Friday, September 22, 2023

Alabama Sports Council scores a big-money touchdown with Magic City Classic, but two Black universities who generate the cash get thrown for a loss


Alabama State and Alabama A&M  square off in the Magic City Classic.

Alabama State and Alabama A&M, the historically Black colleges and universities (HBCUs) who participate in the Magic City Classic football game that is played annually at Legion Field in Birmingham, have been ripped off by a nonprofit organization that was formed in 2016 to promote amateur sports events in the state. The Alabama Sports Council has come to manage the Magic City Classic in recent years, and on the council's watch, the two participating universities have received only a fraction of the proceeds the event generates, according to a report from

Watkins, a longtime Alabama attorney and civil-rights advocate, calls the universities' take from the football game "pocket change or tip money." He also suggests this sets up Alabama A&M to be cheated out of more than $527 million the state of Alabama owes the university in an unrelated matter.

How do the numbers stack up for the Magic City Classic? Not well for the two universities who generate substantial proceeds. Watkins says two historically Black institutions are being financially abused regarding the Magic City Classic. The Alabama Sports Council -- along with its "tight circle of political friends, influencers, and networking partners" -- have become the main benefactors of the event, with Alabama State and Alabama A&M pushed to the outside, trying to look in. The sports council's "tight circle" appears to include Birmingham-based Gene Hallman, perhaps the state's best-known sports executive. Watkins shines light on how Alabama A&M and Alabama State got pushed financially aside in an event where they create the flow of dollars. Watkins shines light on how this grossly unfair situation took shape. He writes:

In 2021, the Alabama Sports Council, Inc., reportedly paid Alabama State University (ASU) and Alabama A&M University (AA&MU) about $375,000 each (for a total $750,000) to play in the Magic City Classic at Legion Field in Birmingham, Alabama.

The Alabama Sports Council is a nonprofit corporation that was formed on April 18, 2016, to promote amateur sports events in the state. The organization has produced the Magic City Classic in recent years.

According to the Alabama Sports Council’s Form 990 tax return for 2021 (which is the latest full-year tax return publicly available), the organization reported $5,878,430 in total revenues and $5,344,097 in expenses that year.

The tax return was signed by Birmingham businessman Larry Thornton, who was listed as the council’s board chairman in 2021.

Nick Sellers, who is best known as CEO of The World Games 2022 in Birmingham, was listed as a board member. Sellers was the council's chairman from 2016 to 2020.

Nichelle Nix, director of the Alabama Office of Minority Affairs, was also listed as a board member on the 2021 tax return.

Did the Magic City Classic pay off for the sports council and its "tight circle"? Yes, in a big way, Watkins reports:

Of the council’s $5,878,430 in revenues in 2021, a whopping $3,897,417 (or 66.3%) was derived from the Magic City Classic.

The remaining $1,981,013 in revenue was derived from the Council's production of Hammerfest, SEC Baseball Tournament, and SEC Women's Golf (which cost the Council $1,210,484 to produce and netted the Council a separate $770,529 profit).

The Alabama Sports Council reported expenditures of $3,269,979 for the Magic City Classic in 2021.

Off the top, the Council made a hefty $627,438 profit on the Magic City Classic, alone (i.e., $3,897,417 in revenues, minus $3,269,979 in expenses).

How did Alabama A&M and Alabama fare in the deal? Not so well, Watkins writes:

Despite their creation of $3,897,417 in revenues from the Magic City Classic, ASU and AA&MU received only $750,000, or a mere 19.2% of the total money generated by the Classic in 2021. In the world of sports promotions, the 19.2% awarded to ASU and AA&MU is viewed as “pocket change” or “tip” money.

Watkins asks an obvious question: Where did money from the Magic City Classic go? Here is his answer:

The Alabama Sports Council’s Form 990 tax return itemizes $863,634 in general expenses related to the 2021 Classic and the three smaller sports events (i.e., Hammerfest, SEC Baseball Tournament, and SEC Women's Golf) that were produced by the council that year. These payments included:

1. $770,469 paid to Gene Hallman’s Bruno Event Team for event-planning management. Hallman's fees for managing the council's sports events have ranged from $448,980 in 2017 to $770.469 in 2021. During the 2020 COVID pandemic year, Hallman's company pocketed $760,117, even though the council reported an overall loss of $378,921. Today, Hallman's company is called Eventive Sports. What is more, Gene Hallman is a big-time Republican donor who contributed $3,300 in campaign contributions to Sen. Tommy Tuberville (R-Alabama) and $2,900 to Sen. Katie Britt (R-Alabama).

