California taxpayers buy a $474 million college football stadium

I was chatting with a friend who is a professor at UC Berkeley [not in the CS department and not Barsky] and he mentioned that the state government, though claiming to be too poor to pay for academics within the University of California system, had recently spent over $450 million on a football stadium renovation. I searched and found this Wall Street Journal article. It turns out that the total cost is $474 million. To make the numbers seem less alarming, the university is pretending that the “training facility” is separate, but in fact it is “nestled right up against the stadium” according to my friend and he added “Originally, the training facility/gym/tutoring center was only intended to serve the football team.  The rules were later relaxed to allow in the basketball team, and perhaps a few high visiblity sports.  Certainly, normal students are not allowed anywhere near the place.”

The WSJ says that the school has raised just $31 million in donations for the project (unclear how much of that money might have been given to UC Berkeley regardless). My mole at the school says that the football program has never made money (WSJ confirms that the university had to kick in $88.4 million in taxpayer funds from 2003 through 2011) and that certainly the $474 million will be paid for by tuition and tax dollars. Wikipedia says that the cost of making the historic stadium, pre-renovation, earthquake-safe, would have been $14 million (shortly after this post was published, someone edited the Wikipedia article to add a zero to this figure, making it appear that the 1998 study (actually from 1997) estimated earthquake-proofing the stadium at $140 million).

The best thing that one can say about the $474 million stadium renovation is that it makes the state’s $327 million web site seem like a bargain.

[Note: even the Chinese, smart enough to keep their public schools open (unlike Chicago!), can’t figure out how not to lose a lot of money on sports stadiums. says that the Beijing Olympic Stadium cost $457 million in 2012 dollars and is mostly a white elephant at this point (though profitable on a operating basis due to people coming and paying to see its unique architecture).]

42 thoughts on “California taxpayers buy a $474 million college football stadium

  1. The men’s basketball team and the football team make plenty of money. The revenue from those sports pay for themselves, and what’s left over is spent on the other sports in the athletic department. The $88 million is spent to cover what the football team and men’s basketball team can’t. It’s fair to say that the athletic department as a whole has never made money.

  2. I was one of those people visiting Beijing and paying to see its unique architecture back in July 2009, almost a year after the Beijing Olympics.

    Not sure how that stadium can be profitable on an operating basis, though. I spent about 90 minutes there in mid-day and don’t think I saw more than a hundred other visitors, so it’s hard for me to imagine 20,000 to 30,000 visitors a day now (per the Wikipedia article), four years after the Beijing Olympics. The gift shop was open selling leftover 2008 Olympic themed souvenirs, which I have to imagine are no longer in any demand.

    I did see that there was much peeling paint, broken seats and railings, and rusted bolts, even before the stadium was officially one year old. It looked kind of sad, really.

  3. You actually published an article without doing your own research? The money the university pays is for the other sports football can’t cover. Football and basketball MORE than pay for themselves. This article should ebarrass you.

  4. Btw, that WSJ article you cited later had to print a correction for their inaccuracies and misrepresentation of facts. It also didn’t help that their sources were 1) the most vocal anti-athletics faculty member at Berkeley, and a local resident who protested the renovation project for NIMBY reasons. But somehow your article managed to outshine them both but misinformation.

  5. Almost no “facts” in this post are accurate. The total cost is roughly correct, but everything else your “faculty mole” told you is incorrect:

    1. The SAHPC was ALWAYS meant to support numerous sports (21 to be exact). In fact, basketball isn’t one of them, but women’s softball, lacrosse, field hockey, etc. are, as well as rugby, soccer, etc., etc.

    2. The football program has ALWAYS made money. Just not enough to support 27 other sports (men’s basketball also makes money). If you bothered to do any research (easy to do), you would know that.

    3. The taxpayers aren’t paying for the stadium or the SAHPC, the cost is being covered by alumni donations (you’re at Harvard; surely you’ve heard of alumni donations?) and a seat licensing program. I don’t know where the WSJ get’s its information, but it is clearly incorrect. The lead gift for the project was $25 million; there is also a $10 million gift and several others in excess of $1 million. Assuming you can do 2nd grade math, that is well over $31 million. In fact, well over $100 million was received in donations BEFORE the project was started. The remainder is to come from the seat licenses.

    4. If your “friend” is who we think he is, you should know that he has been caught lying about the athletic department over and over again, but continues to offer the same misinformation.

    Next time you might actually do a bit of research before posting something about which you know zip.

  6. John: I apologize for not researching the article more carefully. indicates that Berkeley reported a profit of $6 million from its football program. indicates that UC is able to issue bonds at a 4.9 percent interest rate. So if the school borrowed $474 million at 4.9 percent, the annual interest payment would be $23 million. Thus the football program’s profits are enough to pay roughly one quarter of the interest on the stadium renovation cost and none of the principal.

  7. First, everyone knows your “mole” as he isn’t a “mole” at all but a professor named Brian Barsky who has been directing his outrage at Cal Athletics for years. He has no inside information as has made a point of voicing unsupported “facts” much like you’re doing here.

    Second, as has been pointed out to you already both the men’s basketball and the football program have operating expenses well below their revenues, the excess pays mainly for low revenue sports, the majority of which are women’s sports whose support is also mandated by Title IX.

    Third, football programs are the primary revenue drivers for athletic departments, investing in them is actually a means to increase revenues and profits and make athletics more self sustaining.

    Fourth, the financing plan for the stadium renovation and training center has been supported by many millions in donations but also depends on the sale of premium seating the revenue from which will come in over the life of the bonds. It doesn’t depend on direct profits from football operations.

    Fifth, the donations the athletic programs have been shown to drive general donations to the university and the relationships to the athletic programs have been a powerful driver for alumni relations and donations to the entire university.

    Sixth, the stadium renovation had to be done as the stadium resides on an earthquake fault and was financed without using any state or other university funds. This should be praised, not fodder for the zealots like Brian Barsky or those who decide to “anonymously” repeat his opinion.

  8. Josh: As far as “everyone knows” Barsky is my “mole”, as you assert, I must admit that I am not part of “everyone”. I have never spoken to or corresponded with Professor Barsky. I do have friends on the Berkeley faculty, but Barsky is not among them.

