Six years ago, Berkeley’s athletic department announced a mighty goal: to increase its $40-million athletics endowment to an eye-popping $1-billion fund by 2030. It planned to do this through a novel mixture of borrowing and long-term seat licenses. The money was to help finance a $300-million renovation of its football stadium.
As the Wall Street Journal reports today, that plan has failed to materialize. As of December, the athletic department had collected just $31-million toward the goal. It’s likely the university will have to borrow the vast majority of the rest, leading to all sorts of grumbling on a campus facing widespread state cutbacks.
“It is disconcerting that the university may be gambling with student fees and other academic funds to cover a massive financial commitment for a football stadium,” Cal computer-science professor Brian Barsky told the Journal.
John Wilton, the university’s vice chancellor for administration and finance, said the stadium project is complex and should be judged over the long term. Under most projections, he said, the university won’t have to dip into campus funds for many years, as many fans are paying for their seat licenses one year at a time. (After the Journal article, Berkeley issued a release explaining that the $31-million in cash it has received corresponds to a total projected value of more than $144-million over the next 30 years.)
In 2009, the Chronicle reported that Berkeley was trying to sell the rights to 3,000 prime seats in the renovated football stadium for terms of 30 to 50 years, asking fans to pay up to $225,000 for each seat. That money was supposed to go into the university’s athletics endowment.
Berkeley planned to borrow the $300-million it needed to improve the stadium, then use the interest gained from its expanded endowment to pay back the debt on the stadium. That was all assuming that the endowment grew big enough to do that.
At the time, athletics officials said they had little choice but to try something creative because they had recently tapped out their largest donors during a $100-million capital campaign.
Apparently those donors are still too weary to open their wallets.
This post was updated on April 20 to reflect a response by Berkeley to the Journal article.