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June 19, 2013 10:25 AM UC Berkeley’s Disaster Sports Program

By Michael O'Hare

There’s nothing wrong with borrowing for a capital investment, as long as there’s a realistic way to repay the loan. There wasn’t. The details of the financial magic trick are fairly complicated. One part was asking people to just give us a lot of money and buy expensive seats on long term contracts, putting the money (if we got it) into an endowment that paid more than the tax-exempt bonds cost. It also involved putting off repaying any of the bond principal until everyone with fingerprints on this stinker would be safely retired on a nice beach, and it introduced such tough-minded financial innovations as treating a fan’s unenforceable statement of intent “to go on buying seats for some number of more years maybe” as income. Not a hope, not a discounted receivable; income. You can read an exquisitely sanitized version of the story here and here. It contains the immortal promise “Intercollegiate Athletics is taking full responsibility for generating the funds needed to pay the debt for construction of the Simpson Center and Memorial Stadium”. As IA took “full responsibility” a decade ago to eliminate its need for campus subsidy by now, I assume this means, in ordinary English, “When IA shall have failed to pay for its new toys, it will be very sorry and regret the faculty appointments and new facilities Berkeley will have to go without.”

Around the time it became impossible to pretend the stadium financials were going anywhere except in the toilet, the football team and the men’s basketball team’s academic performance collapsed, with this year’s football numbers the worst in the PAC-12 and edging along the 930 Mendoza line of post-season eligibility. Their field performance tanked as well. Bowl game-what bowl game? March whatness? I cannot overemphasize the importance of winning games to selling tickets to football and men’s basketball games, in case you missed that.

Our athletic director, who has an MBA, leaped into action, having overseen the financial, playing, and academic meltdowns for four years, and she did what weak managers always do when they have no clue: she fired the coach who had had five winning seasons when he came and whose team was now on the rocks, unhesitatingly reaching into our pockets for about $5.5m in severance money for her Trump moment. She did more: she ponied up $300,000 of the campus’ money (IA deficits are always campus deficits) to hire marketing experts. Did I mention that she has an MBA?

An unintended reflection on the half-billion-dollar stadium/coaching center morass is provided by John Wilton, the Vice Chancellor for Administration and Finance who found the IA mess curdling in his desk drawer when he arrived. Replying to a critical editorial in the Daily Cal, he wrote an op-ed defending the latest screwup he will have to deal with, a fancy new aquatics center for intercollegiate swimmers and divers:

The author [of the editorial] presumes that the aquatics center financial model is similar to that used for the Simpson Center for Student-Athlete High Performance [the coaching/party/conditioning center]….this project is being financed in the same manner as a recent academic project…whereby construction cannot and will not proceed until 100% of the donor financing is secured and recorded.

Apparently the stadium-SAHPC scheme, borrowing money against filling a gutshot straight, wasn’t so brilliant that Wilton wants to try it again!

Which leads us to the aquatics center. This is being built on a parking lot next to the medical center, across the street from the existing swimming/basketball/track/baseball complex at the SW corner of the main campus. It is a terrible location for yet another facility that does not generate the foot traffic that that part of downtown Berkeley badly needs, and that could just as well go on the hill above the stadium in a rugby/soccer field. I also completely flouts the campus’ rather well-thought-out 2020 development plan. The city hates this very inconsiderate land use decision but can’t do anything about it as Cal is exempt from local zoning. But the worst part of it is what Wilton nimbly avoids in his reassurance: there is no provision for operation and maintenance of this very expensive facility. A prudent organization does not put a shovel in the ground for a building unless it has assured not only its construction cost but the costs of operating it; at Harvard, for example, a dean may not build until she has not only raised not only the cost of the new building but put a like sum for operating it into the university endowment. (Right; Harvard is rich. Should rich institutions be more or less prudent than poor ones?) We have heard nothing about operating costs for the aquatic center, and no, Virginia, swimming, diving and water polo are not money sports. Those operating costs are coming straight out of campus funds. But hey, if we can watch a few Cal swimmers at the Olympics every four years, why would we want to hire more boring professors? I mean, what’s a University for, when you come right down to it?

Michael O'Hare is a Professor of Public Policy at the University of California, Berkeley.

Comments

  • Tim Smith on June 19, 2013 11:18 PM:

    As a former student-athlete at Cal as well as a Cal grad and major donor, all I can say is ...another hatchet piece by whiny little anti-sports wanker. Part of what makes Cal a great, world-class institution is the fact that we have a fabulous sports program. Our student-athletes excel in the classroom and on the field. Deal with it.

  • kate on June 21, 2013 11:17 AM:

    As a former graduate student tutor at Cal, I would caution donors, journalists and supporters of Cal sports as well as anti-Cal writers to be careful about the way sports program are lumped together and not lose sight of the need for less practice time (maybe less = more targeted & effective time) for players. Student athletes in the revenue sports are not graduating well and not getting through without handholding through no fault of their own.
    Instead of adding more money aesthetic of the sports, why not add more money to increase the quality of the programs that need it & improve the time set aside for education so that the athletes can actually be students, and learn to be independent students. That said, many athletes do excel in the classroom, but if you broke the Cal student athlete population down by dollars earned for the school, you would see major gaps in the educational achievement of students.

  • Benny Kovacs on June 24, 2013 2:37 PM:

    Intercollegiate athletics is a fundamental part of UC Berkeley. The mismanagement of money is not the fault of Intercollegiate Athletics; it's an endemic problem that starts with tons of mid-managers with large salaries who do next to nothing and continues with the fact Cal is the only UC campus that robs funds from its state allotment to maintain the "Physical Plant" and uses it for academic reasons. Athletics is a scapegoat to the university's financial situation due to it's visibility. Without athletics, fundraising for academics would drastically suffer; this according to every development officer I've ever encountered. Cal has one of the best athletic departments in the country and the stadium remodel was mandated by the state due to earthquake. Cal will never be the University of Chicago; and your specious logic gains attention but lacks truth.