    Why would you be surprised that there is more than one Berkeley professor who would rather that the university spend money on education rather than on a spectator sport that helps fans get fatter and dumber? You can argue that the eggheads are wrong and that being fat dumb and happy is the best way to live, but why begrudge the educators from wanting money spent on education rather than on a temple of fatness and dumbness? (obviously the athletes themselves are not getting fatter or dumber, but they are a small percentage of the 63,000 people packed into the new stadium). is a report that members of the Berkeley faculty voted 91-68 back in 2009 to try to cut subsidies from the university to athletics. So Barsky does not seem to be unusual in his views. Anyway, my friend on the faculty has a wife and two kids and prefers not to spend his weekends and his kids’ inheritance (tickets start at $85 per seat!) on football. Why would he want the university to renovate the stadium instead of lecture halls and labs?

  9. I am not sure how you could get so much wrong in such a short write up:
    1. The facilities, called the “HPC,” were never intended for exclusive use by the football team. It was always intended that non-revenue sports (ie the sports that cannot and are not ever expected to make a profit or even break even) would use the facilities. As a matter of record, this was particularly difficult for the women’s sports, as they did not even have changing facilities on campus before the “HPC” was built. This was one of the main concerns when designing the “HPC.”
    2. The football team has NEVER lost money. Combined with basketball, the “revenue” sports cover more than 90% of the costs of the department, allowing an exceptionally large number (26) of sports to exist. Recently, that 90% figure has increased due to the state budget cuts (by eliminating 3 well liked sports).
    3. The donations for the project are FAR more than the $31 million you cite. Perhaps the desire to spin the facts blinded you to where the $31 million figure came from? In any case, the amount of VERY HIGH profile donation is $35 Million ($25 million and $10 million donations given by two donors); that excludes the seat license revenue and the individual donations that total below $5 million. This would be easy to find with any effort.
    4. The ridiculous 9 year shortfall you cite (88.4 million), works out to roughly 0.45% of the CAMPUS expenses. An extremely low cost to enable students to participate in 23 intercollegiate athletic teams.
    5. Not only do you (in an astonishing juxtaposition of claiming some Harvard affiliation) cite Wikipedia, but you cite an factoid that does not have any supporting link or citation. SERIOUSLY?
    6. You cite an article that forced to print corrections because of their own poor research? (just to be clear; your sources are a guy at Cal – no name – Wikipedia, and a WSJ article that was essentially retracted because of erroneous and misleading “facts” from, quite possibly, the same “mole” you have inside the university?

    Are you embarrassed? Even a little?

  10. The most recent numbers at show that only $40 million of premium seat payments have been received over the past 3 years. In the most recent quarter, there was a net 2.8% loss in premium seat subscribers, which is hardly the sign of a robust program that can pay its enormous long-term debt.

    The loan is interest only for the first 20 years, so the guilty parties will be long gone when the the required payments see a steep increase. At that point, if not sooner, California taxpayers and University students will have to assume the burden of paying back the construction load.

  11. Don’t think about becoming an associate in my firm, for we fire attorneys that don’t do adequate due diligence. As you failed to point out:

    1) The ESP seat program is just one source of revenues. You failed to mention the surcharge which started over 6 years ago on all tickets, arbitrage (you clearly no nothing about governmental financing as well be discussed below), ticket sales, naming rights (Google Goldman for just one of many examples), etc.

    2) The WSJ until their “correction”, Barsky, and Skeptic failed to mention what is now $250 million in donor pledges to be paid over the life of bonds. This is without Cal being even show what the seat program looks like in person until the stadium could be used. I fact, sales exceeded the economic model as it was expected sales would be higher once donors were able to experience the ESP (luxury seats, premium food, free alcohol (this is a huge one since the Pac 12 doesn’t allow booze to otherwise be distributed at games), fancy seats, meeting areas, etc. And the 2.8 drop rate referred to by skeptic is utter BS. Bain Partners recently prepared an in depth study of ESP which Cal posted. I suggest you read it so you can understand what people who actually do finance for a living have to say about the model.

    3) The seat program model was reviewed both internally by Haas Business profs and outside consultants. The model provides matching revenues with debt service, so today’s users are not saddled with the entire cost. This is standard municipal financing 101.

    4) The stadium had to be fixed due to seismic and other safety concerns. The other alternatives were more expensive (e.g, develop a new stadium)

    5) The Bonds skeptic mentioned (with Barsky once referred to in an article as “sub-prime financing” (I assume you know what that is, and how idiotic Barsky’s comment was), if to fund all sorts of captial

  12. Bruce’s and Josh’s facts as presented earlier match my understanding of matters too; with the exception of one, which was speculation that prof Barsky is the mole in question. While he has been the primary source of misinformation in the past, that cannot be concluded here. And who really cares as bad info is bad info… The other facts or points are what matters, and makes this commentary grossly inaccurate.

    Prior to construction, the University and Cal supporters faced an opposition that utilized lies and shenanigans to achieve its end – to prevent the construction of the SAHPC and a remodeled Cal Memorial Stadium, to make it safe. It was a farce, and the law saw it as such.

    Now with most of the plan complete, and done in admirable fashion, without tax payer monies, we apparently still need to face an opposition who can only arm itself like a politician, which requiring fact-checking after every questionable assertion…

    And while ruling-out misinformation and speculation in what should be factual discussion, extrapolating-out 20 years of seat payments and trends, based upon short-term data points, and concluding from that tax payers will get screwed, holding the bag is speculation, too (skeptic’s post above). It’s wishful thinking maybe for some when there are no facts to support their stance…

    I suppose one can say, a supporter, that if speculation is ok, the new Pac-12 Network will help a lot too towards this financial commitment, if needed. Each member school is to receive at least $20M a year, upwards to $30M, by some accounts. This is for 12 years, at a minimum. A subsequent agreement is likely to yield better, logic would seem to dictate. BUT, this too is speculation, but pretty solid at that…

    The WSJ, as noted earlier, corrected the errors in is reporting. Would be nice if you and others would do the same…

  13. Phil,

    I assume you are at least of average intelligence, though nothing you’ve written to this point would support that.

