UH athletics still in the red despite $3.4M assist, audit finds

Even with a combined $3.4 million infusion from the Legislature and the Manoa campus, University of Hawaii athletics ran at a $1.7 million deficit for the 2017 fiscal year, according to an independent auditor’s report.

The report for the UH Board of Regents by Accuity LLP noted: “The financial condition of the athletic department continues to be fragile due to the ongoing struggle to generate operating and fundraising revenues, compounded by increasing operating expenses. These conditions will likely necessitate future recurring institutional support in order to sustain the athletic department.”

The $1.7 million deficit for the fiscal year ending June 30, was cited as “progress,” noting that the department — which spends upward of $40 million on a 21-team athletic program — “has improved annual losses from $4.2 million in 2015 to $3.2 million in 2016 to $1.7 million in 2017.”

The 2017 red ink marked the sixth consecutive year of deficits in the department and the eighth in the past 10 years. The current fiscal year, which ends June 30, 2018, and will include the 2017 football season, also is anticipated to run at a deficit despite new revenue agreements with Under Armour and Hawaiian Airlines and a multimedia rights deal with sports media agency IMG.

An NCAA report said only “about two dozen” of the more than 120 schools that compete on the Football Bowl Subdivision level with UH “generate revenues over expenses in a given year.”

In a 2015 report to the regents, athletic director David Matlin said the levels of student fees and institutional and governmental support were “low compared to our peers.” Due to geography, Matlin said, UH faces $5.2 million in costs “unique” to the school.

The earlier deficits helped prompt the 2016 Legislature to appropriate $2.7 million in annual support for operations. In addition, the audit report said, the Manoa campus “provided … $700,000 in annual (scholarship) support.”

But while UH was getting additional support from the Legislature and the Manoa campus, “support from booster organizations continued to decline and operating expenses continued to increase,” the audit said. “Further, liquidity continues to be a concern, as the athletic department requires significant borrowings from the university. During the years ending June 30, 2017, and 2016, borrowings from the university totaled $7.4 million and $9 million respectively.”

In a report to regents, it was noted that “while the department strives for financial stability and efficient use of resources, it is increasingly more difficult to sustain athletics competitiveness on its current operating budget and limited financial resources.”

Matlin was said to be attending conference meetings on the mainland and was not immediately available for comment.