Cal athletics bleeding cash at astounding rate due to debt payments on new facility

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BleedGopher

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per the San Jose Mercury News:

The athletic department lost $21.7 million in the 2016 fiscal year, according to a statement of revenues and expenses submitted to the NCAA.

The deficit matches projections outlined months ago by this newspaper and was covered by central campus, which itself is running a $110 million budget shortfall.

The athletic department’s fiscal woes are rooted in the debt service payment on the Memorial Stadium and Simpson Training Center projects, which cost approximately $460 million (combined).

The Bears generated $86.3 million in revenue from continuing operations against $88.1 million in expenses. But the interest payment on the debt service was $18.5 million. (There were minor additional costs for capital projects.)

That interest payment will remain steady until 2032, when the principal kicks in and annual payments soar — first to $30 million and eventually to almost $40 million.

Cal chancellor Nicholas Dirks has formed a task force to recommend a sustainable athletic model. The group is likely months away from issuing its conclusions, but the elimination of sports teams is a potential, if not likely, outcome.

http://www.mercurynews.com/2017/01/20/its-official-cal-athletics-bleeding-cash-at-astounding-rate/

Go Gophers!!
 

Hmm...I've been told here many times how major college football programs are basically a license to print money. Weird.
 

Their stadium remodel was super expensive due to the earthquake concerns and the need to make it compliant with the seismic regulations.
 

http://www.sfgate.com/collegesports/article/Cal-scrambling-to-cover-stadium-bill-4604221.php

Almost four years ago the Chronicle ran a story about the issue especially regarding the endowment seating.

UC Berkeley's plan to sell special football seats to pay off nearly half a billion dollars in stadium debt has long inspired skepticism, as if Cal were setting up a lemonade stand to finance a home mortgage.

True, each of those chairs at the newly renovated Memorial Stadium costs $40,000 to $250,000 and is yours for 40 or 50 years. But even Cal officials, who had said they would sell all 2,902 pricey seats by this month, grew skeptical of their own claims last fall.

The latest figures show sales have stagnated at 1,857 seats. Declined, in fact. Sixteen buyers gave their seats back this winter, stopping payments and cutting short their ownership deal...


...And even if every endowment seat were sold, Cal would still be short by $134 million, nearly a third of its debt, officials learned recently.

"It became clear that the probability of meeting the expectations was reduced," said John Wilton, vice chancellor for administration and finance at the campus. "So as things folded in, we just adapted the model to a new reality."

It was time for plan B.

The idea was to find new ways to raise money - and hire sales professionals to figure out how.

Until last fall, seating and ticket sales had been managed by Cal's development office - the people who solicit charitable donations from alumni and others.

Cal agreed to pay about $300,000 a year to "professionalize" the efforts, and it's been worth it, Wilton said.


Stadium seating

Of the 2,902 seats in the "endowment seating program," 1,857 had been sold as of March 31. Here is the breakdown:

University Club ($175,000 to $225,000 each): 112 of 425 (26%) sold. Perks include free parking and free catered food, 22-inch cushioned seats, TV and non-game-day access for a fee.

Stadium Club ($75,000 to $125,000 each): 688 of 1,051 (65%) sold. Perks include free parking and free catered food, 20-inch cushioned seats and TV.

Field Club ($40,000 to $60,000 each): 1,057 of 1,426 (74%) sold. Perks include free parking, private bar and TV.
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dpodoll68 said:
Hmm...I've been told here many times how major college football programs are basically a license to print money. Weird.
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If you're running major college football and you can't make money, that's on you.
 



It should be noted that Cal basically decided to do a ton of upgrades .... and just financed it all before gathering money. The terms of the deal are brutally bad.
 

Cal sports is a mess. They compete with Stanford, SJSU, pro sports in Oakland, San Jose & San Fran. Makes our situation in Twin Cities look advantageous. If that's not bad enough, the Berkeley campus is about 5" from a major EQ fault and their admission standards are very high.
 

So Californian to take out an interest only balloon loan. There is a reason there are so many real estate booms and busts out here.. Ever-present optimism and groupthink leads someone making 60k to buy a 700k 1 bedroom shack. It's truly amazing.