    1. You wrote: “So if the school borrowed $474 million at 4.9 percent, the annual interest payment would be $23 million”. Why would you assume the school borrowed all of the money for stadium purposes, particularly when others had already pointed out that many millions of dollars of PRIVATE funds had been raised for the project? The answer is obvious – you wanted to confuse the issue to support your point. Intellectually laze and/or dishonest.

    2. With regard to the actual bond financing itself, why would you assume the interest rate or that the payments are made on a level basis? That is not the case.

    3. The revenue numbers you quote fail to take into account the additional revenue provided by the new Pac-12 media contract. Revenues tripled – to over $20M per school per year. When the contract runs out in 12 years, the rights will go up again – more revenue. And by the way, to be in the pac-12 and receive its share of the revenue, Cal needs a football team.

    4. You fail to mention that the original stadium was 80 years old. Had it not been renovated, an alternate site would have had to be paid for (and there weren’t any that were suitable). The bottom line is that if Cal wanted to be in the Pac-12 and/or have a division 1 football team, it really had no choice.

  14. comment cont’d

    projects, including faculty centers, sports facilities for other UC schools, student athletic center, labs, office buildings, and even a building which will have classrooms, all of which is to be paid from future general UC funds, meaning the taxpayers, donors and tuition. Over a billion dollar in improvements, none of which had been currently funded. In fact the only project funded by the bonds to be paid with by private donors and for which funds had been collected with the stadium project. Perhaps that will give you and skeptic some idea how school projects are funded. I have represented a large California agency for over 25 years in bond financing and real estate matters, and have found the things that have come our of mouths of Profs Barsky, Nader and some guy in the English Department show an utter and embarrassing lack of understanding of governmental financing. I feel sorry for their students if they prepare their lectures in this shoddy a manner.

    I suggest you Google Barsky a little more carefully. Look at the Daily Planet and Chronicle articles and the claims made therein.

    There is a long history of conjecture (being nice here) by opponents of the projects. Should you care to spend the time doing a google search, Carolyn Jones was making front page headlines about the crushing blows dealt the project by the courts, Barsky was saying there was no money to fund the project, the WSJ in reliance on Cal faculty had to retract (excuse me, clarify and apologize) the most critical part of its article. Even as recent as two months ago, there was an article in the Chronicle that the project was far behind and would not be ready play. Every one of these articles was wrong, as was your a good part of your inadequately researched comments. Are you too lazy to a google search and read all the related material?

  15. Sources: the POS and OS for the Bonds, the Bain I/A Report, a Google search of article which mention the word “Barsky” or “Nadar”

    BTW, it would be nice if your system had an edit function, rather than just entering a post after a certain length that can’t be proofed.

  16. Folks: The WSJ article cited has not been retracted. It was updated inline and the updates/corrections are explained at the bottom. I do not pretend to be an expert in this area. I merely quoted a friend who is a professor at Berkeley (not the reviled Barsky!), the WSJ, and Wikipedia. The idea that Cal needed to spend at least $14 million to make the old stadium safe from earthquakes seems beyond dispute. Whether it needed to spend another $460 million is apparently an open question.

    The idea that spending $474 million on a renovated stadium was a prudent financial investment for a bankrupt state does not seem to pass the common sense test. If you had $474 million to spend on infrastructure, why not build a toll road in a rapidly growing country, such as China, and then collect the tolls? Or why not spend $474 million on financing companies in rapidly growing economies? Given that the old stadium, with $14 million in earthquake reinforcements, could have held ticket-buying fans, is it really believable that the renovated stadium will generate an additional $474 million in ticket sales? Folks commenting talk about the broadcast revenue that Cal will receive. Wouldn’t the same broadcast revenue have been obtained by playing in the unrenovated stadium? Surely there is no argument that the grass in the middle of the stadium had become unusable.

    None of the folks commenting seem to be addressing the risks in relying on Cal football fans being numerous and rich 30 years from now, when apparently a lot of the money is still to be paid. Do you have a letter from God promising that American football will still be just as popular in a state that is rapidly being transformed by immigrants from Asia and Latin America? Did God promise in the same letter that Californians would still have plenty of discretionary income in the year 2042? Despite the fact that these same folks might have to pay state income and sales tax rates of 20 percent or more in order to meet California’s pension commitments to retired government workers? Did God promise that Californians would still have enough leisure time to spend a day traveling to and watching a football game rather than working to pay whatever new taxes have been imposed by local, state, and federal governments in 2042? Did God also promise that the new stadium’s earthquake engineering will stand up to whatever Nature can dish out over the next 30+ years?

    It is possible, of course, that the $20+ million/year in football revenue will suffice somehow to pay off this $474 million investment. But I don’t understand the argument that is practically a sure thing. The only thing that does seem to be guaranteed is that taxpayers and students will pay if the football program cannot.

  17. In fact there were arguments that the grass (which actually wasn’t grass) had become unusable. In fact the field had to be dropped 4 feet for reasons discussed below, and new turf inserted.

    Now welcome to the State of California:

    Again, you really didn’t do your research fully. Wikipedia cites a 1998 study that says a $14milloin retrofit was necessary . I assume that is where you got your incorrect $14 million number. However, the report was disregarded, and the Cal engineering department had to do a complete redo in order to meet the requirements of the State Engineer and changing practices. In Engineering Today, there is a several page article on the huge infrastructure changes required to make the entire stadium move at once in two different directions. Yes that right, the entire stadium. Also, the press box had to be redesigned.

    Let me describe:

    In between the two sections will be two wedges, with a foot of space separating the wedges from the rim sections. These two wedges, built like bunkers, are positioned right on the fault, so if there is a seismic event, only the wedges will move. Each wedge is constructed with a thick slab foundation and built over layers of sand and High Density Polyethylene plastic sheeting to allow it to move freely in response to the up to six feet of lateral movement occurring below it. All of the simulations done in the lab found that an earthquake would in fact cause these wedges to rotate. The layers of sand and HDPE plastic would provide a flat surface for them to rotate on. Since there is a gap between the wedges and the bowl sections, the worst damage would be at the corners and would be minimal at those points. The new press box will also be seismically sound. The steel structure, which takes much of its inspiration from the design of bridges, will be placed atop four massive cores that are anchored to the foundation with high strength cables and are only connected to the bowl sections below by large shock absorbers. In the case of an earthquake, these shock absorbers would absorb much of the shock, transferring it to the seating bowl below and allowing the press box to sway back and forth without breaking apart. Just moving the sand cost over $14 million.

