Oh, Bears!

Time to update the amazing failing-upward saga of the UC Berkeley Intercollegiate Athletics program, because we have hit the front page of our local paper with another humiliating roundup.  Just to review, we are talking about a $70m-per-year business that loses $10m sending athletes to compete against other schools in a couple of dozen sports where they have fun, do fairly well, and mostly graduate without a lot of handholding and tutoring.  It also sells tickets and television access to people who want to watch about 150 men play basketball and football, and rights to make the usual chotchkes and sweatshirts. There are about 850 so-called student-athletes in the care of IA; our other 20,000 students are allowed to buy tickets and watch them, but IA has nothing to do with “students being athletes” in any general sense.  (Given that the average playing time for a member of the football squad is eight minutes per year, it’s not so clear that those guys should be scored as athletes either…they do get $10,000 each for those eight minutes, so maybe they should be compared to pro stars)
Nor does IA have much to do with anything else on campus, other than absorbing a Niagara of student fees and tuition money. It was once supposed to be self-supporting, like the parking garages, but the regents – the university’s governing board – fixed that silly rule for us several years ago so the chancellor can give it money that would otherwise be wasted on labs and scholarships and other frills. It even has its own spiffy web site (with a .com, not .edu, suffix).
A few years ago, it was discovered that our art museum and our stadium were too dangerous to occupy with the BO (big one) getting organized under our feet.  The museum was temporarily propped up with some awesome steel braces, we designed a really nice new museum at a downtown corner of the campus that would benefit from foot traffic and street activity, and we set about fundraising.
The stadium, which is indeed beautiful and in an awesome location, isn’t actually very good for the business-type football we use it for because there’s no parking and thus no tailgating, it’s a big uphill hike to get to from your car or transit, and there’s no commerce around it for eating and drinking.  We do, however, have two pro football teams in the neighborhood, and one has a stadium with a big parking lot, at a transit station, that was available on the seven or eight relevant fall Saturdays for about $5m per year, a sum that could have been secured forever with about a $100m endowment.  Rebuilding the stadium would cost about $350m, which we didn’t have.  But it’s pretty clear that spending $350m to enjoy football seven days a year in inferior circumstances is much better than spending $100m to do it in an appropriate venue, right?
Fundraising for the museum fell short in a difficult economic environment, and our campus leadership certainly wasn’t going to spend money on something so peripheral to our core business as art, so the new museum will be half the planned size. Fundraising for the stadium barely got off the ground, but we’re not talking about amusement or frills here; football was at stake, a core educational value! So the decision was to borrow the money and go for it.  And while we were at it, we undertook to build a building that’s about a third each coaching office palace/party venue for players and boosters/athlete conditioning space (for some of the 850 letter athletes) right next door, for another borrowed $150m.
The university regents (our governing board) went along with this, with the clear understanding that while the bonds were in their name, the Berkeley campus, not the whole UC system, was on the hook for the whole sum. I should point out that the regents are Hard-headed Republican No-nonsense Business people, people who can Read a Balance Sheet and do not fall for Ponzi Schemes nor let their university get into dangerous financial waters.  They were fine with the idea that IA, this $70m business that lost $10m per year, would figure out how to suddenly make $35m more to retire the bonds and get the campus subsidy down to $5m, and our chancellor, on the way out as of last month, was fine with it too. Indeed he got to go to a whole season of football games there last fall!
There’s nothing wrong with borrowing for a capital investment, as long as there’s a realistic way to repay the loan.  There wasn’t.  The details of the financial magic trick are fairly complicated. One part was asking people to just give us a lot of money and buy expensive seats on long term contracts, putting the money (if we got it) into an endowment that paid more than the tax-exempt bonds cost.  It also involved putting off repaying any of the bond principal until everyone with fingerprints on this stinker would be safely retired on a nice beach, and it introduced such tough-minded financial innovations as treating a fan’s unenforceable statement of intent “to go on buying seats for some number of more years maybe” as income.  Not a hope, not a discounted receivable; income. You can read an exquisitely sanitized version of the story here and here.  It contains the immortal promise “Intercollegiate Athletics is taking full responsibility for generating the funds needed to pay the debt for construction of the Simpson Center and Memorial Stadium”.  As IA took “full responsibility” a decade ago to eliminate its need for campus subsidy by now, I assume this means, in ordinary English, “When IA shall have failed to pay for its new toys, it will be very sorry and regret the faculty appointments and new facilities Berkeley will have to go without.”

