HA Note: "UH, which had a $2.6 million annual deficit for the fiscal year that closed June 30, 2009, has run at a deficit seven of the past eight years and the regents "want it run more like a business," said chairman Howard Karr, a former First Hawaiian Bank executive."
About the possibility that the Board of Regents will approve additional assistance for the Athletic Department, Board of Regents chair Howard Karr said:
"I would like to see what his strategies are going to be and what kind of support he is going to need from, say, the regents or the state or the Mānoa campus." (HA)
About how the Athletic Department should be able to balance its budget, JD said:
"I don't think (UH) should run at a deficit. I mean, I have an MBA from the University of Hawai'i. I think the case I'm trying to make is that the state, the UH system and Mānoa campus, combined, need to come up with a greater percentage of our budget." (HA)
"I'm 100 percent of the belief that we have to run a balanced budget, I just don't think the (current) model is good. If we have to do it all on our own, it is going to take some time. We've already started looking at the projection for next year and I know it (a balanced budget) isn't going to be next year." (HA)
HA Note: "Athletics currently generates about 81 percent of the money needed to run the $30 million operation, getting nearly 19 percent from the school. UH said its peer institutions receive, on average, 50 percent of their operating funds from outside."
Pointing out that their peer schools get a lot more of their budget from the University, JD said:
"this is not for the athletic director to tell people up the chain of command how this should all be solved; this is to point out the situation and the issues and work with everybody to come up with a solution." (HA)
About the complexity of the problem for the Athletic Department budget, UH-Manoa Chancellor Virginia Hinshaw said:
"it is going to take a multi-pronged approach to balance the budget. It is not going to be one solution." (HA)
HA Note: "She said the $66 million in cuts from state funds the Mānoa campus has absorbed has limited what it might be able to do to help athletics. Donovan said a student activity fee that athletics could share in is among his priority initiatives. But regent Grant Teichman, a former Mānoa student body president, cautioned students will want value after opposing a previous athletic department proposal for a student fee. Teichman suggested athletics might want to "sweeten" any proposal with increased access for students to athletic facilities, such as Duke Kahanamoku Pool."
About working with students to make an Athletics Fee worthwhile to them, associate AD Carl Clapp said:
"Our goal is to work collaboratively with the students." (HA)
Pleased with how the meeting went with the Regents, JD said that:
"it seemed like there was a wide understanding of our situation (by the regents) and a realization of our issues, so, I thought, that was a positive step." (HA)
About how the Athletic Department's financial model should have been fixed years ago when the economy was strong, JD said:
"We probably should have had this conversation six years ago when everything was flush with money." (HA)
HA Note: "In the same John A. Burns School of Medicine building, where the regents met yesterday, a different group of regents peered at another independent auditor's report that had the identical conclusion of athletic department finances being "very fragile." The date was April 22, 2005. The auditor's recommendation: "the department needs a plan." Two years before that, when deficits first went back-to-back, still another group of regents requested a plan. And so it was again yesterday that amid UH's seventh deficit in eight years Donovan was asked to go to the drawing board and return at an unspecified date with, you guessed it, "a plan." "
About the financial problems facing the Athletic Department, JD said during the meeting with the Regents:
"... typically, sometimes when things get really bad economically, that's when all the bodies float to the surface, so to speak." (HA)
HA Note: "Student government last year expressed heavy opposition to the proposal for a $50 per semester student athletic fee. But Donovan yesterday floated the idea of tying athletic events to other attractions on campus that "enhance the student experience." "
About ways that they can generate revenue from the students, JD said:
"We'll go either way; we'll either go with individual pricing for students by sport, individual and season (tickets) or an activity fee." (HA)
HA Note: "the regents approved a separate proposal hiking some ticket pricing levels, including the Sept. 2 football opener against Southern California. Students would pay $15 for that game, up from $8. All other games would remain at $8."
HA Note: "Donovan said UH has "bent over backwards" for students in the past, dropping the price of a football season ticket from $65 in 1998 to the current $50 and most individual games from $9 to $8."
HSB Note: "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."
About how he is sure that the Athletic Department can balance their budget after they fix their financial model, JD told the Board of Regents:
"I'm in 100 percent belief that we have to run a balanced budget; I just think the model is broken. 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." (HSB)
Board of Regents chair Howard Karr said that the Board doesn't want to micromanage the Athletic 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." (HSB)
About forgiving the cumulative debt (about $10.1 million as of this June), Karr said it is:
"something that we probably will have to take a look at." (HSB)
HSB Note: "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."
About the challenges UH and all other schools face with their Athletic Department budgets, JD said:
"All of Division I athletics is struggling right now, and we're geographically challenged, especially in our travel and guarantee costs. It's an expensive proposition, but it's not an impossible
proposition." (HSB)
HSB Note: "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."
About how JD made "extraordinary progress" in generating new revenue but the Athletic Department has been hurt by the down economy, UH President M.R.C. Greenwood said:
"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." (HSB)
HSB Note: "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."
Asked about possible ticket-price increases for UH students, JD said:
"We have bent over backward to try to have lower prices for UH 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." (HSB)
HSB Note: "Donovan confirmed students would not be charged further for admission if the fee is passed."
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