university of hawaii manoa athletics...university of hawaii manoa athletics presentation to board of...

University of Hawaii Manoa AthleticsPresentation to

Board of Regents

Athletics: Perceptions, Realities & Discussion on Financial Funding Model

November 19, 2015

• Baseline and Benchmarking• Assessment of UH Athletics Performance/Comparison to Peers

– Academics– On-the-Field– Student-Athlete Participation– In the Community– Around the State– Facilities– Financial Performance

• Athletics Impact to State and UH• Moving Forward

– Intercollegiate Athletics’ Changes on the Horizon– UH Athletics Balanced Financial Model Plan– Partnering with Stakeholders

• Discussion and Decisions for Next Steps

Agenda

November 19, 2015 2

3

• UH Athletics Vision and Mission Being Met– Strong performance in the classroom and on-the-field– UH is embraced as Hawaii’s Team by entire state– Strong support and partnering with stakeholders

• Financial Baseline– Recently completed 2015 year – unaudited deficit of $4.2M– Projecting deficit of $4.8M for 2016 based on various initiatives underway/planned

• Benchmarking– Overall, UH Athletics revenues and expenses are comparable to, or better than, benchmark

schools and conferenceso Only 24 of 230 Division I programs generated enough funds to cover expenses

– UH Athletics bears a $5.2M cost burden that other schools do not have. Without it, 2015 would have resulted in a surplus, rather than deficit

– The level of support to UH Athletics from student fees, governmental support, and institutional support, at 33.9% of revenues, is low when compared to UH’s peers

• Support for UH Athletics is more than offset with significant benefits to State and UH– $66M direct spending, 864 jobs created, and $7M in increased state tax collections

• Discussion on Balanced Funding Model and Actions• Agreement on Next Steps & Consensus on Funding Model

Executive Summary

November 19, 2015

4

1 Besides participating in the Big West Conference, certain UH sports participate in the following conferences: Men’s Volleyball, Men’s Swimming and Diving, Women’s Swimming in Mountain Pacific Sports Federation; Women’s Sailing and Co-ed Sailing in Pacific Coast Collegiate Sailing Conference

• Objective:

– Identify reasonable benchmarks to gauge performance

• Benchmarks

– Big West Conference

o UH currently participates in for most sports other than football1

– Mountain West Conference

o UH currently participates in for football

– Group of 5

o Group of conferences that are not in the Power 5: Mountain West, American Athletic, Conference USA, Sunbelt, and Mid-American

– Power 5

o Made up of the top “power” conferences: Pac-12, SEC, ACC, Big Ten and Big 12

o Power 5 schools are not comparable to UH Athletics, but provide a reference point of where the top collegiate athletics programs are currently

Size of programs and media revenues available (~$30M+) to Power 5 schools are significantly larger than UH

Benchmark Criteria

November 19, 2015

5

• Academic Performance

– Good 2014 academic performance -- must work to achieve more consistency maintaining progress

o UH had higher Academic Performance Rate (APR), Graduation Success Rate, and Current GPA than peers --Big West, Mountain West and Group of 5

o Going forward, utilize resources, such as the Nagatani Academic Center, to strengthen consistency in academic performance year-to-year

• On-The-Field Performance

– Strong 2015 season for UH with conference championships and/or post-season play: 3 conference championships; 11 individual postseason appearances; 5 team postseason appearances, 4 All-Americans; 4 conference coaches of year; 5 conference players of year; and 3 teams ranked in Top 20 nationally in attendance.

– Strong Learfield Sports Directors’ Cup ranking which measures collegiate athletic programs’ overall strength

o Ranked 2nd of 9 within Big West Conference; 5th of 12 within Mountain West Conference

• Student-athlete participation

– 509 student-athletes in UH sports compares favorably to peer groups -- Big West, Mountain West, & Group of 5

• Community Outreach and Mentoring

– During the past 12 months, UH teams participated in more than 50 activities and events, providing opportunities for our youth and addressing the needs of others, throughout the State

• Neighbor Island Outreach

– UH hosted 22 athletic events during the last three seasons on the neighbor islands and participated in five events hosted by other entities, such as UH Hilo and Pac 12 teams. Ninety-one schools competed in these events, some of them more than once, amounting to 232 participations.

• Facilities

– Improvements and progress made, much more work needs to be done to remain competitive

UH AthleticsProgress in Meeting Mission, More to Accomplish

November 19, 2015

6

Deficit = ($4.2M)

Source: UH Manoa Athletics Department Financial Statements and Supplementary Information – Supplementary Schedule II, issued by Accuity LLP and PricewaterhouseCoopers, LLP.

