UH ventures fail to turn a profit for athletics

Over the years the University of Hawaii athletic department has been encouraged to “operate more like a business” and embrace an entrepreneurial approach to revenue, as more than one Board of Regents member has put it.

It was a charge that took on urgency as the department has sought to generate more of its operating funds and curtail a string of deficit finishes.

But three recent developments pose the question: Just how entrepreneurial can UH’s business model really be?

UH announced Thursday, after a three-year effort to make a go of it, the department-operated H-Zone store in Ward Centre will close May 31 and logo apparel and merchandising operations will revert to the bookstore. Athletics will share in the profits.

Also, three years after securing a memo of understanding with the UH Foundation allowing the ‘Ahahui Koa Anuenue booster club to take on fundraising initiatives such as concerts and non-UH sporting events in the Stan Sheriff Center, athletics said it is re-examining that approach in the wake of under-performing returns.

Meanwhile, after more than a decade of working in-house, the department is expected to announce soon an agreement to outsource the bulk of its multimedia marketing to a mainland firm.

The about-faces come as athletic director David Matlin is attempting to streamline operations to meet the 2020 “target” he has given regents for delivering the first balanced budget since 2011.

Of course, apart from the mainstays of selling tickets and sponsorships, the task of “operating more like a business” has come with some inherent problems for a department bound by university and state red tape that can slow or strangle initiative.

At UH, just getting a contract executed, even when major terms are already agreed upon, can take months because of the number of people required to sign off on agreements.

As one UH athletic department staffer with private business executive experience put it, “there’s the way we did it in (the private sector) and the way we do it here.”

Nor has UH always had the right people with the necessary skill sets for the tasks they have undertaken. Some have been good ideas poorly executed. Others short on patience or victims of under-performing marquee teams.

The H-Zone store, which replaced a bookstore-operated Rainbowtique and moved to a larger, 1,465-square-foot space in the Ward Centre in 2014, was supposed to be the catalyst to a $500,000 annual profit, though the potential was over-stated. Instead, UH said it was losing as much as $40,000 until last year, when changes and an improved football team helped produce a $21,000 profit.

‘Ahahui Koa Anuenue, which had been primarily charged with season-ticket sales and booster donations since its 1967 inception, was re-tasked in 2014 to come up with additional fundraising initiatives. But a critical audit five months ago charged, “… AKA has not conducted any substantial fundraising activities or events on behalf of the athletics department as originally intended by the amended and restated memorandum …”

Meanwhile, UH put out a request for proposals in December and has been talking with New York-based Outfront Media about taking over the bulk of its marketing efforts. Outfront currently has the Aloha Stadium advertising contract.

Enterprise isn’t dead at UH, but you’ve got to wonder where its place is going forward.

Reach Ferd Lewis at flewis@staradvertiser.com or 529-4820.