California Golden Blogs: All Posts by Twist NHook

The Father, The Son, And The Holy Ghost

2013-05-21T17:30:03Z

Fog everywhere. Fog up the hill, where it flows among green aits and meadows; fog down the bay, where it rolls defiled among the tiers of shipping and the waterside pollutions of a great (and dirty) city. Fog on the Strawberry creek, fog on the Strawberry Canyon. Fog creeping into the cabooses of collier-brigs; fog lying out on the yards, and hovering in the rigging of great ships; fog drooping on the gunwales of barges and small boats. Fog in the eyes and throats of ancient pensioners, wheezing by the firesides of their wards; fog in the stem and bowl of the afternoon pipe of the robotic football coach, down in his office; fog cruelly pinching the toes and fingers of his shivering little 'prentice waterboys on the field. Chance people on the stadium peeping over the parapets into a nether sky of fog, with fog all round them, as if they were up in a balloon, and hanging in the misty clouds.

And I was wearing shorts.

Clearly, mistakes were made.

But how does this work? First game of the Cal football season, early September; summer slowly backing away for the slick entrance of fall. The 7:30 start time didn't help. Standing in the parking lot near the corner of Hearst and Euclid in the dimming light, my teeth chattered in surprising rhythm with my shivering limbs. I was counting down the time until it was time to go, unable to enjoy the BBQ, which was unfortunate.

At it was the first game of the season, I had months to wait in anxious anticipation of seeing my old ultimate frisbee friends. Months to prepare for the reliving of the glory days and I managed to screw it up.

"Sammy, what's wrong," said Delilah Perkins, my lovely wife. Even though I was doing my hardest to exude a macho exterior, she could figure out what the problem was. It wasn't just love at first sight for us, but still love at first game of the season. I explained my stupidity and she agreed to go buy a sweatshirt and pair of pants for me at The Campus Store at the corner of Euclid and Ridge.

With some modicum of warmth soon flushing away my Na'vi appearance, I was able to finally enjoy the fleeting moments of tailgate with the old buddies. Today, we'd be sitting with Delilah and her family at the game, so I wouldn't get the opportunity to chat with the ultimates as much I would have like. Who is going to remind everybody of the time we almost beat Colorado for the National Championship, if not me????? Could people go mere minutes without a retelling of the great prank we pulled on Tizzy back in Aught Five? They were relying on me! And I showed up in shorts and a t-shirt despite the stalkerish creep of the fog from San Francisco.

Soon, it was time to head north. Given the weather, it seemed like we were making our way towards the Wall. Towards Jeff Tedford, King Of The North. I bid adieu to the team and left with Delilah to meet up with her family. Along the way we enjoyed the incessant stream of acapella groups that populated the trails of the campus on game days. I don't know what sort of lab produces these carbon copies, but they seem delightfully harmless as you scurry by hoping not to miss the opening kick off.

Unfortunately, we did miss opening kick off. As we neared Memorial, I ran into Andrew Stern, an old fraternity brother from AEPi. Normally that wouldn't be much cause to stop as I never quite saw eye to eye with all my brothers. But I did Birthright with Andrew, what almost 10 years ago now? There's something about climbing Masada at an ungodly hour that can really bring somebody together. I don't get to see Andrew Stern as much as I would like, but every time I do see him, I feel the connection created from 10 days in our supposed homeland. Given how harsh the sun was there to our pasty Ashkenazi skin, I'm not sure how homeland it really is. But I couldn't just hurry along past Andrew. That is what Cal games do - they bring old friends together, separated by the din of life over those painful 9 months. Wandering like Moses in a desert, but with only one commandment: Thou Shalt Watch Old Youtube Clips Of Games Online

So, when we finally left Andrew and tried to make it to our seats, we were both surprised, elated, and disappointed to hear the ancient belch of the Cannon. According to the cacophony of cheers emanating from the stadium, clearly Cal had done something good against the Michigan State Spartans. Had we run the opening kick off back? Had MSU fumbled the opening kick off? This was an undecipherable mystery given the few facts we had at our disposal. Did it even matter, though?

Either way, hearing the iron trumpet's clarion call to cheer put us in the perfect mood for another great season of Cal football. Delilah dripped with that sort of particular frustration that consumes her when we miss the marching band. The band was perhaps the best four years of her life (outside of our marriage, of course!). She didn't want to miss an opportunity to watch the band burst from the tunnel like Athena bursting out of Zeus' head. And she had. She was unenthused.