Revenues Expenses

11-Year History – UH Foundation Excluded($ in Millions)

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Revenues $19.9 $21.0 $25.1 $29.1 $26.0 $26.3 $29.2 $29.2 $27.6 $31.2 $33.8

Expenses (20.5) (21.0) (25.5) (28.8) (28.6) (27.8) (28.7) (31.4) (31.0) (33.2) (38.0)

Difference ($0.6) $0.0 ($0.4) $0.3 ($2.6) ($1.5) $0.5 ($2.2) ($3.4) ($2.0) ($4.2)

Source: UH Athletics 2015 Budget report

Unaudited FY2015

UH Athletics BaselineHistorical & Current Financial Results

November 19, 2015

18.3%

31.7%

5.0%7.7%

7.4%

9.2%

2.4%

3.3%

6.2%

2.7%6.2%

Ticket Sales - $6.2

UH Support - $10.8

Student Fees - $1.7

Donations - $2.6

TV/Radio - $2.5

Conf Disb - $3.1

Concessions - $0.8

Merchandising - $1.1

Sponsorships - $2.1

Game Guarantees - $0.9

Other - $2.1

23.7%

37.6%8.9%

7.6%

10.0%

12.1% Scholarships - $9.0

Salaries & Benefits -$14.3

Sports - $3.4

Travel Subsidies & Guarantees - $2.9

Team Travel - $3.8

Other - $4.6

$33.8M $38.0M

7

4.5%

29.4%

0.0%

34.1% 33.3%

0.0%

11.2%

18.7%

11.1%16.4%

25.2%

0.0%0%

10%

20%

30%

40%Student Fees Institutional Support Governmental Support

UH Big West Mtn West Group of 5

See Appendix A for additional detail on athletic department support by school and conference

Expenses exceeding athletic department generated revenues is norm and addressed nationally by student fees, government support, and institutional support

Source: NCAA Institutional Performance Program, “Financial” Data Base, 2014 year data and Winthrop AD data base.

Big West ConferenceRank School %

1. UC Northridge 88.762. CS Riverside 84.943. UC Irvine 79.054. UC Santa Barbara 78.815. UC Davis 78.486. Cal State Fullerton 76.887. Cal Poly 67.318. Long Beach State 61.359. UH 33.92

2014 Athletic Department External Support (as % of revenues)

BenchmarkingExternal Support to Collegiate Athletic Departments

November 19, 2015

• UH Athletics’ expenses exceeding department-generated revenues is consistent with collegiate athletics programs nationwide

– Only 10% (24 out of 230) of NCAA Division I public schools generated enough funds to cover expenses1

o All of the schools are from the Power 5 conferences, which have sizable media revenues of ~$30M+ per school. Even then, the Power 5 conferences have an average deficit of $2.3M2

• Shortfalls within athletic programs are addressed by external support from student fees, direct government support, and direct institutional support

– UH’s 2014 “external support” of $11.8M is low/lowest percentage when compared with peers1Source: College Athletics Finance Report: Non-Power 5 Schools Face Huge Money Pressure, USA Today, Erik Brady, Steve Berkowitz and

Christopher Schnaars, May 26, 2015.2Source: Growth in Division I Athletics Expenses Outpaces Revenue Increases, NCAA, Brian Burnsed, August 20, 2104.

Mountain West ConferenceRank School %

1. Air Force 66.012. San Jose State 60.743. Utah State 53.094. Wyoming 48.605. Colorado State 48.516. San Diego State 38.587. Nevada 34.898. UH 33.929. Fresno State 33.0910.Nevada-Las Vegas 33.0011.New Mexico 23.9712.Boise State 22.47

Other BenchmarksSchool %

Big West 67.34Group of 5 41.59Mountain West 40.91UH 33.92Power 5 2.51

8

$2.4 $3.7

$8.8

$14.9

$0.3 $1.6

$4.1 $6.0

$0.9

$3.0

$6.0

$9.9

$0.6 $2.5

$6.6

$9.7

$0

$5

$10

$15Travel Subsidies & Guarantees Team Travel Athletic Student Aid Total

UH Big West Mtn West Group of 5

• Travel Subsidies and Guarantees– UH is required to pay subsidies to schools traveling to compete against UH and in many

cases pay a larger guarantee to entice schools to play in Hawaii• Travel Costs

– Due to Hawaii’s distance from all other schools, travel costs for UH are significantly higher than other schools (most schools can even bus to certain away games)

• Athletic Student Aid– Athletic Student Aid (scholarships paid to university) is higher for UH based on total number

of athletes due to higher number of team sports; and higher tuition for non-resident athletes

UH Athletics has a $5.2M “challenge” to overcome due to higher costs unique to Hawaii

See Appendix B for additional detail on definition of costs and difference in UH costs from peers.