Around the time it became impossible to pretend the stadium financials were going anywhere except in the toilet, the football team and the men’s basketball team’s academic performance collapsed, with this year’s football numbers the worst in the PAC-12 and edging along the 930 Mendoza line of post-season eligibility.  Their field performance tanked as well.  Bowl game-what bowl game? March whatness? I cannot overemphasize the importance of winning games to selling tickets to football and men’s basketball games, in case you missed that.
Our athletic director, who has an MBA, leaped into action, having overseen the financial, playing, and academic meltdowns for four years, and she did what weak managers always do when they have no clue: she fired the coach who had had five winning seasons when he came and whose team was now on the rocks, unhesitatingly reaching into our pockets for about $5.5m in severance money for her Trump moment.  She did more: she ponied up $300,000 of the campus’ money (IA deficits are always campus deficits) to hire marketing experts. Did I mention that she has an MBA [link to MBA in live action added 19/VI/13]?
An unintended reflection on the half-billion-dollar stadium/coaching center morass is provided by John Wilton, the Vice Chancellor for Administration and Finance who found the IA mess curdling in his desk drawer when he arrived.  Replying to a critical editorial in the Daily Cal, he wrote an op-ed defending the latest screwup he will have to deal with, a fancy new aquatics center for intercollegiate swimmers and divers:

 The author [of the editorial] presumes that the aquatics center financial model is similar to that used for the Simpson Center for Student-Athlete High Performance [the coaching/party/conditioning center]….this project is being financed in the same manner as a recent academic project…whereby construction cannot and will not proceed until 100% of the donor financing is secured and recorded.

Apparently the stadium-SAHPC scheme, borrowing money against filling a gutshot straight,  wasn’t so brilliant that Wilton wants to try it again!
Which leads us to the aquatics center.  This is being built on a parking lot next to the medical center, across the street from the existing swimming/basketball/track/baseball complex at the SW corner of the main campus.  It is a terrible location for yet another facility that does not generate the foot traffic that that part of downtown Berkeley badly needs, and that could just as well go on the hill above the stadium in a rugby/soccer field.  I also completely flouts the campus’ rather well-thought-out 2020 development plan. The city hates this very inconsiderate land use decision but can’t do anything about it as Cal is exempt from local zoning.  But the worst part of it is what Wilton nimbly avoids in his reassurance: there is no provision for operation and maintenance of this very expensive facility.  A prudent organization does not put a shovel in the ground for a building unless it has assured not only its construction cost but the costs of operating it; at Harvard, for example, a dean may not build until she has not only raised not only the cost of the new building but put a like sum for operating it into the university endowment.  (Right; Harvard is rich. Should poor institutions be more prudent than rich ones, or less?) We have heard nothing about operating costs for the aquatic center, and no, Virginia, swimming, diving and water polo are not money sports.  Those operating costs are coming straight out of campus funds. But hey, if we  can watch a few Cal swimmers at the Olympics every four years, why would we want to hire more boring professors?  I mean, what’s a University for, when you come right down to it?
It’s not surprising that IA is insouciant about operating costs. What passes for financial information at IA is this annual P/L (don’t even ask about a balance sheet; we don’t need no stinkin’ balance sheets!). Looked at closely, it has many perplexing entries, of which one is an item for “direct facilities cost” of about $2m, which would cover operating about 200,000 square feet of office space.  The SAHPC alone is about 140,000 square feet, and a small fraction of IA’s total real estate.  Who is paying to light and heat and clean all their space, including but not limited to a whole basketball arena wrapped in thousands and thousands of square feet of offices?  Is it any wonder that IA has a campus reputation for opacity and arrogance, if not flat mendacity?
The next chapters of this story will be continued financial wreckage (ameliorated a little if the economy turns upwards) dumped on the campus, and mismanaged by the same team – in particular the same athletic director (she has an MBA, by the way) and athletic financial director – that has a decade-long record of bad judgment and who got us into the current half-billion-dollar (and growing!) hat trick of losing teams, losing money, and academic failure.