But, again, so was I. Having to leave the close relationships of my friends to spend the 3 hours with Delilah's family was always my least favorite games of the year. It's like what they say about pizza, even if you have bad pizza, you still have pizza. Sure, sitting at Memorial for a game with the extended family was still sitting at Memorial, but it was also sitting with her extended family.

For somebody whose parents never went to Cal, I certainly married into the right family. I guess. Delilah's parents, William and Lisa Britte, met at Cal. Both of their parents met at Cal. Presumably, the generation above met at Cal and the generation above met at Cal and probably the generation above that invented Cal and the generation above that settled Berkeley and the generation above that hung out with Christopher Columbus. Either way, for somebody who had barely stepped foot in California prior to committing to Berkeley, I might as well changed my name to Samuel UC Berkeley by marrying into the Britte family.

That would normally be fine except that William Britte (Billy Britte!) viewed his large annual donation as an Bitch All You Want card. If he wasn't the owner of the Cal Football team, you coulda fooled him. When Michigan State quickly rolled down the field to tie the game up at seven midway through the first quarter, Billy grumbled about how that wasn't what he was paying for. When Cal's quarterback threw a pick six, he threw up his hands in despair and asked in all seriousness why the quarterback would make such a bad throw. Presumably, because Billy hadn't given enough money.

I knew that over in section Q, my ultimate friends were relaxing, enjoying the game, not stressing the initial success by MSU. Alas, this was the Britte family tradition to enjoy the first game together, leading me to better understand the plight of Andy Dufresne in the Shawshank Redemption.

Fortunately for my marraige, Cal started to pick things back up in the 2nd quarter. Down 14-7 to start, an explosive offense appeared, perhaps solely to placate my father in law. With the dense fog making it difficult to get the passing game going, the Cal running backs stole the show. The Bears were truly rolling on. As usual, Cal had a dual running back attack. 1A and 1B. The senior who was already making Mel Kiper Jr. drool in that "The Thanksgiving turkey is finally ready to be cut!" way that he does.

And the 5 star freshman that was going to make everybody forget about the current Face Of The Team in a year or so time. Between the two of them, Cal racked up 75 rushing yards and 2 touchdowns by the time the marching band was heading down to the field in the waning moments of the first half. Delilah perked up her seat, anticipating what was presumably yet another Michael Jackson show.

With the teams safely in their crowded locker rooms awaiting further halftime instruction from the coaching staff, the highlight of the day started for Delilah. Circles, squares, horn flashes, dance blocks, this one had it all. I knew that she wasn't enthusiastic about spending the first game with her family insomuch as the band played away from her for most of the show. She tolerated the backs of everybody's plum for the family tradition of it all.

Plus, we could enjoy the colorful explosions of the cardboard cards from the card stunts. I secretly kind of liked seeing the student section's post card stunt performance more than the marching band, but valued my physical health too much to ever even remotely imply that within earshot of Delilah.

The second half was like an elongated version of the second quarter. The offense continued to pile up points, although the defense did not show the same level of bulldog tenacity. A few miscues led to my father in law shaking his head and cursing Tedford not quite so under his breath. How quickly the positives were forgotten once a failure had occurred. A particularly bone crushing sack put the entire stadium on their feet in celebration, though. The Spartans were able to inch closer from time to time. But like a man chasing a mirage through the Sahara, everytime they tightened the gap, the offense made sure to put more space between Cal and Michigan State.

Perhaps it was due to the fact that the game started sometime Sunday morning Michigan time, but Michigan State seemed to falter as the twilight further dimmed and the stars further shone. By the middle of the fourth quarter, things were out of grasp for MSU. Truly, it was not Sparta. Billy, earlier resigned to yet another losing season after just one quarter, was triumphant in success. Cal's success was his success! As the Michigan State fans started to filter out in the tail end of the fourth quarter, he was enthusiastically aggressive towards them. He really felt like his delightfully antagonistic chants of "Bandwagon" or "fair weather" were the slings and arrows of outrageous fortune that were driving the Spartans out of Memorial. It seemed doubtful that his yells and screams were even heard by the Michigan State fans who had traveled thousands of miles for the sole pleasure of sitting on the other side of the stadium from him.

To Billy, the first win returned Tedford to his status as both the Father, the Son, and the Holy Ghost. He could do no wrong! With geographically indeterminable Presbyterian on the slate for next Saturday, a 2-0 start to the season was pretty much assured. Despite my own incompetence regarding the weather, it was a great first game. Getting to see old friends, even if for the briefest moments, brought a smile to my face. With fans fat and happy over the Spartan feast, I was ready to start the march down the hill towards BART and already looking towards the game in Reno in two weeks.

