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Athletic departments are usually self sufficient or use athletic fees/loans to make up the difference. There is no taxpayer money going directly to coaches salaries.
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I’d be willing to bet the only profitable sports are men’s Football and Basketball at the high end. I’m not talking when the student fees contribute to sports. I’m talking about real revenue (TV and actual ticket sales) minus costs. Clearly the SEC is a football money printing machine, but I wonder about the smaller schools.
My kid goes to a FBS (Division I-A Conferences) school, but not one of the major conferences, and the stands are pretty empty. I don’t think he ever went to a game but he does “pay” for tickets. I did convince him to check it out next fall, especially on a nice day.
Back to the subject at hand, Can UCB and UCLA compete if they are subject to this limit? You might get a good young coach, but the turnover would be ridiculous.