The center of the University of California’s campus lies a mere ~3 miles from San Francisco Bay, which makes it closer to the ocean than many of its new fellow members of the Atlantic Coast Conference.

Except for its, well, you know - the other ocean…

Alas a school cast out to sea cannot be picky about the liferaft it chooses when the alternative is sinking beneath the waves to join the drowned halls of its former conference.

That does not make every liferaft the same.

Cal was already facing incredible financial pressures prior to the collapse of the Pac-12 conference, with its $440M in athletics related debt dragged it down. With a substantial reduction in revenue associated with joining the ACC and increased travel costs, Cal is caught between a rock and a hard place.

Even with the hail mary of forcing UCLA to send Cal some of its B1G media revenue and raising athletics student fees, Cal is unlikely to close all of its budget holes w.o additional actions.

As you can see above, in the Fiscal Year 2022 revenue from NCAA/Conference Distributions, Media Rights, and Post Season Football generated ~$38M for Cal, approx. 32% of its total annual athletics revenue (University of California Berkeley Athletics Department.).

This includes ~$20M from media revenue from the Pac 12.

As part of joining the ACC, Cal will only receive ~30% media revenue share of a “full school” for the first seven years of the agreement, accounting for $8-10M per year or a ($10-12M) reduction from the current PAC 12 deal (Savidge 2023).

According to Stewart Mandel of the Athletic, this may result in Cal’s overall athletic annual revenue declining to only ~$20M/year from ~$38M in these first few years; a ($18M) annual decline. 

Accounting solely for this decrease in media rights revenue would already take Cal Athletics from a ~$3.7M operating profit to a ~($14.3M) operating deficit (inclusive of debt payments towards the $440M in athletics department debt). That is prior to accounting for additional travel costs.

Cal currently pays ~$13M in game and travel related expenses annually. Joining the ACC, where the closest member school, besides Stanford, is Southern Methodist University ~1,700 miles away in Dallas, Texas, will result in a substantial increase in travel for almost all sports.

The current Pac-12 is already geographically expansive, and the ACC is likely to strategically schedule non-revenue sports in ways to minimize additional travel costs (Faraudo 2023). Thus the true impact of the additional travel costs is difficult to ascertain.

Conservatively assuming that Cal’s travel expenses will only increase 25% from joining the ACC, then overall game and travel related expenses will rise to ~$16.4M. Factoring this in with the reduced revenue would increase the annual operating deficit to ~($17.5M).

Cal may be the flagship of the University of California system, but one of their ten peer UC schools will soon be making drastically more media revenue than them, UCLA.

As part of the new Big Ten media deal, UCLA will make upwards of $70-80M per year from media revenue alone by the end of the 2030 Fiscal Year. This amount will be lower to start and ramp up over the duration of the contract for all Big Ten member schools.

Conservatively assuming in 2024 that UCLA will earn the ~$63M that B1G member schools currently make from NCAA/conference disbursements and media revenue, UCLA will see a $20M+ increase in revenue.

As members of the University of California system, Cal and UCLA are both governed by the University of California Board of Regents. 

Jon Wilner of the San Francisco Bay Area The Mercury News reported that the Regents have formed a committee related to Cal and UCLA’s conference realignment. The Regents are expected to require a portion of UCLA’s newfound B1G media revenue to be paid the UC system and then disbursed to Cal Athletics. This amount is estimated to be somewhere between $2M - $10M (Wilner 2023).

This would reduce Cal Athletics Operating deficit from ($17.5M) to anywhere from ($7.5M) - ($15.5M).

Many FBS schools leverage both direct student fees and support from the government or university funds to help support their athletics departments. The morality of these fees and this support is debatable - as it comes down to a debate of what a University’s mission should be.

Regardless, per data from the Knight-Newhouse College Athletics Database, the average FBS school receives ~$17M in revenue from a combination of student fees and institutional/government support.

Cal currently raises income from both sources. In the 2022 fiscal year Cal’s athletic department received ~$0.4M in student fees and ~$28.7M in institutional and government support.

The total amount raised by Cal from both sources, ~$29M, is well above the average for all FBS schools, ~$17M, all Group of 5 schools, ~$25.4M, and substantially higher than the average Power 5 school, ~$7.7M.

This is specifically because Cal Athletics already receives considerable support from the central University office (the entirety of the $28.7M of institutional/governmental support). This was the highest in the Power 5 and 6th highest in all FBS football. 