$1.8M

1.2M

2.2M

$5.2M

Source: NCAA Institutional Performance Program, “Financial” Data Base, 2014 year data, and Winthrop AD data base.Difference From

Group of 5

2014 Higher Hawaii Costs ($ in Millions)

BenchmarkingHawaii Has Challenges Other Schools Do Not Have

November 19, 2015

9

Comparison to Peers (2014 data)

School / Grouping

Athletic Department Generated Student Fees, Governmental

Support,Institutional

Support

Difference After External Support

Adjustment forHawaii-Specific

Costs

NormalizedDifferenceRevenues Expenses

UH $23.0M $36.9M $11.8M ($2.1M) $5.2M $3.1M

Big West $6.0M $18.2M $12.3M $0.1M na $0.1M

Mountain West $21.0M $35.0M $14.5M $0.5M na $0.5M

Group of 5 $16.5M $28.1M $11.8M $0.2M na $0.2M

Power 5 $85.4M $87.3M $2.2M $0.3M na $0.3MSource: NCAA Institutional Performance Program, “Financial” Data Base, 2014 year data, and Winthrop AD data base.

See Appendix A for additional detail on conference comparisons

Normalizing for unique Hawaii-only higher costs, UH Athletics results in overall positive surplus of $3.1M

• UH’s peers’ and even Power 5 conferences’ expenses exceed athletic department generated revenues. The difference is addressed by external support comprised of:

– Student Fees – Student fees assessed and restricted for support of intercollegiate athletics

– Direct Governmental Support – Direct support from state or other government entities as appropriations for collegiate athletics

– Direct Institutional Support – Value of institutional resources as well as all unrestricted funds allocated to athletics department by the university, such as tuition waivers

• The percentage of external support for UH is lowest when compared to peers

• Without the $5.2M in additional costs that no other school bears, UH Athletics would have produced a positive net surplus of $3.1M in 2014

BenchmarkingOn Normalized Basis, UH Outperforms Peers

November 19, 2015

10

Economic Benefits to State of Hawaii

AreaAnnual

Impact YE6/30/2014

Direct spending on labor, goods and services $66M

Hawaii business sales $128M

Income for Hawaii workers $37M

State tax collections $7M

Visitors to Hawaii 21,000

Visitor spending $31M

Jobs created 864

Source: University of Hawaii at Manoa, The Economic Impact of the University of Hawaii at Manoa Athletics Department, Fiscal Year 2013-2014, by Conrad Mostiller, Botir Okhunjanov, Jack Suyderhoud, January 7, 2015

• Even using the lowest measure of economic impact, state tax collections, there is a strong positive benefit from UH Athletics

State Tax Collection Impact $7.0M2015 Unaudited UH Athletics Deficit (4.2M)

Net Benefit $2.8M• UH Athletics has a strong “multiplier effect” on Hawaii’s economy

Each Dollar of UH Athletics Spending Results In• $1.93 of business sales• $0.56 of additional income for Hawaii workers• $0.11 of state taxes

• Significant benefits not quantified in the study, such as:– Tremendous national media exposure value from nationally-televised

gameso Value of media time portraying UH and Hawaii in a positive

manner– Study included impact of visitors associated with UH Athletic events,

but not visitors resulting from watching UH events on mainland in person or on TV

– Increased tourist visitors and spending

UH Athletics Drives Significant Economic Benefits for the State of Hawaii

Benefit to StateUH Athletics Provides Positive Benefits to State

November 19, 2015

11

Benefit to UHUH Athletics Provides Positive Benefits to UH

• Tuition and related costs for scholarship and non-scholarship student-athletes paid by Athletics to Manoa

– Scholarship Student-Athletes: $7.8M1

– Non-scholarship Student-Athletes: $3.1M1

• Marketing Value– Brand recognition – UH is Hawaii’s Team– Media exposure – local and national media exposure from televised

athletic events• Contribution to “UH Experience”

– Athletics, along with arts, are integral parts of holistic student life– Increased Applications– School Pride/Spirit

• Bridge from Campus to Community– Goodwill through community outreach, mentoring, etc.– Increases potential donors and reasons to donate

November 19, 2015 1Source: UH Athletics Department, 2015 UH Athletics Audit work papers.

