The underpants gnomes strike again

Paul Krugman commented recently how some House members' plan for health care reform resembles the Underpants Gnomes' brilliant 3-stage business plan:

1. Collect underpants
2. ?????
3. Profit!

It would appear that Gnomes were at work again this past week in Oakland, when the Regents approved a plan to retrofit Cal Stadium, which was built in 1923 right on top of the Hayward Fault.

According to the plan, the $321M retrofit would be funded, as usual, by issuing a construction bond. And how do the Regents plan to pay for debt service on the bond? Through ESP, of course, the Endowment Seating Program: Cal would be selling lifetime licenses to approximately 3,000 seats in the stadium. It looks like, so far, about 1,700 such licenses have been sold, generating some $215M in revenue (that's about $125,000 per seat; reports have pegged the cost of such seats at $2,700, but that must be the yearly cost over 40 years, or else it would be impossible to generate enough revenue to pay for debt service).

Professional teams in the Bay Area have tried this already, with mixed results: it worked for the Giants at AT&T Park, but it was a flop at the Oakland Coliseum.

Notice that Berkeley's Athletic Program (besides boasting the highest paid employee of the UC system) has been losing money for years, with the Campus having to chip in a few millions each time. OK, so what happens if the anticipated revenue from ESP does not materialize? That's where point (2) of the Gnomes' plan comes in.