Most Cal Sports Programs Lose Money

UC Berkeley financial documents reveal that 27 of the university's 29 sports teams lose money each year, totaling annual average losses of $10.7 million.

A UC Berkeley panel said last week that Cal should dramatically reduce the amount of money it gives to its money-losing sports programs each year. The panel, convened by Chancellor Robert Birgeneau, recommended slashing the sports subsidy from $11 million annually to $5 million by 2014. The panel’s report came in response to UC Berkeley faculty member complaints over the past year that university sports programs are wasting money that could be spent on academics during a time of skyrocketing tuition and education cuts.

Yet the report by the Chancellor’s Committee on Intercollegiate Athletics failed to shed light on which Cal sports are profitable and which ones lose money. The report acknowledged that some lesser-known sports cost the university plenty each year, but it does not recommend that any of these programs be eliminated. Instead, the report outlines a series of cost-efficiency measures that the university should take.

However, a closer examination of the university’s finances raises doubts as to whether efficiency measures alone can shave $6 million a year from the UC Berkeley Athletics Department budget, as the panel suggests. The reason is that, of Cal’s 29 sports teams, 27 of them lose money each year, totaling an average of $10.7 million in annual losses. The only moneymaking sports are football and men’s basketball.

From 2004 to 2009, football averaged a profit of $6.85 million a year, while men’s basketball made $2.17 million annually on average, according to NCAA and UC Berkeley financial documents. In fact, if it weren’t for football in particular, Cal’s athletic department would lose a lot more money than it does. “We’re probably not unlike any other Division One school,” said university spokesman Dan Mogulof, referring to the profitability of football. “To use the Reggie Jackson phrase: ‘It’s the stick that stirs the drink.'”

Football and men’s basketball make a lot of money because they sell a lot of tickets, and because they enjoy lucrative television contracts. Both also receive large donations from alumni. By contrast, most UC Berkeley sports programs have trouble attracting spectators and their ticket sales are dismal in comparison. Women’s basketball is the most unprofitable sport; it loses an average of $1.6 million a year.

In fact, women’s sports programs, including women’s basketball, are the biggest drain on the athletics department budget. However, under federal Title IX, UC Berkeley, like other universities, must offer roughly the same number of women’s sports as it does men’s, regardless of their profitability. Moreover, both women’s and men’s sports offer benefits to the university beyond profits and losses.

For years, UC Berkeley has officially considered sports to be an “auxiliary” program, meaning it should be “self-supporting” under UC system rules, and not require annual subsidies. But more recently, the university has contended that sports are more akin to other student services that don’t make money either, such as the student-health program. “We really shouldn’t be thinking of these programs as needing subsidies any more than other programs that provide services to students,” Mogulof said.

At the same time, some faculty members question the accuracy of the athletic department’s financial reports. Brian Barsky, a computer science professor who has raised numerous concerns about the appropriateness of UC Berkeley’s financial support of intercollegiate athletics, said football and men’s basketball may not be as profitable as the university contends. He notes, for example, that the athletics department incurs millions in central offices expenses each year that appear to be football-related.

For instance, the department reported spending $1.1 million last year on central office medical expenses and insurance, but only $9,283 on such expenditures in the football program — a sport known for high medical costs. “It is entirely possible that a more accurate allocation across the various sports would show that even football itself runs at a loss,” Barsky contended.

Mogulof acknowledged that because of NCAA financial reporting rules concerning athletics department expenditures, football and men’s basketball may look more profitable on paper than they really are — that is, a larger share of the department’s central office expenses possibly should be attributed to them, but are not.

Still, there’s no getting around the fact that the vast majority of Cal sports lose lots of money each year. In fact, the average annual losses of the 27 non-revenue sports roughly equal the overall deficit for the athletics department each year.

So if Cal were to cut sports, which teams should it eliminate? First, it should be noted that UC Berkeley must have at least sixteen sports teams to maintain its status as a Division One school and keep its membership in the Pac-10 Conference. However, with 29 intercollegiate sports teams, Cal has more than any other public university in the nation. In the Pac-10, Cal is second only to the private Stanford University, which has 35 intercollegiate sports teams. Cal also has about six more teams than the average Pac-10 school.

Because of Title IX and UC Berkeley guidelines for gender equity in sports, it’s unlikely that Cal would eliminate women’s-only sports such as field hockey, lacrosse, and volleyball. Although they lose money, they counter-balance men’s football and rugby. Instead, if UC Berkeley were to cut any sports, it would make more sense to look at programs that include money-losing men’s and women’s teams.

According to athletics department documents, several sports, when counting both men’s and women’s teams, lost in excess of $500,000 annually on average from 2004 through 2008 — the last year that complete data was available. Track and field and cross country, for example, posted annual losses averaging $1.2 million. Swimming and diving were the next largest money losers, suffering annual losses of $812,041 a year on average.

Yet, a closer look at the numbers reveals that those sports are not as unprofitable as they seem. The reason is that they serve more students than other sports, and so they provide the university with a bigger bang for every dollar spent. The men’s and women’s track and field and cross country teams, for example, consisted of 218 total students on average from 2004 through 2008. As a result, the cost of both teams was only $5,370 per student.

By contrast, the truly costly sports are the ones that lose money and accommodate the fewest numbers of students. From that perspective, tennis is the biggest money loser on campus, costing the university $26,273 in losses for every student who participates on the men’s and women’s teams. The second most costly sport is men’s and women’s gymnastics. Every participant incurs an average of $23,371 in losses for the university each year. Men’s and women’s soccer is the next most costly. It posts an average loss of $13,555 per student per year.

Eliminating those three sports — tennis, gymnastics, and soccer, which represent six men’s and women’s teams in all — would save the university a total of about $1.8 million annually. It also would bring UC Berkeley into line with the typical Pac-10 school with 23 sports teams in all. And coupled with the efficiency measures outlined in the chancellor committee’s report, Cal actually might be able to reduce sports subsidies to $5 million each year.


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