Desperate times in the Newt Gingrich camp have called for desperate measures.
Scrambling to dig himself out of a $4.5 million hole, the former House speaker has resorted to renting his presidential campaign’s most valuable asset – its donor list – for as much as $26,000-a-pop.
It’s a risky move for an active presidential campaign to give outsiders access to his best supporters and possibly donors who could be easily turned off — just as he says he’s trying to mount a comeback. Diminishing his best asset looks more like a sign of surrender, rather than a genuine effort to challenge Mitt Romney for the GOP nomination.
Campaign insiders attribute the problems partly to Gingrich and his wife Callista’s, asserting that the couple was unwilling to downgrade from private jets and security details even as the campaign floundered. Insiders say Callista Gingrich required an entourage of at least two staffers – including one who dressed in an elephant costume to promote her children’s book – and a contracted security guard who followed her even on non-campaign trips.
The scramble to retire debt comes as Newt Gingrich is loaning his campaign thousands of dollars to keep him out on the trail, and he’s eying an uncertain political and financial future, since “Newt, Inc.” – the network of companies and non-profits that made his fortune – has crumbled.
“They overspent to keep up the appearances of being a top-tier candidate,” asserted Greg Fournier, a Central Florida consultant who chaired Gingrich’s effort in Daytona Beach’s Volusia County. “If you have a campaign bus and you’re flying in on a chartered jet, but you do not have the money for that, you end up sacrificing your ground game,” he said.
R.C. Hammond, a spokesman for the Gingrich campaign, rejected suggestions that the campaign had misspent on overhead, asserting “we’ve done more with less, if you look at total spending, compared to the other candidates.” And he brushed off a question about whether renting the list diluted its value or signaled an end to the campaign.
“No, it demonstrates the campaign is pursuing new sources of revenue,” he said. Gingrich has loaned the campaign “thousands, primarily toward travel and lodging expenses,” Hammond said, but he added “the campaign intends to reimburse” the loans.
And, while the campaign staff has had ongoing discussions about “rebuilding the brand,” his allies expressed confidence that neither the list rental nor the debt would hurt his ability to resuscitate Newt, Inc. after the campaign.
“His ability to move forward after this, if he is not the nominee, is certainly enhanced, because right now he is even more of a national brand than he was before,” said campaign chairman Bob Walker, a former Pennsylvania congressman. “We’re doing what we can to pay off the debt and we feel confident that we will be able, in the course of the campaign, to get much of that debt paid off.”
But the campaign’s debt has nearly tripled since its last financial report, which covered through the end of February, and listed $1.6 million in debt.
That included $5,200 owed for voter data to Fournier, the Florida operative, who said he got paid only after “a war” with campaign staff. But other vendors are grumbling that they’re still fighting with the campaign over past-due invoices, and Fournier said Gingrich is at risk of becoming viewed as “almost as a deadbeat politician.”
Gingrich admitted Sunday that his campaign’s debt has ballooned to “slightly less than” $4.5 million, blaming the situation on his team’s effort to compete with Romney in the costly battleground of Florida. In an interview on Fox News Sunday, he lamented: “it turned out we didn’t have anything like his capacity to raise money.” And while he said “we’re not going to go broke,” he conceded “We are operating on a shoestring.”
Campaign insiders tell POLITICO, though, that the campaign owes several hundred thousand dollars each to a charter air service called Moby Dick Airways and a security firm called the Patriot Group.
The insiders, who did not want to be identified revealing internal discussions or information, said that there was consternation within the campaign about the big travel budget. They also asserted that the campaign undersold its problems late last month, when it announced it was laying off about a third of its full-time staff. That didn’t include a host of contract vendors who had been acting as de facto staff and were also let go, said the insiders.
They partly blame Callista Gingrich, who they say insisted on having multiple staffers travel with her, as well as a personal security detail from Patriot Group, which is based in Warrenton, Va. Gingrich maintained the detail even after her husband’s campaign received taxpayer-funded Secret Service protection early last month.
Through the end of February, Gingrich’s campaign had paid the Patriot Group more than $266,000 and owed it another $33,000, according to FEC filings, which showed that it paid Moby Dick $485,000 and owed it another $76,000.
The Gingrich campaign wouldn’t discuss security, but its spokesman Hammond said “steps were taken beginning last summer to only utilize charter when it was necessary. But the overwhelming majority of the time – even now with the Secret Service – we fly commercial.”
