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Tuesday, September 02, 2014         

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Jim Donovan

The University of Hawaii athletics director hopes to build a sustainable future with a balanced budget and fans in the seats

By Vicki Viotti

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When Jim Donovan finally got the call in March 2008 to tackle the top job of University of Hawaii athletics, it was immediately clear he'd be handling cleanup duty. Except for the windfall the football team scored with the Sugar Bowl berth, he said, the UH Athletics Department had been running a fairly consistent $2 million annual deficit.

Donovan points to about $1.3 million in cuts that he made and a revenue boost of roughly $800,000, which theoretically erased the red ink.

That was theory. Reality, in the form of the recession, set in, and the drop in ticket sales left the department in the same budgetary hole.

Now the athletics director, a UH alumnus himself, sees reason to hope that a sustainable future can be built. But first he had to brave the hot winds of opposition to a controversial element of the plan: a new $50-per-semester athletics fee that students would pay.

That fee is now in place and Donovan believes the long-term results of his plan -- a more loyal and committed student and alumni support system -- will bear him out in the end. Proof of that will be meeting his goal of a balanced budget 18 months from now.

Question: Why do you think there was such a blowback to the student athletic fee proposal?

Answer: It's just the timing of it. We were, like, the third fee in a couple of years.

Conceptually, I'm extremely comfortable with what we asked for and what we did. It is going to provide an immediate benefit for current students and for the athletic department -- both in admissions to the events and the revenue that it will generate.

The net revenue, the students will get about $150,000 and our net will probably be about $1.8 million. So there will be immediate benefits, but what I really focused on is just looking ... 25 to 30 years from now. I really believe there's going to be quite a bit of students, projecting out that time frame, that are going to have a stronger affinity to the University of Hawaii and more positive memories.

We are entertainment; 700,000 people, approximately, came to our events last year, millions watch on TV. In fact, I tell people we're in the business of education and entertainment. ... And so I expect we would see an increase in philanthropy, also, because of that connection, that positive feeling, to the university.

Q: The fee revenue is not enough to erase the budget deficit.

A: The intent was never to put the burden of the budget deficit on the students. ... We added up the value of what all those seats were and came out to approximately $2 million. So we said 20,000 students, that's $100 a year, $50 a semester. We were trying to raise approximately the same amount of value of the seats.

I look at eliminating the deficit as being a multipronged approach. We have to do a better job at selling tickets to the general public. We had to look at student fees. We're looking at additional corporate sponsors. And even donations; we're working very hard on that.

Q: Do you have a timetable for balancing the budget?

A: In our projections right now, this year that we're in, our projections are at a little less than a $1 million deficit. So that means we will cut it back about $1 million. Next fiscal year, starting July 1, 2011, to June 30, 2012, we think we're going to eliminate the deficit. We'll pay a little off maybe next year, but the following year is when we'll look to start really paying off the accumulated deficit.

Q: What will help you make the turnaround?

A: We are getting increased philanthropic support. Our corporate sponsorship revenue has increased for the last three years, even with this recession. Last year it was up 5 percent, this year might be up 7 or 8 percent. But considering most businesses are talking about how much it went down, that's a real positive for us.

And I think we're starting to see an upturn in ticket sales. Men's volleyball had a significant increase in ticket sales last year, and baseball continued to increase. That's tied in quite a bit to the general overall economic health. ... Stan Sheriff, who the arena is named after, said people vote with their wallets. If you're winning, they're going to buy a ticket, and if you're not winning, especially in tough times, they're going to take that money.

Q: How is the latest churn in the Western Athletic Conference likely to affect these projections?

A: It's such a macro issue. It certainly hasn't figured into any of our statistics to this point because we're still going to be playing Boise State this year. Going forward, like next fiscal year, it depends on the replacement team, if, in fact, it does get replaced; maybe we just stay at eight and we have another non-conference game. So if we're playing a PAC-10 or Big 10 conference school, we might do better than Boise State. If we're playing a mid-major Division 1AA school, we might not fare as well as Boise State. So the WAC hasn't had any impact up until today -- that's more of a future issue, and it's probably at least a year out. And my crystal ball is a little hazy because I don't know exactly what we're going to end up with.

Q: How do you hedge your bets, and prepare for the best possible outcome?

A: I'm just one athletic director. There's going to be eight athletic directors and eight presidents/CEOs of the schools. The athletic directors have the opinions; the CEOs actually make the decisions. My opinion is that we have to really focus out five to 10 years from now on what we want the WAC to be, when we're thinking about possible expansion. Instead of just doing more of a knee-jerk reaction or a temporary fix, we need to really start thinking, "What's our long-term vision for the WAC?" Once we decide what we want that to be, then we can start working backwards to what we should be doing now.

Q: What's the time frame for all of these discussions?

A: We have meetings literally about two weeks from now in Las Vegas of all the athletic directors, and then I believe follow-up meetings maybe a month or two after that, with I believe athletic directors and presidents. I would say probably before the start of the year we will have determined what our direction will be.

Q: Do you think that, with the approval of the student athletic fee, you are better positioned to offer the full range of athletic programs here?

A: Absolutely. I think both short term and long term.

Short term, obviously, additional revenue helps us. And having more students come to our events makes for a livelier, fun environment for the paying public to attend. ... I also think it makes it a tougher atmosphere for other teams coming in to play because students are typically very loud and raucous. They create a better home field advantage. That's the immediate impact.

Long-term impact, I see many of them becoming season ticket-holders because they attended certain events. ... That'll have an economic impact in the future for the athletic department.

Q: In the meantime, do you feel you have to tread water a bit?

A: I really feel like we're getting to the light at the end of the tunnel and we're realizing it's not a train. ... I really feel like we're coming out of the fiscal hardship that we had for almost a decade. The model, we had some major problems with it. But now there's a lot of positive things happening, and I do think we'll be in the black, within 12 to 18 months from now.

Q: I'm quoting you on that.

A: That's fine. Now, if there's another economic downturn, we go into a double-dip recession, all bets are off. This assuming we're looking at nationally a long, slow climb out and locally maybe a little bit faster than that, because we're getting inbound tourists from all over the world.

Q: Are there any challenges of this job that you weren't expecting?

A: (Laughs.) I'm going to be quiet. Maybe when I'm getting close to my next job or retirement I'll be glad to answer that question. I think for now I'll just be silent on that.

Q: Anything at all? The flap over the fees didn't wound you?

A: No, I understand where people were coming from. ... Yes, it's less disposable income for the students, but there's a lot of positives we'll develop from this point out. From a macro sense, the conference realignments are very unpredictable. So I think that is something. We're 2,500 miles in the middle of the Pacific. So in a sense we're more vulnerable to some of these changes than schools that are located in the Midwest. They have three or four conference options. We might have a couple.

Q: So that's the down side of being located out here. On the other hand you did mention being the only game in town.

A: And there's the positive. I look at everything. We have so many positives.






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