The University reached a multi-million dollar deal with Players restaurant to purchase its land near the UT AT&T Executive Education and Conference Center. Eventually the University may construct a building to house the graduate business program, according to University officials.
The transactions took place Tuesday in increments dispersed by various purchasers. The McCombs School of Business Foundation, which is independent from the University, paid Players an initial $3 million cash plus a 10-year lease for the Players establishment at no rent, said Kevin Hegarty, chief financial officer and vice president for the University.
Hegarty said the University then bought the property along West Martin Luther King Boulevard from the foundation for $1.5 million cash and assumed the 10-year lease that is worth about $1 million. He said the property was appraised at $2.5 million.
“The University is not, by law, allowed to purchase property at higher than the appraised value so the [foundation] helped pay,” Hegarty said. “Foundations are set up around the University to benefit the University.”
Hegarty said under the 10-year lease the University can call off the lease with six months’ notice and would pay Players about $100,000 for each year left on the lease. The payback method also applies if Players calls off the deal, which the establishment can do after two years into the lease, he said.
He said there are no firm plans for the property, but the foundation may have proceeded with the deal for possible plans for a business graduate school building.
“One natural unit that would be interested in this is the business school,” Hegarty said. “That’s to be determined.”
The Daily Texan spoke with Eric Hirst, associate dean for business graduate programs, in February when the University first began negotiations with Players. Hirst said the business school was considering plans for a new building to house the MBA graduate program because the current McCombs’ business school classrooms do not allow for teamwork, which is essential to the program.
“When we look at our current facilities, we’re not able to do what management does,” Hirst said. “That affects our ability to engage in teaching.”
Hegarty said the deal is very different from 2004 when the University tried to acquire the land through eminent domain, virtually sidestepping the owners to seize the land for public use.
“The transaction was very amicable,” Hegarty said. “They were pleased with it, we were pleased with it.”