The University of Hawai'i athletic department is poised to balance its budget this fiscal year after four straight years of deficits.

At a UH Board of Regents' meeting yesterday, athletics director Herman Frazier said his department should either break even or return a profit in 2006 after losing $92,785 in the year that ended June 30, 2005.

"Between now and June 30, we still have the potential revenue in the sports of baseball, men's volleyball and men's basketball," Frazier told the regents. "We'll be pretty close to what's in the five-year plan for this particular year. We should be either zero or plus."

Balancing the budget would be a big accomplishment for Frazier, who has wrangled with deficits every year since becoming athletic director in 2002. The worst year was 2003 when the deficit hit $2.4 million.

The department has operated with a deficit the past four years — three years under Frazier — and has accumulated a $5 million deficit during that time, according to auditors. The department still needs to pay off a $1 million loan from the Manoa chancellor's office.

The 2005 numbers, which were released yesterday, were an improvement over previous years. The $2.4 million deficit in 2003 was caused by what Frazier said was a combination of new coaching contracts for basketball and volleyball, expenditures for gender-equity law Title IX, and other issues.

The regents challenged Frazier's administration to develop a plan of financial recovery after the 2003 numbers were disclosed.

"Overall, I was pleased with what happened with the department," said James Hasselman, auditor with Pricewaterhouse Coopers, who worked with the UH athletics business department on the financial review. "They're not out of the woods yet financially. Certainly, you can see the trend is favorable."

This is the second year of the department's five-year plan to eliminate the deficit through increasing ticket prices, private gifts through its fundraising arm, 'Ahahui Koa 'Anuenue, and corporate sponsorships.

Cash flow remains a "top concern" for the department, which does not have sufficient cash reserves to cover operating expenses, according to the audit.

"To fund recent losses, the department has been forced to adopt deficit spending policies, including the use of advance ticket sales, loans from the university and working capital advances," the audit said.

The department still owes Aloha Stadium $341,000 in rent for the 2005 Warriors football season, according to Debbie Ishihara, the stadium's administrative services officer.

Frazier, who wants to pay no rent, said UH interim President David McClain and Aloha Stadium Authority chairman Kevin Chong Kee will meet Tuesday to resolve the amount the UH must pay.

On the positive side, the audit said the new KFVE television contract and new marketing initiatives have helped financially, and the new ticket plan that increased prices for premium seats is steadily moving forward.

Last February, UH took back from football fans 660 seats in the Aloha Stadium loge area and repackaged them. The seats are now sold at the face value of the ticket plus an additional premium, which was as high as $15,000 in 2005 and could go as high as $20,000 by 2007.

The department also shares revenue from pay-per-view telecasts of UH sports that started in 2002. In 2005, KFVE/KHNL stood to receive about $922,500 as its share of the revenues, while its partners, Oceanic Time Warner Cable and UH, would get $562,500 and $65,000, respectively.

The hiring of a new assistant athletic director for business operations, Tiffany Kuraoka, has also helped, the audit said.

'Ahahui Koa 'Anuenue contributed more than $5 million in private gifts over the past two years, Frazier said.

He said the department lowered 2005 UH football revenue projections from $4.6 million to $4 million following a subpar season in home attendance. This past season, UH football — the engine that drives the multisport train that is UH athletics — averaged 28,136 fans per home game, the smallest average in coach June Jones' seven years.

"I think everyone knows we did not have the financial windfall we thought we could get in football," Frazier said. "We've gone back and reflected on that already."

Reach Brandon Masuoka at bmasuoka@honoluluadvertiser.com.