Report of the Task Force Reviewing the Fiesta Bowl
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REPORT OF THE TASK FORCE REVIEWING THE FIESTA BOWL This report (the “Report”) contains the recommendations of the task force appointed by the BCS Presidential Oversight Committee (the “Task Force”) to review the relationship between the 11 NCAA Football Bowl Subdivision conferences and the University of Notre Dame (the “BCS Group”), which participate in the Bowl Championship Series arrangement (the “BCS”), and the Arizona Sports Foundation and related entities that own and operate the Fiesta Bowl.1 Executive Summary In March of 2011, BCS Presidential Oversight Committee chairman Graham Spanier, President of Penn State University, appointed a task force to determine what response the BCS group should make to a 276-page report relative to the Fiesta Bowl that was released by the Special Committee of the Board of Directors of the organization. Dr. Spanier personally chaired the Task Force. The other members are: John Peters, President of Northern Illinois University; Bob Bowlsby, Director of Athletics at Stanford University; Jeremy Foley, Director of Athletics at the University of Florida; Richard Giannini, Director of Athletics at the University of Southern Mississippi; John Marinatto, Commissioner of the Big East Conference; and Wright Waters, Commissioner of the Sun Belt Conference. Bill Hancock, Executive Director of the Bowl Championship Series, serves ex officio. The Task Force believes that the board of directors of the Fiesta Bowl failed in its responsibility to properly oversee the management and administration of the Bowl. The Board allowed executive staff to have extraordinary leeway in making decisions without paying heed to checks and balances to ensure that the Bowl was run in a proper and ethical manner. The Task Force is deeply troubled by the evidence set forth in the Special Committee’s report. That evidence strongly suggests that the Bowl’s executive staff frequently acted with scant regard for ethics and proper conduct. Further, it is the opinion of the Task Force that the Bowl’s board of directors over the years was negligent in its oversight responsibilities. That lax oversight, however, ended 1 The Arizona Sports Foundation is the principal entity in a larger enterprise that operates bowl games in Phoenix. The Arizona Sports Foundation is the entity that owns and manages the annual Fiesta Bowl football games and a number of the other events that are part of the bowl experience generally. The conferences and institutions participating in the BCS also contract with the Arizona College Football Championship Foundation, which manages the BCS National Championship when it is hosted in the Phoenix area once every four years. In addition, there are two other entities, Fiesta Events, Inc. and The Valley of the Sun Foundation, with which the conferences and institutions do not contract as part of the BCS, but which operate events related to the Fiesta Bowl. It is the understanding of the Task Force that all four entities are under the control of the same board of directors and managed by the same executive staff. While the Task Force has expressed concern to Fiesta Bowl representatives about the existence of multiple separate entities, the distinctions among them are not material for purposes of the Task Force’s recommendation. For ease of reference, this Report does not distinguish between or among the entities but simply refers to them as the “Fiesta Bowl” or “Bowl.” when the current board chairman received evidence of inappropriate conduct and acted with other board members to create the Special Committee and empower it with broad, independent investigative authority. The Task Force conducted six telephone conferences and met in person once. Fiesta Bowl representatives met with the Task Force for three hours on April 23 and expressed deep remorse. They presented a detailed “reveal and reform” approach, which is appropriate and necessary, but nevertheless the Task Force believes that additional measures and corrective actions are required. Had current board chairman Duane Woods and his colleagues not created the Special Committee and had that committee not produced such a thorough and open report, and had the board not already developed significant reforms, this Task Force almost certainly would have recommended the termination of the BCS Group’s involvement with the Fiesta Bowl. The Task Force commends the board of the Fiesta Bowl for the reforms it presented and has already developed. Nevertheless, the Task Force has concluded that additional reforms are needed, and is recommending sanctions. The Special Committee created by the Fiesta Bowl board was chaired by Justice Ruth McGregor, a respected jurist and former member of the Arizona Supreme Court, and was prepared by out- of-state counsel independent of the Fiesta Bowl Board of Directors. Although the Special Committee’s report makes no findings of fact or conclusions of law, it does recite in detail the evidence the investigation uncovered. Broadly speaking, the report cited evidence of inappropriate conduct in four areas: (1) reimbursement of campaign contributions; (2) the initial Grant Woods investigation; (3) expenses and reimbursements; and (4) gifts. Additionally, the Special Committee’s report cites allegations of a cover-up. While believing that the Fiesta Bowl should remain a BCS game, the Task Force recommends the following additional corrective courses of action in order for the Bowl to remain a part of the BCS. These sanctions are the result of the severity of the problems that have come to light, and are also necessary to make certain the Fiesta Bowl officials will conduct their affairs in an ethical and proper way in the future. 