Through at least the end of January, though, the campaign was not infrequently paying Moby Dick for the use of a Boeing 737 jet with a cabin capacity that far exceeded the press interest in flying Air Newt. There were many empty seats – even on flights during pivotal stretches of the campaign, like his post-loss trips from Iowa to New Hampshire and from New Hampshire to South Carolina. At one point, Gingrich’s traveling press corps balked when the campaign informed journalists that it would cost more than $2,000-per-seat to fly to a single event, and the media boycott forced the campaign to foot the bill for the entire cost of the flight.
Gingrich has long had a taste for charter flights, paying Moby Dick more than $6.6 million before the presidential campaign through his non-profit political vehicle American Solutions for Winning the Future.
The group, which had raised $54.4 million since its creation in late 2006, went belly up last June amid fundraising struggles after Gingrich’s departure. Another once-robust Gingrich vehicle, a for-profit think tank called the Center for Health Transformation that together with its parent company the Gingrich Group produced gross revenues of nearly $55 million from 2001 through 2010, recently filed for bankruptcy.
And a pair of non-profits Gingrich formed called Renewing American Leadership (or ReAL) and ReAL Action raised a combined $5.4 million in 2009 and 2010 according to IRS filings, but saw their fundraising drop 50 percent after Gingrich’s departure.
The plight of the groups makes Gingrich’s vaunted donor list an even more critical asset, since he’d likely rely on it if he sought to resurrect Newt, Inc. after his campaign.
Gingrich built the list into one of the best in politics using American Solutions and a collection of Gingrich firms that have been absorbed by Gingrich Productions, which is controlled by Callista Gingrich. And his presidential campaign continued supplementing the list and the operation – paying $47,000 to Newt Gingrich to buy the list and $75,000 to Gingrich Productions for web services.
“It would make sense that, if Newt doesn’t win the nomination and he doesn’t go into retirement … all of his activities would flow through Gingrich Productions,” said Rick Tyler, a former Gingrich aide who worked at one of his companies and is now helping run a pro-Gingrich super PAC. “And I have no doubt that he would have the ability to earn a very comfortable living,” Tyler added.
Gingrich himself has boasted about his online presence, and it raised eyebrows in the tight-knit community of conservative fundraisers Wednesday when a leading list broker called TMA Direct sent an email touting “Exclusive Management of the Newt for President 2012 files”. The email, obtained by POLITICO, offered campaigns and groups the chance to solicit money or support from Gingrich campaign’s donors (a group which, according to a so-called data card accompanying the email totaled 194,000) and supporters who entered their emails at his website (388,000, according to another data card)
Renting the donor list costs $135-per-thousand-names (more if you want to target specific donor levels or geographic areas), while the activist list can be rented for $50-per-thousand email addresses. That means that each time the full lists are rented, the Gingrich campaign could make between $19,000 and $26,000 after subtracting the broker’s commission, which is typically between 10 and 20 percent.
But it also likely means that Gingrich’s list will become less valuable to his campaign as a fundraising tool, since his donors could be weighing solicitations from multiple conservative groups.
That’s why candidates don’t typically rent their lists until after they’ve bowed out, said a GOP operative who executes list agreements for candidates and groups.
“It’s very odd. It dilutes your ability to keep raising money from your small donors,” said the operative. “My guess is that, as he has sunk in the polls, his response rate has dropped” to campaign emails and other fundraising solicitations.
TMA describes the donors on Gingrich’s list as valuing “his decade’s long fight for true conservative values.” It asserts his email list is populated by folks who “have shown their loyalty by volunteering, making phone calls, helping with GOTV initiatives and purchasing campaign merchandise. These staunch conservatives are dedicated to making Barack Obama a one-term President and to getting America back to a financially sound nation of greatness.”
Even before the list rental arrangement, Gingrich’s money problems – and efforts to remedy them – have caused some embarrassing revelations for the campaign. It drew late-night-show jokes last month when it was revealed that it was charging supporters $50 each to have their photos taken with Gingrich and this week it faced more snickers when the $500 check it wrote to get Gingrich on Utah’s June 26 primary ballot bounced, though Gingrich explained Wednesday that it “wasn’t a question of money,” but rather that the bank account in question had been closed.
Gingrich’s aides are acutely sensitive to the perception that their boss is teetering on the edge of becoming a laughingstock, according to insiders. They recount a two-hour-long meeting of his campaign staff last month at which “the whole subject was rebuilding the brand” and “keeping him from looking like a fool,” said a source familiar with it.
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