Southwestern University’s Location Decision

Southwestern University’s Location Decision
With the steady growth in attendance at Saturday home football games, Southwestern University’s president, Dr. Joel Wisner, had reached a decision. The existing stadium, with seating capacity of 54,000, simply would not suffice. Forecasts showed increasing interest in the program and complaints by loyal fans and big-money athletic club boosters revealed the need for premium-class seating and luxury amenities not found in a 1950s-era stadium. But the choice of what to do was anything but clear to President Wisner. His vice president of development, Leslie Gardner, had presented three options: (1) expand the existing stadium to 75,000 seats, adding numerous luxury skyboxes and upgrading most of the yardline seats to include comfortable backings; (2) build a brand-new stadium three miles from campus on land, worth about $3 million, donated by a team booster; and (3) signing a 10-year contract with the Dallas Cowboys football team to rent their stadium, 28 miles away, for a fee of $200,000 per game. Each of these options had clear benefits—yet each had at least one very strong negative as well. Expanding the current facility carried a $12 million price tag, with an annual fixed cost of about $1 million and with a variable cost of about $1 per attendee. If the job were not completed in the nine-month off-period between seasons, the team would be left without a home field on which to play in 2004. This meant reneging on contract dates with powerhouse teams that were signed some 3 to 4 years earlier. Contract violations are not a matter taken lightly in the NCAA or the Big Eleven Football Conference.

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 Southwestern University’s Location Decision

Building a brand-new stadium off-campus would yield a plush, state-of-the-art facility, but it had to be named after the donor of the land. It also meant a huge fundraising drive on the order of $40 million by President Wisner, plus likely bond insurance placing a 20-year debt burden on the college’s balance sheet. He tentatively concluded that fixed cost would be in the neighborhood of $5 million per year and variable cost about $2 per attendee. The third option had definite advantages from the perspective of many, if not most, of the fans who attended the games. A large number already lived in the Dallas–Fort Worth area and would be spared the long commute and horrible traffic jams that always seemed to occur in Stephenville on game days. Clearly, however, students would be unhappy and buses would have to be provided by SWU, for free, to bring students from Stephenville to Dallas. While the actual noted price of $200,000 per game seemed high on the surface, the $1 million per season (there are five home games a year) was a drop in the bucket compared to the other options. However, the Dean of Students said the school should expect the bus transportation to be about $10 for each of the 15,000 student tickets sold for each game. Prior to asking the VP of finance to do the detailed analysis, President Wisner asked Gardner to survey three groups that held personal stakes in the project: students, booster club members, and college faculty/staff. Selecting 50 people at random in each of these groups, Gardner asked them to “grade” each possible location on five factors. Using letter grades, the results are shown in the table below.

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 Southwestern University’s Location Decision

Factors

Existing Site

New Site 3 Miles from Campus

Dallas Cowboys Facility

Students’ Ratings of Locations Convenience Guaranteed Availability for Next Season Comfort Cost National Image Boosters’ Ratings of Locations Convenience Guaranteed Availability for Next Season Comfort Cost National Image D B C A C A C B A D D C B C C C C A D B D A B B C B D A D B A A A A B F A A B B

College Faculty/Staff Ratings of Locations Convenience Guaranteed Availability for Next Season Comfort Cost National Image B A C A B

Gardner decided to give equal weight to the grading of each of these groups. But the administration did not equally weigh the five factors. “Cost” and “guaranteed availability” were rated twice as important as “convenience,” which in turn was ranked twice as important as “comfort” and “national image.”

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 Southwestern University’s Location Decision DISCUSSION QUESTION 1. Are the factors Gardner selected for evaluation reasonable and complete? What others might be included? ที่ Gardner ไดเลือกหัวขอมา 5 หัวขอซึ่งไดแก • ความสะดวกสบายในการเดินทาง(Convenience) • การรับประกันวาจะทันฤดูกาลหนา(Guaranteed Availability for Next Season) • ความกวางขวางเพียพอ (Comfort) • ตนทุนและคาใชจาย (Cost) • ภาพลักษณ (National Image) เพื่อพิจารณาสําหรับการตัดสินใจเลือกที่ตั้งสนามอเมริกันฟุตบอลนั้นมีความเหมาะสมแลว แตสามารถพิจารณาเพิ่มเติมไดดังนี้ • ที่จอดรถ (Parking area) • ความสามารถในการขยาย ตอเติม (Extend ability) 2. Prepare a crossover chart based on the information provided กําหนดให y = total cost, x= attendee Option 1 Expand มี Annual Fixed cost = $1,000,000 มี Variable cost = $1 / attendee y=$1,000,000+$1x Option 2 New stadium มี Annual Fixed cost = $5,000,000 มี Variable cost = $2 / attendee y=$5,000,000+$2x
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 Southwestern University’s Location Decision

