Connect with us

Stealing the Statehouse

Anatomy of a Rigged Bid

Bill Britt

Published

on

By Bill Britt

Alabama Political Reporter

The following story is a reprint from March 20, 2013

MONTGOMERY—When Alabama House Speaker Mike Hubbard secretly obtained competitors’ bids for the lucrative broadcast rights to Auburn University’s sports department in 2002, he set in motion a chain of events that not only enriched his business interests by millions of dollars, but threatened to drag a premiere Alabama university into yet another public scandal.

This report is the second in a series of periodic stories in which the Alabama Political Reporter follows an unseemly roadmap for bid-rigging drawn by Speaker Hubbard and one of his business interests, Auburn Network Inc.

While much of our reporting uncovers new information, this story and others also document previously published and some unpublished interviews conducted over the years recounting Hubbard’s activities. In particular, we examine here how Hubbard doubled-down on his unfair advantage over competitors by misleading Auburn officials about the financial condition of other companies that sought the broadcast rights contract.

Broadcast Rights and Big Money
Broadcast rights agreements for a NCAA Division I university like Auburn are complex matters with extraordinary amounts of money at stake. Under these agreements between media/production companies – such as Auburn Network Inc. – and Division I universities, the schools turn over near-total control of the sports publicity apparatus, down to the minute details of how long a coach can speak on camera to a local television reporter to how many times a sports writer can Tweet from a basketball game.

Essentially, the company holding broadcast rights controls everything related to the airing of games on radio and television networks. They control sports related publishing, printing, creative design, marketing, licensing, Web sites, video products, promotions, national advertising and signage within sports venues. Everything sports-related goes through a single filter.

ADVERTISEMENT


In exchange for the rights, the school is paid a fixed price over the life of the contract. The amounts can mean tens of millions of dollars per year for top universities. On the other side of the deal, the companies holding broadcast rights make sky-high profits by selling advertising, printing and sports team exposure far and above the fixed cost it pays the university.


In the case of Auburn University in 2002, Host Communications Inc. – at the time a Lexington, KY-based company with broadcast rights contracts multiple Division I universities around the country – made an offer that would have paid $12.5 million to Auburn over a five year period. Financially, it was the best offer the university received.

Hubbard and his Auburn Network offered $8.5 million over the same five years – financially, the least attractive bid offered to the university.

Other proposals submitted to Auburn at the same time included a joint venture by Learfield Communications of Jefferson City, Mo. and ISP Sports ($10.75 million) of Winston-Salem, N.C., (now IMG College) and Viacom Outdoor Sports Marketing ($8.5 million) of Phoenix, Ariz.

 The bottom-line: By passing over the Host proposal in favor of Hubbard’s, Auburn lost $789,000 per year or roughly $4 million over five year deal.

Facing financial ruin, Hubbard sought unfair advantage
in 2002, the Auburn University contract with Hubbard’s Auburn Network Inc. had ground to a end. The university decided to seek competitive bids and beef up the revenue generated by Tigers football, basketball, baseball and other sports. 

The university’s decision to seek competitive bids made Hubbard sweat. And for good reason – Auburn Network clearly could not compete, financially, with the offers of several other bidders. Mitchell said in a sworn affidavit obtained by the Alabama Political Reporter.

Public Service Announcement


 Indeed, Hubbard raised enough doubt about competitors – and Host Communications Inc. – that Auburn officials accepted a bid by Hubbard that, in the end, cost the university $4 million or more in lost revenue.

Hubbard, on the other hand, again held the university’s broadcast rights. But even more, he also was able to continue directing athletic department spending on printing, advertising and radio to his other business holdings. This included funneling spending from Tigers Unlimited, a nonprofit that raised millions of dollars to support the athletics department scholarships and recruiting efforts.

Mischaracterizing the Competition
According to Mitchell account Hubbard used the information from the other proposals to alter his own proposal, but further, to criticize the Host Communication plan by falsely characterizing the company as financially unstable,

By all indications, that was not the case. Consider: 

Jim Host, who founded Host Communications Inc. in 1972, said Host always had solid financial backing. He said his company had ultimate financing from billionaire J. Mack Robinson, the founder and president of Delta Fire & Casualty Life Insurance Co., and a majority shareholder in Wachovia Corp. (now Wells Fargo). 