We do have a new chancellor.  I know little about him: if he’s a ‘football fan’ in the style of our departing leader, meaning that he leaves his critical faculties and his courage at the door when he deals with intercollegiate athletics, we have no hope.  If he wants to lead a university more than he wants to cheer the occasional touchdown and party with boosters, he will clean a lot of  house at IA, and install leadership that has some hope of getting the ship through the rocks without foundering completely and bringing the rest of us underwater with it.

Author: Michael O'Hare

Professor of Public Policy at the Goldman School of Public Policy, University of California, Berkeley, Michael O'Hare was raised in New York City and trained at Harvard as an architect and structural engineer. Diverted from an honest career designing buildings by the offer of a job in which he could think about anything he wanted to and spend his time with very smart and curious young people, he fell among economists and such like, and continues to benefit from their generosity with on-the-job social science training. He has followed the process and principles of design into "nonphysical environments" such as production processes in organizations, regulation, and information management and published a variety of research in environmental policy, government policy towards the arts, and management, with special interests in energy, facility siting, information and perceptions in public choice and work environments, and policy design. His current research is focused on transportation biofuels and their effects on global land use, food security, and international trade; regulatory policy in the face of scientific uncertainty; and, after a three-decade hiatus, on NIMBY conflicts afflicting high speed rail right-of-way and nuclear waste disposal sites. He is also a regular writer on pedagogy, especially teaching in professional education, and co-edited the "Curriculum and Case Notes" section of the Journal of Policy Analysis and Management. Between faculty appointments at the MIT Department of Urban Studies and Planning and the John F. Kennedy School of Government at Harvard, he was director of policy analysis at the Massachusetts Executive Office of Environmental Affairs. He has had visiting appointments at Università Bocconi in Milan and the National University of Singapore and teaches regularly in the Goldman School's executive (mid-career) programs. At GSPP, O'Hare has taught a studio course in Program and Policy Design, Arts and Cultural Policy, Public Management, the pedagogy course for graduate student instructors, Quantitative Methods, Environmental Policy, and the introduction to public policy for its undergraduate minor, which he supervises. Generally, he considers himself the school's resident expert in any subject in which there is no such thing as real expertise (a recent project concerned the governance and design of California county fairs), but is secure in the distinction of being the only faculty member with a metal lathe in his basement and a 4×5 Ebony view camera. At the moment, he would rather be making something with his hands than writing this blurb.

23 thoughts on “Oh, Bears!”

  1. As an alumnus of the school that contributed the LeConte brothers to the University of California, and who as an academic and biologist has great respect for Berkeley, I would like it noted that only one SEC school has a football APR lower than UC-Berkeley for the 2011-2012 academic year. Someone should be ashamed, and it is not Tennessee.

    +1 for the Mendoza Line in this context.

  2. I forgot to add that you should be very proud of your golf team though, Professor O’Hare. They lost at the recent NCAA finals, but they absolutely rock, having a record that is off the charts. Very good in the classroom, too. Of course, they get very little, as in virtually nothing IIRC, from UC-Berkeley IA. Maybe there is a connection?

    1. KLG, you beat me to this comment, so I have to add to yours. I just came back from Merion, where I was astonished by young Michael Kim. Late in the third round, this 19 year old kid was in third place on the most difficult track they’ve played the US Open on in my lifetime. He got a few too many bogeys in his last 21 holes, but he still finished as low amateur…and he really IS an amateur. And his teammate, Michael Weaver, also made the cut. Two college teammates making the cut at the Open an exceptional achievement.