2. $11,048 for accounting services.

3. $78,000 for lobbying.

4. $1,500 for advertising and promotions.

5. $148 for office expenses.

6. $2,469 for insurance.

Only 66.3%, (or $572,589) of the Alabama Sports Council's $863,634 in general expenses can be rightfully attributed to the Magic City Classic, especially since the other three sports events produced by the council in 2021 returned a $770,529 profit.

The Alabama Sports Council's Form 990 tax return does not say how the remaining $3,324,828 (or 85%) in revenues generated from the 2021 Classic was spent. However, we know from published reports that ASU and AA&MU received about $375,000 each for playing in the Classic that year.

Apart from the payment of $750,000 to ASU and AA&MU and the expenditure of $572,589 for the Classic's portion of the council's general expenses, the remaining $2,574,828 in Magic City Classic revenues was disbursed to a cadre of politically-connected consultants, "influencers," and vendors who received non-bid contracts from the council in amounts under the $100,000 threshold for reporting these payments on the Form 990 tax form for 2021.

We will identify the consultants, "influencers," and vendors who received this $2,574,828 in Classic-related money, along with their undisclosed financial relationships to certain politicos in Alabama, in an upcoming October article.

It appears that ASU and AA&MU had zero input in managing and minimizing the Council's $3,269,979 in direct Classic-related expenses in a way that maximized a financial return for the two participating universities. Reportedly, trustees from ASU and AA&MU were content with the opportunity to attend chic parties, sit in skyboxes at the game (for free), and engage in endless photo ops in and around Birmingham during the 2021 Classic weekend.

In Watkins' words, a "pattern and practice of abusing" the two universities that play in the Magic City  Classic has developed within Alabama: 

The Alabama Sports Council's Form 990 tax return for 2021 evidences a disturbing pattern and practice of financial abuse of ASU and AAUM with respect to the revenues generated, expenses paid, and amounts paid to each university. The Council's tax returns for 2017, 2018, and 2019 reflect the same structural flaws in the Magic City Classic's financial deal that appear in the 2021 tax return.

Again, the money paid to ASU and AA&MU in 2017, 2018, and 2019 from the millions of dollars in revenues generated by the Classic fell well within the category of "pocket change" or "tip" money.

The COVID-19 pandemic appears to have been a factor in limiting the Alabama Sports Council's financial abuse of ASU and AA&MU for 2020.

The financial abuse resumed with the 2021 Classic, and likely occurred with the 2022 Magic City Classics, as well. [Note: The Council's tax return for 2022 is not expected to be filed until January 2024].

The financial abuse of ASU and AA&MU is poised to continue with the upcoming 2023 Magic City Classic in October because there are no adequate guardrails against this kind of abuse. Likewise, there is no effective institutional oversight to prevent it.

It should be noted that both ASU and AA&MU voluntarily agreed to the bad financial deal embodied in their Magic City Classic agreements with the Alabama Sports Council. As such, they bear the ultimate responsibility for this unfortunate situation.

This suggests Alabama A&M is poised for more financial abuse in the near future and probably will be unable or unwilling to do anything about it, writes Watkins:

Considering the ease with which the Alabama Sports Council was able to garner a one-sided advantage over ASU and AA&MU in connection with the $3.9 million derived from the 2021 Magic City Classic, it is inconceivable that Alabama A&M is ready, willing, and able to collect the $527,280,064 debt that the university is owed by the state of Alabama. Gov. Kay Ivey and the Republican majority in the Alabama Legislature have far more experience in financially abusing historically Black educational institutions and majority-Black government agencies than the Alabama Sports Council has ever exhibited.

As structured, the Alabama Sports Council's Magic City Classic deal in 2021 was a lose-lose proposition for ASU and AA&MU -- from every financial angle. Both universities were ripped-off in a classic fashion. As shown in the Form 990 tax return for 2021, the Classic was a financial bonanza for the Alabama Sports Council and its tight circle of political friends, "influencers," and networking partners.

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