The company was “totally capitalized” by Robinson’s wealth, according to Host.

In late 2001, Host won an 11-year contract with CBS Sports for marketing, licensing and media rights.
Host also was awarded the exclusive worldwide rights to administer the NCAA Corporate Partner Program. Under that contract, Host gained the rights to sell registered marks of the NCAA and its championships, television rights for NCAA championships not aired by CBS or ESPN, video streaming rights and home video rights to all NCAA championships except the Final Four and exclusive rights to the Hoop City Experience at the men’s and women’s Final Four.

Host in December 2001 reached an agreement with the National Basketball Association to create a new NBA All-Star Saturday Night event entitled All-Star Hoop-It-Up. It was also during that period that Host renewed a 10-year multi-media rights deal with the University of Texas at Austin.


 During 2002, when Auburn was seeking requests for proposals, Host already had contracts with Arizona, Boston College, Florida State, Kentucky, Mississippi State, Michigan, Tennessee and Texas, and several conferences, including the Southeastern Conference.
 
That confirmed what officials at three major universities said at the time.



DeLoss Dodds, athletics director at the University of Texas since 1981, said Host was a solid marketing company for Texas for 20 years. Texas signed an $80 million deal with Host in 2007, but is now with IMG College.
 
“We’ve had great years, some average years, and Host maybe went through one year when they were thin financially, but we never had a financial issue with them,” Dodds said. “They’ve always paid us on time and paid us in full, and we’re making more money than anyone in the country. Their finances were never an issue with us.”



Kentucky was a client of Host for more than three decades.

Rob Mullens, former deputy director of athletics at the University of Kentucky, said that school had a long-term relationship with Host, “and it’s been a fine partnership for both sides.”

Mullens is now director of athletics at Oregon. 

In 2004, Kentucky agreed to a multimedia rights deal with Host worth $80 million over 10 years, then the richest college deal ever brokered. It was described then as “a new gold standard in college sports marketing.”



Steve Early, general manager of the Vol Network at the University of Tennessee, and Bud Ford, now-retired sports information director at Tennessee, separately recalled Host having no financial problems during that same period when Host had the rights to Volunteer broadcast services.

“Your competition will always try to bring something to light, whether it’s true or not,” said Early.

“Host never failed us as a company.”



Ford said Tennessee always had a “good relationship” with Host

Tennessee, which had an 18-year relationship with Host, renewed a 10-year, $83.4 million contract in 2007 with the company. It is also now with IMG College.

Host generated $81.8 million in revenues in the fiscal year that ended June 30, 2007, according to financial reports. In November 2007, the company was acquired for $74.3 million by New York and London-based IMG World. Host, which was renamed IMG College, retained many of its top clients, including Division I schools in Tennessee and Texas.


Six months earlier, IMG World acquired Atlanta-based Collegiate Licensing Company, which was founded by former Alabama football star and ex-Tennessee football coach Bill Battle.


Jim Host, who is now retired, said he never knew the details of Hubbard’s offer to Auburn, and was unaware of the rigged process that allowed Hubbard to see other proposals. “When I heard someone else won, I told my representative, Fine, let’s let it go and move on.”

Meanwhile, Hubbard kept up the fiction that his chief competitor had money troubles.

Hubbard claimed, later, Auburn University did a financial analysis of Host that indicated the company was in poor financial condition. But no Auburn official ever seemed to remember such an audit being done.

 A Hubbard Plan Comes Together 

A year after winning the Auburn contract, Hubbard sold his multi-media rights to ISP Sports (now IMG College). He was then named president of IMG’s Auburn affiliate.
On April 18, 2006, Auburn Athletic Director Jay Jacobs announced the school was extending its contract with IMG College — with no competitive bidding — for nine years after the end of the agreement in 2007.

Auburn athletics is still represented by IMG College.

Mitchell’s account of the events in 2002 was also affirmed in an Oct. 28, 2010 story written by Paul Davis, the late owner and president of The Tuskegee News.

That story can be accessed here.

 

Bill Britt is editor-in-chief at the Alabama Political Reporter and host of The Voice of Alabama Politics. You can email him at [email protected] or follow him on Twitter.

