Stadium debt crushing outlook of Cal athletics
It’s the time of year when we start to think about college sports.
And, if you’re a fan of Cal sports, those thoughts might induce a stomachache.
In recent days, the doom and gloom surrounding Cal athletics has gotten a little thicker.
That’s just as new head football coach Justin Wilcox is about to try to lead a Cal team to a winning conference record for the first time since 2009.
Wilcox is part of the revolving door at Cal. New football coach, new men’s basketball coach and sometime soon — with the recent announcement by athletic director Mike Williams that he is departing next spring — a new AD. The lack of stability doesn’t give one
much reason to expect that winning seasons are imminent.
However, Cal’s biggest issues aren’t wins and losses on the football field or basketball court — though there is a correlation — but, rather, budget deficits on the spreadsheet. Cal athletics is massively, historically in debt. And that problem will mean significant changes.
Last year, Cal athletics had a $22 million budget deficit, the largest in the nation. The most punishing factor is the $18 million annual payment on stadium debt. Right now, those payments are interest only.
Go back almost a decade, when the university was renovating Memorial Stadium. Decision-makers made some questionable choices for which Cal athletics will be paying, possibly for a full century. The renovation and earthquake retrofitting of the stadium were necessary to remain on the site. But what pushed the bill for the project to $474 million was the approximately $230 million spent on amenities and a training center.
The decision-makers on the project, including Chancellor Robert Birgeneau and athletic director Sandy Barbour, are long gone. Out through Cal’s revolving door. Also history: the plan to finance the project with long-term, extremely expensive seat rights.
The debt on the project is debilitating. Once payment on principal is added in 2032, the annual tab will jump to $26 million. Though the goal is to pay off the loan before its due date, the loan runs until 2112. Will Cal have been to the Rose Bowl by then?
The training center and amenities were supposed to create a world-class athletic environment at Cal. Instead, those luxuries will force Cal to make hard choices, ones that probably will undercut the overall strength of its athletic department. A task force appointed last fall was examining all the options including “program reduction” — which means cutting sports.
New Chancellor Carol Christ is pushing to balance budgets university wide by 2020. She will be in charge of making some of those hard choices in athletics and has reviewed the report issued by the task force in June.
Though that report didn’t specifically recommend eliminating sports, it could lay the groundwork for such a move. Cal has 30 sports, more than the other public schools in the Pac-12 (for example, UCLA has 22, Oregon 16).
The NCAA minimum is 14 sports. As Cal found when it tried to cut sports in 2010, such a move carries a high risk and can turn off deep-pocketed donors.
Among other cost-cutting considerations: building housing where Edwards Stadium sits, finding a naming sponsor for Memorial Stadium, reducing roster sizes and selling alcohol at football games. Only one of those choices sounds like it could enhance the fan experience.
Williams inked a deal with Under Armour, which will help the financial situation but not nearly enough. Another source of revenue, the dollars generated from tickets sales for football and men’s basketball, can’t be counted on. According to the Daily Cal, that revenue plunged from $14.5 million in the fiscal year ending in 2013 to $10.5 million three years later.
That drop likely has to do with performance on the field and court, a direct correlation between wins and losses and the budget problems. Neither of the revenue-producing men’s teams have bright forecasts for the immediate future.
New coaches, new eras, same concerns.
And now Williams, whose job was — in large part — to find revenue sources for the athletic department, is ready to turn over this mess to someone else.
That’s going to be a tough sell. Because Cal is No. 1 in something: having the most difficult athletic department in the country to run.