    Then there is over $100 million in construction to bring the stadium up to Code (now that you have started infrastructure improvements), and ADA improvements.

    Then there are State prevailing wage and bidding requirements. We typically tell a developer they can develop and donate to my governmental-client facilities for half the cost that it would cost the client to build it and bill the developer. Want to know how China could make its stadium cost $500 million? Build it in California.

    And for all this you still don’t get the point that private donors already have committed something short of $300 million, there are other revenue sources such as a surcharge on ticket sales,and cal has up to 30 to 50 years to raise the rest (try reading the flipping OS to see the term of the bonds). This is how governmental capital improvements are done. You seem to be under the impression that governments have cash hand when the construct a major capital project, when the reality is they have far, far less than what is committed to the Cal stadium.

    Instead of just saying your not an expert, go talk to one. Call up the Cal AD and get some actual facts. Give me your e mail address and I will send you the correction and the apology e mail from the WSJ, and the letter that they published from the Cal Vice Chancellor pointing out the inaccuracies.

    As for your last paragraph, I want to you to read the flippen OS. (I am assuming as a law student you actually know what an OS is). NO where does it say Cal funds or even the athletic department’s funds are pledged to debt service payments. In fact, there is a disclaimer that says debt service is not backed-up by State tax revenues You know, those things paid by taxpayers). Should I repeat that for emphasis? To put a end to why your last paragraph demonstrates a total lack of understanding on your part, you fail to comprehend that the football revenues you are talking about accrue to an operating fund and not a capital fund (this is called fund accounting, and you should go find an expert in this as well). By law, these revenues can’t be used to pay down debt for capital improvements or used in any manner to fund capital improvements. That’s right, the only revenues you say can be used to pay the debt, are the exact revenues that can’t be used, Only proceeds to capital accounts, such as donations, ESP sales, the ticket sale surcharge, and other capital fund revenues can be used for pay down the debt service. And you wonder why the alumni base gets so exercised when we continually see grossly incorrect factual assertions that demonstrate the writer obviously doesn’t know at all what they are talking about. This is the part where I would be telling you to update your resume if you were an associate in our firm.

    BTW, you seem to have not mentioned the $1 billion plus in other athletic facilities and other capital projects financed by the Bonds that are not to be paid by private donors like the Stadium, but out of UC funds, and therefore, unlike Cal stadium, provide an opportunity cost for funds otherwise available for such bizarre things as students. Perhaps you looking at the wrong project?

  18. After your most recent post, I must admit I stand corrected. Despite what I said earlier, it now seems clear you are not of average intelligence.

    You start by admitting you are not an expert. Sadly, that did not prevent you from publishing your admittedly uninformed statements (without research). Moreover, you now seem intent on defending your non-expert opinion despite all of the contrary factual information posted in the comments. As an academic, you should know its ok to admit when you’re wrong.

    Responding specifically to some of the statements in your most recent post:

    1. I have no idea why you think that spending $14M dollars on a 80 year old stadium would be sufficient to address even the most basic of seismic issues, much less updating/repairing even the basic aspects of a dated stadium Are you aware the stadium (in fact much of the Cal campus) lies on the Hayward fault (google that)?

    2. Once again, the cost to the university, net of private donations, will be significantly less than the $474M figure you seem to be obsessed with. Stop pretending and repeating that the University’s cost will actually be anywhere near that figure.

    3. Did you actually suggest that California finance a toll road in CHINA? For the toll revenue stream? What state or publice university spends its money that way? I doubt it is even legal.

    4. No one ever said the “renovated stadium” would generate “an additional” $474M in ticket sales. You need to read more carefully. What many have said is that private donations, together with ESP seat revenues would likely cover the costs of financing the stadium improvements. If not, other athletic department funds (most notably those from the tv contract), will cover the bill. And for the record, I suppose it is possible that the stadium will generate $474 in “additional” ticket sales over time – particularly if the stadium is used for another 80+ years, but I digress.

    5. Cal is not relying on Cal football fans being rich forever, though I believe that over time, there will be more than enough Cal fans to fill the stadium provided a competitive team is in place (see point 6 below for more about that). The stadium has multiple funding sources and the number of ESP tickets is relatively low. If existing Cal fans die off, they will be replaced by new graduates/fans, many of whom will want premium seats. Moreover, over time ticket prices will rise. Oh, and by the way, those “immigrants” often like football too.

    6. In addition to seismic concerns, Cal needed to make the facilities upgrades to continue to attract fans and top caliber student athletes. Athletes in all sports want at least decent facilities, and Cal’s 80 year old facilities were bottom of the barrel. If Cal wanted to have a decent football product to offer, it needed to make upgrades.

    7. You might ask why it matters if Cal has a good football team/product. The answer is that football (with modest help from men’s basketball) supports all of the non-revenue sports. The university views offering a full panoply of sports as part of its mission. Indeed, Cal’s athletes have excelled in recent Olympics and many sports other than football. Moreover, if you believe in Title 9, football essentially pays for most of the womens’ scholarships. Finally, it has been shown that successful football teams result in a big increase in giving to academic causes.

    There is some risk in financing the project – just like anything in life there is risk. California could fall into the ocean or the overall economy could crash to the point where no one has any discretionary funds. If that happens, Cal will have choices to make (mostly likely eliminating non-revenue sports). However, your original blog and subsequent posts failed to place any perspective on these types of very, very low risks and instead have contributed to the disinformation that surrounds the project. As an academic, you should be ashamed of that.

  19. It’s bad enough you’re relying upon Wikipedia, but then you don’t even cite it correctly. It says the results of the 1998 seismic study concluded the seismit retrofit cost to be $140M, not $14M. And that’s in 1998 dollars, not 2012 dollars.

