http://www.mercurynews.com/2017/09/...-strategy-for-long-term-sustainability-model/
Jon Wilner
It seems Cal is making progress off the field, as well.
The university plans to hire an outside consulting firm to assess the athletic department’s budget situation and “develop recommendations for a long-term sustainability model given the stadium debt service and the ever-escalating costs of intercollegiate athletics,” according to the Request For Proposal (RFP).
The deadline for agencies to submit bids was last week.
This step, essential to the department’s fiscal health, came at the recommendation of the Task Force on Intercollegiate Athletics, which met numerous times over the course of 10 months.
Its final report, delivered in June, made no specific recommendations but called for an independent review of the department’s financial controls.
At the time, there were no guarantees the university would follow through. But chancellor Carol Christ, who assumed office in July — she is described by sources as tough but fair in navigating the campus-wide budget mess — signed off on the third-party review.
Without an outside review, the university can’t make the most informed decisions on the future model for the athletic department, which currently supports 30 intercollegiate sports — more than any public school in the Pac-12.
And without tough decisions made and a sustainable model in place, Cal won’t have an optimal pool of candidates to fill the athletic director vacancy.
Athletic director Mike Williams, who announced last month that he is stepping down, is under contract until May.
The RFP, obtained by the Hotline, is heavy on the procedural matters for the consultant positions, but it includes two pages of information on Cal’s current situation.
Nuggets that might be of interest:
*** The campus-wide deficit has been trimmed from $150 million to $110 million and is expected to be half that total by the end of the 2018 fiscal year.
(Primary reason for the deficit, according to the RFP: “The state currently provides only 12% of Berkeley’s budget, down from 33% a decade ago.”)
*** The athletic department is projected to have an operating loss of $16 million when the books officially close on FY17. That figure includes $3.9 million in support from central campus.
(Important reminder: The Bears send $5 million back to campus as part of Cal’s internal taxation system.)
*** That $16 million loss includes a debt service payment of $18 million on the Memorial Stadium renovation/Simpson Training Center project.
*** Athletic department revenue in FY17 is projected to be $95 million, a year-over-year increase of 10.4 percent.
*** The Endowed Seating Program produced $8.9 million in FY16.
You’ll recall that ESP sales were at the heart of the original plan to service $460 million in debt.
By my estimates, it has generated $85 million thus far. The original long-term goal was $270 million.
*** Athletic department expenses in FY17 are expected to reach the $110 million mark (a slight uptick from FY16.
Worth noting: Since FY10, benefit costs have increased by an average of 14 percent annually.
*** The section of the RFP that gave me pause addressed something as seemingly innocuous as maintenance:
“Like other parts of campus, (athletics) has significant deferred maintenance needs without any maintenance or capital reserve.
“Current anticipated capital maintenance costs are estimated at more than $50m over the next five years.”
Oh, boy.
Jon Wilner
It seems Cal is making progress off the field, as well.
The university plans to hire an outside consulting firm to assess the athletic department’s budget situation and “develop recommendations for a long-term sustainability model given the stadium debt service and the ever-escalating costs of intercollegiate athletics,” according to the Request For Proposal (RFP).
The deadline for agencies to submit bids was last week.
This step, essential to the department’s fiscal health, came at the recommendation of the Task Force on Intercollegiate Athletics, which met numerous times over the course of 10 months.
Its final report, delivered in June, made no specific recommendations but called for an independent review of the department’s financial controls.
At the time, there were no guarantees the university would follow through. But chancellor Carol Christ, who assumed office in July — she is described by sources as tough but fair in navigating the campus-wide budget mess — signed off on the third-party review.
Without an outside review, the university can’t make the most informed decisions on the future model for the athletic department, which currently supports 30 intercollegiate sports — more than any public school in the Pac-12.
And without tough decisions made and a sustainable model in place, Cal won’t have an optimal pool of candidates to fill the athletic director vacancy.
Athletic director Mike Williams, who announced last month that he is stepping down, is under contract until May.
The RFP, obtained by the Hotline, is heavy on the procedural matters for the consultant positions, but it includes two pages of information on Cal’s current situation.
Nuggets that might be of interest:
*** The campus-wide deficit has been trimmed from $150 million to $110 million and is expected to be half that total by the end of the 2018 fiscal year.
(Primary reason for the deficit, according to the RFP: “The state currently provides only 12% of Berkeley’s budget, down from 33% a decade ago.”)
*** The athletic department is projected to have an operating loss of $16 million when the books officially close on FY17. That figure includes $3.9 million in support from central campus.
(Important reminder: The Bears send $5 million back to campus as part of Cal’s internal taxation system.)
*** That $16 million loss includes a debt service payment of $18 million on the Memorial Stadium renovation/Simpson Training Center project.
*** Athletic department revenue in FY17 is projected to be $95 million, a year-over-year increase of 10.4 percent.
*** The Endowed Seating Program produced $8.9 million in FY16.
You’ll recall that ESP sales were at the heart of the original plan to service $460 million in debt.
By my estimates, it has generated $85 million thus far. The original long-term goal was $270 million.
*** Athletic department expenses in FY17 are expected to reach the $110 million mark (a slight uptick from FY16.
Worth noting: Since FY10, benefit costs have increased by an average of 14 percent annually.
*** The section of the RFP that gave me pause addressed something as seemingly innocuous as maintenance:
“Like other parts of campus, (athletics) has significant deferred maintenance needs without any maintenance or capital reserve.
“Current anticipated capital maintenance costs are estimated at more than $50m over the next five years.”
Oh, boy.
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