"This year, 2004, is sort of a good news/bad news situation," said James P. Hasselman, audit partner at PricewaterhouseCoopers. "They lost money ($544,900) but the rate of (loss) was less than they had projected, and that's good."

UH had projected as much as a $1.2 million deficit for 2004 under athletic director Herman Frazier's five-year self-sufficiency plan, according to UH officials.

"I would still characterize the department's situation as very fragile," said Hasselman, who pegged the three-year loss at $4.5 million.

Frazier told the regents the department is projected to come in somewhere between breaking even and a $300,000 loss in the current fiscal year that ends June 30, 2005. Frazier guaranteed the regents his budget would be in the black in 2006 and pay off its $1 million loan from the chancellor's office by 2007.

"I don't want to see that being a steady trend where we're pulling money from other things to give it to athletics," said Kitty Lagareta, board vice chairwoman. "On the other hand, Herman has been working pretty aggressively to move things in the right direction, and I'm happy with that.

"I would say if I was there when the (loan) was given I would have had a lot of questions, but that was done before my time so my concerns have been that it gets paid back."

Said Manoa Chancellor Peter Englert: "What (the audit shows) is what I anticipated, that we're making the progress we projected and we're on the pathway to being self sufficient."

After five years of being in the black, the athletic department ran a $1.9 million deficit in the wake of 9/11 and institutional changes. The loss wiped out the department's so-called "rainy-day fund" of accumulated surpluses.

In 2003, Frazier's first year at UH, the deficit reached $2.47 million, prompting the regents, on the advice of the auditors, to order a plan for self sufficiency. The deficit was blamed on a decline in gate receipts.

"Our basic message was: The department needs a plan," Hasselman said.

In addition, the department was told to hire a chief financial officer and make changes in its accounting and oversight policies, moves instituted last year.

Frazier told the regents several steps have been taken to put the budget on the road to solvency. He said UH will go to the Aloha Stadium Authority next week to seek a reduction in its $874,180 combined rent and expenses.

"We have had partnership for so many years, we want them to come over and communicate with us," said Patrick Leonard, Aloha Stadium spokesman.

In addition, Frazier said enhanced guarantees for upcoming road football games, including $650,000 to play at Alabama in 2006, an expected increase in television rights fees that went out to bid yesterday and a program to sell 8,000 tickets for UH's game at Las Vegas in 2007 will help lift the bottom line.

Frazier said UH will have control of the tickets for the UNLV game and make them available through local travel agency packages that could bring the school $300,000.

Four of UH's 19 sports — football ($3.1 million), men's basketball ($699,570), men's volleyball ($325,486) and women's volleyball ($1.05 million) — turned profits in 2004. Baseball(-$671,547) and women's basketball (-$652,748) sustained the biggest losses though both were improved from 2003 when they lost $855,962 and $784,536 respectively.

"Whether it is me in this (athletic director's) chair or anybody else down the road, we believe the five-year plan we have put together will (get) us back to the black," Frazier said.