University of Hawaii athletics must tackle fiscal woes
LOSING STREAK: University of Hawaii college football has been on a losing streak, impacting athletic department revenue. Photo by UH
by Malia Zimmerman, Watchdog.org, December 18, 2014
HONOLULU — The University of Hawaii Athletic Department has faced a series of fiscal and staffing troubles in recent months, leading legislators, administrators and regents to debate the future of the state’s only athletic program.
With an annual budget of around $30 million, the athletic department has operated in the red for 11 of the past 13 years, with a $3.5 million deficit this year. This is in addition to $13 million in debt accumulated since 2002, which regents waived earlier this year.
The repeated money shortfall has sparked debate over how to generate revenue.
Jeff Portnoy, who heads the Board of Regents Committee on Intercollegiate Athletics, said the athletic department cannot run consistent million-dollar deficits, adding the department could be as much as $5 million in the red next year.
“I’m sure everyone has an opinion as to what should be done, from doing away with the whole sports program to have it be funded by taxpayers,” Portnoy said.
Portnoy supports using government funding to make up the difference, which could be derived any number of ways, including levying an additional 1 percent room tax, legalizing a lottery or using tax dollars from the general fund.
“The UH athletic program is a statewide program, and if the community does care, then state taxpayers ought to pay for it,” Portnoy said, noting the cost would be between $3 million to $10 million annually.
University of Hawaii Regent Jeff Portnoy, Photo by Mel Ah Ching
The department is affected by things such as the economy, a lack of philanthropists in Hawaii and lack of sponsorships, Portnoy said.
Hawaii’s teams also must travel to compete and sometimes pay opposing teams to travel here, costing the university hundreds of thousands of dollars a year.
Rep. Bob McDermott, R-Aiea, suggests Hawaii’s new governor, David Ige, launch a private fundraising campaign, with a target of $2 million for the university’s sports programs.
Former state Senator Bob Hogue, now the commissioner of the PacWest Conference in Division II, said the state must have a conversation about the school’s funding model and whether taxpayers should subsidize it.
“All of us who appreciate the importance of athletics at the UH and its place in Hawaii’s culture understand that it is key that it be funded properly. At Division I, the level the UH is playing at, funding requirements have increased dramatically, and Hawaii is in a catch-up situation right now,” Hogue said. “We cannot continue to fund the program the way it has been funded because it is not working, and it is literally an annual problem.”
Sen. Will Espero, Photo courtesy of Sen. Espero
Senate Vice President Will Espero, D-Ewa, agrees stakeholders should talk about funding. He believes the school could bring in more money with a winning football team and save money by cutting coaches’ salaries.
University of Hawaii head football coach Norm Chow is paid $550,000 a year plus performance bonuses, Espero noted, more than any other public employee in the state. But, according to a USA Today, survey, Chow makes relatively little when compared to his peers.
Hawaii must consider whether it can afford to increase benefits to recruit and retain athletes, as other schools do, by offering scholarships, medical coverage, stipends and money for the use of athletes’ image and likeness that would add millions of dollars to the cost of the UH program, Portnoy said.
“We have to decide if we can afford those, but we cannot afford them on the budget we have now,” Portnoy said. “We have to come up with new ways of increasing revenues or decrease expenses certain things. There are lots of possibilities, the least palatable is to drop football.”
Hogue doesn’t want to see the football team go away either. Hawaii tried that once before and failed.
University of Hawaii Athletic Director Ben Jay resigns before contract expires, Photo by UH
“We went down road once, 50 years ago, when we suspended the UH football program. There was such an outcry, that it came back at a much higher level and proved it could be cost-effective and successful,” Hogue said.
College football could be a driving force for funding – that is if the team wins, said Hogue.
Under Chow, who is in his third of a five-year contract, the football team won four of nine games this year. In 2013, Chow finished the season with dismal 1-11 record, following a 3-9 season in 2012.
“When we had great attendance at the university football games, the university brought higher dollars. Right now, the football program is key to so many universities – a cash cow. When the football program is not successful, it is not surprising there is a financial struggle through the entire athletic program,” Hogue said.
Football ticket sales are dramatically down, and while the football program still makes its budget, it’s not enough money to pay for all other sports, Portnoy said.
University of Hawaii head football coach Norm Chow makes $550,000 a year, more than any other state official Photo by UH
“I feel really strongly that we should embrace the importance of academics and higher education and make them priorities for the state, but I also believe athletics enhances that entire higher education experience and can create a positive culture, increase donations, better community relations and boost student enrollment,” Hogue added.
UH Athletic Director Ben Jay announced last week he is resigning in June, a year before his contract expires.
Portnoy believes the next athletic director should be have a business and fundraising background and sports knowledge is secondary.
“The whole model of athletic directors is changing. It used to be that a retiring football coach was put in that job, but now we need someone who understands how to run a $40 million business, who can fundraise and balance a budget, hire and fire coaches and deal with NCAA issues. This is an extraordinarily difficult job with constituencies with different views.”