Phi Beta Cons

How About a ‘Sports Authority’ Campus?

Good business executives know the ways to reduce costs in order to be more competitive. Although it takes hard work, it’s not a mystery. Convert fixed costs to variable costs as much as possible. Then lower the variable costs. Increase production in order to allocate the remaining fixed costs across more units. As a result, total unit costs decline, and the price of the product can then be reduced to be more competitive in the marketplace. 

The higher education “industry” can, and often does, pursue some of these strategies. Tenured and tenure-track faculty (fixed costs) are being steadily replaced with contingent faculty, a good portion of them low-paid adjuncts (variable costs). Increased ”production units” (i.e. students) are aggressively courted with slick advertising and increasing amounts of financial aid (some of it courtesy of the U.S. taxpayer). 

All well and good, but what about the enormous amount of fixed costs tied up in campus property, plant and equipment? For many students, I suppose the leafy campus is very attractive and it would be hard for them to separate their college degrees from the on-campus living experience. For that market segment, the costs to educate will remain high and presumably these students will be willing to pay the costs.

But what about students who are limited by their financial resources, or simply more in tune to the “new economy”? Some of them are traditional college age and others are working adults. The new economy values substance over form, low costs over frills, and distributed learning and workflow over centralization. In fact, this “new economy” itself may be offering a way for truly creative educational leaders to take a  major step forward in cost reduction and student recruitment.

As retail sales continue to dramatically move from brick and mortar stores to online purchases, prime retail space is coming on the market at a dramatic rate. Recent reports have store closings planned for Macy’s and Sports Authority, among others. These stores are generally located in prime locations in upscale shopping malls, are located in population centers and surrounded with built-in retail services that would dearly love to have a steady influx of students dine and shop on their way to and from classes. 

I would think that these distressed leases could be negotiated in a way that represents both cost reduction and expansion opportunities for the colleges, and a welcome conversion of “distressed” space for the mall operators. 

I would not envision a chemistry lab in these spaces, of course, but certainly all manner of courses could be taught in modern classrooms, complemented by faculty office space in buildings that are well suited for such a use.

The possible result: more students, students who are not as attached to residential life as some others, adult students seeking easy access to classes, retail services provided elsewhere in the mall, lower facilities costs, staffing with local adjunct faculty and….just maybe….lower tuition.

I certainly would not claim this is a perfect solution to the cost and volume challenges, but colleges and universities need to be thinking about every possible way to transform their operations so that they can seek and price themselves for new markets. Satellite campuses are generally stand-alone operations, or housed in corporate office space. Their presence in shopping malls may offer clear advantages in terms of recruitment and cost reduction.

Vic Brown had a thirty-year career in the chemical industry with FMC Corporation, where he held senior positions and worked internationally in sales, marketing, manufacturing, information technology and procurement.

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