DiabloWags said:

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Cal's sports spending soars to over $165 million in first year in ACC

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Cal's spending on intercollegiate athletics soared in the school's first year in the Atlantic Coast Conference, university records show.

Total operating expenses climbed to more than $165 million in the 2024-25 fiscal year, up from approximately $149 million in 2023-24 and $127 million the year before. That marked an increase of more than 30% in the three-year period ending last June 30.

Revenues also jumped, rising to about $153 million in 2024-25 according to Cal's annual financial report released Monday. That represented a boost of more than $33 million, though much of the increase came via payments from UCLA ($10 million) and the system-wide University of California Office of the President ($15 million).

Bottom line: The statement of revenues and expenses put the Cal athletic department's deficit at more than $24 million for the most recent fiscal year, including nearly $12 million in payments for the renovation of Memorial Stadium and other capital projects..

That deficit also could be viewed as an understatement, given that Cal counted as revenue almost $43 million in "direct institutional support" from the university.

The report offers a glimpse into the finances of Cal athletics at the dawn of a new era in college sports. After last year's settlement of antitrust lawsuits against the NCAA and Power Five conferences, college athletes now are permitted to receive revenue-sharing payments directly from schools, in addition to NIL deals (name, image and likeness).

Division I athletic programs are spending up to $20.5 million on payments to athletes in the 2025-26 academic year, with about 75% (more than $15 million) generally committed to football. Those payments were not reflected in the 2024-25 report.

"That will be the biggest change you see for '25-'26, the implementation of the House settlement," Cal co-athletic director Jay Larson said in a Chronicle interview Tuesday. "It adds a $20.5 million expense line. We need to generate the revenue … and we're pleased our donor community has really stepped up, and is primarily funding our revenue sharing."

Cal raised a record $82 million in the 2024-25 fiscal year, Larson said, though that number did not appear on the report because most of it went to endowments. The five programs now fully endowed are men's and women's golf, men's swimming and water polo and rugby.

Asked whether this level of donor support is sustainable, Larson replied, "That's the question, but we're pleased with the early results. The more success we have, the more revenue we can generate in ticket sales and sponsorships and so forth. The idea is to reduce that deficit over time, and the way to do that is to generate more revenue."

An extra layer of financial pressure exists in Berkeley in the wake of a recent, expensive change in head football coaches. Cal fired longtime coach Justin Wilcox in November and hired former Oregon defensive coordinator Tosh Lupoi in December.

The school owed Wilcox approximately $10.9 million for the final two-plus years of his contract, according to a copy of the contract obtained by the Chronicle. Cal covered the payment through private donations, one source said.

Lupoi signed a reported five-year deal to replace Wilcox. The school declined to provide Lupoi's contract in response to a public records request, saying it's still in "draft format."

Cal and Stanford both joined the ACC in the summer 2024 after the Pacific-12 Conference imploded. Four schools in the old Pac-12 (USC, UCLA, Oregon and Washington) bolted to the Big Ten, while four others (Arizona, Arizona State, Utah and Colorado) left for the Big 12.

The financial statement made public Monday illustrates the wide-ranging economic impact of Cal's transition to the ACC.

Most notably, costs for team travel jumped to $14.3 million in 2024-25 from $10.3 million in Cal's final year in the Pac-12 (a 40% increase), given that most conference road games now require flights to the Eastern time zone. Expenses for coaching salaries increased to $30.8 million from $28.8 million a year earlier, as did costs for support staff/administrative compensation to $35.8 million from $32 million.
Cal's media rights revenue dropped sharply, from $25 million in the school's final year as a Pac-12 member to $11 million in its first year in the ACC. Among the concessions Cal and Stanford made to join the conference was a dramatically reduced share of the conference's media-rights revenue for seven years.

Contributions to the athletic department climbed significantly in 2024-25, to $20.4 million from $13.7 million (a 49% increase), driven by aggressive fundraising efforts. Endowment and investment income rose to $15.1 million from $14.2 million.

