By Kerry Miller

In what may be the largest gift ever to a U.S. business school, Stanford University announced Aug. 1 that Nike (NKE ) founder Philip H. Knight will give $105 million to Stanford's Graduate School of Business.

Of that amount, $100 million will go toward the construction of a $245 million campus made up of eight new buildings that will collectively be known as the Knight Management Center.

Robert L. Joss, the Philip H. Knight Professor and Dean of the Graduate School of Business, says the Center will provide more flexible spaces that are designed to fit the more varied types of classes to be offered when Stanford adopts its new MBA curriculum in 2007 (see BusinessWeek.com, 6/6/06, "Stanford's New-Look MBA").

THE VERY GIFTED. "As we look forward to new kinds of teaching and learning as the curriculum has been unfolding, we could see that to achieve that vision we needed a different physical infrastructure," Joss said. The remaining $5 million of Knight's $105 million gift will go toward the faculty endowment. Stanford will have to increase its faculty by 5% to 10% to accommodate the smaller class sizes that are part of the new curriculum.

The last time such a significant gift was made to a business school was in September, 2004, when real estate developer Stephen Ross gave $100 million—$50 million in cash and the rest as part of his estate—to the University of Michigan business school, which was renamed in his honor (see BusinessWeek.com, 9/9/04, "A $100 Million Thanks for Michigan").

Plans for the new campus were approved by Stanford's Board of Trustees in June, and the school expects to break ground in 2008, with an estimated completion date of 2010. In addition to classrooms and breakout spaces, the new campus will include a 450-seat auditorium, dining facilities, a career center, executive education space, and offices. When completed, the Knight Center is expected to net an additional 85,000 square feet of space for the business school.

HANDS-ON DONOR. This is not the first significant gift Stanford has received from 68-year-old Knight, who earned his MBA from Stanford in 1962 and has an estimated net worth of $7.3 billion. Previous contributions include funds for the construction of the business school's Knight Building and the endowment of the Dean's professorship.

Knight was part of the advisory committee tasked with examining Stanford's curriculum and developing a new plan for the school's future, Joss said. When it came time to put the physical facilities component of the new curriculum in place, "he was obviously somebody that I turned in order to help bring this into being."

"Stanford Business School was an important part of my life," Knight said in a statement released by the school. "This is a once-in-a-lifetime chance to give back to the School and help it continue to push the boundaries of excellence in management education."

A MODEST PROPOSAL. Along with its size, Knight's gift is unusual in that Stanford is naming only part of its campus, rather than the entire school, after the donor. Most of the largest gifts B-schools have received in recent years have come with naming rights attached, including, in 2004, Samuel Garvin's $60 million dollar gift to Thunderbird (renamed Thunderbird, The Garvin School of International Management and hedge fund operator David Tepper's $55 million gift to Carnegie Mellon B-school, now the Tepper School of Business. Selling the naming rights to Stanford's business school is "not something I envision for the moment," Joss said.

"That really establishes a new playing field," said John Fernandes, president of accrediting organization AACSB Intl. "This shows business schools that they can get major gifts without selling the business school name."

Fernandes said that selling naming rights in perpetuity is a "debatable mistake" that business schools have made over the past decade because it limits potential sources of income in the future. And with competition between business schools as stiff as ever, the push for more impressive facilities, state-of-the-art technology, and nationally respected faculty will only continue to increase the cost of management education, he said. "It makes you wonder what's next?"