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WVU mishandled media rights deal, Morrisey says; Contract will be re-bid

The attorney general's report

CHARLESTON, W.Va. -- West Virginia University athletic director Oliver Luck and other high-ranking campus officials botched plans to award a multimillion-dollar media rights contract to North Carolina-based IMG College and West Virginia Media Holdings, Attorney General Patrick Morrisey said Monday.

Morrisey's review found that WVU officials made "significant errors" while bidding out the university's third-tier sports broadcast and sponsorship rights -- a contract valued at $110 million over 12 years. However, those same administrators did not attempt to rig the bid for IMG, Morrisey concluded.

WVU immediately announced plans Monday to scrap its tentative deal with IMG and rebid the contract following the release of Morrisey's 24-page report.

"It is clear from this report that mistakes were made in the procurement process, and we will take proactive steps to fix them," said WVU President James Clements. "Starting over is simply the right thing to do."

According to Morrisey's report, a three-member committee -- Luck and two other athletic department administrators -- appointed to analyze media rights bids was changed amid the evaluation. Three new members were added, which "may have materially affected the outcome of the decision," Morrisey said. Two members never voted to award the contract to IMG -- the same two athletic department administrators who served on the initial three-member panel.

Luck headed the committee and voted for IMG.

"It is unclear if IMG College would have been selected by a vote solely of the original three committee members," Morrisey said.

Committee members also scrapped a scoring system they were using to evaluate companies that bid on the media rights contract. Instead, the panel selected IMG based on "group consensus," leading to "confusion and ambiguity," according to Morrisey's report.

"The procurement process utilized in the evaluation and selection of proposals was flawed and incomplete," Morrisey said.

Morrisey also found that Luck tipped off WVU Board of Governors Chairman Drew Payne about the media rights contract -- both before and after WVU solicited bids.

Payne serves on West Virginia Media's board of directors and has a significant stake in the firm. Morrisey said Payne violated bid confidentiality policies by commenting publicly on the financial terms of the IMG deal.

Despite the missteps and numerous violations of policies and procedures, Morrisey concluded that Payne and Luck didn't attempt to "pre-cook the bid" and steer the media rights contract to IMG and West Virginia Media.

"While our office found significant errors and sloppiness in the process warranting a rebid, we did not find any evidence of intentional wrongdoing or intentional interference that might be used to advance a pre-determined result," Morrisey said at a Monday press conference at the state Capitol.

Morrisey, however, released a series of emails between Luck and Payne that raise questions about whether IMG had a leg up on the competition. Five other companies bid on the WVU contract.

In a May 2012 email, Luck forwarded a draft copy of WVU's request for bids to Payne, who responded, "Congratulations. Looks good to me. I think the responses will be strong."

Ten days later, Luck notified Payne that the bid request would be advertised "in a couple of days," according to an email.

The next day, Payne responded in an email, "I am very curious to see the range of bids. It has been a long time to get to this point. On another subject, is Florida State interested in the Big 12?"

The following month, Luck declared his frustration with the slow pace of bidding out WVU's third-tier media rights: "This bureaucracy is killing us," Luck wrote in an email to Payne. WVU and Morrisey redacted or blacked out the remaining contents of the email.

Despite Luck's frequent contract updates to Payne, Morrisey said he found no evidence that Luck disclosed financial details or other specific information about the media rights bids, which would have given IMG an unfair advantage in securing the lucrative contract. Morrisey's report did not say whether Payne forwarded Luck's emails to IMG or West Virginia Media.

On Monday, Luck acknowledged his emails to Payne were "inappropriate."

"I concur with the attorney general's findings that these communications were improper, but agree they did not impact the evaluation or selection process," Luck said in a prepared statement.

Morrisey's report also found that Payne had a conflict of interest because of his stake in West Virginia Media Holdings, which owns four television stations and the State Journal newspaper. WVU board member David Alvarez also holds shares of West Virginia Media.

Morrisey concluded that Payne and Alvarez should have stepped aside from all discussions about the media rights contract while the committee evaluated bids.

"[Payne] improperly received information about the process and instead should have recused himself from any and all participation in this matter," Morrisey said.

The attorney general's report noted that Payne told Charleston and Morgantown newspapers that IMG's proposal "would net the university $5 million more" than WVU's current contract.

Payne told Morrisey that he wasn't given financial details about IMG's bid, and came up with the $5 million figure based on media rights contracts at other universities.

"While the implication of knowledge itself is problematic, our review found that Mr. Payne's comments were nothing more than hyperbole," Morrisey said. "The inference further fueled an appearance of impropriety or potential conflict between his role as chair of the Board of Governors and his financial interests in West Virginia Media."

In a statement Monday, Payne said he accepts Morrisey's findings.

"I'm committed to fine-tuning our board processes so we can do a better job of identifying possible conflicts or problems going forward," Payne said. "I also applaud the university for taking corrective steps in the procurement process."

Alvarez also said he would step aside from discussions about the media rights deal after it's rebid.

"I am fully aware of my responsibilities to recuse myself in the future," he said.

Morrisey's report also scolded WVU purchasing officials who failed to document conversations that Luck and other committee members had with companies that bid on the media rights contract.

Morrisey uncovered only one such document -- a June 2012 email from a WVU consultant who had spoken to WVU Media Holdings President Bray Cary about whether the company was qualified to bid on the contract. The consultant sent the email to Luck.

During the review, Morrisey's office investigated allegations that IMG President Ben Sutton told two WVU athletic department employees that his company -- called ISP Sports at the time -- had reached a deal with the university. The conversation allegedly took place during a 2007 WVU-University of South Florida football game in Tampa.

In an interview with the attorney general's office, Sutton said he "frequently expressed his desire to want to work with WVU." But he denied ever saying there was a pending contract, according to the report.

In the end, Morrisey said he believes "there is clear factual support" for WVU's decision to sign a tentative contract with IMG. The 2007 conversation didn't give IMG an edge, he said.

"Our review found that the record supported the decision to select IMG College's proposal as the most advantageous to the university based upon the substantive terms of its proposal," Morrisey said.

WVU's third-tier media rights cover some non-conference football and basketball games, non-revenue sports, radio broadcast rights, coaches' shows, signage, online content and seatback sales.

Morrisey started his review five weeks ago, after Morgantown businessman John Raese alleged WVU officials violated university and state purchasing rules when IMG was selected to handle WVU's media rights. IMG had planned to partner with Charleston-based West Virginia Media Holdings, but the two firms haven't signed a formal agreement, Luck has said.

On Monday, Raese's lawyers said Payne and Alvarez should resign from the Board of Governors. They said Morrisey's report makes clear that university officials tried to steer the media rights contract to IMG College.

Reach Eric Eyre at ericeyre@wvgazette.com or 304-348-4869.


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