  3. A million or so twittering Brazilians have taken to the streets of a dozen cities demanding more bread and fewer circuses. Sample World Cup stadium in Manaus, home to teams in the marginal Amazonian League – the climate makes the sport hopeless, and the average gate for local teams is 558:
    Dilma is trying de Gaulle’s “je vous ai compris” but it’s hard to see what she can do concretely except hope it fizzles out like Occupy Wall Street. It’s far too late to back out of the World Cup extravaganza, and walking out on the Olympics would be a national humiliation. But perhaps she can call the IOC’s bluff and downsize the venues for sports Brazilians don’t play like badminton and dressage; after all, the IOC has nowhere else to go either.

  4. Pay the athletes in cash, not cars and hoses. After five years, everybody will realize that college basketball and football are minor league sports, and the whole superstructure will wither away. Which is why the NCAA is fighting athlete pay like crazed weasels.

    1. The current big time college football and basketball system is a weird, idiosyncratic structure that American higher education unwisely allowed to evolve over a century. It is built on the fiction that certain highly talented young athletes who are laser-focused on lucrative professional careers are actually amateurs in an extra-curricular activity. It displaces the necessary minor league system that is available on an honest professional basis in baseball, hockey and soccer — totally so in football and largely so in basketball. Legally forcing reclassification of those athletes as employees/professional athletes would indeed strike at the heart of the system. However, that system in huge and entrenched, and I am not so sure about the withering away part; the results could be surprising and are hard to predict. This zombie may have more lives left than one might think.

    2. Are the athletes currently being paid in houses or in ho’s? Enquiring minds want to know.

      1. Actually a full-ride scholarship within the rules is usually darn good pay for a demanding but still part-time college job; that is why they are always in demand and highly competitive. So are most partial athletic scholarships, even in the absence of professional possibilities. The exceptions are the most promising football and basketball players, who may be one injury away from losing millions. Still a screwy system.

        1. This is nonsense on stilts. The “students” awarded these “athletic scholarships” often aren’t qualified to do a real courseload, are (as said above) focused like lasers on goals wholly other than getting an education, and face both expectations and a culture that is (unlike a work-study job) utterly inconsistent with the attainment on a meaningful degree. They’re up at dawn, training half the day and studying the sport much of the other half. They live in segregated housing and often take segregated and largely meaningless courses (“Rocks For Jocks” etcetera) or degrees (“Sports Management”). Should they get injured in the course of their athletic duties they’re dropped, and they for damned sure can’t postpone a single workout because they’re unclear on their physics. And they’re on the road half the time for at least one semester. The scholarships are in demand because the stars get lionized on TV and because some make millions later – not because they’re a great, rationally considered way to get into and afford college.

          And that is just the poor schmucks who manage to grasp the completely fraudulent brass ring of the “athletic scholarship”. It ignores all the middle schoolers and high schoolers who’ve been told by society their path to an education is on the playing fields, but didn’t make the cut. Their lives are crippled by this deception, and they didn’t even get to experience the next betrayal.

          1. I am sure you regretted your tone as soon as you hit send; I will overlook it. We do not differ as to the fate of a key swathe of scholarship athletes, primarily football players, who are worked hard, overdazzled as to their pro prospects, and all too often shabbily treated. The fact is that the vast majority of athletic scholarships across the range of sports and competition levels go to students who are under no illusion whatsoever that a lucrative pro sports career awaits. As the NCAA brags, they graduate at relatively high rate and “go pro in something other than sports.” A complication perhaps for those who like their evils pure, but still true. I did not and do not say that that justifies the overall weird system.

          2. Ken may be right that many scholarship athletes are real students. But I’ve heard that Title IX has come pretty close to gutting mens’ athletic scholarships outside of football and basketball. Which may mean that most of the serious student-athletes are now women. Which wouldn’t surprise me at all: women generically do better in undergraduate education than men.

          3. I have genuinely seen young lives destroyed by the messages our society sends out falsely linking sports and education, and I’ve seen at reasonably close hand the farce of galumphing “student athletes” on campus (admittedly a couple decades ago – but I hardly think it’s gotten better since then). So, no, I will not regret the sharpness of the tone I took in response to an encomium to all the wonderful benefits for-profit collegiate sports and in particular sports scholarships bring to our society.

