UH might have to cut a sport

About how their “very fragile” financial state might force them to cut a sport, JD said:
“I would sort of describe it as I’m trying to save the ship from sinking and then I’ll start thinking about winning the war.” (HA)

“We’re not spending frivolously. We don’t want to cut a sport, but it may become a fiscal reality at some point. But it will only be done as the last resort.” (HSB)

HA Note: “Ironically, the dire talk followed discussion of an independent auditor’s report that will show the athletic department had a surplus from the 2007-08 fiscal year (ending June 30, 2008) when the audit goes to the full board today for approval. Only a $4,385,555 payment for the football team’s appearance in the 2008 Sugar Bowl kept the department from a deficit for the year. Even with the Sugar Bowl, which produced a $300,000 surplus, UH has a net deficit of $5.4 million built up over the past five years, officials have said. The $300,000 was used to pay down the deficit from $5.7 million.”

About the difficult financial situation of UH athletics, the audit report by Accuity LLP said:
“we believe the financial condition of UH athletics is fragile. It requires close scrutiny and monitoring both at the department and campus (levels).” (HA)

HA Note: “With UH looking at the possibility of a $3 million deficit for the current fiscal year that ends June 30, Donovan, who replaced fired Herman Frazier last March, described the department’s finances as “very precarious.” Donovan said cutting a sport would be a last resort if the economic picture doesn’t improve. Under questioning by UH President David McClain and board members, Donovan said that men’s swimming and diving, baseball, men’s tennis or men’s volleyball would be leading possibilities. UH last cut a sport when it dropped women’s track and field in 1985 to add softball. The last men’s sports cuts were track and field and wrestling in 1977.”

About how they cannot cut any of their 11 women’s sports or co-ed sailing, only one of the 7 men’s sports, JD said:
“Only one men’s program (can be cut) and it can’t be football or men’s basketball.” (HA)

“We talk about self-sufficiency, but I am not sure we can ever be completely self-sufficient. There’s a lot of revenue leakage that other athletic departments get to keep that we don’t. If we don’t get those revenue sources, we’ll keep running at a deficit. The definition of business insanity is to keep doing the same things over and over, and expect different results. It’s a disconnect.” (HSB)

HA Note: “The NCAA has a formula for a minimum number of sports a school must offer to retain Division I membership, and UH could not have fewer than six to meet it. UH can’t drop a women’s sport until it comes into compliance with Title IX, the federal law on equality in education.”

HA Note: “It is unlikely that baseball would be dropped except under the most calamitous circumstances because of the strong affinity to the sport here and the investment in the 4,312-seat Les Murakami Stadium. Though no baseball figures for the just-completed fiscal year were given yesterday, previous audits have shown the sport spending $600,000 to $900,000 more than it brings in. Men’s volleyball, until recently, was a money maker, turning a $233,114 profit in 2004-05 and $29,144 in 2005-06. Figures were not available for 2007-08. Figures also weren’t provided for swimming or tennis, where expenses traditionally exceed revenue.”

About how nearly $25 million of their $30 million operating budget is committed to salaries, travel, scholarships and athletes’ welfare, JD said:
“If you look at our operating expenses, it is fairly difficult to for us to make horizontal cuts. We would, potentially, make a vertical cut.” (HA)

Asked by McClain how he would characterize UH’s financial condition in comparison to the rest of the WAC, JD said:
“Through June 30, 2008, we’re probably in the middle of the pack. Looking out over the next 18 months, we might be there in the hunt for the worst.” (HA)

JD said that UH’s operating budget of $29.5 million probably:
“puts us at one or two (in the WAC and), a lot of the schools like Idaho, Utah State and New Mexico State are probably around $13 million to $15 million, so they don’t have as far to fall and won’t be able to build up the net deficits that we’ll be able to.” (HA)

HA Note: “McClain said NCAA President Myles Brand told him that the manner in which the school subsidizes athletics at UH is the “normal rather than abnormal” model in college athletics today. McClain said that only six of more than 100 Division I programs operate on their own dime. McClain said “it is too early to tell” if the school will have to drop a sport. He said the university is bracing for a $30 million cut in the $725 million it gets from the state but the figures could change, based on the economy. Athletics generates about five-sixths of its operating budget, with the school underwriting scholarships and lower campus operations.”

About how the financial situation for UH and its Athletic Department will be clearer in April, UH President McClain said:
“I think we’ll know (the financial picture) better sometime in April, probably near the close of the Legislature. What Virginia (UH-Manoa Chancellor Virginia Hinshaw) will be doing is figuring out what she’s able to do for the athletic department from the central administration, and, at the same time, Jim is already taking action on his own looking for revenues and cutting expenses.” (HA)

Praising JD, McClain said:
“I do feel we are progressing. We’re doing very well under Jim’s leadership. He understands Hawaii, the university and the business end of athletics. Sports is an important front porch for the university. With no professional teams, we have a special responsibility to Hawaii. Our athletes are Hawaii’s stars.” (HSB)

About how their financial statement from the 2007-2008 fiscal year was accepted by the UH Board of Regents committee on university audits, JD said:
“It is by no means a pass. They (the committee) understand how bad the economic situation is. This is the worst fiscal times of our lifetime for anyone who is 60 and younger. I’m not sure if we can ever be completely self-sufficient, but there is a lot of revenue leakage that other schools get to keep that we don’t.” (HSB)

HSB Note: “The athletic department does not retain any revenue from parking or concessions at sports events. Those are among the “revenue leakage” to which Donovan alluded. Another proposal being revisited is an assessment of a student-activities fee, a portion of which would go to the athletic department.”

About adding a student fee for Athletics, McClain said:
“When one of my daughters went to (the University of Colorado), I saw the list of student fees. I’m not saying we have to emulate everything other schools do, but it’s worth paying attention.” (HSB)

HSB Note: “Various forms of a student activity fee have been presented to the UH student senate over the past several decades, each time being voted down. The effort has been made by the athletic department to boost student attendance at events, including free admission this season to men’s volleyball. McClain compared attendance figures for the five theaters in the UH system to those at athletic events in pointing out the impact sports has on the community. He said that annually 150,000 attend events at the theaters as opposed to 700,000 for sports.”

About their financial situation, JD said:
“The audit showed that there are some concerns, that we have to understand how we got to where we’re at. The good thing is the committee understands how bad the economics are. What would help us the most? Parking revenue, concessions … all of those would help make it easier to start paying off some of the accumulated debt. If it hadn’t been for the Sugar Bowl and the Ching Foundation, we would have been in a deficit.” (HSB)

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