12

• Overall revenues and expenses are comparable to peers• Shortfalls are very typical nationwide, including the Power 5 conferences, which have significantly

higher media revenues of ~$30M+ each– Athletic department shortfalls are funded through student fees, direct government support, and

direct institutional support– UH Athletics’ total support of 33.9% of revenue is low compared to peers

o UH ranked 9th of 9 Big West schools, 8th of 12 Mountain West schoolso UH (33.9%) support level is lower than Big West (67.3%), Mountain West (40.8%) and

larger peer group, Group of 5 (41.6%)• UH Athletics’ results are impacted significantly by $5.2M of costs that other schools do not have to bear

– Without the $5.2M in higher Hawaii-only costs, UH Athletics would have had a $3.1M surplus in 2014

• Significant positive benefits to the State and to UH are provided by UH Athletics– State realizes significant “net” economic benefits from UH Athletics

o $66M in direct spending, $7M in state taxes, 864 jobs created, $128M in business sales– UH receives benefit from UH Athletics in the form of enhanced attendance, tuition and other

related revenues, media exposure, improved brand recognition, etc.

Despite a $5.2M burden that no other school has to address, UH Athletics provides significant positive net economic benefits to State and benefits to UH

Baseline and Benchmarking Summary

November 19, 2015

13

Planning for Significant Changes on the Collegiate Athletics Horizon

November 19, 2015 The above are preliminary order of magnitude projections subject to revision

2016 2017 2018 2019 2020

Cost of Attendance (COA) $0.3 $0.5 $0.8 $1.0 $1.3

Evolving Collegiate Landscape 0.0 0.3 0.7 1.1 1.4

Competitive Improvements 0.0 0.4 0.7 1.0 1.3

Baseline Expense Increases(labor, tuition, operating costs) 2.3 3.1 4.8 6.5 8.2

TOTAL $2.6 $4.3 $7.0 $9.6 $12.2

Changes on the Horizon

(Incremental changes)

Moving UH Athletics forward will need to consider significant changes on the horizon that are impacting collegiate athletics

Adopt sustainable financial model, pursue revenue opportunities and expense efficiencies, and partner with stakeholders

Operating Budget: $38.0MProjected Deficit $4.2M

Existing Baseline(2015)

Operating budget: $50.4MSurplus/(Deficit): New Balanced Financial Model

Where UH Athletics Needs To Be in 2020

14

Meeting the ChallengeMajor Categories for Balanced Approach

November 19, 2015

• New long-term (5 – 6 Years) financial model for UH Athletics required– Current “self-sustaining” financial model is inconsistent with collegiate athletics

nationwide– Challenge for Hawaii’s Team needs to be met by joint effort of UH Athletics and

partners• Four major areas for consideration to get to balanced budget

– UH Athletics Controlled Itemso Generally revenues, contributions, and expense management

– Areas requiring discussion, agreement and partneringo Student Feeso Direct Governmental Support from Legislatureo Direct Institutional Support from UH

• Update on UH initiatives and approach for the other three categories

15

New Revenues or Enhancements 2016 2017 2018 2019 2020Gate Receipts ($0.5) $0.2 $0.4 $0.7 $1.2

Contributions 0.1 0.4 0.7 0.9 1.2

Marketing and Licensing 0.3 0.8 1.1 1.3 1.5

Facilities (including Stan Sheriff) 0.1 0.1 0.2 0.3 0.3

Game Guarantees 1.2 0.8 0.2 0.0 0.1

Expense ReductionsReduced Travel Costs/Other 0.2 0.4 0.4 0.4 0.4

TOTAL $1.4 $2.7 $3.0 $3.6 $4.7

Meeting the ChallengeStatus of UH Athletics Generated Enhancements

UH Athletics Potential OpportunitiesIncremental Changes

($ in Millions)


• Every budget line item is being scrutinized by UH Athletics Team• Numerous revenue enhancements and contribution increases being pursued

– Enhanced Merchandising license agreements being developed– Improved apparel contracts being negotiated– Active discussions and collaboration ongoing with Aloha Stadium– Pursuing additional Stan Sheriff Rentals, such as: Los Angeles Lakers Training Venue

• Rational team travel being examined for all sports• Results estimated at $1.4M - $4.7M of positive contribution

16

Meeting the ChallengeExternal Support to UH Athletics Scenario


External Support to UH Athletics Scenario($ in Millions)

1 Baseline based on 2015 results from UH Athletics Department, 2015 UH Athletics Audit work papers.2 “Institutional Support (Baseline)” reflects the current level of institutional support provided by UH to Athletics, adjusted for already known and planned for

changes in Academic Student Aid (e.g., tuition).3 Based on legislative request submitted by UH for 2016 Hawaii State Legislative Session.

