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The Salt Lake Tribune

The University of Utah will close its Red Zone stores following a legislative audit that found the shops unfairly compete with the private businesses.

"We expect to phase out the Red Zone stores," as the leases run out, said U. president David Pershing. It wasn't immediately clear when the stores would close their doors. "We don't want to be in competition with the private sector."

The three stores sold about $1.9 million worth of U.-insignia merchandise like hats and sweatshirts during fiscal 2013, according to the July audit. The first off-campus store opened in Sandy in 2010 followed by a second in Layton the following year and a third in West Jordan in 2012. Combined revenues at the three locations more than doubled during that time.

"These sales totals demonstrate the potential sales revenue lost by private businesses from the presence of off-campus Red Zone stores," the audit stated. The U. doesn't pay income tax on its Red Zone profits, the report said. It says the stores didn't get an exception to the rule against marketing to the general public and recommends they stop outside advertising, but it doesn't suggest the closure of the stores.

The audit also dinged other ways public higher education facilities, like weddings at Rice-Eccles Stadium or corporate events at Utah State University, offer similar services as for-profit businesses.

Last week, the state Board of Regents adopted new rules barring advertising such services outside of the "campus community," which includes prospective students and alumni as well as students and faculty. Exceptions to that rule require a written policy on how they plan to avoid edging out private businesspeople. The revisions don't require the closure of the Red Zone stores.

The policy bars schools from advertising their services outside their website, Facebook page or social media. It also sets up a process for businesses to file a grievance if they feel a college enterprise has an unfair edge.

"There will be a place businesspeople and citizens can go if they feel there is something out of bounds," said David Buhler, commissioner for higher education. "Having it on a local level makes a lot of sense."

The changes, which also carry a directive to keep a more active eye on college and university enterprises, could forestall the Utah Legislature passing new legal requirements governing the stores -- something auditors suggested in July.

"They could still weigh in, but I think we've done what they asked us to do," Buhler said.

lwhitehurst@sltrib.com

Twitter: @lwhitehurst

 

January 30, 2014

 

 
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