UC Berkeley chancellor proposes taking on some Cal Athletics debt in exchange for developing on Edwards Stadium

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Big changes could be on their way for Cal Athletics — and for UC Berkeley’s budget.

At a Thursday meeting of the campus Academic Senate, UC Berkeley Chancellor Carol Christ proposed the campus take on the portion of Cal Athletics’ debt stemming from the seismic retrofitting costs of the 2012 renovation of California Memorial Stadium. In exchange, Cal Athletics would let the campus develop on Edwards Stadium, currently home of the soccer and track and field programs.

Christ said she made the decision “in principle,” and that specifics had not yet been ironed out, such as how much of the debt is related to seismic retrofitting and what would happen to the programs that currently use Edwards Stadium.

Cal Athletics has run large deficits in recent years, requiring two consecutive bailouts from the chancellor’s office in the past two fiscal years. Christ insisted that the department must balance its budget by 2020, despite Cal Athletics’ debt service payments continually rising in coming years.

“Many of us, including me, wish the campus had made different decisions about the football stadium when the decision was made to renovate it. But right now, we have that debt,” Christ said at the meeting. “It’s as if, I don’t know, one of your children made an extraordinarily unwise expense. There’s no way that you aren’t obligated to pay that expense.”

Cal Athletics holds more than $400 million in debt, the most of any athletic department in the country, almost entirely from the renovation and seismic retrofitting of the football stadium and construction of an adjacent athletics complex.

Moving the debt onto the campus’s books is only one of many proposed changes the athletic department is facing. Cutting teams, shrinking rosters and selling beer at football games are on the table to close Cal Athletics’ deficit. In an August budget proposal, the campus suggested turning Edwards Stadium into housing.

“The opportunity to do something with that big, large piece of land is a huge plus,” said Robert Powell, professor of political science, in an interview after the Academic Senate meeting. Powell previously served as co-chair of the Chancellor’s Task Force on Intercollegiate Athletics.

All of UC Berkeley has been pressed to cut costs and raise revenues as Christ tries to get the campus back in the black. At the meeting, Christ announced that as of the close of fiscal year 2017, the campus’s deficit was $77 million, down from $150 million the year before.

Moving some of Cal Athletics’ debt onto the campus’s books, if implemented, would only change where the debt service payments are located, Powell said. The cuts will still have to be made somewhere, he added.

“That’s just moving deck chairs around the Titanic,” said John Wilton, former campus vice chancellor for administration and finance, of a potential debt transfer in a recent interview with The Daily Californian. As vice chancellor for administration and finance, Wilton oversaw the creation of a new funding model for California Memorial Stadium.

“The university is no better off,” Wilton added. “It makes not one cent difference.”

Staff writer Revati Thatte contributed to this report.

Austin Weinstein covers academics and administration. Contact him at aweinstei[email protected] and follow him on Twitter at @austwein.

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  • Dolly Fine

    You all understand that Edwards track is a nightmare waiting to happen? I alerted the media after management ignored our complaints of concrete spalling and falling in the tunnels. The grounds dept was immediately moved out but they still rent it out for track and field events. Whatever happens, it must be condemned and retrofitted or demolished. Hank Chapot

  • thompson_richard

    The bells had been ordered from a foundry in England while the campanile tower was under construction, but they would not arrive in Berkeley until 1917, in part because of delays caused by World War I. By the Fall of 1917, the bells were finally in Berkeley and had been hoisted to the top of the tower by cables powered by a small steam engine. Hung and connected to the playing console by an Englishman who came from the foundry, they were first played in November 1917 during the Cal vs. Washington home football game.

    Official dedication was postponed another several months until March 1918, when the university celebrated its 50th anniversary. Then, the Campanile was dedicated along with other new buildings,
    Neither the stadium nor the bell tower collapsed in subsequent earthquakes.

  • BerkPed

    How about cancelling football and defaulting on the debt.

