The U of M somehow lost money on TCF Bank Stadium booze sales, leaving legislator baffled

Categories: Booze, U of M
tcf stadium beer.jpeg
Image by Tatiana Craine
Despite selling nearly a million bucks worth of booze, the U still ended up in the red.
Remember earlier this year when the University of Minnesota was being criticized by the Wall Street Journal and legislature for having lost control of its spending? If the latest news is any indication, it looks like not much has changed the past couple months.

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Two weeks after a U of M official told the legislature the school made $16,000 from booze sales during football games last season at TCF Bank stadium, an AP investigation revealed the school actually lost just under $16,000 despite selling more than $900,000 of beer and wine.

The AP's investigation identifies "hiring additional police and security officers, setting up tents and other facilities, and equipment rental" as factors that drove expenses up past the $900,000 mark. "Roughly half of its revenues went directly to Philadelphia-based Aramark Corp., which had the contract to sell beer and wine," the AP found.

For what it's worth, those expenses are expected to come down next year now that the school has taken care of one-time preparatory costs, and the U is also hoping to "adjust its contract" with Aramark. Officials expect to make a profit off TCF Stadium beer and wine sales next year, but then again, they told us two weeks ago that they made a profit this past season.

Rep. Dan Schoen, D-St. Paul Park, wanted to extend U of M alcohol sales to other sporting events. But in wake of the latest news, he now says he'll hold off on that effort.

"I think the average Minnesotan would have a very difficult time understanding how any business could do $900,000 in sales and lose $16,000 doing it," Schoen told the AP. "With this information, we probably need to take a deeper look."

:::: UPDATE ::::

A bit more information comes via a Star Tribune blog post:
How can anyone lose money selling beer at $7.25 a cup?

The university's contract with its vendor, Aramark Corp., gives the school a 22 percent cut of the profits from stadium alcohol sales. That came to $185,025 for the season after taxes. The university's alcohol-related expenses for the first year? $200,587...

The long list of startup expenses that cut into the school's beer profits range from extra security to $12,000 worth of oversized plants to screen the A Gate beer kiosk from the view of visitors to the nearby Tribal Nations Plaza...

In testimony before the Minnesota Legislature earlier this month, the university initially reported a modest $16,000 profit on beer and wine sales. That, university officials later realized, was a spreadsheet error.

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20 comments
sixonestew
sixonestew

"somehow"???? Isn't it obvious? There are a ridiculous amount of bars within walking distance of the stadium. Everyone is getting wasted and then going to the games. I would too, to avoid a 7plus dollar beverage. They are getting two-fers all day long at 4$ a pop. Decrease your price by a little, see your profits increase a ton. Simple math.

ChazDanger
ChazDanger topcommenter

They definitely sold more suites because of alcohol, to leave that out of the equation is asinine.

Onan
Onan

There are these things called "one time expenses" that should be taken into account. Those expenses and the very real possibility that they sold more seats/suites due to the availability of alcohol are probably not taken into account on their "spreadsheet."

Tim Charest
Tim Charest

No worries, they faced several one time costs last year. Should see profits moving forward.

Edward Bertsch
Edward Bertsch

The U of M should be in this deal for a minimum $100,000 a year fee from the exclusive vendor, and at least a 22% cut of the GROSS not the profit.

Topher Spah
Topher Spah

Get a team worth drinking a beer and watching.

Justin Ulysses Morse
Justin Ulysses Morse

"I think the average Minnesotan would have a very difficult time understanding how any business could do $900,000 in sales and lose $16,000 doing it," Schoen told the AP. So the real story is that Rep. Schoen has no idea how new business ventures work. Tesla Motors hasn't turned a profit yet in their 10 years in business, and they're regarded as successful.

Alice Garrett
Alice Garrett

I don't think people should take economics from this university..not sure they understand the concept..lol

Shawn Taylor
Shawn Taylor

Maybe if they would have planned for beer sales when building the stadium they could make money.

Courtney Klos
Courtney Klos

What isn't stated is what was the projected first year profit (or loss)? I assume that since the actual sales crushed the projected sales, the U is actually ahead of where they predicted they would be after the first year.

Mark Snyder
Mark Snyder

Um, when you start a new venture, there are upfront costs that eat into your profits. That's what happened here. Most new businesses are not profitable in their first year.

Trevor Ludwig
Trevor Ludwig

They could try making it affordable... See how that works.

Ann Whitman
Ann Whitman

tailgating/pregaming student culture, underage students, expensive drinks...not surprising that the stadium itself didn't even break even on their beer sales.

David Farr
David Farr

Only the UofM can make a win/win into a lose/lose. Sigh.

Peter Gokey
Peter Gokey

That's just a slow weekend in Dinkytown.

Paul Walker
Paul Walker

The U of M is legendary for losing or wasting money. Not surprised.

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