    Ok, in order of your rants: 1. Toll roads in China can suffer from shotty construction and are prone to major earthquakes, too. 2. Investing in emerging markets is risky. 3. Retrofitting the stadium against a major seismic event decreases the risk to stadium users more so than simply continuing to enjoy broadcast revenue in an unrenovated stadium. 4. Sure, every investment has risk; there was significant due diligence that went into understanding this risk, because, you know, researching topics is important. 5. God says that, should soccer trump American football one day, Memorial Stadium could host major soccer events. 6. God says that there will always be those with discretionary income (if only for the sake of toll road investment everywhere!). 7. God says we should plan on having some leisure time in our lives, even in 2042. 8. God promises that the structural engineers know how to do their job more than you know how to do their job (and reminds you to see #3 above). 9. God would like to remind you that nothing in life is a sure thing, and that yes, just as it would be if Memorial Stadium had not been renovated, students and taxpayers will pay if success of the football program cannot.

  20. But yes, if “God” as you put it, takes away our Saturday’s and if “God” destroys the stadium via the rapture or some other means, things would definitely not be good. In the meantime while we wait for the end of times, college sports is a massive business which is only getting bigger. Do some research on it, as well as the effects of Arhletics in donor interaction. According to the Univesity’s recently released Bain audit of the AD, the biggest connection over 75% of 100k alumni had with the university was, wait for it….sports. I’ll leave you to guess which sport is most popular.

  21. Since it is obvious that doing even grade school level research is beyond your realm:
    [ A 1998 seismic safety study on the California campus gave the stadium a “poor” rating (meaning that the building represents an “appreciable life hazard” in an earthquake), and estimated the cost of making the structure safe at $140 million. Because the stadium is on the U.S. National Register of Historic Places and because of the nostalgia that surrounds the site, the university decided that a retrofit and renovation (as opposed to building a new stadium elsewhere) would be the best scenario for the California football program]

    140= safe
    Rest of $$$ = stadium upgrades

  22. God, John: Thank you for pointing out that my posting is at variance with the Wikipedia page. My posting says that the 1998 study estimated the cost of seismic stabilization at $14 million. The current Wikipedia page says $140 million. Am I getting senile that I missed an extra zero? Surprisingly, the answer seems to be “no”. The Wikipedia page was updated from $14 million to $140 million at 2 am (GMT?) on September 19, 2012.

  23. This comment from A. Shipman was forwarded to me: “Look at the Daily Planet and Chronicle articles and the claims made therein.” Perhaps Mr. Shipman could cite his source. A quick check of Planet archives produced just an op-ed from a reader which quoted a Barsky letter in the SF Chronicle which made no discernible disputable claims. Is there something else that I’ve missed?

    By the way, the alterations in question are now completed, and beyond dispute they’re plug ugly, very reminiscent of Fascist additions to Rome in the 1930’s.
    The grand stairway alone would do Mussolini proud.

    In my day at Cal we were proud of all the games that the football teams lost and of the Nobel prizes the faculty won. The current emphasis on crypto-professional sports is embarrassing.

    Becky O’Malley, Editor, Berkeley Daily Planet

  24. The verdict is in. After endless posturing and asserting, the final figures for the ESP seating program are in. The ESP program is a stunning failure! The final figures according to the university show that only 64% of the lower level season tickets($2.7k-$4.1k) were sold; 54% of the mid priced season tickets ($5.1k – $8.6k) and only 23% of the new expensive seat season tickets ($12k-$15.4k). The poor sales of these new, expensive seats were particularly problematic as they were going to be the backbone of the funding program because of their high prices and because those seats are new and all of that revenue would be new funding available to pay the SAHPC/Stadium debt. The revenue from the other seats can only be considered net, new revenue available for the debt payment after you deduct that money from the revenue from the seats in the old stadium (and the number of those seats were reduced by 40% in the new reconfigured stadium). Final proof of failure-the university has reversed course and is now selling the remaining ESP seats at steeply discounted prices. Will these discounted prices (similar to the old prices) end up being next year ‘s prices? How many will continue to pay $8.6k for a regular ticket for 30 years?
    The golden rule of collegiate sports facilities is, “never build with debt”. But because private donations dried up well short of the goal, these facilities will cost -construction and debt service- well more than $1billion. Pie-in-the-sky projections of future donations are belied by the failure to sell most of the naming rights. Some of the net, new TV revenue has to go to lowering the campus support to Athletics which is about $11m annually and then there are the competitive pressures that will eat up more of the TV money. Roger Noll of Stanford, the Bay Area’s preeminent sports stadium economist projected that in several years the revenue stream would be insufficient. It could be sooner if the university doesn’t cook the books. And that is even before the principal has to be paid which will take the annual debt service from about $18m to $65m.
    So who will end up paying? State money is prohibited-for the moment. What’s left? Student tuition!! They may try to play three-card monty with the money but in the end that’s where it will come from.
    The real crime here is that the university had been warned by studies that the finacing plan was not feasible but went ahead with the project anyway. In 2009, the stadium recieved it’s umpteenth seismic upgrade and was declared “life safe”. Further upgrades would have been financially doable but the decision was made instead to build a palace. Directly on top of a dangerous earthquake fault that is overdue for a major quake.
    Chancellor Bergineau is retiring but this mess wil be his legacy.

  25. Cal boosters: It is nice that Californians can afford this plush new stadium. But why assert that the money won’t come from taxpayers? If there is a shortfall and the bonds can’t be paid from football revenues, the bonds will be paid from tuition; if the tuition dollars then do not suffice to keep the university staff (and associated pensions!) paid, then taxpayer dollars will have to be used. Football is a great sport, but it doesn’t have its own currency.

    The usual argument for making taxpayers spend $1 billion or so on a new stadium is that a professional sports team threatens to move to another city, leaving the citizens of the current city with no alternative (the idea that people would exercise/play with their children, learn a new skill, or read a book on a Sunday instead of cheering for professional athletes is apparently anathema to most Americans). That argument doesn’t apply here. The Cal football team cannot move to Diablo Valley College.

    The richest university in the world is Harvard, with more than $30 billion in the bank (still not enough to bail out California’s unfunded pension commitments, of course!) plus probably another $10 billion in assets (the true figure is kind of tough to find because Harvard is split up into a variety of entities, each with its own Form 990). How old is the football stadium for a school that is rich enough to buy every student and employee a private 4-seat helicopter? says the stadium was built in 1903 (and took just 4.5 months to build! We always think that we were smarter than people back in the old days; you couldn’t do the environmental impact and zoning paperwork for that stadium in less than three years today!).