Baseline1 2016 2017 2018 2019 2020Difference Expenses vsGenerated Revenues ($16.7) ($19.2) ($21.0) ($23.6) ($26.3) ($29.1)External Support (Baseline)

Student Fees $1.7 $1.7 $1.7 $1.7 $1.7 $1.7Institutional Support2 10.8 11.3 11.8 12.2 12.7 13.2

Total $12.5 $13.0 $13.5 $13.9 $14.4 $14.9

Difference After Baseline Support ($4.2) ($6.2) ($7.5) ($9.7) ($11.9) ($14.2)UH-AD Revenue Enhancements

& Expense Reductions 0.0 1.4 2.7 3.0 3.6 4.7Projected “Gap” Before

Incremental External Support ($4.2) ($4.8) ($4.8) ($6.7) ($8.3) ($9.5)External Support (Incremental) Scenario

Student Fees $0.0 $0.0 $0.4 $0.8 $1.3 $1.7Governmental Support3 0.0 0.0 5.0 5.0 5.3 5.5Institutional Support 0.0 0.0 0.0 0.9 1.7 2.3

Total $0.0 $0.0 $5.4 $6.7 $8.3 $9.5

Surplus / (Deficit) ($4.2) ($4.8) $0.6 $0.0 $0.0 $0.0

Total External Support $12.5 $13.0 $18.9 $20.6 $22.7 $24.4

Percentage of Revenues 32.81% 32.48% 40.15% 41.14% 43.44% 44.14%

• Balance the importance and benefits of Hawaii’s Team to the Students, Community, State and UH, with the additional external support to UH Athletics

• Even after UH Athletics initiatives, significant gap exists to get to a balanced budget

17

Meeting the ChallengeNon-Operating Capital Projects


Improvements

Name Project Cost

Clarence T.C. Ching Athletic Complex $16.7M

Shannon Smith Football Player & Coaches Locker Rooms and Meeting Rooms Improvements, Dr.Alvin & Monica Saake Athletic Training Room Upgrades, and Basketball Office Area and Lecture Hall Upgrades

$6.3M

Nagatani Academic Center, Women’s Locker Room& Equipment Room $4.5M

Stan Sheriff Center Exterior & Interior Repairs $1.5M

Duke Kahanamoku Aquatic Complex & Tennis Courts Sun & Rain Covering $1.2M

Beach Volleyball Practice Courts Installation $0.8M

Les Murakami Stadium Scoreboard and Fencing Replacement $0.5M

Rainbow Wahine Softball Stadium Scoreboard Replacement $0.2M

Football Video Platform Design $0.2M

Duke Kahanamoku Aquatic Complex Equipment $0.1M

Total (2010 – 2014) $32.0M

Capital Project Needs Are in Addition to Operating Needs - - Not Included in Prior Financial Projections

Future & Continuing Needs

Name Project Estimate

New 400M Track & Infield $8.5M

Les Murakami Baseball Stadium Modernization $8.0M

Sport Performance Complex (Klum Gym) $7.7M

Tennis Complex Court Cover $6.9M

Softball Stadium Modernization $5.8M

Athletic Department Administration & Coaches Office Modernization $4.1M

Support Buildings for Rainbow Wahine Softball Stadium & Practice Fields $2.4M

Tennis Complex Building $0.7M

Golf Practice Facility $0.6M

Athletic Training Table & Lounge TBD*

Total in 2016 Dollars (*estimate not available) $44.7M

Progress being made, more to accomplish

18

• Potential Opportunity:

– Increase student fees from $50 to $100 per semester -- over a four-year period, commencing in 2017:

2015 2016 2017 2018 2019 2020Student Fee (per semester) $50.00 $50.00 $60.50 $75.00 $87.50 $100.00

Projected Revenues $1.7M $1.7M $2.1M $2.5M $2.9M $3.4M

• Description:

– Support competitiveness of athletics and student directed programs that contribute to an improved game experience, campus life, school pride, and more, for students

– Even with the increase, student fees will continue to remain the lowest among all peer groups by a significant margin, just comparing Hawaii’s projected 2020 student fees, after the increase, to the peers’ 2014 levels:

Hawaii Mountain West Big West Group of 5

20141 $1,563,721 $3,970,596 $6,208,950 $4,629,080

2020 $3,365,672 ? ? ?