Running The Numbers On Cal's Memorial Stadium Upgrade Numbers

2013-05-20T10:00:05Z

Previously, I wrote a post regarding Cal's update on financing for the Memorial Stadium Upgrade. That was based on an analysis provided by Cal itself. Recently, a report was issued entitled "Evaluation Of Financing For U.C. Berkeley's California Memorial Stadium and Simpson Center For Student-Athlete High Performance." It was drafted by three Haas School Of Business professors, William Fuchs, Richard Stanton, and Nancy Wallace. The Vice Chancellor for Administration and Finance, John Wilton, specifically requested they provide an objective analysis of the ESP Program etc etc. The PDF with their report is 118 pages long (although the report itself is about 34 pages, there is a lengthy appendix with many exhibits).

It appears that they reviewed a lot of documents from Cal and even interviewed key players (such as Sandy Barbour and other administrators). I read through this report, so you do not have to. It echoes many of the thoughts that we saw in the previous post about Cal's financing plan for the Memorial Stadium Upgrade. Initial projections for funding were absurdly rosy. Cal faces a massive problem in 20-ish years if recent changes don't provide improvement. But in the end, it is actually fairly optimistic about the future of the financing here. Let's dive in!

First, the report provides a background to the building of Memorial Stadium. It notes that seismic problems inherent in the location. It talks about how plans to update the stadium were delayed due to litigation (and the tree sitters) and this created a complex problem that increased the costs. They note that the combined debt to seismically upgrade the stadium and provide the other upgrades (such as the Simpson Center) will cost approximately $445 million.

They note that from 2013-2031, the annual payments (for interest only) are 18.1 million. Then, as Cal starts paying principal back in 2032, the payments jump up to $26-37 million until 2050. In 2053, there appears to be a massive balloon payment of $81.9 million, which is a staggeringly large number. However, the bonds don't technically have to be paid off until 2112, so it looks like Cal has set up a very aggressive payment schedule for itself here. This gives Cal a fairly large margin of error. However, this is a massive amount of debt, so you can't be too conservative about paying this off smartly and quickly. Then, they look at the 6 sources of obtaining money to pay off the debt. These sources are:

1. ESP Seat Sales

2. Other Seat Sales.

3. Philanthropy

4. New Media.

5. Rental Revenue

6. Investment Earnings.

I want to take them out of turn. Let's look at 1 and 6 today and 2, 3, 4, and 5 in a future post.

ENDOWMENT SEATING PROGRAM

Revenue from ESP seat sales (i.e. long-term 40-50 year contracts for football seats) is the larger source of incomes. The report notes that if every ESP seat were sold, the total raised would be $311 million, which is well short of the over $400 million in debt. So, the other 5 sources are still important and relevant. Another aspect that is relevant is how much return Cal can get investing the money it makes from the ESP sales. We'll get into that in the next section.

The report notes that initial statements on ESP seat sales were misleading and inflated. Cal stated they sold 1,854 seats by June 30, 2010. It appears that they used a vaguer definition of "sold," that included seats that weren't quite 100% sold. Under a more concrete definition of "sold," by June 30, 2012, Cal stated they sold 1,745 seats. It is true that seats can become unsold if the buyer decides to no longer continue paying for the long-term ESP seat. However, the decrease in seat sales is based on the change in definitions and what it means is that sales have not been as robust as we had previously been led to believe. Not good. But don't worry, we have decades to get this right and Cal is already aware of the need to change.

The report notes that they tried to dig into the assumptions underlying the initial forecasts, but many of the people who set them up had moved on from Cal. So, they couldn't figure out the rationale. They note by June 2012, seat sales were at 60% of the originally forecasted levels. Total dollar sales at that time were half of what they were forecasted. Cal got sold a bill of goods by some nameless "forecasters." Who are these people?!?!?

As I outlined in my prior post, Cal has made a series of changes to its ESP sales program that should hopefully have all seats sold by 2021. Although that is a delay from earlier forecasts, hopefully it'll be accomplishable and allow Cal to meet all of its debt payments by 2053. Per the report if Cal can meet 54% or more of its currently forecasted level of seat sales, then it should be good to go by 2053. That requires the sale of 389 seats for $43 million. So, that is the goal! The report provides a series of graphs outlining futures depending on whether Cal sells 40%, 60%, 80%, or 100% of the seats. Here they are. You can make them larger by opening them in a new tab.

