Sunday, June 16, 2024

UC regents expected to hit UCLA with maximum annual subsidy — err, “contribution” for Cal

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The University of California Board of Regents is planning to require UCLA to “contribute” $10 million annually to Cal’s athletic department in the aftermath of the conference realignment that separated the sister campuses, according to a summary of the upcoming meeting at UC Merced on the regents’ website.

That is the maximum amount agreed upon by the regents in late 2022, after UCLA’s announced departure to the Big Ten placed the Pac-12’s future, and Cal’s athletic revenue, at risk.

Since then, Cal’s situation has become more fraught. The Pac-12’s collapse in Aug. 2023 forced the Bears (and Stanford) to join the ACC later this year with a partial share of the conference’s revenue.

The approved range for the contribution — some have termed it ‘Calimony’ — was $2 million to $10 million, with the exact figure based “on the best available information on projected revenues for both campuses,” the regents stated at the time.

The Bruins will be required to support Cal through the 2029-30 academic year, when the Big Ten’s media rights agreement expires.

In other words: $60 million will be sent from Westwood to Berkeley.

An executive summary posted on the regents’ website in advance of the May 14 meeting at UC Merced states:

“While universities and colleges are still in tumultuous times with an unsettled landscape in college athletics, there is some clarity on projected media rights revenues in the near term.

“It is anticipated that there will be an approximately $50 million difference between UCLA’s Big Ten contract and UC Berkeley’s agreement with the ACC.

“As a result, the President is proposing that UCLA contribute $10 million a year to UC Berkeley, the top end of the range established by the Regents in December 2022.”

The issue is labeled as an action item during an open session, meaning a vote is expected to occur.

UCLA will be a full-share member of the Big Ten when it enters the conference on Aug. 2. The Bruins are expected to receive approximately $65 million, on average, for the six years of the Big Ten’s media rights deal with Fox, CBS and NBC.

The $10 million contribution headed to Berkeley comes in addition to the increased travel costs that accompany life in a conference based in the Upper Midwest. UCLA has estimated that cost to be approximately $10 million more than it was spending on travel in the Pac-12.

Put another way, the Bruins will enter the Big Ten with financial constraints that many of their peers in the 18-team conference won’t experience.

Meanwhile, Cal and Stanford will receive approximately 30 percent of the ACC’s annual media rights revenue for seven years, before their shares ladder up to 100 percent in Year 10 of the membership agreement.

At 30 percent shares, the Bay Area school likely will receive approximately $8 million to $10 million from the ACC’s Tier 1 media deal with ESPN.

Additionally, Cal’s athletic department required more than $30 million in direct campus support in the 2023 fiscal year in order to balance the books.

The executive summary includes this recommendation:

“That the Regents authorize the transfer of $10 million a year from UCLA to the Berkeley campus from 2024-25 through 2029-30, the term of UCLA’s existing Big Ten Conference contract.

“In the event that there is a significant change in revenues and/or expenses for either campus, exceeding ten percent over 2024-25 pro forma assumptions, UCLA’s contribution commitment will return to the Regents for further evaluation and potential action.”

The regents also addressed Cal’s situation specifically in their summary:

“Beyond UCLA’s contribution, Cal Athletics will continue to work diligently to be fiscally responsible, priding itself on being able to achieve excellence on and off the playing fields while operating the Department in a cost-efficient manner.

“In addition, UC Berkeley is evaluating other solutions to address the financial gap. These include the development of new department revenue streams, additional philanthropic support, consolidating athletic scholarships to the campus Financial Aid and Scholarships Office, and an additional extraordinary payout from athletics related endowed funds.”

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