Cal joins the ACC at discounted revenue shares: Will the deal pinch a budget that has always been tight?

Cal joins the ACC at discounted revenue shares: Will the deal pinch a budget that has always been tight?

Cal chancellor Carol Christ heard a loud knock on her hotel door before dawn Friday morning in San Diego, where she was scheduled to meet with donors.

“There’s someone from the hotel saying there was an urgent call, and I was thinking, ‘What catastrophe has happened?’ But it turned out to be this very good news.”

Cal was headed to the ACC.

University presidents of the Charlotte-based conference approved membership offers to Cal and Stanford, ending a lengthy reverse courtship in which the Bay Area schools sought salvation following the demise of the Pac-12. (SMU is joining the Bears and Cardinal to give the ACC 18 members.)

“It’s been a month of frenzied activity,” Christ said Friday morning during a Zoom interview. “I’ve been joking that Kumbaya has turned into ‘Lord of the Flies’ rather quickly as everybody tried to find a landing place with the increasing instability of the Pac-12.

“It’s been probably as intense a period as I’ve had in my professional life. (It’s) surprising to me, given everything the university does, that it’s about athletics. But I feel very good about the result.”

Now that the Bears have secured a home for their teams through the 2035-36 sports season, all they have to do is pay for it.

Membership in the ACC comes at a price, for the Bay Area schools will receive reduced revenue shares from their new league for nine years.

Cal described the arrangement in the following manner (without specific dollar amounts):

“The university will receive a full share of all revenues, including media revenue, while contributing back a portion of its media revenue to support and strengthen the conference and its current member institutions. UC Berkeley’s membership contribution will taper off until the 10th year, at which point it will begin retaining 100% of its media revenue share.”

Over time, the Bears’ cash deficit relative to the ACC’s existing members could exceed $75 million, based on estimates in published media reports and the publicly known details of the league’s revenue streams.

In fact, Cal likely will receive several million dollars less per year than the Bears have been collecting in the Pac-12.

“There certainly are financial challenges to this agreement,” Christ said. “We believe this was the best agreement in financial terms that we could have made and look forward to working through the challenges.”

This, for an athletic department that lives on the dollar’s edge and requires massive help from central campus to balance its book.

Several years ago, Christ and athletic director Jim Knowlton devised a plan by which the university would provide $22 million in direct support to athletics with the goal of reducing the amount “down to $13 million over a period of years,” Christ said.

“Obviously, we have to rethink that in the context of the current agreement we will have with the ACC. But we still don’t have all the pieces on the table.”

One of those pieces is the level of support Cal might receive from UCLA.

In December, the University of California Board of Regents granted itself the authority to impose a so-called Berkeley tax on the Westwood campus, allowing a portion of UCLA’s revenue from the Big Ten to be earmarked for Cal.

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The level of support could range from $2 million to $10 million. While the regents didn’t commit to enforcing the subsidy, the collapse of the Pac-12 combined with the reduced revenue shares from the ACC and the potential for added travel costs to the East Coast seemingly makes the Berkeley tax inevitable.

“I can’t give you specifics,” Christ said. “I think the regents are going to return to this issue. The agreement they made in December was awaiting the media contract Cal was getting (in the Pac-12). It’s a regents decision, and the regents haven’t made that specific decision yet. But I expect they will sometime soon.”

Asked if she would be open to increasing the level of campus support for Cal athletics in the wake of the ACC agreement, Christ said:

“It’s too early to comment on that. We’ve barely begun to think about strategy. There’s a piece of it that’s missing, which is what the regents decide about UCLA’s contribution to Cal.”

Cal athletic director Jim Knowlton added that he is working with Christ “on how to continue to support at an exceptional level our student-athletes in all our sports. It’s certainly going to be a process.”

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