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Stadium seating quandary

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FEBRUARY 26, 2013

UC Berkeley administrators have finally acquiesced to a difficult truth: Financing the renovation of California Memorial Stadium through a heavy reliance on luxury seat sales is not going to work. In order to keep the project on track, the campus will need to maximize all sources of revenue.

It has been apparent for some time now that the Endowment Seating Program was overambitious. Sales in the luxury seat section are intended to help the campus pay off the cost of the $321 million project over the course of many years. Originally, Cal Athletics anticipated that it would be able to sell all the ESP seats by June of this year — a goal that has since been readjusted due to the fact that at the end of last year, only 1,873 of the 2,902 seats had been sold. In light of the sluggish sales, the campus now expects to sell ESP seats at a rate of about 70 to 120 each year, and it has turned to a group of professors from the Haas School of Business to assist in finding other ways of bringing in funds for the stadium.

The campus’s recognition of ESP’s shortcomings is encouraging. Hopefully, with the assistance of the business faculty members, it will be able to develop a more sustainable path forward. Already, some promising ideas have come to light, such as making use of additional sponsorship rights in the future.

But problems remain. Chief among them is the volatility inherent in any significant reliance on seat sales, which are tied to the football team’s performance. The strongest motivation for purchasing seats — especially extremely expensive ones — is watching a strong team play great football. Cal has been mediocre at best for years. Until the team can turn its game around, the campus will continue to struggle selling ESP seats.

The campus may also encounter difficulty holding on to its ESP purchasers, especially if the football program remains weak. Those who purchase ESP seats are under no contractual obligation to renew their payments, adding a further layer of unpredictability to the stadium’s funding plan. Why would anyone continue to pay more than $2,000 per year to watch a subpar football team?

Even if the campus is able to maximize all other revenue streams to counterbalance the weak performance of ESP sales, the luxury seats are still needed to finance the stadium. Altered plans allow for the luxury program to move forward at a slower pace, but no matter what, the campus will need to sell the seats. And the lackluster performance of ESP so far makes that fact extremely worrisome.

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FEBRUARY 26, 2013