Advertisement

Featured Columnists

Opinion | Inside the Statehouse: Buck’s pocket

Steve Flowers

Published

on

You voted Tuesday on a crowded ballot.

Historically, in Alabama we have voted more heavily in our Governor’s race year than in a presidential year. That is probably because we were more interested in the local sheriff and probate judge’s races, which run in a gubernatorial year, than who is president. The old adage, “all politics is local,” definitely applies here in Alabama.

We not only have a governor’s race this year, we have all secondary statewide offices with a good many of them open including Lt. Governor, Attorney General, State Treasurer, Auditor, and two seats on the Public Service Commission. We have five seats on the State Supreme Court, one being Chief Justice. All 140 seats in the Legislature are up for a four-year term. These 35 state Senate seats and 105 House contests are where most of the special interest PAC money will go. And, yes, we have 67 sheriffs and 68 probate judges as well as a lot of circuit judgeships on the ballot.

You may think the campaigning is over. However, some of the above races have resulted in a runoff which will be held on July 17. So get ready, we have six more weeks of campaigning before all the horses are settled on for the sprint in November.

We have a lot of folks headed to Buck’s Pocket. Last year after the open Senate seat contest, a young TV reporter for one of the stations I do commentary for asked me about Roy Moore and his loss. I told her ole Moore had gotten on his horse, Sassy, and ridden off into the sunset to Buck’s Pocket, which by the way wasn’t a long ride from his home in Gallant in Etowah County. She looked at me with a puzzled look. Probably a lot of you are also wondering what I’m talking about when I refer to Buck’s Pocket.

For decades, losing political candidates in Alabama have been exiled to Buck’s Pocket.  It is uncertain when or how the colloquialism began, but political insiders have used this terminology for at least 60 years.  Alabama author, Winston Groom, wrote a colorful allegorical novel about Alabama politics and he referred to a defeated gubernatorial candidate having to go to Buck’s Pocket.  Most observers credit Big Jim Folsom with creating the term.  He would refer to the pilgrimage and ultimate arrival of his opponents to the political purgatory reserved for losing gubernatorial candidates.

ADVERTISEMENT

This brings me to another contention surrounding Buck’s Pocket. Many argue that Buck’s Pocket is reserved for losing candidates in the governor’s race. Others say Buck’s Pocket is the proverbial graveyard for all losing candidates in Alabama.

One thing that all insiders agree on is that once you are sent to Buck’s pocket you eat poke salad for every meal. Groom also suggested that you were relegated to this mythical rural resting place forever. However, history has proven that a good many defeated Alabama politicians have risen from the grave and left Buck’s Pocket to live another day. Roy Moore may be a good example. He has risen from the grave before. He is only 70, and he may grow weary of eating poke sallet.

Most folks don’t know that there really is a Buck’s Pocket. Big Jim would campaign extensively in rural North Alabama often one on one on county roads. One day while stumping in the remote Sand Mountain area of DeKalb County he wound up in an area referred to as Buck’s Pocket. It was a beautiful and pristine area, but it was sure enough back in the woods. Big Jim who loved the country and loved country folks was said to say that, “I love the country but I sure wouldn’t want to be sent to Buck’s Pocket to live.”

Buck’s pocket is now not a mythical place. If you are traveling up the interstate past Gadsden, on the way to Chattanooga, you will see it. There is a Buck’s Pocket State Park in DeKalb County, thanks to Big Jim.

Public Service Announcement

So the next time you hear an old timer refer to a defeated candidate as going to Buck’s Pocket, you will know what they are talking about.

See you next week.

Steve Flowers is Alabama’s leading political columnist. His weekly column appears in over 60 Alabama newspapers. He served 16 years in the state legislature. Steve may be reached at www.steveflowers.us.

 

Continue Reading

In Case You Missed It

Hubbard’s Lee County Trial Finally Ends in Silence

Bill Britt

Published

on

By Bill Britt
Alabama Political Reporter

MONTGOMERY—The post-trial appeal of convicted felon and former Speaker of the House, Mike Hubbard, finally expired on September 8, in silence, according to the Attorney General’s office calculations.