The PAC -12 network is relatively new and isn't even available on Directv yet. That will be a source of rising income, most likely but that's still a pretty big shortfall.

SNL did a great skit years ago "Don't spend money you don't have".
 



ncgo4 said:
Cal sports is a mess. They compete with Stanford, SJSU, pro sports in Oakland, San Jose & San Fran. Makes our situation in Twin Cities look advantageous. If that's not bad enough, the Berkeley campus is about 5" from a major EQ fault and their admission standards are very high.
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At least the Raiders are leaving.

There's a huge difference between Pac 12 money and Big Ten money: http://www.cougcenter.com/2016/5/19/11718256/pac-12-revenues-washington-state

Long story short, the Pac-12 may have made one inadvertent and one deliberate mistake: they may have negotiated their rights deal too early and their insistence on being the sole owner of the Pac-12 Network is killing them on revenue. The conference agreed to a deal with Fox and ESPN back in 2011 but it's not up for another seven years. Unless the league can renegotiate parts of the deal, we're still years away from the schools in this conference raking in even close to what their counterparts in the Big Ten and SEC will.

How much more will each team in those conferences make? $10 million.

And lets not pretend like that short fall will only effect schools like your WSUs, your Oregon States, your Utahs. Nuh-uh. Over the remaining life of the deal, Michigan is set to rake in $80 million more than USC, UCLA, Oregon, Washington, Stanford, all schools that consider themselves the class of the Pac-12; all schools that are now in an all out fight of keeping up with the Harbaughs they surely won't win.

Want me to make it worse? Here's Wilner:

$10 million gap per school X 12 schools X eight years = $960 million shortfall in total conference revenue.

Basically: One billion.
 

They made a horrible investment and are surprised that it's backfiring. Who would have thought that an investment where the interest payments alone are over 20% of your annual revenue would be a bad decision, especially when you already struggle to break even before that investment?
 

Welcome to the football arms race.

How many football programs face extinction in the coming years?

Maybe many colleges are going to either opt out of D1 football or drop it altogether. Who knows.
 

hungan1 said:
Welcome to the football arms race.

How many football programs face extinction in the coming years?

Maybe many colleges are going to either opt out of D1 football or drop it altogether. Who knows.
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The arms race is crazy, but Cal's situation is pretty bonkers extreme compared to most.

IMO the folks who signed off on that financing and etc are somewhere between the border of criminally incompetent.
 



It would be interesting to know how the football program alone is doing? The athletic department is losing money, but how are the football and basketball teams doing?
 

Maybe Aaron Rodgers can write em a check? I'd love to see that bastard broke lol


Sent from my iPhone using Tapatalk
 

JTsolo612 said:
Maybe Aaron Rodgers can write em a check? I'd love to see that bastard broke lol


Sent from my iPhone using Tapatalk
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Any Packer or Badger malady is good. I am tired of losing especially to the Badgers.
 




JTsolo612 said:
Maybe Aaron Rodgers can write em a check? I'd love to see that bastard broke lol
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He disassociated himself from Cal after they fired his mentor Tedford. That's why he always says "Butte Community College" during his SNF intro. So I bet BCC will be getting some sweeeet facilities soon...the State Farm Center or the Aaron Rodgers and Olivia Munn Training Complex.
 

WindyCityGopher said:
He disassociated himself from Cal after they fired his mentor Tedford. That's why he always says "Butte Community College" during his SNF intro. So I bet BCC will be getting some sweeeet facilities soon...the State Farm Center or the Aaron Rodgers and Olivia Munn Training Complex.
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Dude likes to cut himself off from folks when he doesn't get his own way...
 

anyone know how much the U of M debt service is for its sports facilities?
 

Maroon92 said:
anyone know how much the U of M debt service is for its sports facilities?
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It was $2,157,604 for football alone in 2016. I'm assuming that's just the stadium but it's hard to tell. Plus $1,200,000 each for baseball and basketball and $2,400,000 for other expenses not listed for specific sports for a total of just under $7 million. That potentially counts leases and rental fees but I'm not sure if we lease or rent anything.
 

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