  26. The $14 million number for seismicly retrofitting the stadium comes from the university’s 1997 Seismic Review. The university reviewed all of their buildings, rated them seismicaly, and then estimated the cost of raising their ratings to “good”. The cost for the stadium was estimated at $14 million.
    It’s not at all clear how much seismic safety motivated the stadium renovation. In 2008, before the 2009 retrofit, the chief engineer for the new stadium said that one could go to a season’s worth of games in the old stadium and it would be no more dangerous than flying to San Diego.
    State seismic officials tried to negotiate a $75 million limit to sesmic upgrades and program improvements, which their engineers estimated as sufficient, but the university rejected that.
    All while the university knew that there were major funding problems.

  27. My 10 y/o is not allowed to cite wiki because of how poor of a source it is. This is what you did,and this is why it backfired and why your article should embarrass you.

    Also, the fact that you are now comparing Harvard football to anything at the BCS level is beyond ridiculous. One football team makes money and helps pay for the Olympic sports which don’t generate ANY revenue, the other team does not. You are right, Harvard is rich and can comp the entire AD on their own, Cal cannot. We have one of the best athletic programs in the country, and it needs to be paid for somehow. With out upgrading our facilities we would not be able to compete in actual college football(not the ivy league) without competeing in fb, the university would have to pay MUCH more for the rest of our sports (those teams also require coaching salaries, facilities, scholarships etc)That’s the part of this argument that anti football folks leave out, for a school like Cal, no football means no Olympic sports. Donors arent clamoring to support those sports, their support comes from football, because that what they like.

    You are right about one thing, Cal football cannot leave us. But big time college football and the money that comes with is sure as heck can leave us.

  28. John: I got in trouble by citing Wikipedia because someone went in a few hours after I cited it and changed the $14 million seismic study estimate to an absurd $140 million 1998 dollars (which can’t possibly be right due to the fact that the stadium was fully gold plated for $321 million 2012 dollars).

    As to your assertion that Cal football is somehow a gold mine that the university needs to spend $474 million to preserve… if that were true, the football team would have accumulated a $474 million surplus over the years and there would not have been any need to borrow money to pay for renovating the stadium.

    Suppose that a high school in California has to pay a $200 million judgment due to a football player developing brain damage. Then the rest of the high schools decide that they can’t afford the risk of continuing their football programs. And maybe universities decide that they don’t want the liability either. It seems to me just as possible that football won’t exist in its present form in the year 2033 when the school is supposed to start paying off the principal on the stadium debt as that revenues will magically rise to cover the balloon payments.

    What is it about subprime mortgage structures (interest-only loan for 21 years then massive payment spike for subsequent years) that is so irresistible to Californians?

  29. John: I thought about the Harvard comparison a little more. Given that the Harvard alumni who enjoy attending football games donate literally billions of dollars to the university, the revenue from Harvard football far exceeds anything that Cal football could hope to attain (even if the Harvard players are not as good at the game itself). So if football revenue were a justification for building fancy new facilities, Harvard should be building the world’s nicest football stadium right now, instead of making due with a plain one from 1903.

    Anyway, I’m not sure why this posting has upset some people so much. I accurately reported the cost of the stadium and the fact that my friend on the faculty would prefer that the university spend its money on academics rather than athletics. As the school is part of the bankrupt state government of California, it seems reasonable to infer that the cost of this stadium will eventually be added to the overall debt (e.g., for government workers’ health care and pensions) that California taxpayers must pay. Even if the stadium is paid for from football ticket sales, that’s still money that otherwise would have been available to the university for other purposes. Obviously on balance the majority of Californians would rather have the $474 million stadium since the cost was approved and the renovation carried out. I did not mean to suggest that Californians will be unhappy as they work longer hours or more days per year in order to pay off this debt, only that my friend the teacher will be unhappy about it.

    Here is the link to the UCB 1997 seismic review with the cost estimates.
    You wonder why these boosters (and maybe athletic office people) would go so far as to change the Wikipedia entry and then accuse you of lying. It’s been like this from the beginning. The deceptions, fabrications, removing papers on the seismic dangers at the stadium site and stealling an important engineering review from the archive library-nothing has been beyond the pale of Chancellor
    Bergineau to get this project done. They went to Sacramento and spent a year and a half decieving and bullying to get an exemption from state law to build the new stadium which is directly on the Hayward Fault.
    The ‘why’ of all this is terribly important to ferret out. Obviously, it can’t be because it will add money to UC Berkeley. It’s net giving that counts. The first $1 billion of donations is simply to repay the stadium. How much giving will the stadium bring above $1 billion?
    Why spend all this money and risk precious tuition money? That’s the question to answer.

  31. Phil seriously? If Harvard football ceased to exist, the university could still afford to keep their entire athletic department. This would not happen at Cal. This is why your comparison failed. Your donors would contribute if sports were not a factor, ours have already told us no.

  32. John: I do appreciate your attempts to educate me as to why spending $474 million on a stadium is essential to the financial solvency of U.C. Berkeley. However, I’m still confused. If U.C. Berkeley wanted to invest $474 million in a way that turned a profit, wouldn’t it make more sense to use the money as start-up capital for a “U.C. Berkeley Shanghai” campus and then collect $100 million in tuition revenue from that campus ever year going forward? It is tough to believe that the wisest folks in Berkeley sat down and said “How can we invest $474 million in a way that maximizes the returns to the school?” and came up with “Let’s make the football stadium really plush!”

  33. Another way to look at this is if it were such a great idea to have a winning football team, why isn’t a school like Harvard, with infinite money, doing it? Harvard has accumulated billions of dollars over the years. The university has expressed a desire to have billions more. If big-time college football truly turned a profit, why wouldn’t Harvard take $1 billion out of the bank, gold plate its 1903 stadium, hire the best coaches, etc.? It is not as though a football player would need to be studying 24/7 to get through Harvard undergrad (“A is for Average”).