Now, let's look at investment earnings.

INVESTMENT EARNINGS

While the seat sales can provide a significant sum of money, Cal can make even more money. How? By having their money do all the work! Invest the money you make off of the ESP seat sales to make more money! So simple a caveman could do it!

The report talks generally about investing and how Cal invests etc etc. They believe that Cal can average about 6% on its investments based on historical factors etc etc. However, for Cal to remain positive heading into 2053, all they need to do is make 4.1% on their investments, which is the average rate for Cal's borrowing.

Of course, these are sliding factors. The more seats you sell, the less return you need. The fewer seats you sell, the harder you need that money to work for you. This is where the models come into play. The report provides different models that show the various levels to ensure Cal is good to go by 2053. Thanks to Berkelium97 for help with formatting.

Table 5: Break-even returns

For various realized proportions of the ESP sales forecasts in 2013–2021 shown in Table 3, this

table shows the minimum return that needs to be earned on FFE investments each year in order for

the FFE balance in 2053 to remain positive.

Sales Proportion Return (%)

0.0 8.44

0.1 7.97

0.2 7.51

0.3 7.06

0.4 6.61

0.5 6.16

0.6 5.73

0.7 5.3

0.8 4.88

0.9 4.46

1.0 4.06

So, here, if Cal sells 10% of its remaining ESP seats, they'd have to get nearly 8% return to break even by 2053. Conversely, if they sell 90%, they only need 4.46% return. Since Cal believes they can sell 100%, they'd only need 4.06%, below their standard average return. Now let's flip things around and look at how many seats Cal must sell based on a range of investment returns.

Table 6: Break-even sales

For various realized returns on the FFE, this table shows the proportion of the ESP sales forecasts

in 2013–2021 shown in Table 3 that needs to be achieved in order for the FFE balance in 2053 to

remain positive.

Return (%) Sales Proportion

2 1:54

3 1:27

4 1:01

5 0:77

6 0:54

7 0:32

8 0:09

9 0:00

10 0:00

11 0:00

Here, the return is the key factor. If Cal only gets a 2% return, they'd need to sell an impossible 150+% of seats. If Cal gets a 10% return, they would not need to sell another single seat!

The report notes that in a worst case scenario (i.e. no more seat sales and only 2% return), Cal actually doesn't run out of money until 2034. So, even in the worst case scenario, we have 20 years of "WE HAVEN'T SOLD A SINGLE SEAT SINCE 2012 AND THE ECONOMY HAS BEEN IN SHAMBLES FOR DECADES" to try to figure something else out. Given that we've sold ESP seats since 2012, I think we're doing OK.

Finally, on page 213 of the report (PDF page 27), they provide more charts. The first chart shows how much money would be in the fund in 2053 based on ESP seat sales and investment returns. Under the report's belief that Cal can sell all of the seats and get 6% return, Cal would have $319 million by 2053. A best case scenario of all seats sold at 10% return on investment nets Cal $2.5 billion!

CONCLUSION

Cal has taken out over $400 million in debt to finance a new stadium. It doesn't have to pay off the debt until 2112, but has plans to pay it off by 2053. To do so, it created a special kind of long term seat plan for the most expensive seats. These seats cost thousands a year, but could raise millions in income if they are all sold and the proceeds are invested wisely. Initial attempts to do that have fared somewhat poorly and Cal did itself a disservice by essentially misleading the public about how well things were.

However, after a more reasonable course correction, things appear to be back on track. If Cal can sell at least 54% of remaining ESP seats and get about 6% of return on investing those proceeds, they should be fine. Sell all those seats and get a decent return and Cal could make itself a decent chunk of change!

I believe that Cal can sell all the seats and am hopeful they can get a reasonable return. Even if things go poorly, they have decades to keep tinkering. It was essentially decisions made in the 60s, 70s, 80s, and 90s that got us to this point and it is decisions made in the early 2000s that will affect how Cal Athletics looks decades from now. Good luck, Sandy Barbour!

The report continues on to discuss a few other factors, including most importantly rental proceeds. This post has already gotten fairly lengthy, so I'll discuss that in a future post. Thanks and feel free to provide your thoughts on this in the comments. GO BEARS!

DBD 5.17.13 I continue to hate you,SBN

2013-05-17T14:10:58Z

I'm particularly frustrated by the fact that scheduled posts dont post. So, the moring post didnt go up until I just woke up at 10 AM EST. :(. I feel bad for our East Coast readers.