For almost four years, Hubbard, aided by his criminal lawyers, used the State House, the Governor’s Office and some within the Attorney General’s office to deny, deflect and delay justice. Hubbard stormed the State House presiding over an orgy of greed and corruption. Those days are over for Hubbard and so is any appeal before the circuit court of Lee County.

Under Rule 24.4 of the Alabama Rules of Criminal Procedure, Hubbard’s motion for a new trial, dismissal and/or an investigation by the Lee County Sheriff were denied by operation of law because Judge Jacob Walker, III, did nothing.

Under the Rules of Criminal Procedure, “no motion for a new trial or motion… shall remain pending in the trial court for more than sixty days after the pronouncement of sentence.” Hubbard’s sentencing July 8, on 12 felony counts of public corruption, means as of September 8, the calendar has run out for him, with Judge Walker deciding not to rule at all.

Under Rule 24.4: Denial by operation of law. “A failure by the trial court to rule on such a motion within the sixty (60) days allowed by this section shall constitute a denial of the motion as of the sixtieth day.”

ADVERTISEMENT

At his post-trial hearing, Hubbard’s attorneys made their last stand in Lee County, with Bill Baxley arguing that his client was blindsided, bushwhacked and bamboozled, to no avail.

The Lee County case of the State of Alabama versus Michael G. Hubbard is over. He has a right to appeal his conviction to the Alabama Court of Criminal Appeals within 42 days, which expires on October 20.

Hubbard’s past efforts show he will seek every avenue available to delay his incarceration.

Every previous motion that Hubbard has set before the Court of Criminal Appeals, was denied without opinion. Many believe this same fate awaits Hubbard’s next appeal before the high court.

Public Service Announcement

Hubbard’s days of freedom are rapidly coming to an end. His appeal was silently denied and most didn’t even notice. He is rapidly becoming yesterday’s news.

Continue Reading

In Case You Missed It

Hubbard’s Post-Trial Snoozer

Bill Britt

Published

on

By Bill Britt
Alabama Political Reporter

OPELIKA—While searching for any thread of an argument that might lead to a new trial for convicted felon Mike Hubbard—once the most powerful politico in the state—attorney Bill Baxley whined, fretted and accused state prosecutors of blindsiding, bushwhacking and bamboozling his client.

Having written about Hubbard’s misdeeds since late 2012, the courtroom drama ending with his conviction makes Baxley’s latest attempt at the September 2 hearing feel like Hubbard trial 2.0 ad nauseam. Only Baxley’s fantastical leaps of legal logic and strained linguistic gymnastics kept the proceedings remotely interesting. Baxley argued several points, only winning on one issue with Judge Walker’s ruling that Hubbard would not be required to pay $1.125 million in restitution, as the prosecution asked.

Before the hearing began, Hubbard’s criminal defense team filed a motion to unseal all court documents related to the case, except one document. Baxley indicated that Judge Jacob Walker knew “the one” he referred too. After some legal wrangling by the prosecution and with Judge Walker, the defense was directed to construct a list of documents to be unsealed. Judge Walker’s decision was followed by Baxley huffing and puffing. Finally, he made reference to testimony given by Professor Bennett L. Gershman a “so-called” expert in prosecutorial misconduct. Hubbard filed to have Gershman’s testimony unsealed in 2015, to no avail.

Testimony given by former State Ethics Directors James “Jim” Sumner is central to Hubbard’s motion to dismiss or grant a new trial, neither of which is likely to occur. But, Baxley and company need to earn the additional $50,000 plus Hubbard recently raised from “friends.” Baxley argued it was improper for the State to present “expert” testimony about what various portions of the ethics statute mean, and whether certain phrases or clauses within those statutes would or would not encompass certain situations or events. The court seemed unmoved by Baxley’s logic since Judge Walker certified Sumner as an expert.

During the two-hour hearing, Baxley’s delaying tactics appeared to try Judge Walker’s patience, especially when the defense claimed they were unprepared to hear testimony concerning jury misconduct. Judge Walker said he set aside other cases to hear Hubbard’s claims of jury misconduct, a surprising claim that surfaced quickly after Hubbard’s conviction.

