us the opportunity to build more economically and on a shorter time schedule," Williams said before the financing issue arose. "They are not bound by any public controlling bodies. They have the right to negotiate on their own instead of going to bid."

Knight, a University of Oregon graduate, is the project's primary donor, but Williams stressed that Nike as a company does not have a role in the project. Knight was also lead donor for the $90 million renovation of Autzen Stadium, administered through the university.

Industry officials said the privatized concept is familiar elsewhere on college campuses and in the pro ranks. Oregon, in fact, has gone through a similar process on a smaller scale for a new track and field facility and its business school, Williams said.

"I have not seen it done a lot for arena projects," said facility consultant Chris Dunlavey.

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Colleges, Ellerbe Becket

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