This is your DBD

I'm particularly frustrated by the fact that scheduled posts dont post. So, the moring post didnt go up until I just woke up at 10 AM EST. :(. I feel bad for our East Coast readers.

This is your DBD

DBD 5.16.13 SBN, I hate You

2013-05-16T14:10:59Z

The Long National Nightmare of poorly functioning SBN sites continues. There is a SBN Status site that updates you:

http://status.sbnation.com/

But its struggling to load! There is a twitter site, too, which isnt a lot of help right now:

https://twitter.com/SBNSupport

Continue trying to rec things to no avail!

The Long National Nightmare of poorly functioning SBN sites continues. There is a SBN Status site that updates you:

http://status.sbnation.com/

But its struggling to load! There is a twitter site, too, which isnt a lot of help right now:

https://twitter.com/SBNSupport

Continue trying to rec things to no avail!

Damon Harrington Named Cal Football Strength And Conditioning Coach!

2013-05-16T03:19:33Z

Hot off the e-presses, Damon Harrington is joining Cal to be the Strength coach for football. Let's learn more:

BERKELEY - Director of Athletics Sandy Barbour announced Wednesday that Damon Harrington has joined Cal as the football head strength and conditioning coach. Harrington will work directly with the Cal football program on a day-to-basis and oversee three assistant strength and conditioning coaches in his role. He will report to the department's director of strength and conditioning Mike Blasquez.

"We have restructured our strength and conditioning department to better serve the needs of our entire student-athlete population," Barbour said. "The addition of Damon will add to an already excellent and experienced staff that will take both our entire strength and conditioning program as well as our specific operation for football to new heights."

So, Blasquez will stay at Cal as the director of the strength department, but Damon Harrington will focus on football specifically.

Who wants to guess which southern football program, Harrington came from??? LOUISIANA TECH! Pretty soon, we'll be getting the Louisiana Tech cafeteria workers at Crossroads in Berkeley.

To end this on a nice note, let's see if Cal can match this:

Harrington was instrumental in improving Louisiana Tech's strength and conditioning program, with Bulldog football players breaking 26 strength records (by position) during his final seven years with the school.

What do you think about the Strength Dept reorganization and Coach Harrington??

A Closer Look At Cal Football's Endowment Seating Progress

2013-05-15T14:10:37Z

Today, I wanted to talk about the recent change in management of the Athletics Facilities Financing. Cal recently put out a huge report on it, which you can find here.

I read through it and am hopeful that I can provide insight into what it says in this post. First things first, I'm not a financial expert. In fact, I recently traded my sole cow for a series of magical beans. Hope that one works out, FINGERS CROSSED!

Having said that, I did go to Cal, so I presume I'm a genius the likes of which we haven't seen since 19th century feminist Margaret Fuller. So, hopefully, this all turns out well. Plus, if I do screw something up, you can yell at me in the comments and yelling at me in internet comments is currently America's #1 growing business sector! AMERICA! LOVE IT OR YELL AT ME IN THE COMMENTS!

Before we get into the nittiest of the gritty, I feel it prudent to define our terms today and provide greater context. The background to this piece is that Cal had to provide seismic updates to its football stadium (California Memorial Stadium). In doing this, Cal decided to also upgrade the facilities with non-seismic upgrades (i.e. a massive overhaul of the facilities themselves). This cost money. Lots and lots of money. We'll get into that in a second. Cal initially had a plan to pay off all this money. This plan has not been going really well, so they had to revise their plan. And that is the basic overarching point of the post here. Now, let's get into the details.

BONDS (NOT BARRY)

Cal decided to issue bonds to pay for this plan. What are bonds? Webster's Dictionary defines bonds as "I don't know, but this is what I stole from Wikipedia:

In finance, a bond is an instrument of indebtedness of the bond issuer to the holders. It is a debt security, under which the issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay them interest (the coupon) and/or to repay the principal at a later date, termed the maturity.[1] Interest is usually payable at fixed intervals (semiannual, annual, sometimes monthly). Very often the bond is negotiable, i.e. the ownership of the instrument can be transferred in the secondary market.[2]

Thus a bond is a form of loan or IOU: the holder of the bond is the lender (creditor), the issuer of the bond is the borrower (debtor), and the coupon is the interest. Bonds provide the borrower with external funds to finance long-term investments, or, in the case of government bonds, to finance current expenditure. Certificates of deposit (CDs) or short term commercial paper are considered to be money market instruments and not bonds: the main difference is in the length of the term of the instrument."

