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

The Bears depend on campus support; that arrangement won’t change

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

“I heard from the hotel that there was an urgent call, and I thought, ‘What catastrophe has happened?'” However, it turned out to be very good news.”

Cal was on his way to the ACC.

The Charlotte-based conference’s university presidents approved membership offers to Cal and Stanford, bringing an end to a lengthy reverse courtship in which the Bay Area schools sought salvation following the demise of the Pac-12. (With SMU joining the Bears and Cardinal, the ACC now has 18 members.)

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

“It’s probably been the most intense period of my professional life.” Given everything the university does, it’s surprising that it’s all about athletics. But I’m very pleased with the outcome.”

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

Membership in the ACC comes with a cost, as Bay Area schools will receive lower revenue shares from their new league for the next nine years.

Cal described the arrangement as follows (without specifying dollar amounts):

“The university will receive a full share of all revenues, including media revenue, while contributing a portion of its media revenue back to the conference and its current member institutions to support and strengthen them.” UC Berkeley’s membership contribution will gradually decrease until the tenth year, when it will begin to retain 100% of its media revenue share.”

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

In fact, Cal will almost certainly receive several million dollars less per year than the Bears have received in the Pac-12.

“There are certainly financial challenges to this agreement,” Christ stated. “We believe this was the best financial agreement we could have made and look forward to overcoming the challenges.”

This is for an athletic department that operates on a shoestring budget and relies heavily on central campus to stay afloat.

Christ and athletic director Jim Knowlton devised a plan several years ago in 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 need to reconsider that in light of the current agreement we will have with the ACC.” But we still don’t have all of the pieces in place.”

The level of support Cal might receive from UCLA is one of those factors.

The University of California Board of Regents granted itself the authority to levy a so-called Berkeley tax on the Westwood campus in December, allocating a portion of UCLA’s Big Ten revenue to Cal.

The amount of assistance could range from $2 million to $10 million. While the regents did not commit to enforcing the subsidy, the Pac-12’s demise, combined with reduced revenue shares from the ACC and the possibility of increased travel costs to the East Coast, appears to make the Berkeley tax unavoidable.

“I’m afraid I can’t give you any specifics,” Christ said. “I believe the regents will revisit this issue.” The December agreement was contingent on Cal receiving a media contract (in the Pac-12). It is a regents decision, and the regents have not yet made that particular decision. But I believe they will do so soon.”

When asked if she would be open to increasing campus support for Cal athletics in the aftermath of the ACC agreement, Christ responded:

“It is too soon to comment on that.” We’ve only just begun to consider strategy. There is one piece missing, and that 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 our student-athletes in all of our sports at an exceptional level.” It will undoubtedly be a lengthy process.”