Budget shortfall prompts questions

In the wake of news that Cal is facing a projected budget deficit this year of $ 150 million, questions emerged regarding the effect that shortfall might have on athletics.

In a statement sent Wednesday to faculty, staff and students, Cal Chancellor Nicholas Dirks detailed seven long- term initiatives aimed at balancing the growing deficit.

The final measure called for re- examining athletic department spending in hopes “to reduce administrative costs and other team expenses.” And although Dirks later told reporters that Cal has not

considered cutting any teams, key questions remain:

How does the athletic department’s financial shortfall factor into the campus deficit?

How do officials plan to make Bears sports profitable again?

Campus records show that the athletic department faced a $ 9 million deficit last year. Athletics brought in $ 9 million, but the $ 18 million annual fee needed to help pay for the Memorial Stadium renovation more than wiped that out.

The overall athletics deficit is in the $ 17 million to $ 20 million range, according to a source with knowledge of the budget who requested anonymity, lacking authority to speak on the matter. A number of factors make an immediate fix difficult, including a four- year UC system tuition freeze, minimal increases in state funding and the ballooning cost of business.

In 2010, when Cal proposed the elimination of baseball and four other sports ( a plan that went unrealized, thanks to fundraising efforts and public outcry), the athletic department was receiving $ 13 million in annual support from the campus. That figure is down to $ 5 million.

“We are focused on finding efficiencies and executing growth strategies that will enhance our financial situation for athletics, as well as provide significant opportunities and benefits to our campus partners,” athletic department spokesman Wes Mallette said. “In the next several weeks, we plan on announcing several initiatives that will keep us on that upward trajectory.”

The Bears’ contracts with Nike ( apparel) and IMG ( multimedia rights) will expire next year. The Chronicle has learned that Cal is weighing apparel offers from Nike, Adidas and Under Armour. The top suitors for the multimedia rights deal include IMG, the Pac- 12 Conference and Learfield Sports.

The combined net gain of the two new contracts is expected to be $ 6 million to $ 8 million annually, according to a source. Cal is also expected to earn more than $ 1 million for its Aug. 27 football game against Hawaii in Sydney.

Largely because of those developments, the Bears’ athletics deficit is projected to be back down to seven figures by the next fiscal year. That, of course, would equate to only a small fraction of the university’s overall debt.

“We’re looking at everything,” campus spokesman Dan Mogulof said when asked about the university’s plans to balance the budget. “We have that obligation to the students, the alumni, the state. But at the same time, given the broader context and the magnitude of the campus’ challenges, the main part of those solutions to the challenges are not going to be found in Haas Pavilion or Memorial Stadium.”

“We are focused on finding efficiencies and executing growth strategies that will enhance our financial situation for athletics.” Wes Mallette, athletic department spokesman