UC Berkeley to pay $238M of Cal Athletics debt from stadium renovations

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UC Berkeley will take on 54 percent of the approximated $440 million debt stemming from the Memorial Stadium renovation as well as the Simpson Student-Athlete High Performance Center, according to Chancellor Carol Christ in a recent interview with the Mercury News.

Approximately $9.5 million of the athletic department’s $18 million in annual debt service payments will be shifted from athletic operations to central campus. A specific payment schedule has yet to be finalized.

Christ also announced in a meeting of the Academic Senate that the athletic department must have a balanced budget by 2020. Cal Athletics finished the 2017 fiscal year with a $16 million deficit, which includes an $18 million debt service.

“The campus has, for decades, not dealt honestly with the budget,” Christ said. “And it has not sought to reconcile how much money it takes to run a sports program and how much money we’ve allocated.”

Shifting the athletic department’s debt to central campus will not balance the athletic department’s budget, but it would lessen the possibility that any of Cal’s 30 intercollegiate teams — the most of any college in the Pac-12 — will be cut. Christ stated that cutting teams would be a “last resort.”

Should the athletics department make cuts to its programs, it will have to comply with Title IX policies. The athletic department currently adheres to the third prong of Title IX, meaning Cal would only be able to cut men’s teams.

In November, Christ proposed that the campus take on a portion of the athletic department’s debt in exchange for letting the campus develop on Edwards Stadium, home of the men’s and women’s soccer and track and field teams. The idea of converting the stadium into residential housing was introduced in August.

Christ stated that clarity regarding finances will be necessary in order to proceed and has laid out three steps to gather that information.

The first involves hiring Collegiate Sports Associates, or CSA, a sports consulting and search firm, to assist Cal Athletics with cutting costs and generating revenue. Led by Bradley Bates, CSA vice president of consulting and former Boston College athletic director, the firm’s services will cost the campus $75,000 plus expenses — costs that will be covered by private donors.

Marts & Lundy, a philanthropy consultant, will review Cal’s fundraising as the second part of this plan. The third and final step is a peer review group composed of two current or former athletic directors, a fundraiser, a financial specialist and a Title IX expert.

Despite the steps, UC Berkeley and the athletic department may need a century to pay off the debt. The annual payments will be $18 million per year until 2032 before leaping to $26 million per year. The peak will arrive in 2039 at $37 million per year, and Cal’s loan extends to 2112, according to Bloomberg.

“The easy thing to do is to let athletics proceed with a budget that looks like there’s a minimal investment from the campus, run this continuing deficit and then have a bailout at the end of the year,” Christ said.

Justice delos Santos is the sports editor. Contact him at [email protected]. Follow him on Twitter @jdelossantos510

A previous version of this article in one instance may have implied that only Cal Athletics would contribute to annual payments. In fact, both UC Berkeley and the sports department will pay off the debt.