Man, Webster's Dictionary has really fallen apart, hasn't it? Long story short, bonds are basically Cal taking on debt to pay for this. How much debt? They've taken on $276 million for Memorial Stadium upgrades and $124 million for the Simpson Center (SAHPC), which is to say the new, fancy facilities next to Memorial Stadium. The report also states that they have $45 million remaining in bonds to be issued.

Bottom line: They've taken on $400 million worth of debt so far and they anticipated spending $45 million more.

My reaction when reading this:

via images.doctissimo.fr

Yes, that is a lot of Tostitos! But, wait, there is good news! This debt does not have to be paid off by tomorrow or else Sandy Barbour's thumbs are broken. While payment terms differ for various different types of bonds issued, the last payment does not have to be paid until 2112! 2112! President Marshawn The Third will be in his 8th term of office by then.

It's not quite so easy, though. The real problem will start in the 2030s. Until the 2030s, Cal can just pay off the annual interest payments on the debt and be A-OK. However, starting in the 2030s, Cal will have to start paying down the principal of the loans or else be in breach of the debt service. A KQED story on this matter notes what the future might holds:

Some projections showed Athletics might not be able to make payments starting in the 2030s when the debt service balloons. The debt is structured so that for the next 20 years, Cal only needs to make interest payments on the debt. The principal kicks in in the early 2030s, resulting in payments between $24 million and $37 million per year.

Additionally, due to historically low interest rates, Cal was able to get the debt for cheap. The KQED story says that it is 4% for most of the debt. I guess that is historically low, but I lack context to independently judge that.

Now, I'll be honest with you. I don't know exactly what happens if you fail to service your debt principal. Does a sleazy looking guy show up and say "That's a nice football stadium you got there, would be a shame if something bad happened to it"? Do repo men show up to tow the stadium away? The KQED story actually addresses that issue somewhat:

Though the Berkeley campus has pledged that Athletics will make its debt payments, ultimately the Regents are on the hook for the bonds.

So, it appears that if Cal cannot make the payments, the Regents would have to step in. Presumably, this would be a disastrous financial burden on the Regents and the UC system in general. I'll also note this one item from the KQED story that surprised me greatly:

At a meeting of the Board of Regents in September 2009, a Berkeley campus administrator, armed with numbers from Athletics, told the Regents that 65 percent of ESP tickets were sold to date, even though the actual figure was far lower. Convinced the plan was viable, the Regents approved $321 million in debt financing for the stadium.

When asked about the discrepancy, Barbour and other administrators said Athletics had changed its definition of the word "sold."

Uhhhhhhhh...... They must have used that crappy old Webster's Dictionary above in defining the word "Sold." How Bill Clinton of them. This seems out of character for Sandy and I was shocked to read this. I'd like to learn more. Maybe they just meant that the definition of sold included seats where people had shown significant interest, but not quite 100% pulled the trigger. Or started the paperwork, but weren't finished yet? I don't know.

Anyway, the problem that Cal faced was that its initial plan to ensure that the loan payments were always going to be made was faring poorly. Cal's plans was to use ESP seats (more on this in a moment) and planned to have all ESP seats sold by June, 2013. That won't happen and Cal is quite honest about it.

ESP SEATS

Let's delve deeper into ESP seats (the main revenue stream to pay off the debt). ESP seats are the super 1% seats that cost a ton of money. You can find out more here

The most expensive seats can cost up to $450,000.00 (over 30 years) or $225,000 in one lump sum payment. That is for one ticket! But you get it for up to 50 years. Cal's plan was basically to jack up the prices, but give you access for up to 50 years and hope that people bought in. As anybody who went to any Cal game last year can attest, people didn't really buy in and so that is why Cal is making this change.

If you click on the link at the top of the this post, you can see the charts outlining seats sold and monies received etc etc for every quarter of the last three years. I've also placed the most recent chart below:

Table 1: Summary of ESP Seats Secured through 12/31/12

	Field Club Seats	Stadium Club Seats	Univ. Club Seats	Total FY 13
Total Seat Inventory for Sale*	1,426	1,051	425	2,902
Seats Sold to Date	1,073	697	103	1,873
Seat Sales in Progress	12	3	4	19
Percent of Goal - Number of Seats Sold	75%	66%	24%	65%
Percent of Goal - Number of Seats Sold and Sales in Progress	76%	67%	25%	65%

Total Dollar Value of Seat Inventory for Sale	$84 million	$126 million	$63 million	$273 million
Dollar Value of Seats Sold*	$57.1 million	$72.6 million	$21.6 million	$151.3 million

