Cal’s Athletic Department Faces Financial Challenges Heading into ACC Membership

Cal’s athletic department is facing a significant financial crisis, with losses totaling nearly $68 million over the past two years, according to a report by Jon Wilner of the San Jose Mercury-News. The situation is even more dire as Cal prepares to join the Atlantic Coast Conference (ACC) next fall, knowing that they will receive less than full revenue shares from the conference for the next few years.

In fiscal year 2022, Cal generated $120.5 million in revenue against $116.8 million in expenses, resulting in a total shortfall of $25.4 million without campus support. In fiscal year 2023, they booked $129.5 million in revenue against $138.3 million in expenses, with a total shortfall of $42.5 million without support. These shortfalls come as Cal and Stanford, combined, had an operating shortfall of $37.6 million for the 2022 and 2023 fiscal years.

The financial burden falls on athletic director Jim Knowlton and incoming chancellor Richard Lyons, who will take over on June 1. Lyons, a Cal alumnus with a background in finance, will need to address the department’s financial situation.

One potential lifeline for Cal is the so-called Berkeley tax, which would require UCLA to send some of its Big Ten membership revenue to Cal’s athletic department. However, the status of this requirement remains uncertain.

In addition to these challenges, departing Pac-12 members and all NCAA schools face major financial obligations in the coming years. There is also the possibility that colleges may soon be required to directly pay revenue-generating athletes, which could further strain Cal’s finances.

As Cal navigates these financial hurdles, all eyes will be on Chancellor Lyons to see how he addresses the athletic department’s financial woes and ensures the long-term sustainability of Cal’s sports programs.