When the University of California, Berkeley announced this fall it was cutting funding for its venerable 118-year-old baseball team, the program was a money-sucking sponge that drew few fans and even fewer sponsors to its no-frills campus ballyard.

Just six months later, Cal baseball is alive and kicking, flush with a fresh $10 million in donations and ranked No. 15 in the country. And as budget cuts continue to force colleges to slash athletic spending, Cal is embarking on an unorthodox and creative funding plan that, if...