After an independent auditor bleakly described the University of Hawaii’s financial prospects to the school’s Board of Regents Thursday, regent John Holzman sought to look on the bright side.
“Fortunately, we just hired a new athletic director,” Holzman said.
To which Manoa Chancellor Tom Apple, quickly glancing at AD Ben Jay, shot back, “And, he hasn’t left the room … yet.”
Jay, in his second week on the job, is scheduled to begin meeting today with members of a newly created, regent-appointed task group for intercollegiate athletics about possible solutions for the financially troubled 21-sport program.
Cory Kubota of Accuity LLP told the regents UH athletics “is technically insolvent” and “the condition of the athletic department is a concern.” To which regent Chuck Gee said, “I think that’s an understatement.”
The department finished $1.8 million in the red for the fiscal year that closed June 30, 2012, is running an accumulated net deficit of $11.3 million and is projected to lose more than $2 million for the current fiscal year. Of the $11.3 million debt accumulated since 2002, Apple said, “I think this year it is going to get even worse.”
Auditors recommended that the financial situation “be closely monitored” but Gee asked “do we require a more drastic solution than monitoring?”
Regents questioned whether ticket revenues and other traditional sources are sufficient for UH to operate a competitive athletic program and said football coach Norm Chow told them more resources were needed. Holzman said “a decision needs to be made with athletics.”
Regents’ chair Eric Martinson said, “We’re going to have to address that (financial situation). I mean, it is an earnest issue that has come up for discussion in the past and we don’t have an immediate solution for it. But with the new AD, the (Manoa) chancellor and the appropriate committee, we do have to address it.”
Asked about a timetable, Martinson said, “The sooner the better.”
Martinson declined to speculate on possible remedies, saying he would await a recommendation from the administration. “They know all the pieces, they are far more familiar with it and deserve the opportunity to present to the board a solution.”
Apple told the board that based upon a national survey, UH athletics receives one of the smallest subsidies of a non-Bowl Championship Series school, with 32 percent of its approximately $30 million in operating costs subsidized. Apple said the only non-BCS school with a smaller subsidy was Fresno State at 27 percent.
“That (subsidies) is a conversation we need to have,” Apple said. “But there are a lot of other issues involved here, too. We pay to have our teams fly around and we pay to bring other teams here. We don’t have our own stadium, which may be good or bad, but when we do play football out there (at Aloha Stadium) we pay to use it and clean it up and we don’t collect any of the fees from (non-ticket) sales. There are a lot of issues that make us unique.”
Apple said he planned to discuss the situation with several constituencies, including the faculty senate.
Jay said, “Tom and I both agree that something needs to be done but I want to look at it on both sides of the ledger, both revenue and expenses and see what we can possibly do.”
John M. Cash of the consulting firm Marts & Lundy told the regents to think of athletics as a “front porch for the university” opening up to the public. Afterward, Apple said, “maybe we have to clean up our front porch.”
