LOS ANGELES—When President Obama's reelection win was projected on a screen at Rep. Howard Berman's Encino headquarters on Tuesday, not everyone in the room was cheering.

"There’s a lot of Republicans here," a campaign staffer explained.

That might come as a surprise at any other Democratic campaign office on Election Day, but not in this Los Angeles-area district where Berman faced off against fellow Democrat Rep. Brad Sherman. Here, in one of the country's costliest House races, getting Republicans on board has been an active part of Berman's strategy.

"We wanted to fight for all the Democratic votes that we could," Brandon Hall, Berman's campaign manager, told C&E. "But what we hoped is that this race would come down to a fight over who could get more Republicans.

"And if we could make the ending factor of this race being, how do the Republicans break? We were confident that we would be able to win," a bearded and weary Hall explained. "The problem was that, because of how we were positioned initially, we conceded too much of the Democratic vote to [Sherman].

It’s just one of the oddities created by California’s new top-two system, which altered strategy in the race on everything from fundraising to media and mail spending. In the end, Berman lost to Sherman by a significant margin (with returns delayed, he trailed 40 to 60 percent with about two thirds of precincts reporting).

Thrown together by redistricting in a conjoined San Fernando Valley seat, Berman initially faced Sherman in the June primary, which was the first statewide use of California's new top-two system. Berman lost by 10 points, but instead of going home under the new rules he advanced to the November election as the second-place finisher.

Berman would go on to spend more than $5.3 million over the course of the campaign, but much of that was burned through during the primary leaving him with only about $1 million for the general compared with some $3 million for Sherman.

"I think there was a mistake made during the primary to spend too much money," said Hall. "The campaign was a little bit careless with their money early on. [Berman] was raising a ton of money, but then he was spending money at too high a rate."

Hall tightened the purse strings after he came on board as manager after the primary, but the damage was done.

With money running low, Berman went off the air between Sept. 13 and Oct. 17, according to Sherman's camp, who were also left scratching their heads at their rival's expenditures.

"I was just a little puzzled by the spending decisions they made," said Parke Skelton, Sherman's lead strategist.

While his fundraising fell short, Berman did excel at wracking up endorsements. He was backed by everyone from Betty White to GOP Sen. John McCain (Ariz.) to both of California’s Democratic senators to (unofficially) President Obama, who gave the congressman his tacit backing in a glowing letter but didn’t outright endorse him.

Rep. Henry Waxman, who gave up a slice of his district to the newly drawn 30th, recorded a robocall for Berman in which he bashed Sherman for losing control at their debate at Pierce College in mid-October.

But the support of Waxman and other high-profile liberals was used against Berman. Republicans in the district received a mailer from the Sherman-backing Super PAC Californians for Integrity in Government that said Reps. Barney Frank and Maxine Waters, along with Sen. Barbara Boxer "WANT YOU TO VOTE FOR HOWARD BERMAN.”

Bottom line is that Berman's endorsements cut both ways. His liberal backers chaffed at his GOP support and his GOP backers weakened the stomachs of his left-leaning supporters. McCain's endorsement, for instance, came as a result of Berman voting for the Iraq war, something the Sherman camp took pains to point out to the party faithful.

"We mailed that to Democrats three times," said Skelton, who noted the campaign spent triple on mail what it did on cable advertising.

Meanwhile, Hall said he thought the tide would turn after the confrontation at Pierce College where Sherman put his arm around Berman in a gruff, unfriendly embrace. The Berman campaign characterized it as a "fight" and used the incident in its campaign TV advertising. Hall called it a potential "game changer."

"We certainly were making an issue of it," he said. "We were making up serious ground the days after that."

But as soon as that happened, the Sherman camp "went into straight negative mode," said Hall. "They delivered their negatives on Howard and they had a lot more money to do that so it blunted the progress that we were making from the incident."

For Skelton, the race came down to the fact Sherman kept two thirds of his old district and was better known after years of aggressive retail campaigning.

"We started with an advantage. They had to play catch up," Skelton said. "I think we ran a stronger campaign."

Hall said it came down to money and how it was spent. "If you're not going to keep your powder dry, you've got to keep it closer than 10 points," he said referring to the outcome of the June primary. "If you're going to go for broke, be ahead."

Meanwhile, Waxman said Sherman's victory was "affirmation of the never ending campaign."

"For this [top-two] system to make any sense at all, Howard Berman should win because he's better able to reach out to Republicans and Independents," Waxman told C&E. "There's a contradiction in that people say they want contested elections, but they don't want more money in politics. Why do we need them to run against each other twice?"