Hawaii Football May Fold Due To Insufficient Revenue

Posted on August 23, 2014 | in Football, Leadership, Sports | by
hawaii football

The University of Hawaii may shut down its football program due to insufficient revenues.

The University of Hawaii football program has had a strong, competitive history – BCS bowl games, record-setting Heisman candidates, hosting bowl games, participating in the highest levels of college competition in the WAC and Mountain West Conference, and the like.

However, the costs of running a competitive college football program are escalating and the Hawaii football program is at risk of dissolving due to revenues that aren’t able to keep up with the changing landscape.

Hawaii athletics director Ben Jay painted a grim picture for the future of his football program while speaking to the university’s board of regents on Monday afternoon.

“There’s a very real possibility of football going away,” (Hawaii athletics director) Ben Jay reportedly told the Board. “But even if football goes away, all the revenues that football drives goes away and then it becomes a costlier venture for the university.”

First and foremost, colleges and universities exist to provide higher education to students and grant levels of degrees to those who complete their academic curriculum. Missions of colleges are not to serve as for-profit institutions or as minor leagues to professional athletics. An athletics program best serves its university when it operates as a revenue driver for the university as a whole and not as a financial vacuum.

What do we know about the plight of the University of Hawaii football program? This significant budget deficit in athletics:

Jay is hoping the board will ask the state for the direct funding. Hawaii is currently facing a $1.5 to $3-million budget deficit this year and has worked under a budget deficit during 11 of the past 13 years.

And this significant increase in expenses:

Since 2005, Hawaii’s athletic operating expenses have increased 75 percent according to the last figures available in 2012. That compares favorably with the FBS median of a 71 percent increase since ’05.

So Hawaii football is a financial black hole because of the continuous deficits and significant boosts in expenses. How does that compare to other football programs?

– From a Inside Higher Ed report in 2006:

In the 2006 fiscal year, the latest of three examined in the study, only 19 of the 119 Football Bowl Subdivision institutions had positive net revenue, while for the rest, expenses exceeded generated revenues.

– From another NCAA report in 2011:

Twenty-two elite athletics departments made money in 2010, up from 14 the previous year, according to an annual spending report released … by the NCAA. The median surplus at those programs was $7.4-million last year, up from $4.4-million in 2009.

The numbers weren’t nearly as rosy for everyone else. At the 98 other programs in the NCAA’s Football Bowl Subdivision (formerly Division I-A), the median deficit in 2010 was $11.6-million, barely changing from the previous year.

– And overall spending? Take it away, NCAA:

The 2012 edition of the NCAA’s Revenues and Expenses Report for Division I Intercollegiate Athletics Programs shows an increase of 10.8 percent from the previous year in athletics spending from schools in the Football Bowl Subdivision. The increase was 6.8 percent for programs in the Football Championship Subdivision and 8.8 percent for Division I schools without football.

Meanwhile, generated revenues (dollars generated directly by the athletics department, such as ticket sales, media contracts, royalties and alumni contributions), rose only at a 4.6 percent rate in the FBS and fell by 1.7 percent for non-football schools.

Okay, most other college football programs run in the red. Not only do they lose money for their schools, but the gap between the top 20 or so institutions and the remainder of the schools is getting wider.

But at Hawaii, are you aware that they and an opponent are permitted to play a 13th regular season game to help both schools generate more money and offset the significant Hawaii travel costs? No other team has this special “Hawaii Exemption”. From the NCAA Division 1 Manual:

17.27.2 Alaska/Hawaii, Additional Football Contest
Member institutions located in Alaska and Hawaii shall be permitted to exceed, by one, the maximum number of football contests permitted under Bylaw but otherwise shall conform to the same maximum number of contests and dates of competition permitted other members of the Association.

Even with the Hawaii Exemption, a significant majority of athletics programs are running negative.

So why do schools keep running out football programs that are financial drains on their institutions? Ego? Pride? “That’s the way we’ve always done it”?

Why would you continue to finance something that not only is draining your own financial portfolio but also shows no sign of improving financial performance and turning the net revenue figure around?

Not only should Hawaii give serious consideration to this option, but I would suggest that other schools do the same UNLESS there were known ways to turn the net revenue figure around. After all, what is school for?

As Dr. Deming said,

“Survival is optional. No one has to change.”

Just because a school has a football program with a history and tradition, it doesn’t mean it will last forever. Maybe other schools should evaluate the direct and indirect financial impacts their football programs provide.

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One Response to “Hawaii Football May Fold Due To Insufficient Revenue”

  1. I wonder how the indirect financial impacts play into this. Just as pro teams that are looking to move to a new market tout all the concessions, vendors, hotels, and side businesses that will benefit, I wonder if these same businesses would help keep the program alive to support them? Maybe they would be willing to pitch in?

    Sounds like a fun BB project. I’ll volunteer to go out there and help them…

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