ADVERTISEMENT

Hubbard’s criminal defense team citing an affidavit from a panel member filed a motion just days after Hubbard’s conviction calling for an investigation into jury misconduct by an impartial third party. In searching for a neutral investigator, Baxley determined Hubbard’s friend Lee County Sheriff Jay Jones was the best choice.

From the bench, Judge Walker informed Baxley that there is no legal basis for an outside investigation, and that testimony would be taken before his court to settle the matter. Baxley claimed the defense was once again unprepared for such at the hearing, and the juror who reported the alleged misconduct was unavailable.

Judge Walker questioned the two bailiffs and the court administrators who oversaw Hubbard’s trial. Bailiff Bobby Bond testified that he was instructed by court administrator Patricia Campbell, to caution a juror who reportedly was talking under her breath at the beginning of Hubbard’s trial. Bond said he issued the warning, but the juror denied the allegations and no further complaints were noted. Both Bailiffs who rotated sitting next to the jury box during the proceedings testified they never heard chatter from any jurors.

Under oath, Campbell confirmed she had received the complaint and reported it to Judge Walker, who ordered her to address the situation through the bailiffs. Baxley asked Campbell what was said. She remembered the accusing juror of claiming a fellow juror said, “Yes, now the truth comes out.”

Public Service Announcement

Defense co-council Lance Bell rose to claim that Hubbard had not received a fair trial an assertion soon rebutted by the prosecution.
He, along with Baxley said the jury was not impartial, and Hubbard should receive, at least, a new trial. Arguing for the prosecution, Assistant Attorney General Katie Langer cited case law and explained the split verdict showed they were, in fact, impartial because otherwise, the trial would have ended with a hung jury.

As Judge Walker pointed out several times, the clock is ticking with very few days remaining before the 60 day deadline brings all proceeding before his court to a close. The trial judge may rule on these motion or simply wait out the clock.

 

Photo Credit: Albert Cesare/Montgomery Advertiser/Pool

 

Continue Reading

In Case You Missed It

Attorney General Reacts to Hubbard Loyalist’s Plans for Ethics Reform

Bill Britt

Published

on

By Bill Britt
Alabama Political Reporter

MONTGOMERY—Alabama House Ethics Committee Chairman, Mike Ball (R-Madison), announced his plans (yesterday) to form a commission to review the state’s ethics laws. Ball, a staunch defender of convicted felon and former House Speaker, Mike Hubbard, told WHNT-TV in Huntsville that his committee would “review the State’s Ethics laws and recommend improvements in time for the opening of the Alabama Legislature next year.”

However, just hours after APR published its story on Ball’s plan, Attorney General Luther Strange, sent his comments.  “I am strongly opposed to Rep. Mike Ball’s idea of a commission to review Alabama’s ethics law. The whole point of such a commission would be to undermine the law,” said Strange.  “Alabamians want our ethics laws enforced, not gutted.”

Ball also said he wanted an “open and honest” process, stating, “Our best chance for success is for it to be carefully looked at, out in the open.” Ball claims he is determined to stop three ethics bills from coming to the House because he didn’t want them “lost in the mix, however, there is a reason to believe other forces are at work, especially given Speaker McCutcheon’s promise of principled leadership.”

It would be difficult to fathom a Hubbard loyalist overseeing a commission to amend laws that landed his former boss in prison.

The day after Hubbard’s indictment, Ball stood by his side at a pep rally proclaiming his boss’s innocence while sporting an “I Like Mike” sticker on his lapel.

ADVERTISEMENT

Ball regularly appeared on talk radio accusing State prosecutors of conducting a political witch hunt to ensnare Hubbard.

In April 2015, Ball testified in a pre-trial hearing that Hubbard’s arrest was politically motivated. Under oath, Ball said the ethics laws needed amending to avoid prosecutions like Hubbard’s in the future.

Presiding Circuit Court Judge Jacob Walker, III allowed Ball to testify, even though he said Ball’s testimony was not relevant to Hubbard’s indictments. Judge Walker ruled that accusations against Special Division’s Chief Matt Hart were not only irrelevant, but unfounded.

Ball is one of the remaining Hubbard loyalists at the State House.

Public Service Announcement

Continue Reading
Advertisement
Advertisement