A financial report from Cal Athletics shows an increase in total revenue over the previous fiscal year, despite declining income from pledge seats at Memorial Stadium.
The total proceeds — about $29.4 million for fiscal year 2014, which is an increase of more than 26 percent from 2013 — are greater in part due to higher investment returns and leasing and rental revenue. These changes reflect a revised, diversified funding model introduced in 2012.
The stadium’s original funding model drew criticism regarding its reliance on the sale of luxury seats, which have not kept pace with initial projections, due to both optimistic forecasting and economic downturn.
The new model is significantly less dependent on the sale of luxury seats, according to Vice Chancellor of Administration and Finance John Wilton.
Plans to retrofit Memorial Stadium began in 2008 after the UC Board of Regents declared that continuing to play in the seismically unsafe stadium would amount to a safety hazard.
The university borrowed $276 million dollars through the sale of bonds to finance the project, most of which was originally expected to be repaid through the sale of luxury seats. The stadium reopened in 2012.
Wilton said the diversified funding sources gave the stadium more flexibility even in the case of below-target sales — even if the campus sells fewer than than its expected number of seats, the model predicts that the stadium’s other revenue sources will help, he said.
UC Berkeley’s Intercollegiate Athletics department met its debt service payment of about $16 million, and the balance of its endowment fund at the end of the fiscal year was almost $8 million ahead of the forecasted value, according to the report.
“This is a moment where it would be nice to have something celebratory,” Wilton said. “The probability of an issue has been diminished significantly — we have now a multiuse facility which is marrying athletics, academics and the community, and our team’s doing quite well.”
The total number of pledge seats — premium seats reserved by donors — sold was 1,664 at the end of fiscal year 2014, down from the 1,780 sold the previous year. The most expensive of these seats costs $225,000 upfront. Revenue from nonpledge premium seats, however, increased.
One of the sources of income emphasized in the new model is rental revenue, which more than doubled from the previous fiscal year, primarily due to agreements with the Haas School of Business and a recreational sports fitness facility. Leases are currently being signed with the Goldman School of Public Policy and the College of Engineering, which will bring additional revenue, according to the report.
About $3.5 million, or 57 percent, of the total increase in revenue was due to greater investment earnings, which the report attributes to strong returns in the equities markets.
The model isn’t infallible, Wilton said, but this year’s positive report indicates that it is working.
“We know that things will happen. The probability that there will be a future challenge isn’t zero,” he said. “But the degrees of freedom to react to bad events isn’t zero either.”
The UC regents will receive an update on the stadium’s financing model at their meeting Tuesday.
Senior staff writer Sophie Ho contributed to this report.