• Stakeholders:

– UH Manoa (Vice Chancellor for Students), ASUH, Graduate Student Organization, Student Athletic Fee Committee, and Athletic Advisory Board

• Enabler Required:

– Action and Approval by UH Board of Regents

November 19, 2015

External SupportStudent Fees Support

1 Source: NCAA Institutional Performance Program, “Financial” Data Base, 2014 year data and Winthrop AD data base.

19


– Legislative appropriation for UH Athletics transitioning from 2017 to annual $5.5M legislative appropriation over five years:

2016 2017 2018 2019 2020Legislative Appropriation $0.0M $5.0M $5.0M $5.3M $5.5M

• Description:

– Use of Funds: Obtain legislative appropriation for UH Athletics of $5.0M, to be utilized to offset portion of: guarantees, team travel, cost of attendance, supplemental meals, and enhanced recruiting

– Monitoring: Annual report to Legislature, for prior year results, 90 days before start of session, detailing expenditure of legislative funds within athletic program. More frequent web-based reporting will be provided as well.

– Benefit:

o Support the UH Athletics’ program which provides various benefits to the state and community such as: media exposure, increased visitor traffic, strengthening of UH as a premier institution, etc.

o Increased economic benefits from UH Athletics, for example:Impact of

Baseline Study Proposed Changes TotalBusiness Sales $128.0M $31.5M $159.5MAdditional Income for Hawaii Workers 37.0M 9.1M 46.1MState Tax Collections 7.0M 1.8M 8.8M

• Stakeholders:

– UH Manoa (Chancellor, President, Board of Regents), Hawaii State Legislature, and Governor’s Office


– Inclusion in Budget by Hawaii State Legislature, release of funds by Governor’s Office

November 19, 2015

External SupportDirect Governmental Support

20


– Provide additional UH Institutional Support:

2016 2017 2018 2019 2020Baseline $11.3M $11.8M $12.2M $12.7M $13.1MAdditional Support 0.0M 0.0M 0.9M 1.8M 2.3M

Total $11.3M $11.8M $13.1M $14.5M $15.4M

• Description:

– Additional Institutional Support will increase the competitiveness of athletics, enhance campus and student life, improve brand recognition, increase media exposure value, and serve as a bridge between the UH and the community statewide

– The majority of Institutional Support will be returned to the UH in the form of Athletic-Student-Aid by Athletics:

• Stakeholders:

– UH Manoa Administration


– Approval by UH Manoa Chancellor

November 19, 2015

External SupportDirect Institutional Support

1 Athletic Student Aid to UH Manoa from UH Athletics estimated based on 2015 ASA of $10.9M, grown at 6% annually to 2020.

Institutional Support to Athletics - $15.4M

Athletic Student Aid to Manoa - $14.6M1

Difference $0.8M

21November 19, 2015

UH AthleticsProjections Summary and Benefits

• Combination of UH Athletics’ increased revenues and controlled expenses, with partnering on external support, allows 2020 Athletics program to meet anticipated needs

• External Support (as percent of revenues) increases from 33.92% (2014) to projected 44.14% (2020)

– Even with increase after five years, UH athletic support would still be comparable to peers at their 2014 levels.

– Peers’ percentages expected to increase over the next five years as all schools facing same competitive pressures impacting collegiate athletics. Expect UH to remain low/lowest compared to peers through five-year period

Hawaii Big West Mountain West Group of 52014 33.92% 67.34% 40.91% 41.59%2020 44.14% ? ? ?

• State will benefit from increased economic impact from the UH Athletics program with annual state tax collections increasing from $7.0M to $8.9M and other economic benefits

• UH will realize various benefits while receiving the majority of its institutional support back in the form of Academic Student Aid from Athletics

UH Athletics - 2020

UH Athletics

Athletic Department Generated Baseline

AthleticsRevenueEnhance-

ments

External Support Difference After

ExternalSupport

Adjmt forHawaii-SpecificCosts

NormalizeDifference

ExternalSupport as % of

RevsRevenues Expenses Student Fees

Govern-mental Institut’l

Balanced Financial Model

$26.4M $55.5M $4.7M $3.4M $5.5M $15.5M $0.0M $6.6M1 $6.6M 43.27%

1Source: Based on current unique cost difference computation of $5.2M, escalated at 4% a year to 2020.

22November 19, 2015

• Need agreement to adopt a long-term balanced financial model.

• To cover the 2020 gap, this is the summary:• UH Athletics’ Initiatives $4.7M• Student Fees’ Increase 1.7M• Direct Legislative Support 5.5M• Increased UH Institutional Support 2.3M

TOTAL $14.2M• Need UH and Regents support and assistance with key

stakeholders -- Governor, Legislature, Hawaii Tourism Authority, Aloha Stadium Authority -- to allow UH Athletics to pursue revenue and expense opportunities currently not available.

