In 2015, just over six months into the job, athletic director David Matlin gave the University of Hawaii Board of Regents a slide show of his plan to balance the department budget by 2020, prompting one of them to dub it, “2020 vision.”
As the school prepares to close the books on fiscal year 2018 and embark on 2019 in two weeks, the expectation is that the “vision” will begin to become clearer after a record seven consecutive years of red ink.
“We are very focused on returning to break-even by (fiscal year) 2020,” UH President David Lassner reiterated to the board last month.
Despite the projection of closing the 2018 books June 30 with a $2.3 million to $2.6 million deficit, “There is reason for optimism,” said Kalbert Young, the UH system’s vice president for budget and finance and chief financial officer
“I would say that in (going on) three years of focusing on it, they have made tremendous progress (from a $4.2 million deficit in FY 2015),” Young said.
Securing a $2.7 million appropriation from the legislature two years ago “is definitely part of that, but even without that, they have made a fair amount of progress,” Young said.
But, Young cautioned, “The toughest part is always that last $2.5 million to $3 million. The low-hanging fruit is basically gone.”
Matlin said, “No question it is not going to get any easier the next few years. There are more challenges coming down the pike,” he said, citing cost of attendance stipends for scholarship athletes, dipping ticket sales and increased fringe benefit costs for coaches and staff.
In his 2015 “deep dive” presentation to the Regents, Matlin said the “Current self-sustaining financial model is inconsistent with collegiate athletics nationwide,” especially with UH facing $5.2 million in “unique” annual costs due to its geography.
An NCAA study has said that fewer than 25 of the 130 Football Bowl Subdivision NCAA Division I programs pay for themselves. In the Mountain West Conference, where UH competes in football, Fresno State is projecting a $1.5 million-$2 million deficit and New Mexico, which is trying to overcome a $4.7 million accumulated debt, is looking at the possibility of cutting one of its 22 sports.
Washington State, one of the more well-heeled Pac-12 schools, projects a $4.9 million deficit for 2018 and has run up $51.5 million in accumulated net debt over the past six years.
At UH, athletics had a $14.7 million accumulated debt absorbed by the Manoa campus in 2013 and, with subsequent deficit years, overall debts have run to more than $20 million, Regents were told. “Right now, the (Manoa) campus is carrying that debt,” Lassner said.
Against that backdrop, Matlin has said his department needs to generate more revenue and bring in additional contributions while also managing expenses. He said outsourcing media rights to IMG, a new apparel deal with Under Armour and a ticketing agreement with Hawaiian Airlines have helped reduce deficits.
Athletics has been self-generating approximately 66 percent of its revenue while garnering 33.92 percent from a combination of institution, state and student source.
Matlin told Regents that student fees are areas where his department needs more assistance.
It currently receives approximately $1.7 million a year from mandatory student fees. “The reality is that student fees are about 3 percent of our budget, (but) when you look at a lot of the Mountain West, it goes up to 33 percent at San Diego State,” Matlin said. “Most schools (in the conference) are over 10 percent.”
For example, SDSU receives more than $10 million a year in student fees, while San Jose State gets $8.3 million and Fresno State $4.4 million.
Regents have also charged athletics with doing more to maximize fundraising in the wake of planned changes in ‘Ahahui Koa Anuenue, the umbrella booster organization, for more than a year. “We do have a plan,” Matlin assured the board.
Matlin said, “We need to get better and there’s always work to do. It is a journey, not a destination.”