Financing for Cal's stadium renovation becoming a problem
Published: Wednesday, 18 April 2012 10:03
by Doug Samuels
The Wall Street Journal ran fascinating article about the status of the major renovation to Cal's Memorial Stadium and the major financial problems they are having paying for it.
The planned renovations had a hefty price tag of $321 million, and would make the project one of the most expensive renovations in college sports history. Originally, the University had hoped to fund the project through long term seating sales and naming rights to various parts of the stadium. The renovation will actually reduce seating capacity from 72,000 to about 63,000.
Athletic director Sandy Barbour, who approved and promoted the renovation plans and the associated funding plan (which called for raising $270 million from the sale of seats), is now admitting that the University will have to borrow the vast majority of the money. As of December, which marked about three years into the project, Cal had only collected $31 million. In the WSJ article, Barbour added, "We're not asleep at the wheel here."
According to the WSJ, the $321 million is far more than what Minnesota and Stanford paid to build brand new football stadiums. To further put things in perspective, Michigan spent $148 million to add luxury seats at The Big House, Washington is spending about $200 million on recent stadium renovations, and Minnesota borrowed $220 million to build their new stadium. In the WSJ article, Barbour says that about 70% of the total cost of the project is attributable to "safety upgrades" due to the fact that the stadium sits atop a geological fault. Really? So is that saying that if the stadium weren't there, it would only cost 30% of $321 million ($96 million)? TCU is reportedly spending about $150 million on their renovation. Baylor's proposed on campus stadium is projected to cost "up to $250 million".
Along with the football stadium renovations, the athletic department was also planning to build a new multi sport training facility for $153 million. Combined, the two projects were looking at a half a billion dollars. It's no secret that higher education in California is going through some financial troubles of their own. Last year the state legislature cut $650 million dollars from the University of California's $3 billion operating budget.
Despite leading the country in tuition increases (in-state tuition increased 17% this year, with another double digit tuition increase in the near future), University officials say that because of the shortfall from athletics the rest of the funds will have to come from campus funds including an increase in student fees.
When we visited Cal on our recent Pac-12 tour, construction was ongoing, hot and heavy (see picture below). The word from the staff was that the stadium would be "game ready" by opening day; but the project would be far from finished. In fact, the coaches were just moving into their new offices the week that we were there.
We're hoping Coach Tedford and his staff can win a bunch of games this year to help shore up the financing of this project.