UC Berkeley is under a formally declared state of Extreme Financial Emergency with ubiquitous cuts to its academic programs and services. But amid all that slashing, Intercollegiate Athletics continues racking up millions of dollars in losses, year after year.

Out of the thousands of employees at all the UC campuses, only coaches boast multi-million dollar annual compensation. The football coach's 10 percent furlough only applies to less than 10 percent of his annual compensation-that means his earnings are actually cut by less than 1 percent, a rate that is far less than the reduction being applied to the paychecks of the staff and faculty on campus. The defense that the source of funds for coaching compensation is private donations is specious because money is fungible and the bottom line, quite literally, is that the Cal intercollegiate athletics program costs millions more than it earns.

All the take from tickets to T-shirts falls short of covering the expenditures to the tune of about $10 million annually. For the most recent year, this drain has jumped to a record high of approximately $13.5 million.

Instead of revealing this seven-figure cost, the Berkeley campus props up athletics by pouring in millions from the discretionary funds of the chancellor and from the registration fees paid directly by the students. Even after absorbing these subsidies, Cal athletics still does not make ends meet, but continues right on spending, piling up an annual deficit on top of these subsidies. The deficit is a debt to the UC Berkeley campus, but it never gets repaid.

Intercollegiate Athletics is a money-losing proposition. The cost to campus is the sum of the Chancellor's subsidy plus the student registration fees plus the annual deficit. Faced with all this red ink, proponents of the program are forced to trot out the same tired argument that athletics attracts donations to the academic side of the campus. But if that were true, wouldn't the athletics program be fully self-supporting, as it is supposed to be, with the help of these donors?

Instead, Intercollegiate Athletics has cost the campus approximately $171 million since 1991, an amount in excess of the Berkeley campus' share of the shortfall in this year's state budget for the university.

In fact, it is a myth that athletics brings big bucks to the university at large. Even the NCAA could not show that increased spending on athletics increases alumni donations, prompting its then president Myles Brand to advise college presidents to reconsider the amount of money their institutions spend on sports.

Former Harvard President Derek Bok wrote, "More than a few college presidents seem to think that a successful athletic program will at least inspire the alumni to give more money to their alma matter. Yet even this hope appears to be groundless" and continued "There is no reliable evidence that successful athletic teams raise … alumni giving to any appreciable extent".

Robert H. Frank, the Henrietta Johnson Louis Professor of Management and Professor of Economics at Cornell stated, "Individual institutions that decide to invest more money in their sports programs in the hope of raising more funds may be throwing good money after bad, and would be wiser to spend the money in other ways." What's even worse is that there is evidence that increased donations to athletics can bring a decline in academic fundraising at the same institution.

Yet at the University of California Board of Regents meeting last month, while introducing discussion of a 32 percent fee hike that was later protested in walk-outs across all ten campuses, the Regents approved seeking $321 million in loans for the Berkeley campus to renovate its football stadium.This passed on the heels of having already approved external financing of up to $136 million to construct the new Student-Athlete High Performance Center (SAHPC), a facility whose use will be restricted to 450 athletes while 99 percent of students, staff, and faculty have to make do with crowded and crumbling exercise facilities that flood during rainy weather.

Exposure to this debt of almost half a billion dollars was justified by stating that the loans will be repaid by Intercollegiate Athletics. But that doesn't add up since Athletics runs in the red every year.

The campus hatched a plan to rent out seats for a cool quarter-million dollars a pop. Now, this is really risky business. If not enough fans step up with their checks, Intercollegiate Athletics will have still more debt that it won't pay back to the campus, and it will be the campus left holding the bag. This could be sub-prime lending of record-breaking proportions. Have we not learned our lesson from the economic meltdown last year?

Looking outward, runaway expenditures of intercollegiate athletics is a nationwide problem. Rather than following along in this arms race, Berkeley can seize the opportunity to be a leader and squarely confront this challenge, to subsequently be emulated by the rest of the nation.

Tags: DEPARTMENT OF INTERCOLLEGIATE ATHLETICS, UC BERKELEY