This aid is largely to help Cal Athletics shoulder the high debt costs associated with their recent stadium renovation, which annually is costing the athletic department $18M in just interest-only debt payments. The University has further promised to cover 54% of total stadium related costs, or $238M of the $445M debt saddling the athletic department, over the next few decades (Sports Business Journal 2023).

Given the substantial amount of funding Cal Athletics already receives from the University at-large, additional support there may be difficult to obtain. Direct support from the state government is unlikely given California’s ongoing budgetary woes.

Student fees, albeit unpopular, remain one of Cal Athletics’ few viable options to generate additional income.

Compared to other public FBS programs, Cal raised the 38th lowest amount of total revenue from student fees at $0.4M in FY 2022. Of FBS schools charging athletics student fees Cal actually raised the 4th lowest.

If Cal raised their student fees to generate the average amount that other Power Five schools generate, an additional $4.7M to total ~$5.1M.

Even if Cal were to raise student fee revenue by $4.7M, they would still face a deficit of ($2.8M) to ($12.8M) depending on how much they are able to get from a UCLA “tax”. 

If the operating deficit were to fall closer to ($2.8M) it may be feasible to fill the gap with donor contributions. Towards the upper end, Cal athletics would need to reassess its portfolio of sports.

Cal, like other members of the Pac12, has prided itself on hosting the whole range of “Olympic sports”, however with its financial woes mounting this tradition may be difficult to justify continuing.

Only football and men’s basketball are revenue positive, and once men’s and women’s basketball are aggregated together basketball net costs the athletics program ($2.9M) to support. Given Cal is joining a renowned basketball conference, it is unlikely that basketball would be a viable option to cut.

The traditional “non-revenue” sports in FY 2022 generated a loss of $19.6M for Cal athletics. Of the ~$28.5M in expenses for these sports, coaching salaries are roughly $9.7M and travel is roughly $4.9M. 

Given both of these expense categories, namely travel, is likely to only expand with ACC membership, Cal may be faced with the tough choice to at minimum, for those sports not already in a separate conference move them to a regional conference, devolve down to D2, or disband entirely.

Cal is currently a part of the Mountain Pacific Sports Federation for men's gymnastics, indoor track & field, water polo (Mountain Pacific Sports Federation 2018), and a part of the America East conference for field hockey (America East Conference, n.d.). Sending additional non-revenue sports to one of these conferences instead of the ACC may be financially beneficial, albeit unlikely to do more than minimize the increase in costs rather than lead to any actual reduction in costs.

Without finding creative ways to reduce spending inside the athletic department, or generate more revenue, the future of Cal athletics is at stake. 

Even in the most optimal scenario, students and/or taxpayers will have to pay more to subsidy a limping athletics department, student athletes will be burdened with increased travel, and non-revenue sport student athletes will likely face resources cuts or even the elimination of their sports entirely.

The Cal community has to do significant soul searching in the months and years ahead, not just about what is worth saving, but simply what can be saved. 

n.d. Knight-Newhouse College Athletics Database. Accessed November 7, 2023. https://knightnewhousedata.org/

America East Conference. n.d. “Field Hockey.” America East Conference. Accessed November 10, 2023. https://americaeast.com/sports/fhockey

Faraudo, Jeff. 2023. “Cal, Stanford and SMU Accept Invitations to Join the ACC in 2024-25.” Sports Illustrated, September 1, 2023. https://www.si.com/college/cal/news/cal-joins-acc

Mountain Pacific Sports Federation. 2018. “Members.” Mountain Pacific Sports Federation. https://mpsports.org/sports/2018/6/18/members-mpsf-members-html.aspx

Savidge, Nico. 2023. “Why moving to the ACC could further strain UC Berkeley's budget.” Berkeleyside, September 8, 2023. https://www.berkeleyside.org/2023/09/08/cal-acc-pac-12-realignment-uc-berkeley-budget

University of California Berkeley Athletics Department. n.d. “Statement of Revenues and Expenses - UNAUDITED Year Ended June 30, 2022.” Cal Athletics. https://calbears.com/documents/2023/1/25/FY22_UCB_Athletics_SRE_Online_Copy_.pdf

Wilner, Jon. 2023. “UC regents form committee to monitor Cal, UCLA moves to ACC, Big Ten.” The Mercury News, September 22, 2023. https://www.mercurynews.com/2023/09/22/uc-regents-meet-mull-confer-and-ultimately-decide-to-take-more-control-of-cal-ucla-athletics/