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The Honolulu Advertiser
Posted on: Thursday, February 18, 2010

University of Hawaii athletics deficit may hit $10.1 million

By Ferd Lewis
Advertiser Staff Writer

Hawaii news photo - The Honolulu Advertiser
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The University of Hawai'i athletic department's financial condition "continues to be very fragile" as it stares at the likelihood of a record $10.1 million accumulated net deficit at the end of the current fiscal year, a Board of Regents committee was told yesterday.

An independent auditor's report showed an accumulated net deficit of $8,051,123 built from 2002 to the close of the last fiscal year, June 30, 2009, and athletic director Jim Donovan forecast it could reach $10.1 million when the books close on this fiscal year, which ends June 30.

UH athletics had a $2,632,408 deficit for the past fiscal year, the seventh time in eight years a deficit has been recorded. The exception came after the Sugar Bowl year of 2007.

"In the near term, during the next two or three fiscal years, it is probably not realistic for Manoa athletics to self-generate enough revenues, at the current level of allocated revenues , to produce a balanced budget," a report by the auditor, Accuity LLP, observed. The auditor also "reiterated concern" about UH's "financial condition."

Donovan forecast a $2.1 million deficit for just the current fiscal year.

The four-member committee on university audits voted to accept the audit and send it before the full board today, where Donovan and UH administrators might face deeper questioning.

Board chairman Howard Karr said he wasn't surprised at the numbers revealed yesterday, based on briefings Donovan had given in the past and that athletics is "working in one of the worst recessions that we've ever had."

"I think Jim is trying to do his job but there are certain things that I want to discuss with the regents (today) and we'll see where we go from there," Karr said.


UH's financial plight has been the result of several factors, including declining ticket sales in its major money producers, football and men's basketball, a $716,000 loss in its investments and rising costs in travel, guarantees and salaries.

UH said it tops the nine-member Western Athletic Conference in travel expenses ($2.78 million), is second in coaches' salaries and benefits ($5.6 million), first in staff and administrative salaries and benefits ($5.1 million) and has the highest student aid expense ($5.5 million).

Meanwhile, Donovan told the committee that UH is the only school in the WAC that doesn't receive some form of student fees. UH has said that a $50 per semester student athletic fee would "generate approximately $2 million."

Moreover, Donovan said, athletics receives none of the $400,000 in parking revenue he said its events generate and pays approximately $735,000 annually for student housing and shares only marginally in the sales of logo items.

In an effort to trim costs, Donovan told the committee, 17 positions in the department have been abolished or are no longer funded, saving more than $580,000 annually. He said ticket prices have been dropped in some areas for all events in an attempt to lure more ticket buyers. In addition, new and more lucrative concessions, TV and radio agreements have been negotiated and an additional $209,000 in revenue generated by securing parking at Aloha Stadium.


Donovan said cutting sports would be problematic for UH and could either cost the school its Division I standing or not substantially help reduce the red ink within four years.

"Sometimes people ask me, 'Can you cut a sport?' " Donovan said. "Because of Title IX and gender equity, we can't cut a women's sport unless we cut football. And if we cut football, we couldn't stay Division I. So that would leave on the table for us (men's) swimming, tennis, golf, baseball and volleyball."

Of those men's sports, Donovan said, "the biggest (financial) loser for us right now is baseball."

Baseball had a $659,899 shortfall for 2007-08, the most recent year for which complete numbers are available.

"So, if you were looking at it just from a fiscal standpoint, you'd pick baseball," Donovan said.

"But then, we'd have seven acres down there (on the lower campus) that would have a stadium and wouldn't have a sport in it. And I would claim we're pretty much a football, volleyball and baseball state. So, there aren't any easy choices."

Cutting the other men's sports, Donovan said, "might result in a $250,000 savings a year for any one of those sports, so it wouldn't make a big impact on that ($2.6) million."