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Financial Updates
Courtesy: Cal Athletics  
Release:  04/17/2013

Message from Sandy Barbour and John Wilton

Dear Cal Athletics Community,

Late summer is always a special time on this campus as we begin to welcome home thousands of new and returning students. That palpable sense of renewed excitement and possibility is part of what makes working at Berkeley a privilege, even as it reminds us of our primary mission and purpose. At the most fundamental level, all of us at Cal Athletics share with our academic colleagues a dedication to providing our students with what they need to excel, to grow and to fully realize their potential. That is why we are here.

As you all know, the resources necessary to make all that magic happen have been hard to come by in recent years. Yet, together, we have all stepped up to confront the challenges and sustain the excellence of our academic and athletic programs in an era when private philanthropy is more important than it has ever been for this campus. Lost in press coverage that tends to focus on the negative is the fact that we continue to attract an ever-growing number of amazing applicants for admission; continue to recruit and retain world-class faculty; continue to expand our research enterprise; and continue to produce teams and individuals who successfully compete for national titles, Olympic medals and coveted spots on the rosters of professional organizations. While there are many measures of our achievements, we should take pride in our most recent accomplishments - Cal athletes won 17 medals, 11 of them gold, at the London Olympics. If Berkeley was a country, we would be tied for 14th place.

That continued success is the result of a lot of hard work, innovative thinking and generosity ... and sustaining that success is going to require even more of the same. For that reason, we want to provide all of you with an update on the significant progress that Cal Athletics has made over the last 18 months in terms of analyzing our financial opportunities and challenges, as well developing new strategies to increase our revenues and keep our costs contained.

Not to put too fine a point on it, but we have fundamentally altered our strategic approach to maintaining a robust, world-class and financially sustainable intercollegiate athletics program at Cal. In September 2011, we invited a group of Cal alumni from Bain & Co. to undertake an objective, independent analysis of Cal Athletics' business operations. We asked for and received a no-holds-barred assessment and are extraordinarily appreciative for what was a pro-bono endeavor. While an executive summary of the findings is attached to this letter, they can be summarized in a clear, concise fashion: for a 29-sport program, Cal Athletics is already operating a relatively efficient and cost-effective program relative to best practices and relevant benchmarks, while there are significant steps we could take to generate additional revenue.

Report on financial outlook and challenges for Intercollegiate Athletics

These findings support and confirm our own internal assessment. Consequently, we have developed an aggressive strategic plan that will continue to push for increased cost containment as well as increased net revenue. On the revenue side, we include initiatives that are already underway and new endeavors flowing from the independent review. It is clear that we cannot cut our way to sustainability while, at the same time, maintaining the current breadth and quality of our intercollegiate program at Cal. That is our challenge and our opportunity. We have to invest to grow. We will do this even as we continue to seek new ways to improve the efficiency of our operations.

We want to acknowledge as clearly as possible that there are real risks inherent in this strategy. We know that not everything we do will succeed as planned or expected, and Cal Athletics does not operate in a bubble; it is part of a dynamic, ever-changing campus, society and national economy. However, like our student athletes, we are playing to "win," with the understanding that if we don't prevail at first we will keep coming back, keep adapting and keep innovating until we achieve our goals. What we can promise is that we will not be complacent and that we are fully engaged and ready to address whatever challenges the future holds.

As part of this new, emerging strategy, we are also reexamining the business model underpinning the financing of the Simpson Center and the renovated California Memorial Stadium. Here, too, we can literally not afford to be complacent. Yes, we are currently close to 70% of goal in terms of participation in the Endowment Seating Program and have secured an additional $15 million in philanthropy. And, as we have explained before, these projects are financed for the next 20 years, even under sub-optimal scenarios and projections. However, because of the importance of these projects to Cal Athletics and the campus as a whole, we have decided to reevaluate our approach in order to maximize our financial security and the likelihood of success. This reevaluation has already led us to implement a number of new initiatives, including changes in how we market and sell ESP seats, as well as the exploration of proposals to generate additional revenue in direct support of the two projects. At the same time, we are working in close collaboration with faculty, including professors from the Haas School of Business, who are engaged in an objective, independent validation of the financial model for the Simpson Center and stadium projects. Once we have credible data and some experience of how our modified approach is working, we will provide you with the revised financing model, along with the commentary of our faculty colleagues. We want you all to understand the variables involved, the steps we are taking and the options that are being weighed.

In the mean time, please read through the summary of the analysis our alumni from Bain have produced. We know that many of you have been inquiring about its conclusions, and we now want and need your engagement, your input and your support as we start to turn the findings in to action. The opening of the Simpson Center, the retrofit and rejuvenation of Memorial Stadium and the restoration of our full portfolio of sports programs were all made possible by your generosity and devotion. We have already seen what we can accomplish when we come together. We firmly believe that once you have had a chance to review this work and assess our response, we will be very well positioned to tackle our challenges and take full advantage of our opportunities.

In closing, it is important to step back from the day-to-day challenges and focus on the bigger picture outlined at the start of this letter. Memorial Stadium is more than a "venue;" it is a place where the idea of a Cal community finds expression. The Simpson Center is more than a training facility, it is a place where young people advance on their dreams. Many of us deeply believe that having a vibrant, successful and diverse community of student-athletes is an important part of what makes Berkeley Berkeley. Their success on the field of play complements, supports and reinforces our defining attributes: access and excellence. This is what we, together, are working to sustain, and with your support we shall.

We look forward to seeing you on September 1. Welcome home!

Go Bears!

Sandy Barbour, Director of Athletics
John Wilton, Vice Chancellor, Administration and Finance

Financial Statements

Facilities Project Summary: Simpson Center and Memorial Stadium (2/27/12)

Athletics Facilities Financing Reports

ESP Financial Plan Update from Vice Chancellor John Wilton (9/8/11)

Memorial Stadium FAQ (4/18/12)

Statements of Revenues and Expenses

Public Records Requests

Important Links

Donor Letter on Graduation Rates (10/29/13)

Proposed Aquatics Center Aids Campus (5/3/13)

Cal, Jeff Tedford Reach Contract Settlement (2/4/13)

2012-13 IA Annual Report (1/25/13)

Statement on 2012 Graduation Success Rates (10/25/12)

Augmented 2012 Cell Service Plan for Memorial Stadium (8/15/12)

Academic Performance Working Group (7/13/12)

Statement on Men's Basketball Graduation Rates (7/13/12)

Cal Responds to Wall Street Journal Article (4/20/12)

How the Pac-12 Media Rights Agreement Impacts Cal (5/5/11)

Cal Baseball officially reinstated as team preps for College World Series (6/17/11)

Men's gymnastics program to continue at UC Berkeley (5/2/11)

Baseball program will continue at UC Berkeley (4/8/11)

Three UC Berkeley athletic teams to be preserved (2/11/11)

Chancellor's Statement on Continuation of Sports Teams (2/11/11) »

Sandy Barbour letter to Cal donor community (2/11/11) »

Updated FAQ on program changes (11/29/10) » PDF doc

Sandy Barbour letter to Cal donor community (11/29/10) »

Public Records Act request response (11/19/10) »

Chancellor Announces New Plan for Cal Athletics' Future
(9/28/10) »

Chancellor's letter to the campus community (9/28/10) » PDF doc

FAQ on program changes (9/28/10) » PDF doc

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