DALLAS — Arizona State University has big plans for the 56-year-old Sun Devil Stadium on its campus in Tempe.
The university will begin a major remodeling of the football stadium this spring, financed in part by a $356 million bond deal coming to market Feb. 24.
The debt-financed portion of the $256 million stadium project is estimated at $200 million. The university expects to raise $85 million through private donations.
The campaign will not use taxpayer dollars since it will be self-funded through private donations and new revenue streams, according to Ray Anderson, ASU vice president for University Athletics.
"The more we work through what we need and what we want from both a functional and a fan experience perspective, the more we recognize what needs to be done through our fundraising efforts," Anderson said. "So, we're accelerating our efforts, if anything."
The fundraising campaign will mirror the three-year phased redesign of the stadium. Construction will take place in the off-seasons while the Sun Devil football team continues to play its regular seasons. Completion is expected in 2017.
Opened in 1958, Sun Devil Stadium for years hosted college football's annual Fiesta Bowl, and was home to the NFL's Cardinals from 1988 until 2006, when they moved to a new stadium in Glendale. Sun Devil Stadium hosted Arizona's first Super Bowl in 1996, but the Fiesta Bowl and pro football action, including Sunday's Super Bowl, has moved to the Cardinals' University of Phoenix Stadium in Glendale.
Sun Devil Stadium is one of several projects that will be funded by ASU's upcoming bond proceeds. About $60 million is expected to go to the stadium, according to Standard & Poor's. The final $70 million of bonds for the project are expected to come to market in 2017.
Other projects included in this month's deal include construction of a new law school in downtown Phoenix to replace the current law school on the Tempe campus, renovation of the psychology building and installation of new information technology on ASU campuses.
The bonds are pricing through a syndicate led by Wells Fargo Securities, with director Douglas Brown as lead banker.
Kurt Freund, managing director at RBC Capital Markets, is financial advisor.
In addition to $192.7 million of new money, the bonds will refund about $163.6 million of previously issued debt.
ASU chief financial officer Morgan Olsen said savings should come to about $23.8 million or 13.4% of the par amount.
"Given the University's very strong credit ratings and name recognition in the market, coupled with the current level of demand for tax-exempt bonds, we expect the sale to be very well received, with investor demand across most buyer segments," Olsen said.
ASU's future debt plans brought a negative outlook on Standard & Poor's AA rating, but Olsen said he does not expect that to affect demand for the bonds.
Moody's Investors Service affirmed its Aa3 rating and stable outlook; its rating is one notch lower than S&P's.
"The university's overall debt has grown significantly in our view to approximately $1.8 billion ... which has not allowed financial resources compared to debt to improve significantly," S&P analyst Jessica Wood wrote. "During our two-year outlook period, the university plans to issue approximately $340 million in new debt, including this issuance. In our view, the continued issuance of debt, which does not appear to be slowing down anytime soon, pressures the rating."
To expand the appeal of the upcoming bonds, ASU is considering marketing some as "green bonds," Olsen said.
"Some of the proceeds will be for projects that promote environmental sustainability on the University's campuses," Olsen said. "A portion of the refunding bonds also may be sold as green bonds since the proceeds of those bonds were used for sustainability purposes."
The Cardinals expected to be playing in Sun Devils Stadium for only a couple of years after moving to Arizona from St. Louis. But financing and locating the site for a new stadium took longer than expected.
The Cardinals wanted to stay in Tempe, but disputes with Phoenix over a new stadium's impact on Sky Harbor Airport airspace sent the team looking for a new site. After neighboring Mesa was chosen, voters there mounted a petition drive to prevent use of any tax funds for stadium-related purposes.
Glendale, on the other side of Phoenix, came to the rescue as part of an effort to become a major sports hub. Glendale later paid a steep price when the recession of 2008 left the city deeply in debt for a $180 million National Hockey League arena and a $200 million spring training facility for major league baseball.
Glendale issued some debt for roads and related infrastructure around the Cardinals stadium, but the $455 million stadium was financed primarily through the Arizona Sports and Tourism Authority's sales-tax-supported bonds.
The last major renovation to Sun Devil Stadium came with the Cardinals' arrival in 1988 when 1,700 seats were added to bring the facility to a capacity of 71,706. The capacity of the new stadium is to be determined.
While the National Football League may never play another game in Sun Devil Stadium, it remains a high profile facility for the Pac 12 Conference.
ASU is the latest entrant in the so-called "stadium arms race" between major universities with top-tier football teams. Over the past five years, about $3.3 billion of college football stadium projects have been completed or announced.
As ASU launches the stadium remodel, the University of Colorado, another Pac 12 team, is beginning a $150 million project at Folsom Field in Boulder.
In-state rival the University of Arizona completed an $86 million redesign of its stadium in Tucson in 2013.
In other parts of the nation, earlier this month the University of Notre Dame issued $120 million for a $400 million remodeling of its stadium in South Bend, Ind. Texas A&M University is in the midst of a $450 million redevelopment of Kyle Field in College Station, Texas.
