In 2004, billionaire Alex Spanos pledged $10 million to athletic facilities at Sacramento State University. To date, the Spanos family has only delivered $1 million.
But decisions made in the intervening years put the school in a position that made it difficult to write down the pledge and walk away. According to internal financial records obtained by Capitol Weekly, the school has borrowed heavily to keep the construction going.
This borrowing, in turn, could end up costing the school more than the $1 million the Spanos family actually gave.
School officials, meanwhile, claim the most expensive loan was paid off years early, but provided no documentation.
The same financial documents appear to show that some school officials believed the money would still show up, even after two or more years of receiving no additional funds from the Spanos family. The school did not publicly acknowledge the shortfall until asked by Capitol Weekly last month.
The documents also appear to show that if the $9 million balance showed up tomorrow, much of it would likely be consumed by paying off debt on the Broad Fieldhouse, which is one part of the larger Alex G. Spanos Sports Complex. Eli and Edyth Broad delivered all of the $2 million they pledged in 2005.
Among the actions taken by the school was taking out a $2,154,000 loan from University Transportation and Parking Services (UTAPS), referred to as the “Parking Fund” in financial documents.
“A loan from UTAPS has been repaid and there was never any cost to students,” said school spokeswoman Kimberly Nava, when asked about the loan. She did not provide documentation that the loan had been paid off.
“Fundraising is an ongoing effort,” Nava added. “Let me reiterate that we have every confidence that the gift agreement the University has with Mr. Spanos will be fulfilled.”
One financial document noted, “Repayment of the Parking Fund loan is scheduled to begin no later than 11/30/13 and be completed within 5 years (11/30/18).” This means that if the parking loan was paid off, it happened seven years early, and two years before payments were originally scheduled to begin.
Though the loan is internal within the school, the five-year deferral of paying it back would raise the cost of building the Broad Fieldhouse. The school will be forced to pay about nearly $1.1 million in interest and fees to borrow the parking fund money, according to these documents.
In other words, the cost of borrowing the parking funds to keep up construction at the athletic facilities appears to be more than the Spanos family actually donated, according to documents—though obviously this point would be moot if the loan had been paid off.
Kevin Wehr, an associate sociology professor and the president of the Capitol chapter of the California Faculty Association, said that he was aware of some of the financial problems around the sports complex, though he had not seen most of the financial documents that lay out the extensive borrowing.
“These fiscal shenanigans show why Senator Yee was right to champion the CSU auxiliary transparency bill. The more we know about the way money flows, or does not flow, around campus, the more concerned we get and the more we must demand accountability,” Wehr said. “The CSUS administration has a lot to answer to regarding these issues.”
Gov. Jerry Brown signed Sen. Leland Yee’s, D-San Francisco, SB 8 last month. It subjects auxiliary organizations to the same public records act requirements as regular public employees, starting Jan. 1. Much of the fundraising for Sacramento State’s athletic facilities has run through the school’s auxiliary, called University Enterprises, Inc. (UEI), though school officials have also maintained the fundraising documents in their possession are “confidential.”
The same documents also show $6.45 million in commercial borrowing. According to these documents, this brings the total amount borrowed for the Broad to $8.6 million, with a borrowing cost of $1.9 million. These are among the factors driving the cost of the Broad to $11.5 million.
A spreadsheet provided by the school shows that as of June 2 the commercial loan had been paid down to $3,367,000. Interest payments so far totaled over $300,000.
According to one off-the-record source, Sacramento State President Alexander Gonzalez and other top officials had another hope as well: that the growing success of the football team and other sports teams would excite the alumni base and inspire them to open their wallets.
Indeed, the football team has recorded historic wins this year, beating Oregon State from the Pac-12 and longtime Big Sky Conference power Montana. However, they’re still only 3-4 and mired in the middle of the conference standings. The ongoing U.S. financial slump is also making fundraising difficult for a wide variety of organizations.
Meanwhile, some of the students attending those football games at the 26,000-seat Hornet Stadium are sitting on “temporary” bleachers installed before most current freshmen were even born. The seating was increased from 6,000 in early 1992 in a deal with the Sacramento Surge. That team was part of the World League of American Football, which went out of business after the 1992 season.
The spreadsheets also show that the construction was absorbing most of the money paid to the school by Pepsi to be the preferred on-campus soft drink provider. That deal, signed in 2006, calls for Pepsi to pay the school $12 million over 25 years. According to the Broad payoff document, the school was allocating all $480,000 received each year towards the project for the five fiscal years between 2007 and 2012.
Meanwhile, a “Use of Spanos Money” spreadsheet from December 2008 confirms that, at least at that time, Spanos had only paid $1 million. It refers to a “Payment 1 of 10 on $10 million pledge” as received in April 2006, but lists no subsequent payments. It indicates that at the time, $450,222 of this money remained in the school’s accounts, though sources say this remaining money is now gone, as well.
A June 30, 2009 memo sent to Carole Hayashino, vice president of University Advancement, shows that the school was restructuring debt for a longer term and lower annual payments. The memo listed “debt service” as $505,957” for the 2009-10 school year.
“UEI will continue to make the annual payment from the Pepsi money until the existing pledge is received from Mr. Spanos, or other pledges or cash gifts are received for similar purposes, and the commercial paper debt is retired,” the memo states.
An outside fundraiser for the school told the Sacramento Bee on Oct. 15 that it was “not usual” for funds to take seven years to show up. The story also reported that “since the pledge was made, the school has netted $11.5 million in other private and corporate donations to build the Broad Fieldhouse.”
However, there appears to be little evidence that most of this $11.5 million had shown up by the 2008-09 school year. The school did report a strong fundraising year overall that year, logging $9.7 million in actual gifts received.
But little of this appeared likely to do anything to help out the financial situation around the Spanos Complex. That year’s fundraising was highlighted by $5 million from Les and Anita Harper for undergraduate scholarships and collection of artwork by Sacramento State alumnus Wayne Thiebaud valued at almost $1.4 million. Nearly $7.5 million of the money is slotted for programs besides athletics.
The 2009-10 report showed almost $7.7 million in gifts and $3 million in
pledge payments. Of the money shown in the report, none was specifically shown to be slotted for athletic facilities. About half of the money was pledged towards particular academic programs or other uses.