• Periodic briefings for Regents will be provided; Athletics website to be used for increased transparency for status updates - goals and results.

• Ideas, comments, and feedback are important and welcomed - - a unified approach is desired end game!

Summary & Going Forward Plans

Fulfill the responsibility of being “Hawaii’s Team”

UH Athletics compares well to its peers as indicated in the benchmarking analyses. But, Hawaii has unique cost challenges plus new challenges on the horizon. UH Athletics believes those challenges can be met:

23

MahaloNovember 19, 2015

24

Appendices

November 19, 2015

25

SHORTFALLS IN COLLEGIATE ATHLETICSWhen comparing athletic department revenues to expenses, shortfalls are the norm

Computation of “Athletic Department Generated” Revenues to Expenses (2014)(a) (b) (c) (d) (e = b – c – d) (f) (g) (h = f – g) (i = e – h)

School

Athletics Generated Revenues Athletics Generated Expenses

Surplus / (Shortfall)Total Athletic

Revenue

Indirect Facilities &

Administrative Support

Total Student Fees, Direct

Governmental,& Direct

InstitutionalSupport

Adjusted Total Revenue

Total Athletic Expenses

Indirect Facilities &

Administrative Support

Adjusted Total Expenses

Hawaii1 $40,989,898 $6,205,533 $11,799,740 $22,984,625 $43,086,528 $6,205,533 $36,880,995 ($13,896,370)

Big West2 $20,629,031 $2,391,552 $12,281,830 $5,955,649 $20,596,695 $2,391,552 $18,205,143 ($12,249,494)

Mountain West2 $38,394,117 $2,832,977 $14,549,093 $21,012,047 $37,864,239 $2,832,977 $35,031,262 ($14,019,215)

Group of 51 $29,666,940 $1,399,962 $11,757,637 $16,509,341 $29,513,451 $1,399,962 $28,113,489 ($11,604,148)

Power 51 $87,637,118 $0 $2,198,917 $85,438,201 $87,291,886 $0 $87,291,886 ($1,853,685)

• Revenues do not cover expenses incurred by athletics, resulting in shortfalls– Holds true for even Power 5 conferences which have significant media revenues, not available

to other schools such as UH, to offset expenses• The shortfall is covered through support generated from sources external to athletics, primarily from:

student fees, direct governmental support, and direct institutional support

1 Source: NCAA Institutional Performance Program (IPP), “Financial” data base, 2014 year data.2 Source: Winthrop AD data base, https: www.winad-hq.com/benchmark

Appendix AExternal Support for Collegiate Athletics

Shortfalls in Collegiate Athletics

November 19, 2015

26

Comparison of Athletic Department Subsidies (2014)(a) (b) (c) (d) (e) (f = c + d + e) (g = f / b)

School Revenues

Student Fees, Direct Governmental and Direct Institutional Support

Student FeesDirect

Governmental Support

Direct Institutional

Support

Total

Dollars Percent of Revenue

Big West2 $18,237,478 $6,208,950 $0 $6,072,880 $12,281,830 67.34%

Group of 51 $28,266,978 $4,629,080 $0 $7,128,557 $11,757,637 41.59%

Mountain West2 $35,561,141 $3,970,596 $3,941,923 $6,636,574 $14,549,093 40.91%

Hawaii1 $34,784,365 $1,563,721 $0 $10,236,019 $11,799,740 33.92%

Power 51 $87,637,118 $683,917 $0 $1,515,000 $2,198,917 2.51%

• Shortfalls are typically addressed through support “external” to athletics from the following sources:- Student Fees Student fees assessed and restricted for support of intercollegiate

athletics.- Direct Governmental Support State, municipal, federal and other government appropriations made

in support of the operations of intercollegiate athletics.- Direct Institutional Support Value of institutional resources for the current operations of

intercollegiate athletics, as well as all unrestricted funds allocated to the athletics department by the university.

• The level of external support received by UH Athletics is low compared to peers

SHORTFALLS ADDRESSED BY SUPPORT SUBSIDIES TO ATHLETICS DEPARTMENTSCollegiate athletic programs nationwide are supported from funds generated external to the athletic department

Appendix AExternal Support for Collegiate Athletics

Athletic Department Support

1 Source: NCAA Institutional Performance Program (IPP), “Financial” data base, 2014 year data.2 Source: Winthrop AD data base, https: www.winad-hq.com/benchmark November 19, 2015

27

Source: NCAA Membership Financial Reporting System definitions.