    • John Hudson

      Football makes about $27M per year. Cancelling football would only make the situation worse.

      • still trying

        So, with your logic, if you are losing money just keep doing the same because if you change you will still lose money. You must have gone to Cal because your logic is not logical..

        • John Hudson

          I will repeat it so that even you can understand. Football makes money at Cal just as it does at almost every institution that has Division 1-A football. All your denials will not change that fact.

          • still trying

            You must have taken accounting at Cal. Football makes money as long as you do not include costs. Trump’s accounting methods and one used by Enron. There is gross proceeds and net proceeds. Football is profitable gross wise but not net wise. If you have a football stadium, and used only for football, should you not include its costs. And if you do, football is a net loser for Cal. If it is so profitable, why then is UC bailing them out? It is not because of the Title 9 sports or retro fit. Remember retrofit was only 181 million, not the 485 million they spent. Add interest and you now have a 800 million dollars hole to fill. Over 100 years. Hayward fault, self insured, reason to worry.
            Get your facts right you are the one in denial.

          • John Hudson

            As a matter of fact, I DID take accounting at Cal from the late Professor Cerf. I have since become an attorney. I have never practiced bankruptcy law but I did get an “A” in my bankruptcy course. I can tell you that if this matter were to come before a bankruptcy court Cal would be ordered to continue the football program because the marginal revenue exceeds the marginal cost and the operating result could be used to rehabilitate the debtor and help pay off the creditors.

            As you point out, only $181M was spent on stadium upgrades while the remaining $270M was spent on the “high performance center”, a facility shared with all other sports.

            BTW: Did they abolish the Subject A requirement?

          • still trying

            I did not say anything about the high performance gym. That is another sum all together different and separate. The stadium cost around 500 million, upgrades for quakes were 181 million. The remainder was fluff spent to make it look spiffy, Fancy seats and luxary boxes.. Spiffy is not practical when you have a cost deficit for sports.

          • John Hudson

            “Remember retrofit (sic) was only 181 million, not the 485 million they spent”. That’s what you said. I guarantee that the new seats did not cost an additional $304M. The “high performance center” is the rest of the debt. That includes a study center, weight rooms, and offices for every coach in every sport except rugby. The new seats, rest rooms, and other goodies was a speculative investment in getting big donations from alumni and wanna be alumni who were attracted by a winning football team. Sales of seats ranging from $40,000 for 40 years to $225,000 for 50 years were supposed to cover the stadium debt. The big names in college football who seem to always have 10 win seasons can make that work. Our stupid affirmative action athletic director bet the farm on being able to do that. If $304M was spent to upgrade 50,000 seats (it is actually only about 25,000 seats) that comes to a little over $60K per seat. That didn’t happen.

          • still trying

            Try interest debt, any bookkeeper would. I do agree the picture would be different if Cal had a winning team. But they don’t and haven’t for a long time.

          • BerkPed

            Here is one unaudited, incomplete doc about football money.
            Good luck finding a better one.

            http://vcaf.berkeley.edu/sites/default/files/2013-01-Fin.pdf

            This one claims to show football generated $4 million, not the $27 million you mention.
            However, it does not really include any field expenses, so it overstates the profitability of football. It also does not seem to show the annual forgiveness of money taken from central campus.

          • John Hudson

            The document you produced shows that football pays over $2,830,000 in debt service and that no other sport pays debt service. It also shows that football grosses a little over $26M; that of the $26M, $3,017595 goes for football scholarships, $5,347,734 goes for coaches salaries, $1,817,336 being raked off for the bureaucracy, $1,413,123 is “transferred to institution”, and $1,060,139 goes to “other”. After that, $4,010,800 net profit is used to offset the $572,133 deficit of “other” women’s sports and $302,656 deficit of “other” men’s sports. This hardly paints a picture of football being a financial detriment to the university. It shows football paying debt service for the stadium.