Option 3 New stadium มี rental cost = $200,000/game * 5 games/year = $1,000,000 Transportation cost = $10 x 15,000 students x 5 games = $750,000 Annual Fixed cost = $1,000,000 + $750,000 =$1,750,000 มี Variable cost = $1 / attendee y=$1,750,000+$1x

Figure 1 Crossover chart

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 Southwestern University’s Location Decision 3. Based first on your analysis of the survey data, and then on your analysis of the crossover charts, provide a justification for each location. Provide a complete list of reasons for not selecting each of the three sites. ํ จากผลสํารวจ “cost” และ “guaranteed availability”มีคาน้าหนัก เปน4เทาหรือ 0.333 “convenience” มีคาน้ําหนัก เปน2เทาหรือ 0.1667 “comfort” และ“national image” มีคาน้าหนัก เปน 1เทาหรือ 0.0833 ํ กําหนดใหคะแนน A=5, B=4, C=3 D=2, F=1 ทําการคํานวนหา Weighted Score ไดดังตาราง
Score Factors S tudents’ Ratings of Locations Convenience Guaranteed Availability for Next Season Comfort Cost National Image Total Boosters’ Ratings of Locations Convenience Guaranteed Availability for Next Season Comfort Cost National Image Total College Faculty/S taff Ratings of Locations Convenience Guaranteed Availability for Next Season Comfort Cost National Image Total 4 5 3 5 4 3 3 5 2 4 2 5 4 4 3 0.1667 0.3333 0.0833 0.3333 0.0833 1.6667 0.6667 1.3333 0.6667 1.6667 0.5000 0.5000 1.0000 0.8333 0.3333 1.6667 0.6667 2 4 3 5 3 2 3 4 3 3 5 5 5 5 4 0.1667 0.3333 0.0833 0.3333 0.0833 1.6667 3.8333 1.0000 3.0000 1.6667 5.0000 0.3333 1.3333 0.5000 0.3333 1.0000 0.6667 0.8333 1.6667 0.8333 5 3 4 5 2 4 2 5 2 4 1 5 5 4 4 0.1667 0.3333 0.0833 0.3333 0.0833 1.6667 4.1667 0.6667 2.8333 1.3333 4.0000 0.8333 1.0000 0.6667 0.6667 0.6667 0.8333 0.1667 1.6667 0.8333 Existing Site New Site 3 Miles Dallas Cowboys Facility from Campus Weight Weighted Scores New Site 3 Miles Dallas Cowboys Facility Existing Site from Campus

1.0000

1.0000

1.0000

4.5000 4.1667

3.0000 2.9444

4.0000 4.3333

Total from 3 group

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 Southwestern University’s Location Decision กลุมนักเรียนจะกลางๆระหวาง ใชที่เดิมกับการยายไปใชของ Dallas Cowboy ในขณะที่ กลุม ผูสนับสนุน ตองการที่จะยายไปใชของ Dallas Cowboy และเจาหนาทีของคณะ ตองการที่จะใชที่เดิม ่ โดยทีไมมีใครหรือกลุมไหนตองการยายไปที่ใหมใกลๆมหาลัยเลย ่ 4. Which location do you recommend, and why? แนะนําให เลือกการขยายสนามเดิม เพราะใหตนทุนนอยที่สุด เมื่อคิดตามจํานวนผูเขาชม จนกระทั่งจํานวนผูชมตอปมากกวา 800,000 คน 5. Discuss the process followed by Gardner. Gardner ใชวธี factor rating method ในการคิดประเมินคาจากกลุมคนทีมีสวนรวมกับการ ิ  ่ เขาชมอเมริกันฟุตบอล โดยวิธนี้มีความเหมาะสมในการประเมินเชิงคุณภาพ โดยกําหนด ี ตัวเลขแทนทีของระดับความพึงพอใจ และใหนาหนักในดานที่มีความสําคัญ นอกจากการ ่ ้ํ พิจารณาเชิงคุณภาพจากความคิดเห็นของกลุมนเหลานันแลว Gardner ควรที่จะนําปจจัย ้ ทางดานเศรษฐกิจ เชนเรื่องตนทุน มาพิจารณาประกอบการตัดสินใจ เลือก Location ดวย

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