Item Description/Definition Unique to UH and Not BenchmarksTravel Subsidies and Guarantees

Travel subsidies and guarantees paid to visiting participating schools

• UH is the only athletic program paying travel subsidies to all conference opponents -- Big West, Mountain West, MPSF.

• In addition, for non-conference games, due to a reluctance of schools to travel to Hawaii to participate in events due to higher travel costs, UH is required to pay higher guarantees than other schools.

Team Travel Include air and ground travel, lodging, meals and incidentals for competition related to preseason, regular season and postseason.

• While all teams incur team travel costs for their athletic programs, UH’s costs are considerably higher than most benchmarks, particularly when normalizing for similar modes of transportation -- normalizing for scheduled-air vs more expensive chartered-air travel.

Athletic Student Aid

Include the total amount of athletically related student aid awarded, including summer school and tuition discounts and waivers (including aid given to student-athletes who have exhausted their eligibility or who are inactive due to medical reasons).

• UH’s athletic student aid is higher due to the higher number of sports fielded by UH (21) compared to its benchmarks. For example, both the Big West and Mountain West schools, on average, field 19 sports, allowing for fewer athletes.

• Hawaii’s higher athletic student aid is also higher due to the higher non-resident tuition associated with non-resident athletes participating in UH programs.

Identification of Costs Unique to UH Athletics

Appendix BHawaii Has Challenges Other Schools Do Not Have

November 19, 2015

28

Cost or Expenses Unique to UH Athletics as Compared to Other Schools

Item 2009 2010 2011 2012 2013 2014Travel Subsidies and Guarantees

UH $1,624,697 $1,385,835 $1,300,442 $2,060,082 $2,218,935 $2,437,321

Group of 5 Average 495,000 557,685 607,979 642,968 697,132 653,782

Difference $1,129,697 $828,150 $692,463 $1,417,114 $1,521,803 $1,783,539

Team Travel

UH $3,738,094 $3,386,209 $3,649,366 $3,554,204 $3,411,570 $3,728,942

Group of 5 Average 1,901,992 1,966,291 2,061,440 2,250,288 2,385,190 2,493,328

Difference $1,836,102 $1,419,918 $1,587,926 $1,303,916 $1,026,380 $1,235,614

Athletic Student Aid

UH $5,917,087 $6,486,674 $6,911,764 $7,193,480 $8,140,736 $8,815,750

Group of 5 Average 4,913,873 5,388,893 5,855,077 6,085,431 6,233,067 6,554,031

Difference $1,003,214 $1,097,781 $1,056,687 $1,108,049 $1,907,669 $2,261,719

TOTAL $3,969,013 $3,345,849 $3,337,076 $3,829,079 $4,455,852 $5,280,872

Source: NCAA Institutional Performance Program (IPP), “Financial” data base, based on inputs provided by individual schools on standardized reporting.

Quantification of Costs Unique to UH Athletics


November 19, 2015

29

Comparison of UH to Benchmarks (2014)

School No. of Sports Athletics Grant-in-Aid

Hawaii 21 $8.8M

Power 5 21 $11.1M

Mountain West 19 $6.5M

Big West 19 $3.1M

Group of 5 17 $6.6M

• “Athletics Grant-in-Aid” expense for UH is higher than all benchmarks other than Power 5 average.

• Higher “Athletics Grant-in-Aid” for UH attributable to two primary factors:

– UH fields 21 sports which is comparable to the Power 5 average, but higher than peers -- Big West, Mountain West, Group of 5

o More sports more athletes, translating to higher Athletics Grant-in-Aid

– Higher Athletics Grant-in-Aid also impacted by higher non-resident tuition costs associated with number of non-resident athletes participating in UH sports

• Estimated $1.8M difference

UH Athletics Grant-in-Aid Expense Higher than Peers

Men’s• Baseball• Basketball• Football• Golf• Swimming & Diving• Tennis• Volleyball

Women’s• Basketball• Cross Country• Golf• Sailing• Beach Volleyball• Soccer• Softball• Swimming & Diving• Tennis• Track & Field – Indoor• Track & Field – Outdoor• Volleyball• Water Polo

Co-ed• Sailing

Athletes Receiving AidHawaii1 382Group of 51 - 321

Difference 61Weighted Avg. Grant-in-Aid2 x $30,312Cost of Additional Sports (range) $1,849,032


November 19, 2015

1 Source: NCAA Institutional Performance Program (IPP), “Financial” data base.2 Source: UH Athletics Department financial records.

university of hawaii manoa athletics...university of hawaii manoa athletics presentation to board of...

Documents