          • BerkPed

            Ha, not sure what your mortgage rate is but if they owe $400 million at 3%, the should be doing 12 million a year in interest alone, plus maybe $12 million / year in principle.

            So I think it is a sad joke of an accounting form.

          • John Hudson

            As “Still Trying” said, the figure for the stadium is $185M, not $400M. The stadium was completed shortly after this statement was issued. $185M at 3% is about $5.5M per year. That’s about $1.5M more than the figure given in the statement that also showed football with a net profit of over $4M even after “transfers to institution” and $1M worth of “other”. .

          • BerkPed

            “the stadium’s $321 million renovation and a new $153 million Student-Athlete High Performance Center”

            https://en.wikipedia.org/wiki/California_Memorial_Stadium

            not sure why you use 185 million, but it seems wrong

          • John Hudson

            If you are not sure why I’m using the $185M figure you didn’t read my post. I said that it was the figure that “Still Trying” used. If the number is $321M, 3% interest would be about $10M. That would eat up the $4M net plus the $1.4M “transferred to institution” plus the $1.06M that goes to “other”, plus the $1.8M that is raked off for administrative salaries (i.e., the bloated athletic department bureaucracy). We still have about $2M to go to meet interest payments. I guess we’ll have to cut the coach’s salaries.

          • BerkPed

            John, Can you site any publicly available accounting documents to back up your claim about the profitability of football? If not, I don’t see why we should believe it.

            As far as I know, if it really made money, we would not be discussing the need to bail it out.

            Here are a couple of links to get you started !

            http://cucfa.org/2009/10/response-to-faculty-questions-they-pledged-your-tuition-ii/
            https://escholarship.org/content/qt9q3349tt/qt9q3349tt.pdf

          • John Hudson

            The verb “cite”, meaning to point out, is spelled with a “c”, not an “s”. I personally have not audited the athletic department’s books. If you wish to do so I would suggest that you make a Public Records Act request for all writings that were relied on by the athletics department in publishing whatever figure it has on the financial result of football operations. However I believe it because I have seen the crowds who pay $50 per ticket and am aware that all Cal football games are now on TV. Just ask anyone who is on the track, volleyball, gymnastics, crew, or tennis teams whether they want football to be abolished. They will tell you that they do not because they realize that football subsidizes their sports.

  • ugh

  • Carl Rose

    Considering this is potentially a historic landmark built in 1933?, it might be worthwhile to get legislators involved at the local, state and federal level.

    • John Hudson

      1923

  • Disqusted

    Instead of punishing soccer and track and field for the sins of football, how about renting out the football stadium for lucrative events to generate revenue? Surely, the campus and the neighbors can handle a few weekend matinee concerts or conventions that would generate substantial revenues to CAL from ticket sales, concessions, and parking. The stadium is absurdly under utilized and it is wrong to punish sports that did not cause the problem.

    • Jc Flores

      Sins of football? Or administrators that are no longer here? Soccer and track will get a brand new facility, one which isn’t an actual health hazard, while campus gets some much needed land to develop into academic space.

      And in the process football can continue paying for soccer and track to keep the lights on. No one is being punished.

      • still trying

        The stadium was built for football and only used for football. The stadium loses money each year. So really football is not paying for itself, let alone other sports. Get real. The stadium was a bad idea and football is not covering its costs. Reality-football is not a money maker at Cal. Unless you are Trump who lies daily to the public and a few morons believe him, bad decisions were made and are still being made at UC.

        • Jc Flores

          So you don’t believe that Football pays for non-revenue sports? That’s not even debatable. That they have stadium debt doesn’t change the fact that they still have to cover costs for those sports which don’t bring in any revenue themselves. Both of these things can be true.

          • still trying

            Yes, all of the money goes into one pot. Which is doled out to other sports. But even if all the money collected from football went to cover its costs, football and stadium only, including debt interest, football is still a negative income source for Cal. Only if you remove some cost items from football does the numbers work out. Which is what Cal does when it talks to the public. Please read UC’s budget, not what Mugolof says. The pudding is in the fine print. Football could not cover their debt so they refigured their loan so no interest is paid for 25 years. Then chicken little will be proven right.

