Berkeley’s $447 Million Mistake
by Daniel Luzer
UC Berkeley will probably have to borrow money to renovate its football stadium, a lot of money.
Two years ago, when the University of California regents approved a $321 million renovation of Berkeley’s Memorial Stadium (right), UC officials said “the project will be funded mainly by sales of long-term rights to about 3,000 stadium seats and that no state money will be used.”
But, according to an article by Rachel Bachman in the Wall Street Journal:
Three years into the fund-raising effort, a projected $270 million from the sale of seats has failed to materialize. At the end of December, the school had collected only $31 million in the first three years of the sale. Now it has become clear that the university will have to borrow the vast majority of the money. The total bonded debt for the project, including the training center, will be $447 million.
And it looks like this stadium, and significant interest on money to facilitate that stadium, will be financed by student tuition. This is what your debt is paying for.
The University of Minnesota borrowed $220 million to build its new stadium in 2009. The University of Michigan borrowed only $148 million to renovate its stadium in 2010.
The stadium, which is listed on the National Register of Historic Places, opened in 1923. The university funded construction from public contributions, as a memorial to Californians who died in World War I. The total cost was was $1.4 million ($18.6 million in today’s money). [Image via]
[Update: The Wall Street Journal has issued a correction, explaining that “The University of California-Berkeley always intended to borrow most of the $474 million needed to renovate its football stadium and build an athlete-training facility. An earlier version of this article implied that Cal was taking on more debt than originally planned. Also, in noting that Cal had raised $31 million of a proposed $270 million endowment for the stadium, the article failed to mention that the school had gained nonbinding commitments of an additional $113 million, the majority of which will be paid over 30 years.”]