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UC Berkeley considering cuts to Cal Athletics to alleviate $9 million deficit in department, no teams being cut

Time to do this again.

By Avinash Kunnath
Neilson Barnard/Getty Images

It's happening again. Cal intercollegiate athletics is considering cuts to their programs, and maybe even individual programs altogether. Nanette Asimov of the San Francisco Chronicle has more.

UC Berkeley is projecting a deficit of $150 million this fiscal year — about 6 percent of its operating budget of $2.5 billion. The campus overspent by $109 million last year and by $12 million in the 2013-14 fiscal year, according to campus officials. In previous years, despite the economic recession, the campus enjoyed surpluses.

When it comes to cuts, "every aspect of Berkeley's operations and organizational structure will be under consideration," Dirks said. Sources said there are no plans to reduce the number of tenured faculty, roughly 1,600 professors.

This has been in the making for awhile.  With the state deciding to keep education funding on the backburner on a constant yearly basis while freezing tuition hikes and out-of-state enrollment, it has been draining the coffers of every part of the university, and that leaves no money all over the place.

Despite the increased money from the Pac-12 TV contract and an operating surplus of $9 million, the Bears are still trying to cast off the costs of the facilities upgrades from the last decade ($17.5 million a year!). Thus Cal Athletics had aabout a $9 million dollar shortfall in 2015, mostly due to the lingering costs of the still-incomplete Memorial Stadium upgrade (Phase III to improve the East Side of Memorial is on permanent hiatus). The cost of the Simpson Center and new Memorial is not likely to be paid off for some time, leaving Cal in the red.

Oddly enough, Jon Wilner might be the voice of reason here. He points out that Cal Athletics has actually been pretty profitable, and there are ways to fix things. Some good details here.

Industry sources have indicated that Cal's new deal (with IMG, Learfield or the Pac-12's new in-house entity) could very well fall in the $8 - $9 million range annually.

Those same sources believe the cash portion in the new apparel deal — contracts with Nike, Adidas and Under Armour typically have apparel and cash components — will add several million dollars more to the total.

The net gain ... the difference between the cash from existing apparel/multi-media rights and the cash from the upcoming deals ... will approach $5 million, sources believe.

Next, add the windfall from the August football game in Australia - it should be more than $1 million, according to Pac-12 sources - and a jump in basketball gate receipts by at least $500,000 (a figure based on my calculations from the dynamic pricing model).

All in all, that's an immediate influx of at least $6.5 million to offset the long-term debt.

And here's the key: The apparel and multimedia revenue streams aren't one-time events. That's an additional $5 million annually in net income, and the total probably will rise over time. (Deals of that nature usually have escalator clauses by which payments in later years are greater than payments in the initial years.

That's promising. However, given the climate surrounding funding higher education in California, it's unlikely we're going to see a huge switch back to the good old days. That could mean higher deficits are probably on the horizon. Cuts may have to be considered.

Cal has 28 sports, the most of any public program in the Pac-12, and it's likely time to look at ways to keep Cal profitable rather than just breaking even. The profits that football and basketball have made aren't nearly enough to sustain all the non-revenue sports, and with some very significant long-term financial problems for the university going forward, it might be time to take a look at what programs need to be let go.

The big sport that was nearly cut last time was Cal baseball, which usually has the highest operating deficit of any major non-revenue sport.  Based on what happened last time though (Cal baseball made the College World Series the year they were on the chopping block), it could be a huge disaster to try and do anything.  Cal baseball has set up a foundation and looks to be doing its best to ensure sustainability down the line. (Let's not even get started on the Cal rugby fiasco, one of the lowest points of Sandy Barbour's tenure).

Cal swimming and water polo isn't going anywhere with a new aquatics facility being built. Cal crew is fairly self-sufficient. Cal tennis just finished upgrades to their facilities. Cal volleyball is pretty healthy. These sports are pretty self-sufficient as well and have a huge donor base, so they will stay. Cal soccer has a long and great tradition.

Sports to watch for significant cuts might be the gymnastics programs, Cal cross country and track and field, Cal field hockey and lacrosse. Many of these programs will have to consider changes.

UPDATE: No teams will be cut.


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