          • Jc Flores

            So your point that there is debt is. Of course? No one is denying this. Certainly not me, so I’m not sure why you even replied to my comment. Especially when the money football does bring in does cover sports like track. At no point did I say there wasn’t other debt.

          • still trying

            My point is–football does not cover its own debt. Granted money from football helps other sports, but if you only took the money football made and offset football’s true costs-you are still in the red. UC even states that in their future cost estimates regarding footballs true costs to UC.

          • thompson_richard

            David Shaw is, with little opposition, the greatest football coach in Stanford history. Closing in on his seventh full season on the Farm, Shaw’s teams have won 77.7 percent of their games (70-20), gone to six straight bowl games (and won four of them), claimed three Pac-12 titles and sent a drove of players to the NFL. Compare this with recent eras of Stanford football — including a seven-season stretch from 2002-08 when the Cardinal went 25-55 — and Shaw’s success is brought into greater focus. His goal-line play-calling and personnel decisions at the quarterback position may be routinely questioned, but Stanford has never had better than David Shaw.

            And he’s paid like it, too. University tax return forms released this summer show Shaw was credited with $5,680,441 in total compensation during the 2015 fiscal year. His pay has more than doubled since data on his salary became available several years ago, and his 2015 compensation represented a $1.5 million raise from 2014. He is the highest-paid Stanford employee by nearly $2 million, receiving in 2015 more than double what the President and Provost made — combined.

          • still trying

            I note when people start to lose their debate they start talking about things that do not pertain to the original subject. Trump comes to mind. Deflecting facts to support his view. Cal has not had a good team for decades while Standford has. Plus their stadium cost half as much as Cal’s to build. Cal made many bad choices when rebuilding the stadium and now must be bailed out. This has nothing to do with the other sports teams, but football, a stadium and bad choices that resulted in costs not being covered by attendance. Plain and simple. Net and gross. If football kept all of its proceeds for itself, it still would not cover its costs. At least the other sports teams cost less to run.

          • thompson_richard

            Yes, I’m trying to extract my scones from the fire because they haven’t even been warm since Craig Morton was quarterback! I paid for this years’ season tickets and for the upcoming UCLA game at the wonderful Rose Bowl — also under the San Andreas Fault.– and for The Big Game on the 18th of this month at Stanford’s miserable stadium. I admire your and Jc Flores superb comments!

          • John Hudson

            The bad decisions were made by our affirmative action former athletic director and the stupid rich people desperate to curry her favor. I wanted to build a new stadium where Edwards is and do a Kezar with Memorial. Since that is not going to happen there is no point in discussing the advantages of the Edwards site other than cost.

          • still trying

            Wow, We agree on several things. Many points you make here-I agree with.
            Above, however you omit the true cost of the stadium. I do see how easy that would be. Berkeley makes it extremely hard to see actual costs.

          • John Hudson

            Even if football does not cover all of the stadium costs it does, at least, cover some of them. Therefore abolishing football would only make the situation worse.

          • still trying

            At this point, I agree.

          • John Hudson

            There is considerable dissatisfaction with Shaw on the part of Stanfordites as evidenced by the comments in the SF Comical following their loss to the team we beat 37 – 3. That is just a foretaste of the dissatisfaction that will follow our team crushing them like bugs.

          • thompson_richard

            r
            hearhear

    • John Hudson

      Football did not cause the problem. The affirmative action athletic director feathering her bureaucratic nest caused the problem. The last time I looked there were 15 deputy, associate, and assistant athletic directors. You can go to the official Cal website, find the online directory, and count for yourself. The bloated athletic department bureaucracy is nothing compared to the even more bloated, self-serving, and self-perpetuating campus and statewide administrations.

      • still trying

        I definitely agree with you here.