30 March 2010

UC Berkeley invests $300,000 for each student

We commented a few months ago about the hare-brained scheme at UC Berkeley to fund construction of the California Memorial Stadium and the new Athletic Center. UC was planning to pay for debt service for construction bonds at Cal Stadium by selling stadium seats at $220,000 each. We don't know how that is working out. But it appears that a similar scheme to fund the Athletic Center has run into some trouble.

UC's plan to pay for the Athletic Center was to float a $135 million construction bond, raise a similar amount through private donations, invest that amount in the stock market and use the returns on that investment to pay for debt service.

It was a good plan. Except that as David Downs reports in the Chronicle, the donations never materialized, and the first payment of $4.92 million will come due in a couple of years. It should be noted that Berkeley's intercollegiate athletic, which is supposed to be self-supporting, has in fact been losing money for many years, and had to be bailed out with several million dollars of campus general funds, and this before the Athletic Center fiasco. And the $135-million, 142,000-square foot, 4-story Center being build to house the lockers of Berkeley's football team will serve at most 450 students a year. That's $300,000 or 315 square feet for each of the 450 student-athletes using the Center.

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