There is little question that the University of Hawaii athletic department's financial model—a mechanism that produced seven-digit shortfalls five of the past seven years—is “;broken.”;

How to fix it is the $8 million (and rising) question.

UH athletic director Jim Donovan presented the athletic department's standing and the hurdles in the path to profitability to the UH Board of Regents during its monthly meeting yesterday at the John A. Burns School of Medicine.

An audit of the athletic department showed a $2.6 million deficit for the 2008-09 fiscal year. The department estimates another $2.1 million shortfall for the current year, which would push a cumulative deficit, piling up since 2002, to more than $10 million.

The board yesterday asked Donovan to produce a five-year projection of the department's finances. Donovan said he believes the department, which spent $28.7 million last fiscal year, can get back to operating at the break-even mark within that span, depending on improvement in the economy.

“;I'm in 100 percent belief that we have to run a balanced budget; I just think the model is broken,”; Donovan told the regents.

“;If the equation doesn't change at all, then it will probably take at least a couple of years for us to have the economy get better so we can grow out of this.”;

BOR chairperson Howard Karr said the board doesn't want to micromanage the department, “;but because this is a high-profile area, we want to see what they're doing to take care of this annual deficit ... because we can't continue at this $2 to 2.5 million clip.”;

Karr said eventually forgiving the cumulative debt is “;something that we probably will have to take a look at.”;

UH is certainly not alone in its financial plight. According to NCAA figures cited by the athletic department's presentation, 25 programs were profitable in 2008. The rest lost an average of $9.9 million.

“;All of Division I athletics is struggling right now, and we're geographically challenged, especially in our travel and guarantee costs,”; Donovan said after the meeting. “;It's an expensive proposition, but it's not an impossible proposition.”;

Donovan said new revenue streams combined with reduced expenses amounted to a gain of about $2 million. But those strides were offset by reduced ticket sales in football and men's basketball.

UH president M.R.C. Greenwood said Donovan made “;extraordinary progress”; in generating new revenue though the department has been hampered by the downturn in the economy.

“;But I also think we are structured differently than some other campuses in the conferences we play in and there are some policy issues we will be needing to address,”; Greenwood said.

The department's presentation stated that UH athletics generated 81 percent of its revenue. About 18.7 percent came from institutional or state funds, compared to a national average of 30 percent in 2008.

The department last year proposed a student activity fee of $50 per semester, which would raise about $2 million.

UH is the only Western Athletic Conference school without a student athletic fee. Other schools raise from $232,000 (Louisiana Tech, $10 per quarter) to $4.7 million (San Jose State, $77.50 per semester) through similar fees.

“;We have bent over backward to try to have lower prices for UH students,”; Donovan said in response to a question regarding possible ticket-price increases for students.

“;But if we are to get out of our overall deficit, UH students will have to be part of the solution, whether it be in a potential activity fee or whether it be in some price increases.”;

Donovan confirmed students would not be charged further for admission if the fee is passed.