URI Budget Director Linda Barrett says, "It is not our first choice to [make up the revenue shortfall] on the backs of students."

01:00 AM EDT on Friday, September 24, 2004

BY JENNIFER D. JORDAN
Journal Staff Writer

The $54-million Ryan Center at the University of Rhode Island, which debuted amid great fanfare two years ago, has fallen short of its revenue goals. And now URI administrators expect students to cover most of the gap -- by boosting the mandatory fee students pay for the Ryan Center by 45 percent in the next academic year.

Overly optimistic financial targets, the challenges of opening a new arena, and disappointing turnout for some events contributed to the shortfall, according to Robert A. Weygand, URI's vice president for administration.

"Our expectations will be a little lower" this year, Weygand said yesterday. "We're being extremely realistic about future growth and we're pushing hard for future events."

The center took in $2.1 million during the 2002-03 school year, $400,000 below target. While the books are not yet closed on last year, which had a target of $2.67 million in revenues, URI administrators expect a similar shortfall.

Weygand said he met recently with the private company running the center, Global Spectrum, and pushed them to be more aggressive in booking shows.

"I've already sat down with them about their contract and about taking a more realistic approach to financing for the Ryan Center, and about better expectations for more efficiently managing and promoting the center," Weygand said. Global Spectrum earns a flat fee of $118,800 a year, and its contract expires next June, Weygand said.

Global Spectrum is already networking with promoters to attract big events and hopes to see an increase in ticket sales for the coming year, said manager Terry Butler.

However, student fees remain the most reliable source of revenue, and URI will depend even more on them next year.

Student fees already cover most expenses at the center, which is home to URI men's and women's basketball and hosts events as diverse as a Clay Aiken concert to the South County Home Show. The first year the Ryan Center operated, it cost $1.75 million to run; $1.3 million came from student fees. From the revenue perspective, student fees represented 62 percent of all money that flowed into the center.

But a three-year business plan presented to URI by business consultants Brailsford and Dunlavey in 1999 estimated that student fees would account for less than half of all revenues.

"My gut feeling is that [the plan] was overly optimistic," said Weygand, who took over URI's top finance job last spring. "I would not have approved a business plan like that, in hindsight."

TUCKED INSIDE the proposed tuition and fee increases for 2005-06 is an $80 a year Ryan Center fee increase, which would boost the fee to $256 for URI's undergraduate and graduate students. About 11,000 are full-time and pay the full fee amount; 3,500 part-time students pay less).

URI would net more than $3 million -- or about $1 million more than this year's fee total.

Student fees have always been part of the mix for paying for the 220,500-square-foot arena, along with other revenue streams such as ticket sales, parking and facility fees, rental rates, and concession licensing charges.

Students paid $130 a year for the center's first year of operation, $136 the following year, and $176 this year.

However, next year -- the first year URI has to come up with an additional $2.8 million to pay off bonded construction costs along with operating costs -- the proposed Ryan Center fee would increase by 45 percent.

It's a big jump, especially when administrators know how many students and families struggle to pay for college. But students benefit in many ways from the center, Weygand said.

For example, he said, students receive reduced ticket prices to URI basketball games and marquee shows such as John Mayer and Bob Dylan, as well as the enjoyment of a first-rate facility.

"The Ryan Center has had immeasurable value in improving the reputation of the university and in many other respects," Weygand said.

Weygand said the fee increase might be temporary.

"We want to stabilize the fee, and our goal is to increase revenue from non-student sources beyond the level that currently exists," he said. "Again, we'd like nothing better than to stabilize or even decrease the fee. Let's be very realistic about this, and see if we can increase the target, improve marketing and adjust the fee downward in future years."

However, Weygand also acknowledged that student fees trend upward; rarely is a fee decreased.

URI OFFICIALS knew in 2002 their biggest challenge was to make sure the center made enough money to be self-sustaining.

So they set modest goals for the first three years, based on what other venues similar to the Ryan Center were reaching, and estimated the center could book 80 major events a year, including 30 men's and women's basketball games. URI also set aside $10 million to pay for the first few years' of the $38 million in bond debt, spread over 30 years.

By 2006, the Ryan Center would be able to cover $2.8 million a year in bond debt, plus cover operating expenses. By 2007, they said, the arena would be profitable.

Now it appears those goals were not modest enough.

Barrett, the budget director, said the center's financial plan never set a schedule for how much of the cost should flow from student fees versus other sources.

"You assess the plan as you go along," Barrett said.

The revenue projection for this year was set at $2.9 million; it remains to be seen if the center will reach that goal. About $1.9 million will come from student fees.

Barrett said it makes sense for URI to boost fees significantly next year, given that the bond must also be paid down. But placing the burden of a shortfall on the students is a last resort, and she hopes the fee will go down in future years, she said.

"To be fiscally prudent at this time is to increase the other revenues -- the ticket sales -- but in the meantime we want to prepare a plan that is solvent," Barrett said. "It is not our first choice to put it on the backs of students."

Staff writer Jennifer D. Jordan can be reached at jjordan [at] projo.com