You can see that Cal has only reached 65% of its goal and I think part of that has to do with the fact that Cal's total seats for sale decreased slightly. In the December 31, 2011 chart, it says that 3,198 seats are for sale. Now, it says that as of December 31, 2012 only 2,902 seats are for sale. Plus, when you break it down by the three categories (from cheapest to most expensive: Field Club, Stadium Club, University Club) you can see that people are buying the (relatively) cheapest seats. 76% of the Field Club seats are sold as of December 31, 2012, while only 25% of the University Clubs seats are sold. So, even when Cal is selling seats, they aren't getting the biggest ones out the door. Out of the $273 million potential sales, Cal has currently made $151.3 million worth of ticket sales. However, as noted above, people can opt into payment plans as long as 30 years. So, while it is true that people have agreed to pay $151.3 million, none of that is actually guaranteed and people can back out whenever (more or less). This chart notes actual cash received through December 31, 2012:

Cash Received Summary

Cash Received Summary
FY 10 ESP Revenue	$14,367,534
FY 11 ESP Revenue	$13,461,021
FY 12 ESP Revenue	$12,910,763
FY 12 Naming Rights Revenue	$714,286
FY 13 ESP Revenue	$2,064,874
FY 13 ESP "Perk Sales" Revenue	$210,755
FY 13 Philanthropic Naming Revenue	$0
Total Cash Received through December 31, 2012	$43,729,233

**Annual ESP payments are due on April 1st.

Cal has received in actual cash approximately $43 million, although that number does include about $1 million of non-ESP payments (naming rights etc etc). A few things jump out here.

1. The revenue has gone down from ESP sources each year. 14 mil in 10, 13 mil in 11, 13 mil in 12, and only 2 mil to date in FY13 (which goes from July to June, so it is half over). Not good.

2. The vast, vast, vast, vast VAST majority stems from ESP sources, which means that if ESP seat sales are going poorly (which they are), then Cal will be in trouble.

Fortunately, Cal has two decades to get this figured out and they have the brightest minds at Haas School Of Business (and elsewhere) to redo the models. So, we've looked at the problem (the debt) and the proposed solution (the ESP seats), let's look at the changes to the proposed solution to make it better solve the problems.

CHANGES TO THE REVENUE SALES PLANS

Let's take the changes turn by turn as outlined in the Cal Report.

1. New Sales Staff. Cal has hired a sales staff specific to ESP. Previously, the Intercollegiate Development Office was handling the sales. Hopefully, this dedicated staff can handle the matters better and make this program a 100% success. It could have been better to augment the marketing department, too, on top of the sales department. The KQED story has more information on this new sales team:

For fiscal year 2013, the budget for entire Marketing, Sales and Service group is $2.7 million out of a nearly $90 million Athletics budget, according to public records received by the Investigative Reporting Program. Payroll for Honerkamp's elite premium sales team of five people is $500,000, according to a department spokesperson.

2. New Ticket Options. They've created corporate bundles (which potentially is why the sum of potential ESP seats decreased over time as noted above). These are just two year contracts instead of the up to 50 year contracts. They don't appear to be cheaper, but having a two year commitment instead of a longer term commitment makes it palatable for corporate interests. And if there is one things Cal is known for, its pleasing corporate interests! Apparently, 26 new University Seat purchases have been made with the corporate bundles.

Plus, there are "perk pricing" seats, which are discounted seats on a short term basis for ESP buyers. So, you can get an extra seat for your friend to this game or that. These perk pricing seats have already generated $200,000 in revenue according to Cal.

The basic thrust of these changes is that there was minimal flexibility with the previous plan. This meant that people were concerned about entering into extremely long term payment plans, especially with the financial downturn. This increased flexibility (and discounts) has already started attracting interest and will hopefully goose ticket sales a bit.

3. Future Revenue. This isn't really a change for now, but the report does discuss new revenues that they anticipate. $2.5 mil annually from media rights for the new post-season playoff that should come on board in 2014. Multi-million dollar payments for other media rights once the current contract is up in 2017 (2017!). Hopefully, those revenue streams will go online at the appropriate times and be as anticipated. Otherwise, things could get ugly.

4. Facilities Rental. Who wants to get married at Memorial Stadium??? Some money can be made from this and Cal will hopefully start getting that soon.

