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The Honolulu Advertiser
Posted on: Sunday, February 14, 2010

Keeping sharp eye on UH finances

By Ferd Lewis
Advertiser Staff Writer

Hawaii news photo - The Honolulu Advertiser

Photos by BRUCE ASATO | The Honolulu Advertiser

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"We've worked hard to increase value across the board. We've lowered some ticket prices and concession costs. In the meantime we've done it through maybe the hardest economic times this program has seen."

Jim Donovan | UH athletic director, on the focus of his first two years on the job.

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Hawaii news photo - The Honolulu Advertiser

"We're a source of pride for the state when we are doing well and consternation for the state when we're not."

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Jim Donovan will shortly wrap up his second year as director of the 19-team athletic department at the University of Hawai'i.

He sat down with The Advertiser to discuss where the state's only Division I sports program stands and where it is headed, touching upon initiatives, finances, student fees, conference membership, the evaluation of men's basketball coach Bob Nash and extending UH's brand into Asia.

Question: What has been the focus of your first two years?

Answer: "We really focused on who we see as our customers, which are our student-athletes, our corporate sponsors and fans who either come to games or watch us on TV. We've tried to build value in all those areas. We are working hard to improve our facilities, which directly involves our student-athletes.

"We've worked hard to increase value across the board. We've lowered some ticket prices and concession costs. In the meantime, we've done it through maybe the hardest economic times this program has seen. The fact that the economy has done so poorly has been a weight around our ankles."

Q: What was the financial picture of UH athletics when you came in?

A: "From my perspective coming in, things financially were very much out of whack and had been from about 2002, when you look at the (numbers). Within about a month of really doing some financial forensics, we found out that the (accumulated net) deficit was more like $5.5 million."

Q: What about the Sugar Bowl windfall?

A: "That (2008) first year was the Sugar Bowl year and we made over $2 million from the Sugar Bowl. So my assumption when I was hired in March was that we had over $2 million to go spend. The reality was we only had about $200,000 left over of the $2 million because the department was running at a $1.8 million (fiscal year) deficit. If we hadn't had the Sugar Bowl funds, we would have turned in a $1.8 million deficit that year."

Q: Overall?

A: "They were running about a million to a million and a half (dollars) annual deficit (each year) from about 2002. We're hitting about $2 million a clip right now and doing it in probably the worst economic times in 50 years. It is definitely a struggle and we have to get it turned around."

Q: When do you see a balancing of the books?

A: "I think we need some more time. I think it will probably take another year or two. In a sense we have to sort of grow out of this. We have to either increase our self-generated funds or we have to get more support."

Q: More support?

A: "I think argument could be made a Division I program operating in the middle of the Pacific has more costs than any other Division I program. We could argue that we need some more support. It is just that I don't know if it is available with the situation that government and the university are facing with this recession.

"The question is are we getting an appropriate amount of funding for the educational mission we have? A lot of people think Division I athletics isn't part of the educational experience. I say: bull. It absolutely is (part of it). I mean, we teach young people how to make a plan; what to do when things don't go according to plan; how to react to adversity. We teach them teamwork, belief in themselves and belief in others, sacrifice."

Q: How much money do you raise versus that provided by the school and the state?

A: "We are off the charts compared to our peers in the WAC and Mountain West as far as what we self-generate. We're at about 88 percent (self-generated) with about 12 percent provided by the state and the university. The average in the WAC and MWC is somewhere between 50 and 52 percent self-generated with the rest being provided by the state and university. We're way over-performing in that regard but we're coming in short a couple million dollars a year. And that's something we've been working hard to try and eliminate as we make the cuts and create new revenue streams."

Q: Is the current UH financial model (sustainable)?

A: "It has to be looked at. It is more than the athletic director that makes that decision. It really comes all the way from the state to the university system to UH-Mānoa to the athletic department.

"At the same time we bring exposure to the whole University of Hawai'i system and state. We're the only game in town. We're a source of pride for the whole state when we are doing well and consternation for the whole state when we're not. (So), to sit there and say all of it has to fall on the backs of just what can be self-generated by the department itself really doesn't take into itself the scope of how broad we represent the whole state."

Q: So, again, when can UH be back in the black?

A: "I won't make a claim that we can pay off the accumulated deficit in two years. I'm hoping within a couple of years we can run not only a balanced annual budget, but that we can start to chip away at the accumulated deficit.

"Again, a lot depends upon how fast the economy continues to improve because that gives disposable income to people to actually purchase tickets or pay-per-view. Potentially, if the economy improves, there may be a way for the university system or the state to provide us some more funding."

Q: Such as...

A: "One of the big things that hasn't been on the table is that we're the only school in the WAC right now that doesn't earn revenue from a student fee deal. That's where students get to go to the (events) for free and, in return, there's a student fee that helps fund athletics."

Q: Where is the student-free proposal?

A: "We went forward on that with a proposal last year and met with the Associated Students of UH (leadership), the Graduate Student organization and a student committee. We were just not successful in getting that moved forward. We are currently working on campus to take a look at something that would be even more inclusive, some kind of activity fee instead of a straight athletic fee."

Q: The Pac-10, which has long been a wished-upon destination for UH sports, has announced it will consider expansion. Is UH interested?

A: "I've reached out and had a preliminary conversation with the Pac-10 just to find out what the process might be."

Q: When will you make a decision on whether Bob Nash will be back as men's basketball coach?

A: "I've learned that you need to wait and see how the season plays out and get all the data in. But I think it is really important that we see improvement in our programs."

Q: How do you evaluate the handling of the basketball program overall?

A: "Bob Nash is an outstanding man; you can't find someone out there that has better character than he does. I would love for my son to play for him in that sense because I know that he'd mature into a very good person. Bob's improved the grade point average for the men's basketball team. Their academic progress rate went from being in the danger zone I think we even lost a scholarship one year and that was what he inherited and he has gotten them out of the danger zone. They are not under any penalty situation so a lot of things outside of win/loss Bob has done a very good job on. But win/loss is also a very important component of the success of a coach."

Q: What in-roads has UH made in taking the UH brand into Asia and overseas?

A: "Coach (Greg) McMackin and I went to (Japan) last spring. We've also signed on with a company called Pacific Rim Sports Initiative that has contacts in Japan. Currently, the home football and men's basketball games that we have rights to are being aired in Japan on a cable network with approximately a half million homes on a delayed basis. We're also looking at the possibility of airing some of our events in Australia."

Q: Will you be recruiting more prospective athletes in Asia?

A: "Hopefully the contacts we are building in Australia will help. Right now, Japan, China and Korea, because of the language barrier and (entrance) requirements, that may be more difficult."