Intercollegiate Athletics Report Of Limited Utility to Chancellor

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It is gratifying that the "Academics First!" resolution has led to the exposure of the inappropriate unbridled support of Intercollegiate Athletics (IA) by UC Berkeley administrators as they oversee an academic institution reeling in fiscal crisis.

However, the Chancellor's Advisory Council on Intercollegiate Athletics' recommendation that the campus should continue propping up IA, but merely aim for a lower amount by 2014, is too little too late; more profoundly this recommendation is both in defiance of the will of the faculty, thereby showing the weak state of Berkeley's tradition of shared governance, and in violation of existing UC Policy.

The will of the faculty was expressed clearly at an exceptionally well-attended Academic Senate meeting on Nov. 5, 2009 at which the faculty voted by a significant margin to pass the "Academics First!" resolution which said that the campus should cease enabling IA to overspend its generated revenues.

UC Policy states that Intercollegiate Athletics (IA) at Berkeley is an auxiliary enterprise and as such must be self-supporting rather than draw campus funds (UC Accounting Manual, Chapter A-783-1, II.A, II.C.5, III.A, III.B). The administration's response to this concern is that the support has been on-going for years, as if to argue that not complying with existing policy for a while somehow changes it without any process of discussion and review; however, this response merely admits that campus accounting practice has violated university policy with impunity.

To the Council's credit, its report did recognize the "unconstrained spending" culture of the Intercollegiate Athletics auxiliary as well as the "unacceptable" current system of financial accounting in IA, and noted that IA's financial dependence on campus funds "is larger than the campus should bear" and that "an expanded Pac-10 could lead to increases in travel costs, as well as further fuel for the arms race." Indeed, at the April 27, 2010 public meeting of the Task Force on Intercollegiate Athletics, its Chair announced that the cost to campus for 2009-10 would be at least as high as it was for 2008-9, which was $14 million. That will bring the cost to campus of this auxiliary to over $80 million since 2003, which is an average of more than $11 million per year.

"All the published literature suggests that there is no reliably positive impact of athletic success on giving to the general endowment of a university. This literature consists of at least twelve separate studies," wrote Andrew Zimbalist, the Robert A. Woods Professor Economics at Smith College, "In some cases, a significantly negative effect is found."

Yet the Council's report ignores the published literature and relies instead on a completely unsubstantiated claim that donors would reduce their contributions (presumably to academics, not athletics) by an estimated $25 million if the special protection being afforded IA were to be ruptured. Apparently, the campus believes that our alumni would punish our already beleaguered academic program if the campus were to take the necessary measures to rein in the IA auxiliary; however, I hold the intellect and motivations of our former students in higher esteem than that.

Why did the Council make a recommendation discordant with these facts? The answer would seem to lie in the skewed membership of the Council. It comprised four faculty members, most and possibly all of whom were from the minority of faculty who had voted against the resolution, and four alumni who are major donors to IA. Ironically, the Council's report revealed that "the current annual donor participation in the annual Bear Backer program is 1.6% of our alumni." Thus, the Council had no representation from the 98.4% of our alumni who are not donors to Intercollegiate Athletics but instead it drew 100% of its alumni members from the most vociferous voices of big donors to Cal Athletics, two of whom even publicly mounted opposition to the faculty resolution in November 2009.

Unfortunately, the Council ignored more than the published literature. It seems to have been asleep at the switch when it issued the recommendation that the level of ongoing annual campus support should decline to a target amount of $5 million by 2014. Did none of its members read the minutes of the UC Regents meeting of Sept. 16, 2009 that obligated the IA auxiliary to start annual payments, required to be paid first ahead of any other expenses, of $28 million in 2014-15 as debt service on the stadium project?

How can IA be expected to need a $5 million handout from the campus and at the same time have a surplus of generated revenues exceeding expenditures by $28 million to pay this debt service? Any rhetoric that there will be an extra $28 million available from the Endowment Seating Program (ESP) is dispelled in Document GB2# from the Regents meeting, which explicitly states that the Estimated Athletics Gross Revenue for 2014-15 of $64 million already includes the revenues from the ESP.

Here is the scenario for four years hence: The campus will hand over $5 million to the IA auxiliary, according to the Council's recommendation. Since IA's accounting practices include campus support as part of Gross Revenue, IA will have a total of $64 million, from which IA is obligated by the Regents to pay $28 million for debt service for the stadium. This then leaves $36 million available for spending. This means that the IA auxiliary would have less than half of its current $73 million of expenditures available for expenses, but would still need to maintain its current $59 million level of generated revenue; this seems rather infeasible.

The Council's lack of attention to the future annual financial obligations on the revenue of the IA auxiliary placed by the Regents for debt service for the stadium renders the report of limited utility.


Brian Barsky is a professor at UC Berkeley. Reply to [email protected]

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