By Daniel Borenstein
Winning might not be everything, but it's becoming much more important at Cal. The university is about to sign another large long-term athletic contract, this one with new basketball coach Michael Montgomery, who will take in at least $1.7 million annually over the next six years. That's 61 percent more than his predecessor, Ben Braun, received last year. And it follows the seven-year contract renewal UC Berkeley inked with football coach Jeff Tedford that paid $2.8 million last year.
The Montgomery deal, which has not been officially released, is part of the university's high-priced gamble to turn the athletics department into a major revenue-generator. The strategy hinges on the football and men's basketball teams, the two top spectator sports on campus, becoming consistent national competitors that can attract the best player talent, increase ticket sales and, most importantly, generate rapidly increasing alumni donations.
Thus far, the university has shown significant gains. In the first five years since Tedford was hired in 2002, donations to the department jumped 76 percent. And the football program, which was struggling financially, now turns an annual $9 million profit. In addition, the athletic department has raised pledges for about $100 million of the roughly $400 million it needs to fund a new training facility and renovations to the football stadium. But the university has much grander long-range plans. They call for an additional doubling of annual contributions, to $21 million a year, by 2017, on top of raising the other $300 million for the capital improvements.
There are two problems with this strategy. First, it counts on the school producing consistent top-contending teams, which can be an elusive goal. Remember that Cal's football team early last season was on the verge of earning the nation's No. 1 ranking, but then finished the regular season with a dismal 6-6 record. The team hasn't been to the Rose Bowl since 1959. The basketball team hasn't reached the Final Four since 1960 and last won the national championship in 1959.
The second, and bigger, question is whether the underlying premise of the plan will hold — whether winning sports teams can generate substantially greater contributions in the long run. Cornell University economist Robert Frank, who has studied the finances of college athletics, says the link is weak at best. "You'd want to be skeptical of an influx of new money," he said. "We haven't seen it in programs in the past. It doesn't mean it couldn't happen."
Sandy Barbour, Cal's athletic director, remains confident the money can be raised. Of about 425,000 living Cal alumni, only 8,000 currently contribute to the athletic program. She hopes to increase that to 20,000 over the next decade. Spending 90 minutes with her last week, I got the sense that she could convince homeless on Telegraph Avenue to contribute.
Successful teams are her key to luring donors. On one hand, she says that winning is not everything, that academic excellence, community involvement and fiscal responsibility are important criteria for a successful athletic program. On the other hand, she makes clear that a return to the football team's 0-11 record of 1999 or 1-10 in 2001 is not acceptable. And to win, she reasons, the university needs to hire top-tier coaches.
That is the rationale behind the university's contract with basketball coach Montgomery, formerly with Stanford and the Golden State Warriors. His new deal, I'm informed, starts with a $250,000 annual base salary and will be sweetened with a "talent fee—" what the university describes as payout "based on standard participation in outside events representing UCB" — averaging $1.125 million a year.
On top of that, Montgomery will receive mandatory bonuses of $300,000 the first year and $500,000 in three of the other five years of the contract. Add in two cars, pension contributions and a country club membership, and the compensation package averages out to $1.7 million a year.
Then there are the 11 possible performance bonuses if the team does well — everything from winning 20 games in a season to capturing the national championship — that could add up to $330,000 more to Montgomery's salary each year. Montgomery's contract, like Tedford's, dwarfs the compensation paid to Mark Yudof, the new president of the UC system. As I've said before, these superheated coaching contracts are misguided, especially when the university subsidized the athletic department to the tune of $9.45 million last year. The good news is that Barbour has brought the subsidy down from $13 million three years earlier. The bad news is that there are no plans to eliminate it. Barbour says it can't be done if the university is going to continue to fund 27 different collegiate sports, most of which are not profitable like football and men's basketball.
But, perhaps, at a time when other departments in the university are being forced to trim staff, there needs to be some belt-tightening in the athletics department as well. Moreover, that subsidy is certain to rise if the football and basketball teams aren't successful — and fail to draw the major donors as planned. A greater subsidy means less money for other programs or more tax revenues. So for now, let's all hope that the Bears do well. Just win, baby.