            Are there great student-athletes: yeah, sure. I’d bet the vast majority of students competing at the intercollegiate level in non-televised and non-career sports are just terrific young people all around, including a serious dedication to scholarship. But they’re not the problem, they’re not the ones being given the scholarships (except for women given scholarships in an effort to balance massive expenditures on men-only football teams). Their achievements on the playing field haven’t left a trail strewn with broken dreams and damaged lives behind them. On the other hand, basically every aspect of “Collegiate” Men’s Football and Men’s Basketball is a humiliation and a shame on the society that would propagate it.

          4. Warren, you clearly have no idea at all about what athletics outside of a narrow range is like at all. You would think that someone who admits to not having any contact with the matter in a couple of decades would have some humility as to their level of knowledge, but apparently that isn’t the case.

            But they’re not the problem, they’re not the ones being given the scholarships (except for women given scholarships in an effort to balance massive expenditures on men-only football teams).

            Wrong. Football gets a disproportionate share of the scholarships but, to use the University of Minnesota as an example since I’m most familiar to it, it isn’t even a majority of the scholarships provided to male athletes. Overall, Minnesota provides about 320 athletic scholarships each year of which at most 85 go to football. As I said, disproportionate but hardly exclusive.

            And for the most part the the students in the sports without a professional track are pretty good students. Not all of them, but most. In the sport I’m most familiar with, women’s hockey, we graduated six players this year. One was a sports management major. The other majors were forestry, journalism, psychology, chemistry and a biological sciences major designed to be pre-med. Not bad considering that the journalism and chemistry majors hardly spoke English when they arrived here four years ago.

            Ebenezer: But I’ve heard that Title IX has come pretty close to gutting mens’ athletic scholarships outside of football and basketball.

            “Gutted” is, I think, too strong a word; as noted above, football isn’t even a majority of men’s scholarships, though football plus basketball is, barely. Further, I’d change the locus of causality in that sentence. Title IX hasn’t gutted a thing; the insistence of the football barons on maintaining roster sizes twice the size of NFL teams is the problem. There really isn’t any reason they couldn’t make do with 40 scholarships and things would work out a lot better for everyone.

            There are a lot of problems with college athletics. As Mike points out in the top post, you can question the amount of resources devoted even to the non-revenue sports. Becoming de facto minor leagues means that football and basketball are clearly the worst offenders in many ways. Baseball and men’s hockey also have a problem with being feeders for the professional ranks, though it’s more limited since players that really have zero interest in going to class do have other options. Regardless, though, Warren’s screed is both over the top and misinformed.

          5. J. Michael Neal,
            Look at your numbers again. 85 football scholarships of a total 320 means over half of all athletic scholarships go to football and to the title IX requirement to balance football expenditures (indeed, given non-scholarship expenses of football it’s quite possible more than an equal number of athletic scholarships are created for women to balance the football expenses). You can add another couple dozen for the other nationally televised sports, men’s and women’s basketball.

            Yes, that does mean there are still a touch more than a hundred athletic scholarships that can’t be accounted for by football, football-balancing expenditures, and basketball. But, why are they there? I’d be fairly surprised if U. Minn offered a hundred full-ride scholarships based on academic merit, or even a dozen (certainly my own large state school alma mater had no such opportunities when I was there, what few merit-based awards were available were tiny in comparison; admittedly that’s a couple of decades ago, but their state funding has only been cut since then, quite harshly), and here the U. Minn. is, offering a cool hundred full-ride scholarships on athletic merit, even discounting the revenue sports and requirements created by them.

            As to the rest of your response to me, you may note that I distinguished between the televised sports that offer the (usually false) lure of a lucrative career, and I had nothing but good things to say about those dedicated young people who participate in the other sports programs. Whom you’re arguing with there, I’ve no idea – but to reiterate what I said before, your laudable female hockey players are neither symptomatic of nor the victims of the blight professional, revenue-mad collegiate athletics impose on our society; they are barely tangential to it.