So, these are the changes that Cal discusses. They note that their new goal is to 70-120 seats per year until all seats are sold. They believe that with these changes, they can accomplish that goal. Cal runs through a series of different models based on a variety of factors, such as donations, seat sales, return on investment etc etc etc. They discuss how things may have gone under the old model (showing that in some worst case scenarios, shit gets real in the 2030s and 2040s). Under this new plan, they believe that their models show problems will only arise starting in the 2050s and only if the annual earnings rate is well below historical norms. I lack the context to know whether a 4% annual earnings rate is well below historical norms, so I can only take their word for it.

If Cal's projections are accurate, then Cal can pay off the debt early. If not, Cal will have time to make additional changes in the 2020s, 2030s, 2040s, and beyond. These changes are partially borne out of the realities of today, but also are made in an abundance of caution. They have decades before things REALLY go downhill, but Sandy doesn't want to put the Athletic Directors Of The Future (presumably Sandy until we are ready for Robo-Sandy) in a really bad situation.

Conclusion:

Cal has taken on a LOT of financial responsibility and so far things are not looking great. Problems will not arise for decades, but if Cal does nothing, it could get truly bleak. I'm somewhat concerned about this changing the definition of the word "sold" thing, that seems out of character for Sandy. Cal is planning on using hyper expensive ESP seats to help pay off the debt, but it does not look like they are going to reach their goal, so they made some changes to the plan.

I am hopeful that with these changes (mostly relating to increased flexibility in purchasing the expensive ESP seats), Cal will be able to accomplish its goal of selling all of the ESP seats and ensuring financial stability for Cal and UC system for the next century. Whew, that is a lot! What is your thought on this? What do you think about the ESP plan in general? What do you think about the debt Cal has taken on? What do you think about the changes in the ESP plan? Tell us your thoughts in the comments and GO BEARS!

Strength and Conditioning Coach Mike Blasquez Done With Cal Football??

2013-05-14T17:41:48Z

No inside information here, but Cal Rivals has tweeted out some interesting information about the Cal Strength and Conditioning Coach, Mike Blazquez:

GM: According to multiple sources, #Cal strength and conditioning coach Mike Blasquez has been let go.
— Cal Rivals (@CalRivals) May 13, 2013

#Cal officials couldn't confirm the Blasquez news at this point. To clarify, we're hearing he's out as S&C coach for football specifically.
— Cal Rivals (@CalRivals) May 14, 2013

According to his Cal bio, Blasquez has been with Cal for over 10 years, but has only been with the football team for 2. If the Rivals tweets are accurate, Blasquez may still be staying at Cal, but just not working with the football team. What is your thought about this?

If we hear anything further regarding this matter, we will update you. Thanks! GO BEARS!

According to ESPN's Adam Schefter, Former Cal Football Great Chuck Muncie Has Passed Away

2013-05-14T15:04:08Z

Per Adam Schefter's Twitter:

Former Chargers RB Chuck Muncie passed away of a heart attactk. RIP.
— Adam Schefter (@AdamSchefter) May 14, 2013

How sad! Muncie was known to many for being a San Diego Charger, but he'll always be a Golden Bear to us! Some more info on his time at Cal:

Muncie was a star running back for California during the 1970s. He was big, fast and elusive, and was also a good receiver. Muncie set six school rushing records, including most touchdowns and most yards gained in a single season. He was instrumental in Cal's NCAA-leading offense which propelled the team to the co-championship of the Pac-8 in 1975, and he appeared for the first time on the cover of Sports Illustrated. Muncie was a strong candidate for the Heisman Trophy and finished second in the voting in 1975 behind Archie Griffin of Ohio State. He was awarded the 1975 W.J. Voit Memorial Trophy as the outstanding football player on the Pacific Coast. After Muncie graduated, the New Orleans Saints selected him in the 1st round of the 1976 NFL Draft with the 3rd overall selection. Michael Trope known as Mike Trope during his days of being an NFL agent was able to negotiate an unheard of amount of $900,000 contract for seven years on behalf of Munice with the New Orleans Saints.^[1]^[2]^[3]

Here are some videos with him at both Cal and the pros:

Share your memories of Chuck Muncie in the comments and GO BEARS!

Sales Proportion	Return (%)
0.0	8.44
0.1	7.97
0.2	7.51
0.3	7.06
0.4	6.61
0.5	6.16
0.6	5.73
0.7	5.3
0.8	4.88
0.9	4.46
1.0	4.06

Return (%)	Sales Proportion
2	1:54
3	1:27
4	1:01
5	0:77
6	0:54
7	0:32
8	0:09
9	0:00
10	0:00
11	0:00