Will UCLA be forced to subsidize Cal for financial damages for moving to the Big Ten?
The die is cast, as UC regents begin investigation into UCLA’s move to Big Tenmost likely at the request of California Governor Gavin Newsom.
What might a potential successful and practical outcome look like for Cal?
It’s safe to say that UCLA is unlikely to return to the Pac-12. UC Regents don’t have the power to block such a move to the Big Ten, because the UC system is constitutionally free from any state obligationespecially in terms of contracts.
But that doesn’t mean there can’t be repercussions. There are serious discussions about the financial complexities that UCLA’s decision has imposed on their Berkeley big brothers.
Jon Wilner indicated that the UC regents were exploring financial remedies to make the move from UCLA as uncomfortable as possible.
Multiple sources believe the Regents will consider forcing the Bruins to subsidize Cal’s athletic department, which stands to lose millions each year in Pac-12 distributions due to the loss of the Los Angeles market.
Details of a power move by the Regents are unanswered at this point, including how the money would be redirected.
We’re not sure they can touch Big Ten revenues; instead, they might have to collect state stipends from UCLA.
The California Golden Bears are currently facing nine-figure sports repayments due to their financially reckless debt service on Memorial Stadium. Although UC Berkeley’s central campus has already taken on half the debt service to reduce the $440 million to just over $200 millionmuch relief is unlikely to come in the coming years.
Under the terms of the stadium renovation, Cal Athletics initially only had to repay the annual interest. But the terms change in the 2030s.
By the end of the decade, Cal will have to start paying principal rather than just interest, via a survey by KQED and reported by reputable Cal California site Golden Blogs. These payments originally ranged from $24 million to $37 million per year. They’ve probably come down a bit thanks to UC Berkeley taking on some of the debt service, but there’s probably still eight-figure annual payments required.
With ESP sales lagging, the hope was that the new Pac-12 TV deal could pick up the slack. The hope is that with ESP ticket sales for premium seats at Memorial Stadium and stronger television contracts, Cal would be able to repay that principal well in time. USC and UCLA leave the Pac-12 greatly affects this calculation.
So the UC regents might investigate UCLA’s decision and find that even if the Bruins make a ton of money for themselves, it’s canceled by Cal, potentially defaulting on debt by a reduced Pac-12 TV deal and likely lower ticket sales (USC and UCLA are the second and fourth average draws on the Pac-12 slate). More CGB via KQED report:
Although the Berkeley campus has pledged for Athletics to repay its debt, the Regents are ultimately responsible for the bonds.
If there’s one thing I’m sure of, it’s that the state of California doesn’t want ANY part of the management of its flagship university that isn’t repaying its debt.
Even if UCLA does not have to answer to the State of California, it is still a public university in the State of California, and thus harming the flagship university would have serious consequences. UC Regents must exercise due diligence to ensure they protect their most valuable assets.