OaktownBear;842863961 said:
I supported the stadium and facility upgrade because they said it would be entirely paid for by donors and ESP. That made it a no brainer. Had we instead had the assumption that it would cost hundreds of millions of dollars, there would have been an analysis of other options, including a bare minimum retrofit, looking at other building sites, looking at leasing one of the other local stadiums.
I love Memorial stadium. I think our athletes deserve great facilities. You know what? We couldn't afford it. The crap way they handled the stadium has done incredible damage to the athletic department. Even if the campus chooses to take on the debt, you run into the problem that the opponents of the stadium project will have been proven right that the school will ultimately have paid for it and will be given legitimacy for everything else they fight against.
If they had said the campus would be paying $20M a year for the stadium, there is no way in hell they would have gotten approval for the project. I think it is the right thing to do for the campus to take this on now, but I'm one alum who is ticked off about it.
I'm going to respond to Oak because I view him as the "rational Cal fan" and he is quite good at finding the flaws in other's arguments.
I believe there was many mistakes in planing and implementation of the SAHPC and Memorial rebuild, which are both financial, planning and construction in nature. While I think these misstates are instructive, they were made by individuals who are now gone (admittedly Brystorm still is around), and they have resulted in sunk costs. The debt service is what the debt service is today, and while some tinkering with ESP is possible, we are left on the revenue side with essentially in the same position that exists today. If I had a crystal ball and was in power, I would have likely recommended following the UCLA route and renting a stadium or look at other options as Oak suggests. IMO, you have to look forward and '71 has a pretty good summary what logically will happen.
As I said in another thread, the debt issue has different components, and while important is not the end all to what ails I/A. The revenue stream to repay the debt, to the extent it relies on one program, football, is unreliable as revenue from that program will vary on how well the program is winning (which likely will vary over time), and football TV revenues which also is likely to vary as the platform for broadcasting is changing, and for other reasons which involve a discourse on TV sports that no wants to read. Moreover, the structure of the debt is overly sensitive to interest rates. If rates go up, reinvestment of capital fund proceeds could even exceed the interest due. Interest rates stay low, the more negative variance there is from the original model. Bottom line is any reduction in the debt means a far more stable athletic department. That said, I don't see how Cal I/A gets the benefit of the revenue produced by a football team with competitive facilities and ESP from build-out of clubs and not pay the related debt service. I can see how a forward thinking Chancellor would find it beneficial to reduce the debt for reasons that are in the University's interest, especially if she can get big brother UC (who was asleep when it came refinancing the debt in the lower interest rate environment before the Regents imposed a credit limit due to reckless borrowing the the UC level) will underwrite some portion of the debt in order to avoid paying for new land costs (and to expedite housing that would otherwise take years more and ****-off the City of Berkeley with land acquisition involved). This is a win-win. And my guess is there are other plans at work to get the debt more manageable.
That doesn't mean there can be business as usual because the current model of football paying the deficits of so many teams doesn't work, and in the long run gets worse. IMO, you can't cut teams in such a horrible way that you alienate donors and end-up with a net loss of money (see Sandy Barbour). But making programs more accountable for reducing their operating deficits or other prudent financial driven incentives or disincentives make sense. Or change the current business model over some time period. But the status quo doesn't work regardless of whatever this Chancellor can do about the debt issue. The good news is the new Chancellor actually wants to do something to make I/A work in the future and is reaching out to different stakeholders. The newspaper writers simply don't understand the issues involved; although, Wilner at least has a general understanding (he just doesn't understand the specifics). Anything you read in the Comical or most publications is garbage, and all poster do here is beat each other-up over inaccurate information.