    [Note that, contrary to what you might think from the hosting organization of this weblog, I do not teach or study at Harvard.]

  34. Mis-statements galore:

    Where to begin: You should have done that search on Sub Prime Bob Barsky, as I suggested.

    On March 30, 2010, the SF Chronicle printed an article with extensive quotes from Barsky. The article has been changed dramatically in response to criticism as it now appears on the Chronicle website today. Barsky got just about everything wrong up to the issuer of the bonds (he said Cal, not UC financed the project). What remains is a great quote which you duplicated in your incompetence, by calling municipal bonds issued by governmental entity with a double A rating “sub-prime financing.” Might I make another recommendation to you which I am sure you won’t follow. Read “The Big Short” by Michael Lewis so you can understand what the term “sub-prime financing” really menas. Bonds averaging a coupon rate close to or below prime rate, not backed by mortgages, issued by AA rated entities (and I could go on, but why bother) are not sub-prime financing.

    Then there was Barsky’s 2/15/11 letter an excerpt which is here:

    This nebulous category reported expenditures even higher than the official total stated for the football program and reveals subsidies of $12 million from the Berkeley campus. Less than 1 percent of “fundraising” and “medical expenses” were denoted as football expenses. IA’s administrators (not including coaches) received a whopping $14 million, of which less than $1 million was reported as a football expense.

    None of the $4 million of “facilities costs” was allocated to football. Where are stadium maintenance costs? Furthermore, the controversial billion-dollar debt commitment for the football stadium construction project should be integral to any discussion of the cost of football. These facts seem to render specious IA’s claim that football generates more than it costs.

    Since we are on the subject of misstatements, the cost of stadium is not a billion dollars, the reason why Barsky has problems with the coaching numbers is because Nike pays most of the salaries, and you don’t even want to get into facility costs. Nevertheless, you managed to misstate the cost at $474 million, rather than the $321 million actual cost. At least your closer than Barsky.

    And then from a June 20, 2100 article:

    Now, state lawmakers have approved new language for the proposed 2011-12 budget that bans the use of taxpayer money for intercollegiate athletics.

    “It’s gratifying to know that this policy will now be explicitly codified in the state budget,” Barsky said.

    Wait, the title of article says taxpayers bought a $474 (sic) million stadium. You mean you missed a complete article that shows the legislature banned taxpayer funds being used for this purpose? Forget the bond indenture doesn’t allow the bond holders to go after the state coffers. Its prohibited by State law? Don’t you think that is something a first year journalism student could have figured out? Your mole doesn’t seem to have a lot of credibility.

    Its alwyas great to see a quote from Becky O’Malley . A facist comparison and then a reference to Mussolini. Sounds like Becky, which may explain its rather limited circulation: But lets look at what language she referenced

    From the 11/5/2009 Daily Planet “no disputable claims” quote:

    This {football] program has tens of thousands of followers, who gather at Memorial Stadium, Harmon Gym, and Edwards Track to support Cal Bears teams. At a time when UC is suffering a severe financial crisis, the fans’ enthusiasm, which consists not only of cheering but also of gift-giving, is certainly welcome. Team spirit brings thousands of Berkeley alums to the campus, some of whom might not donate to their alma mater if it were not showing its athletic excellence.

    But recently a group of faculty at Cal have made a discovery: It turns out that Berkeley’s athletic program has been running in the red for years. The resolution that is being submitted to the Academic Senate provides evidence that the cost of the program exceeds the sum of its economic benefits.

    One author of the resolution, UC Berkeley Computer Science Professor Brian Barsky, has written a letter to The San Francisco Chronicle stating that “all the revenues and donations to Cal intercollegiate athletics fall short by millions of dollars annually to cover excessive expenditures of this program, which is propped up from the campus’ coffers with funds that could instead keep the library open on Saturdays, for example.“ He adds that “It is a myth that intercollegiate athletics earns money for the university; even the NCAA reports that increased spending on athletics does not increase alumni donations to the university, prompting its president to advise college presidents to reconsider their institutional spending on sports.“ [I should point out the full text of the letter that is missing, Barsky defends his mis-ttament about the Cal football coach gets paid $2.8 million annually by the State (oops, actually Nike pays most about $2.4 million of that), because it shouldn’t matter the source of who pays the coach’s salary (yes, he actually did say that)]

    As an aside, the operating funds of almost all major (BCS) schools’ sports programs runs in the red, and the Bain Report found that Cal subsidy is the bottom of all peer schools. For example, competitors Stanford and USC subsidize (loan or whatever you call it) multiples of the amount of the Cal subsidy. They do this because of the donations they get back. Where do donations typically show-up? Why in capital funds. The problem schools have is the can’t use the surpluses in the capital funds for the operating funds. You still really have not addressed your disconnect between operating and capital funds and your complete mis-statement of the use of the $21 million in football operating funds. Don’t feel bad, Barsky constantly shows his ignorance of fund accounting as well. So then there is the no disputable claims to the following:

    The cost of the program exceeds its benefits (all the BCS schools are just plain dumb)

    All the revenues and donations to Cal intercollegiate athletics fall short by millions of dollars annually to cover excessive expenditures of this program {this is only true when talking about operating funds] which is propped up from the campus’ coffers with funds that could instead keep the library open on Saturdays [this is totally false – the funds for the subsidy are from the Chancellor’s discretionary fund, not the library operating fund]

    “It is a myth that intercollegiate athletics earns money for the university; even the NCAA reports that increased spending on athletics does not increase alumni donations to the university, prompting its president to advise college presidents to reconsider their institutional spending on sports” {its actually a myth the NCAA said this or the President of the NCAA advised this.] When Cal attempted to cuts certain sports a few years ago, donors responded by withholding more funds from academic giving that the total cost saving from eliminating the teams. I guess that proves there was no controversy to the good professor’s statements.

    By why stop there on the Daily Planet: Do a google search and see how many times Barsky’s name appears and the claims behind it (hint, the no confidence vote one is a real winner).

    Let’s also pint out the accurate comment. Wikipedia said $14 million. I looked, before it was changed. With countless news articles discussing why the study was invalid, I am not sure why you relied on Wikipedia, but whoever put in $140 million is demonstrating why court’s don’t allow information from Wikipedia to be entered on the record.