          6. The extent to which you have oversimplified the motivations of people by arguing that women’s athletics exists only to balance football is quite breathtaking. It also so badly skews your perspective on what is actually going on that it’s not worth continuing. Again, I submit that if you don’t have any experience less than a couple of decades old, you should probably be somewhat less convinced of your conclusions.

          7. J Michael Neal,
            What’s breathtaking is the extent to which you insinuate ill motives and in particular sexism. It is not merely obvious but inescapable that the part of spending on athletic scholarships for women that is mandated by Title IX as a consequence of massive spending on the male-only sport of football must be considered an expense of playing football. Your attempt to portray this spending as something the athletics department generously decides to offer female students out of noble motives and in support of education is ludicrous. If Title IX didn’t exist, not a single penny of those scholarships would, either, save what little they felt they must concede to the same political forces in favor of equality that caused the enactment of Title IX.

            Also breathtaking is that you offer up indignation and strawmen, but refuse to engage with any substantive points or disagreement. Thus: you denied most athletic scholarships were spent on the revenue sports, but when I point out your own numbers demonstrate that almost 2/3 of athletic scholarships result from spending on revenue sports you resort to ad hominem in reply. Acting in willful blindness of what I’ve written in the same subthread you accuse me of denigrating the scholarship of students who participate in non-revenue sports, and don’t even respond when I point out your bad faith.

            Sure: my time in a big, football-obsessed state school is the best part of two decades ago. I’ve seen nothing in the news since them to convince me anything has gotten better, nor have you offered so much as anecdotal evidence to propose it has. The main post that led to all these comments tells a story of utter fiscal madness by a university campus whose state funding has been devastated in recent years, all in support of athletics both televised and non-televised. I suspect a similar imbalance of priorities occurs at your own campus; I know it is in place at my own alma mater, which is building its own new football stadium. But rather than engage with any substantive issues, you’d rather insult me, accuse me of having ill motives and of being ignorant.

          8. The disproportionate effect of athletic obsession on marginal students is important, I agree, but as a society the disproportionate emphasis on athletics AS A WAY OF gaining admission to college has insidious effects for high achievers and others well before they really start gearing up for college admission. There is only so much time in a day, and most parents only have so much money to devote to activities. I wonder how many would be artists, musicians, writers or scientists are lost because their parents decided to devote their efforts wholly to getting that athletic scholarship? I say this as someone who likes sports, and I accept that our society as a whole has celebrated superior athleticism for a long while, but the notion that so many academic institutions, including those that really do value their academic reputations, would put such a high value on sports in their student life and in their recruitment of students is hollowing out these insitutions, no matter what these administrators say.

  5. As a sports fan, I can only wish for two things here: continued atrophying of college basketball by every really talented player defecting ASAP to professional teams — which, I believe, has to some extent blunted the “big money” phenomenon for basketball (along with the fact that the teams are smaller and facility and equipment needs much less vast than with football). And for football: this mama doesn’t let her little boy play football because she values the well-being of the contents of his cranial vault. This will be a trend. football will die of its own dire consequences. It will be a slow decline but at some point there will be nothing there worth paying coaches for.

    I hate hate hate this aspect of American college life. Even small liberal arts collges fall prey (at a lower level of outrageousness) to the sports uber alles.

    1. When he was ten, my kid asked me when would Mom and Dad let him play football. I said,’when you are 18 and we can’t stop you’. He has gone on to have a perfectly nice high school career in basketball and lacrosse. I can’t imagine that football will still be there in its present form after another ten years of tort lawyers have gone after it.

  6. In my state, the head of the state university bamboozled the board of trustees into building a new campus for the medical center. Cost $60 mllion more than the initial cost estimates, which he knew were false when he presented them. He lost his fortune and went to prison for a couple of years. Of course, we’re a bunch of idealistic hippies instead of being hard-headed businessmen. But still, it’s something to aspire to.

  7. I don’t have much to add here, other than to say this is a typically fantastic post by Prof O’Hare.

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