Give ’Em the Axe
Last November I posted a mini-tutorial about the economics of intercollegiate athletics, starting from the startling fact that between 2010 and January 31, 2021, public universities paid at least $533 million to ex-coaches. Most of that money went to former football and men’s basketball coaches, who have tremendous negotiating leverage because their teams generate the revenue that covers the entire athletics budget.
In truth, even athletics departments with wildly popular football and men’s basketball teams struggle to break even. And so the quest for revenue has become cruelly relentless.
Five major conferences dominate intercollegiate athletics. USA Today reports that in 2021, Big Ten teams received nearly $49 million each from their conference, whereas Pac-12 teams received just $20 million from theirs. Which is why UCLA, after paying $15.5 million to ex-coaches between 2010 and 2021 and running deficits of $18.9 million in 2019, $21.7 million in 2020, and a jaw-dropping $62.5 million in 2021 (thanks Covid!), deserted the PAC-12 and jumped to the Midwest-based Big Ten. The University of Southern California also went.
Most of a conference disbursement consists of media and licensing revenue. Imagine the Big Ten’s revenue prospects with the addition of two popular, competitive teams from Los Angeles, the second-biggest media market in the country.
Now imagine the revenue prospects for the Pac-12's remaining teams (including UC Berkeley, called Cal in a sports context) without popular, competitive opponents from the second-biggest media market in the country.
I’ve seen all sorts of speculation about what will happen next. Much of it assumes further dismemberment of the Pac-12, with at least two other universities, and perhaps as many as six, merging with or migrating to other conferences, leaving behind perennial mediocrities such as Oregon State, Washington State, and yes, Cal. So what is my former employer going to do?
So far all it’s done is issue a rote statement. (“Regardless of what the future holds, we maintain our steadfast commitment to the athletic and academic success of our student athletes.”) But I hope it lives up to its reputation as the leading public university in the world and releases another statement along the lines of, “we’ve looked at this from every angle and Athletics will never be anything but a bottomless money pit with dubious value to our mission of education, research, and public service, so we’re shutting it down.”
As former associate chancellor John Cummins noted years ago, UC Berkeley has long avoided answering fundamental questions about its relationship to intercollegiate athletics. It’s time for that reckoning, because whatever happens next, it’s all but certain Cal Athletics’ revenue will stagnate — and perhaps dwindle to the point where paying ex-coaches not to coach will become the least of its financial worries. The opportunity cost of maintaining Athletics will become too big and embarrassing to ignore — and for a university of Berkeley’s stature and constrained budget, unconscionable.
And so, absent a rigorous cost-benefit analysis to the contrary, and with profuse apologies to the many wonderful people in Athletics I worked with, true leadership would involve asking the State of California for the capital necessary to retire the debt on bonds for Athletics facilities (primarily Memorial Stadium) and re-purposing Athletics’ campus assets for academics, recreational sports, and housing.
That said, I’m wide open to an alternative suggested by Drew Magary, my favorite writer from the old Deadspin: “Cal and Stanford should form their own mini-conference and play each other ten times a season. Whichever school wins that conference has to adopt the other’s political leanings.” The annual Big Game between the arch-rivals is played for possession of an axe. Maybe if the stakes were higher, as Magary proposes, revenue would soar, because then even professors who have long detested Athletics might be willing to spend whatever it takes to win.