1. A $1 Million Sanction: The Task Force calls for a minimum $1 million sanction in the form of a mandatory distribution to charities recommended by the BCS Group. Further, the Bowl should make an additional mandatory distribution to charities recommended by the BCS Group of any funds recovered from individuals or entities as a result of the - 2 - evidence uncovered by the Special Committee’s investigation. It is the intention of the BCS Group to recommend charities that benefit youth in Arizona. 2. Board of Directors: The Task Force expects that persons who were members of the Fiesta Bowl board and for which the Special Committee’s report found substantial evidence of inappropriate conduct will be removed from the board immediately. Further, the Task Force expects that any board members who may subsequently be implicated in any inappropriate conduct or wrongdoing as a result of investigations by government agencies will be removed from the board immediately upon those revelations. 3. Collegiate Officials on New Board: Fiesta Bowl representatives have developed new criteria for serving on the board. It is expected that individuals with appropriate business, not-for-profit, and other relevant executive experience be appointed to the board to enhance management experience and oversight. The Task Force believes those are steps in the right direction. The Task Force is concerned, however, that merely having persons with such credentials is not enough. The Task Force recommends that at least two members of the Fiesta Bowl board should be drawn from among the collegiate community, such as university presidents or other senior administrators, faculty representatives, or athletic directors. One of the members from among the higher education community should be drawn from outside the state of Arizona. 4. Independent Audit of Internal Controls: The evidence uncovered by the Special Committee suggests that the Fiesta Bowl operated without adequate internal controls. Accordingly, for the duration of the current contract, the Fiesta Bowl annually must have an independent audit of its internal controls and must share the results of that audit with the BCS Executive Director. 5. More Probing and Extensive Financial Audit: Based on the failure of the Fiesta Bowl to reveal financial irregularities, the Task Force believes that the Fiesta Bowl must either replace its auditing firm or require that a new supervisory partner be engaged. The Task Force also believes that the Fiesta Bowl must have a more thorough annual financial audit appropriate for not-for-profit entities and consistent with best practices for such organizations. The results of the audit should be shared with the BCS Executive Director. 6. Increased Accountability: To ensure accountability, representatives of the Fiesta Bowl and representatives of the BCS Group must meet no less than annually to review: (i) the reforms implemented by the Fiesta Bowl; (ii) the governance, operation, and management of the Fiesta Bowl; and (iii) any matters revealed by the audits described in paragraphs 4-5. Frequency of such meetings will be determined by the BCS Group. 7. New Executive Director: The hiring of an Executive Director by the Fiesta Bowl is crucial to the future of the organization. Responsibility for the selection of that person should belong to the Bowl. However, the BCS Executive Director and the chair of the BCS Presidential Oversight Committee should be kept informed of the progress of the hiring process and consulted on the hiring decision. The Task Force encourages the - 3 - Fiesta Bowl to consider candidates for the position who not only have relevant experience in business but also who understand the collegiate athletic model and have the highest ethical standards. While the Task Force’s charge did not extend beyond the Fiesta Bowl, this experience is a reminder of the importance of having in place strict and proper financial and governance procedures at all BCS bowls. Consequently, the Task Force recommends that the BCS Group retain an independent expert with a background in management of non-profit organizations to develop standards for responsible bowl governance. Following the dissemination of such standards, each bowl associated with the BCS will be required to certify annually to the Executive Director of the BCS that it is conducting its business in accordance with the standards.