UH sports posts
$544,900 loss

The deficit, however, is much lower
than the last two years, which totaled
$4.4 million

The University of Hawaii athletic department hasn't quite reversed its financial fortunes, but it appears to have slowed its slide deeper into the red.

Coming off losses totaling close to $4.4 million the previous two years, the athletic department operated at a $544,900 deficit for the 2003-04 fiscal year, according to an auditor's report presented to the UH Board of Regents yesterday at Windward Community College.

"It's a good news, bad news situation," said Jim Hasselman, who presented the report on behalf of the accounting firm PricewaterhouseCoopers.

"The bad news is that there was another year of loss. ... The good news is they lost money, but the rate of loss was reduced, and was less than they projected."

Although the department incurred a third straight year of losses, UH athletic director Herman Frazier presented an optimistic outlook for the regents considering the department had been projected to lose $1.2 million last year.

"That number is tremendously down compared to what it was supposed to be," Frazier said.

Frazier introduced a five-year plan to move the department toward profitability last summer in response to an auditor's report that showed close to $2.5 million in losses for the 2002-03 fiscal year.

"We believe the five-year plan we have put together will show you that athletics can get back to the black and serve the university," Frazier said.

The plan calls for the department to become profitable by 2006 and then start chipping away at what is now a $4.5 million total deficit.

"Right now the key is to stay the course and make sure this plan does get executed the way it was envisioned and keep working on revenue generation," said Hasselman, who characterized the department's situation as "still very fragile."

The department's expenses rose by 4 percent in 2004 while revenues jumped 16 percent.

Football, the department's top bread-winner, was $3 million in the black following the 2003 season, up from $2.3 the previous year. The men's basketball program's figure jumped close to $700,000. The women's volleyball team's increased by about $331,000.

Premium-seat donations accounted for more than $1 million in sales, opposed to $753,000 in 2003.

The department also hired a fiscal officer to help track the flow of funds.

"When we started to analyze the situation it was our common goal to bring the athletics department into a sustainable situation, which means to make it profitable," UH-Manoa Chancellor Peter Englert said. "They didn't have any instruments to do so at the time, but with the help of the Board of Regents and their agreement to new seating arrangements, to new prices, and so on, we're now making progress."

Englert said the department is also on schedule in paying back its debts to the university which reached $3.4 million in the form of loans and advances to help fund its operations.

"It's an instrument that I felt I could use to give the athletic department an incentive to accelerate its move towards profitability," he said.

Frazier cited the school's financial arrangement with Aloha Stadium as the biggest issue now facing the department. UH currently pays approximately $800,000 in rent for use of the stadium.

"It's somewhat ironic that the negative number for the end of (2004) is similar to the amount we paid the stadium for rent," Frazier told the board.

UH associate athletic director Tom Sadler said the Stadium Authority has put the issue on the agenda for its meeting next week, and he's hopeful the discussion will eventually lead to a new arrangement.

"It can be a $500,000 to a million-dollar swing depending on what deal we're able to work out," Sadler said. "I think it's on (the agenda) because I think everyone is seeing that we're the only entity that's paying rent, and that it's worth a discussion to figure out how we can make that a little more equitable.

"We did not put that item on the agenda, we're delighted it's there and we'll be happy to participate in the discussion."

Frazier said he will give the regents another update once an agreement on a new television contract is reached.

The athletic department sent out a request for proposal for the exclusive television rights to UH sports to potential bidders yesterday. Proposals are due to UH on May 6 to be evaluated by a committee.

KHNL/KFVE has televised UH events for the last 22 years. The current contract pays UH $700,000 per year.