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April 1 , 2008

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CSU farms out building operations

By Amanda Glatfelter

Following the national trend, Cleveland State is outsourcing many of its operations. The Wolstein Center, the Recreation Center, Fenn Tower, Viking Hall and the day care center are all managed by private companies. Although the motives behind the outsourcing trend may be questioned, CSU maintains the reasons for the private management of these facilities are legitimate. CSU lost millions of dollars in the early 1990s when the university tried to manage the Wolstein Center. “In the first year we lost $1 million and in the second year we lost almost as much,” said John Boyle III, vice president for Business Affairs and Finance.
The university then decided that it was in its best interest to bring in a professional management team. “We wanted to bring in people who actually knew how to do this,” said Boyle. And that’s how the outsourcing idea originated. Enter SMG. This management company operates 80 facilities nationwide, and therefore knows how to attract entertainers to a specific venue, something that CSU had to learn the hard way.
“You can’t just open the door and say we have a 13,000-seat arena here, come and talk to us about booking your event,” said Boyle. “You have to aggressively book people.”And because of this, the Wolstein Center received top honors in 2006. The center earned first place in Ohio as an entertainment venue, excluding sporting events, beating out the Q arena. The center was topped by only one other entertainment venue nationally.
Since SMG is able to book so many concerts and other entertainment events, CSU is able to use the Wolstein Center virtually for free, allowing for concessions to pay for many of the costs.For the 2006-2007 school year, the Wolstein Center generated around $250,000 in revenue and made a $50,000 profit, according to Boyle.
Fenn Tower and Viking Hall, the two dormitories at CSU, are also privately managed. When the university decided to use Fenn Tower for campus housing, it began to look for an outside management company to construct and manage the building.The university found such a company in American Campus. American Campus manages and rents out Fenn Tower. It was at this point that CSU asked American Campus to manage Viking Hall as well. “It would be silly to have the university manage Viking Hall and American Campus run Fenn Tower,” said Boyle.
Therefore the university signed a 10-year contract with American Campus to manage the current dorms for a fee. Down the road, if the student housing at CSU rapidly increases it would financially make sense for the university to hire workers from the inside to run the dorms.Viking Hall runs at a loss for the university, whereas Fenn Tower makes a profit. Therefore the two facilities break even, according to Boyle. With an outside company managing the student housing, the question of liability definitely surfaces. For example, if any kind of emergency arises and should something go wrong, who would be responsible? CSU or American Campus?Only the shell of the building belongs to CSU, according to Boyle. Therefore if a malfunction occurs within the shell of the building, the university would in fact be responsible. However American Campus is responsible for the operation and management of the facility, and it would be held liable for all other issues.The student recreation center, bookstore, food services and daycare center are also under private operation. During the 2006-2007 school year, the food services caused the university to lose money, netting just under $3 million in sales, according to Boyle.
CSU then decided to dismiss AVI, the food vendor during that school year, and formulate a contract with Chartwells Food Service.
The new contract allows for the university dining services to be operated by CSU and managed by Chartwells, according to Boyle.
The daycare center requires specific and specialized licensing procedures.
Therefore it only made sense to hire a managing company that already had the necessary licenses; in this case the YMCA. When the recreation center was constructed, no department existed at CSU that could properly run the new facility. Therefore, it only made sense to hire an experienced outside management company: Centers Inc. The bookstore is managed by Nebraska Books for a fee, and it posted $8 million in sales during the 2006-2007 school year, with a revenue of $500,000 for CSU. The recreation center is funded through a $14 per credit hour fee that is charged to students. The future student center will be funded in the same way.
The recreation center, therefore, does not generate a profit. Instead, it is designed to break even as a service to the students, according to Boyle. Most universities hire outside companies to manage bookstores, and run dining services, according to Boyle.
However CSU does do more outsourcing than many schools, according to Boyle.




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