Monday, June 7, 1999
UH athletic department revenue
By Al Chase
streams flow from many directions
Star-Bulletin
Sponsors want to see sales for their dollars
THE University of Hawaii athletic department faces a dilemma: How does it balance its books during the state's economic stall coupled with a downturn in its share of state general funds?
It is no easy task, and the department faces challenges on many fronts as it tries to meet its approximately $14.5 million annual budget.
Ticket sales and rights fees for television and radio make up the bulk of the athletic department's income.
In addition, it receives a percentage of the revenue generated at the Stan Sheriff Center, Rainbow Stadium and swimming pool concession stands and from catered events on the lower campus. The department also takes in a significant amount from sponsorships by local and national companies such as Bank of Hawaii, Outrigger Hotels, Nike and Starter, and a percentage of licensing royalties collected from merchandisers approved to use UH trademarks.
Sodexhio Marriott Services, for example, holds the exclusive contract to provide all food services on the Manoa campus. It pays the university a rebate of 8 percent of gross sales - less the cost of utilities at concession stands - at lower campus athletic facilities. The contract started Jan. 1, 1989, and runs for 15 years.
Marriott paid UH $143,388 in fiscal year 1997-98, according to Mike Nagafuchi, athletic department business manager.Marriott general manager Ralph Nakamoto said there are no exclusive rights fees paid by outside vendors.
"All our subcontractors pay a percentage of their gross sales, which we monitor carefully, to Marriott. That is included in the 8 percent Marriott pays the university, Nakamoto said.
Apparel licensees who want to use UH trademarks pay royalties of 6 percent of wholesale cost.
Finding ways to increase revenue -- or reduce expenses -- becomes even more critical when attendance slips, as was the case in football, women's volleyball and men's basketball this past season. Trademark logo in works;
credit card bears UH nameApparel deals, equipment deals, title sponsorships, revenue from concessions and licensing royalties all help, but, as UH Athletic Director Hugh Yoshida says, "We're always looking for new ways to generate new monies."
The university is looking into developing a trademark for the athletic department, which could result in revenue flowing directly into the department's coffers.
Wayne Fujishige, UH director, auxiliary services, has met with a company that does work for various NFL and NHL teams.
"We have received a very conceptual proposal from him, but to date have not received a formal 'final' proposal," Fujishige said.
Another idea that should generate revenue for UH is a Rainbow credit card. Last October, MBNA America Bank, N.A., began marketing a University of Hawaii affinity credit card with no annual fee and with special introductory interest rates for UH alumni and students.
The athletic department put out tables at its athletic facilities during sporting events where fans could sign up for the card, and the response has been good.
The financial benefit to the athletic department is not yet available, but associate athletic director Jim Donovan said, "It's a substantial commitment to the university by MBNA."
"It's a system-wide policy," said Debbie Kutara, UH's licensing administrator. "That 6 percent goes to the university. There is no distinction if the merchandise is athletic department related."
Thirty-five percent of the licensing royalties is earmarked for the athletic department, according to Wayne Fujishige, UH director of auxiliary enterprises. The actual percentage distributed can vary to provide funds for the licensing office, which receives no state general funding.
Royalty payments for fiscal year 1997-98 were $142,000. The athletic department received $36,500, or about 26 percent.
The athletic department, however, gets none of the revenue from merchandise sales at the two RainBowTiques, which are operated by the bookstore as part of the University of Hawaii Bond System.
The Bond System includes the bookstores, faculty housing, student housing at Manoa, Hilo and Maui, the UH campus center, Manoa parking, telecommunications systems and the Onizuka Center for International Astronomy.
In fiscal year 1997-98, gross sales at the RainBowTique at the Stan Sheriff Center totaled $487,810. A second RainBowTique has since opened at Ward Centre.
xAll components of the Bond System are required by law to be self-supporting and receive no general-fund support. Proceeds from bookstore operations are used to maintain and support its operations.UH Athletic Director Hugh Yoshida said he is satisfied with the arrangement.
"Based on the policy that all merchandise will fall under their umbrella, we don't have very much latitude in regards to that," he said.
"If there were other options, I think we'd probably want to look at them. RainBowTique has been supportive of some of our promotional activities from a standpoint of servicing and getting apparel contracts for our coaches."
Whether the athletic department would realize greater revenues if it was allowed to run the concessions and sell merchandise is questionable.
When football (top five ranking) and men's basketball (Final Four appearance) do well, that translates into higher merchandise sales nationally. Then athletic departments want to control sales. But if high-profile teams aren't successful, athletic departments want off the bandwagon.
Only 19 percent of the athletic departments nationally are involved directly in the selling of merchandise with athletic-related logos.
