"Naturally, we like to compete with the other schools in our conference, not only on the football or basketball field but also … with respect to our branding and licensing side of things too," Combe said, pointing out that five of the other Pac-12 schools have similar stores.
The U. opened the shops in Sandy, Layton and West Jordan after "years of complaints" from fans who wanted to buy more and different gear without having to drive up to campus, Combe had previously written to the Utah Board of Regents.
The Red Zones offer more than double the number of products than the next-largest supplier, Scheels 5,000 different items compared to 2,000, Combe wrote.
The Regents signed off Friday on Combe's plan to extend the leases at two of the three stores, so they'll all close at the same time when the last lease expires at the end of 2017. They also approved an exception to a new policy and allowed the stores to continue advertising on media targeted to Ute fans.
Marketing will keep the stores profitable to "allow for a smooth transition in the ownership of these off-campus retail outlets," according to Combe's letter.
The shops weren't intended to "increase market share" but rather offer "more convenient locations" for Ute fans, Combe wrote. "Fans and alumni have the choice to support the University of Utah without having to make the trip to campus."
The stores support private business by contracting with local suppliers, and products aren't priced to undercut other stores, he said.
But the July audit found the stores' $1.9 million in revenue during the last fiscal year represents "potential sales revenue lost by private businesses," and could also mean the state is losing out on tax money.
The report also criticized other university offerings that could overlap with the private sector, such as weddings at Rice-Eccles Stadium and conference facilities at hotels on the Utah State University campus.
Auditors recommended lawmakers increase oversight on the stores, possibility including a new law. Instead, the Regents adopted a new policy barring schools from advertising their services outside their website, Facebook page or social media and setting up a process for businesses to file grievances.
The Regents didn't call for the closure of the stores, but the U. decided to shutter them voluntarily.
"I know they've taken this very seriously," said Regent Daniel Campbell Friday. The U. is also developing its own complaint process for the business community.