    Also, in fairness, I meant the Daily Cal, not the Daily Planet. There are some great back and forths between Barsky and the Cal administration I urge you to read.

    I am still waiting for that e mail address to send you the WSJ ,materials.

    So let’s count the mis-statements in your comments:

    1) The state taxpayers are paying for the stadium
    2) Operating football funds will be used to pay back the debt
    3) The cost of the stadium is simply wrong
    4) You didn’t state the funds that can be used to repay the construction costs
    5) You quote a $31 million amount that is wrong and was subsequently corrected by the WSJ to include several $100 million of donor pledges
    6) You failed to understand the distinction between operating and capital funds, implying that the Cal is in the red
    7) The athletic center was designed for the football team and Olympic sports (swimming, water polo, etc.). The basketball teams can’t use the facility (nor can baseball, softball, rugby (which is huge at Cal), etc. . I don’t know what you mean by a few high visible sports. There must be a thousand articles dealing with who was supposed to use the facility – none of which you obviously read. Guess you forgot to mention the law school and the business school supposed to be part of the complex, but why let facts get in the way.
    8. The terms of the Bonds are wrong
    9. You have the bond interest rates wrong
    10. You quoted an outdated study on seismic costs

    I might add you fail to respond to the comment about this is how governmental entities like universities finance capital projects, and let’s face it, there are more risks they want be able to fund other projects these days. I suggest you ask CfO’s at major stat universities who has the more sustainable economic model, sports programs or academic programs?

    Here is the kicker. Stanford just redid their stadium. U of Washington is rebuilding their stadium (and using an ESP program), the Rose Bowl (UCLA) is being massively remodeled, ASU is massively remodeling their stadium, WSU is remodeling their stadium, Oregon wants to expand their stadium, and this is just the original Pac 10 teams. Looks like you have many more schools to make un-researched, misleading comments about.

  35. Harry why not ask why all the BCS schools are doing this? Because their administrators make financial decisions. If the grandaughter of the guy who donates over $100 million to build a state of the art business school loves attending women’s basketball games with the donor, then I guess that team is going to run a big deficit (take a look at which team runs the largest deficit). Cal tried to trim just five minor sports and the former head of the board of trustees (as opposed to the Board of Regents that oversees UC) walked into the Chancellor’s office with a long list of donors who were threatening to pull their donations from both the academic and sports sides. Way, way, more than the Chancellor’s then $5 million annual contribution to sports or the cost savings form axing the teams. Guess what, the sports were reinstated, and the deficit continues. An incredible victory for the faculty sponsoring the non-binding resolution.

    The only difference between Cal and all these other schools like say Stanford is the faculty at the other schools are “counseled” and then shut-up. (There is a great story – which may be urban legend – told to me by a Dean of Letters ad Science, about the Provost telling a complaining professor that the loss of donor revenue in response to an article he penned was coming out of his department’s budget). Only Cal’s faculty is at war with its donor alums, another legacy the well intending Chancellor will leave.

  36. One final clarification. As the Bain Report indicates, the recent operating deficits were caused by increases in tuition and overhead payments made by the athletic department for over 700 student athletes, which I believe is somewhere near 2.5% of the undergrads. Today’s question is where does Cal get this money without its sports program to pay for this portions of its student body? Ask your so well-informed professor friend that?

  37. Mr. Shipman: You encouraged me to Google around and look at those other stadium projects, of which I was unaware. I found where the president of University of Washington explains why taxpayers in that state have to fork out $150 million and why the school couldn’t simply use the city’s existing Qwest Field (they have a perfectly good nearby stadium that is unused more than 90% of the time!). It is remarkable the kinds of arguments that people will apparently accept, e.g., he says that the $150 million won’t come from Washington State residents because the money comes from a tourism tax (and that money could not have otherwise been used by the state for whatever it wanted/needed?). He talks about how in 10 years the fans have donated $111 million to the entire Husky athletics program, thus revealing that there is no conceivable way that fan donations will ever pay for this stadium (principal plus interest will exceed 30 years of donations and some of those donations are presumably necessary to pay for operating expenses). indicates that Arizona State University is going to try to fund its new stadium with a real estate development scheme (I was not aware that the Phoenix area needed more real estate development, but let’s hope that it works out for them!)

    What these other schools’ projects seem to demonstrate is that football does not make a profit for the schools, which is why they need to find some non-football source of funds in order to pay for football stadiums.

    For folks who love football, I’m sure that these stadium projects seem like sensible ways to spend money. But I don’t think it is fair to vilify taxpayers and professors who would rather spend the money on something else.

  38. Thanks for the last post. I think you may be getting it (note Washington also is selling luxury seats like Cal). So we are clear, Cal can’t use taxpayer money, even if other schools do. Cal has several hundred million in non-taxpayer money already committed. It has 40 to 50 years to raise the rest of the money. You used a bad example. However, I really meant what I said when I suggested you needed to look at other projects. See for yourself the commitments universities are undertaking without funds in hand (not talking about the few schools with very large endowments). And not just sport facilities, but what you have in this post is a start. Where will the money come from to pay the bonds for these facilities? My guess is the federal government, unless State finances improve dramatically.

  39. Mr. Shipman has no credibility when he misrepresents the Wall Street Journal reporting that is linked in the second sentence of this blog post. The WSJ article was accurate and his statement that the WSJ had to retract the most critical part of its article is false. His statement that the “$31 million amount was wrong” is also incorrect. That fact is that at the time of that article, the university reported that the total cash received was $30,898,832. Mr. Shipman falsely states that “private donors already have committed something short of $300 million.” Clicking on the link provided at the beginning of this blog post for the WSJ article reveals that the amplification that was published states, “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.” This $113 million is quite short of $300 million. Not only is the period of the pledges 30 years, but the donor agreement states that the donor has no obligation to make any of the payments.

  40. @Senorpablo: No you won’t. Your grandchildren will pay for your today’s hamburger, while they are enjoying [1] a game at RCSUCB [2].

    [1] For this plan to work, we better start teaching our Chinese friends about the game of football, otherwise they may not invest into it.

    [2] “Republic of China Stadium at UC Berkeley”.

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