The athletic department's radio and television contracts, which combined pay the University of Hawaii more than $1.5 million a year, require objectives be met. TV, radio pacts offer
stations 'a good deal'For television, KHNL and KFVE must provide 9,000 Nielsen rating points per contract year (Aug. 1-July 31).
Radio stations KCCN (AM and FM) and KINE are required to reach 3,500 Arbitron gross rating points each contract year.
The rating points are a measuring stick. They represent a percentage of the population that is listening to or watching in a time slot.
"We've always delivered what we're required to deliver and never fell short," said John Fink, president and general manager of KHNL and KFVE.
"Whoever wrote up the university's contract proposal knew what they were doing," said Mike Kelly, general manager of KCCN and KINE. "It's a lot of people to reach, but the university is a good deal."
Fink said one Nielsen rating point is worth 1 percent of Hawaii's 365,000 television homes, or 3,650 homes. During the course of a contract year, UH advertisements are seen almost 33 million times.
"During the 1997-98 contract year we exceeded the minimum by 10 percent," Fink said. "This allows UH to assure its clients that the message is being delivered."
The University of Hawaii athletic department has a number of deals with apparel and equipment manufacturers who provide merchandise free or at a discount to UH teams. Apparel, equipment deals
are invaluableEach head coach is responsible for securing such contracts. Some coaches also receive endorsement fees for aligning their teams with a specific brand name. Other coaches receive allowances for themselves and their staffs.
Here's a look at some of the deals:
FOOTBALL
A deal with Starter Corp. saved the school about $50,000 on uniforms. Sideline wear for the coaches and staff has an estimated retail value of $14,000.Nike, in the final year of a $75,000 contract, provides shoes, T-shirts, socks, towels, wristbands and gloves.
MEN'S BASKETBALL
Nike provides 140 pairs of shoes, 20 sets of sweat suits, T-shirts and cross-training shoes. Head coach Riley Wallace estimates the value at $60,000. He also receives an endorsement fee but said he does not reveal the amount.Wilson provides basketballs worth approximately $1,000. Starter provides reversible shirts, sweats and shorts for practice.
WOMEN'S BASKETBALL
Nike provides 100 pairs of shoes ($13,000) and merchandise for tournaments. Head coach Vince Goo estimates this contract saves the school approximately $15,000.There is no endorsement fee for the coaches, but they receive an apparel allowance.
The contract with Spalding calls for 15 new balls each season worth $1,500. Goo is negotiating a deal with a supplier to provide 18 sets of uniforms (practice, home, away, etc.) that would save the school $5,000.
WOMEN'S VOLLEYBALL
The team is outfitted with shoes and apparel (sweats, uniforms, socks, equipment bags, hats and slippers) by Asics Tiger Corp. Head coach Dave Shoji estimates the dollar value at more than $10,000. He receives compensation in exchange for conducting clinics for Asics.The ball changes every year, but the majority (UH still buys a few) were provided by Spalding (10 dozen, retail value about $40 each for a savings of $4,800) this season.
Asics also provides T-shirts at cost for the Wahine summer camps.
MEN'S VOLLEYBALL
Local Motion takes care of all volleyball-related clothing needs (practice, game and travel outfits) for the players and coaches, worth about $30,000. Local Motion also helps with T-shirts for the summer camps. In lieu of a cash endorsement fee, the coaches receive a clothing allowance.Asics provides knee pads, socks and shoes.
Molten provides 18 free volleyballs each year ($21 wholesale cost means a $378 savings) since this is the official Mountain Pacific Sports Federation game ball.
BASEBALL
Louisville Slugger provides 60 bats (48 aluminum, 12 wood composite) at $200 a bat; 34 fielders gloves at about $115 a glove and 48 batting gloves at $20 a pair. Total benefit: $16,870.UH head coach Les Murakami receives a $5,000 endorsement fee.
SOFTBALL
There is a contract with Easton to supply 20 bats, fielding gloves, batting gloves and equipment bags and $1,000 of retail merchandise for the coaches. Head coach Bob Coolen also receives an escalating endorsement fee that is worth $7,000 this year.Reebok offers a "buy three, get one free" deal on pairs of shoes. The deal also includes free shoes for the coaches.
MEN'S GOLF
Kahala Hawaiian Islands, a division of Local Motion, provides uniforms on a buy one, get one free basis. This saves $1,000 to $2,000.
SWIMMING
Speedo outfits the team (warm-up suits, shorts, swimsuits, goggles, caps, etc.) worth $12,600. Fila provides deck shoes ($4,000). Adolph Keifer & Associates provides kickboards, fins, hand paddles and other training tools worth $2,000.
SOCCER
The program receives a deal on Diadora uniforms and coaches apparel from the local supplier.