"Our first year in the ACC was exactly what we expected from a financial standpoint, exactly what we prepared for," Larson said. "We knew we'd have a reduced (media rights) revenue share, we knew we'd have increased travel expenses, and both things played out as we expected.

"More broadly, we're excited about the framework we're putting in place to enhance our financial future. I think we have the winds at our back."

Cal's spending for football, its most costly program, increased slightly to $46.8 million from $45.6 million. Travel costs for football skyrocketed to $4.5 million from $2.4 million, an 87% increase; game expenses jumped to $5.6 million from $4.1 million; and athletic student aid also went up to $6.5 million from $4.9 million.

Football revenues for media rights plunged from $19.6 million to $8.8 million. But ticket revenues for football increased to $11.2 million from $8.4 million, and contributions leaped to $5.8 million from $2.7 million.
The most striking year-over-year change in the fiscal report was Cal saying intercollegiate sports collectively generated $28.1 million in "other operating revenue," a huge increase from $2.4 million one year earlier. The men's basketball program generated $5 million of this revenue, a year after posting only $1,100.

This overall spike traces to two new sources of money. One is a $10 million payment from UCLA, authorized by the UC Board of Regents in May 2024 in the wake of UCLA's departure to the Big Ten, the first step (in tandem with USC's exit) in the collapse of the old Pac-12.

That payment is scheduled to occur annually through 2026-27, according to a memo of understanding dated June 6, 2024, and obtained by the Chronicle through a public records request.

The memo also details a separate $15 million annual payment from the UC President's Endowment Fund to aid "Cal athletic programs and student athlete support." That $15 million payment similarly is set to occur in the 2025-26 and '26-'27 academic years, according to the memo signed by (among others) former UC President Michael Drake and former UC Berkeley Chancellor Carol Christ.

Critics say the accounting methodology used to compile Cal's sports balance sheet dramatically understates the financial support intercollegiate athletics receives from the university. For example, under the department's "revenues," the 2025 report listed more than $42.6 million in "direct institutional support."

But Brian Barsky, a UC Berkeley computer science professor who has scrutinized sports finances at the school, said that's not generated revenue it's simply a multimillion-dollar expenditure of university funds to underwrite athletics. If it were counted that way, Cal's reported sports deficit would more than double.

Also, an annual drag on the athletic department's finances was the payout for the 2011-12 renovation of Memorial Stadium, and simultaneous construction of an adjoining high-performance training center for Cal athletes.

When first proposed, optimistic school officials claimed the $474 million project would all but pay for itself via an innovative financial plan based on the sale of expensive, multiyear "endowed" seats to Cal football fans. But fans balked at the prices, which topped out at $225,000 per seat.

In the end, the school was saddled with paying off what John Cummins, who was chief of staff to four UC Berkeley chancellors, described in an academic journal as "the most expensive intercollegiate athletics capital project in the nation."

Cal presently pays out about $18 million per year for the stadium bonds, with $9.9 million charged to the athletic department. The rest is paid by the chancellor's office, which in 2017 agreed to cover the seismic upgrade portion of the project.

The first 20 years of payments cover only interest on the bonds sold to pay for construction, then ramp up to pay the principal. The original plan was to pay off the bonds in 30 years.

Records show a restructuring later converted the original 30-year loan into a payout plan lasting until 2112 a full 100 years after the renovated stadium reopened. According to calculations by Barsky, the Cal professor, by the time the stadium is paid off UC will have spent $1.25 billion.

Freelance writer Lance Williams has won two George Polk Awards and a dozen other national prizes for investigative reporting in California. He teamed with Mark Fainaru-Wada to lead the San Francisco Chronicle's award-winning coverage of the BALCO sports doping scandal. Williams also has worked for the San Francisco Examiner and the Center for Investigative Reporting.

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75bear said:

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Mods removing this thread in 3…2….1

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