Monday, October 2, 2023

Possible skimming of proceeds, plus evidence of "grifting" by public officials, appear to be driving financial scandal surrounding the Magic City Classic

Alabama State and Alabama A&M square off before a packed house at Legion Field.

Concerns about possible skimming of proceeds from the Magic City Classic prompted officials from Alabama A&M to meet late last year, after the 2022 game had been played, with Birmingham Mayor Randall Woodfin, according to an article today  from longtime attorney and sports enthusiast Donald Watkins. At the heart of the matter, Watkins writes, are the event's murky financial agreements, which seem to favor White-owned promoters and event managers over the Historically Black Colleges and Universities (HBCUs) -- Alabama A&M (AA & MU) and Alabama State (ASU) -- that generate the millions of dollars realized from what has become the No. 1 annual football classic involving HBCUs -- essentially making the Magic City Classic the Super Bowl for historically Black universities.

The financial agreements are not the only oddities surrounding the Magic City Classic, Watkins reports. He has uncovered evidence that public officials whose actions have benefited the game's White promoters and event managers -- the Alabama Sports Council and Bruno Event Team (now Eventive Sports) -- saw significant upturns in their personal financial ledgers from 2017 to 2022. We will examine that issue in a moment, but first, Watkins takes a closer look at financial data that left officials at the participating schools concerned that their institutions are being short-changed in favor of the promoters and managers. Under the headline "Did Magic City Classic Promoters Skim a 20% Commission on City Money for Annual Football Game?" Watkins writes:

Last year, a team of top officials from Alabama A&M University (AA&MU) met with Mayor Randall Woodfin and his staff to discuss several topics related to the 2022 Magic City Classic which had been recently concluded. They questioned whether Gene Hallman’s Bruno Event Team had been skimming a 20% commission on the support money the city of Birmingham provided directly to Alabama State University (ASU) and AA&MU to play the Magic City Classic in Birmingham. They also expressed the need for an audit of the revenues and expenditures associated with the Classic.

The meeting occurred because the 2018 Legion Field Stadium Agreement had expired. The Agreement provided direct payments to ASU and AA&MU as an incentive to play the Classic in Birmingham. It was time to begin the discussions on a new agreement.

The AA&MU team thought the money that the Bruno Event Team provided to both universities was inadequate, and said so to Woodfin. They also wanted an audit of the monies generated from the Classic and the expenses paid out by the promoters of the event.

Why were the school officials concerned? Financial documents prepared by the event promoters raised a number of red flags, Watkins reports:

In 2016, Hallman's company teamed with the Alabama Sports Council, Inc., to produce and promote the Magic City Classic from 2017 to 2022. Their job was to grow revenues for the Classic while minimizing the expenses associated with producing and promoting a high-quality event.

In 2017, the city paid ASU and AA&MU a total of $400,000 for the Classic, which was split on a 50/50 basis. In 2018, this amount increased to $425,000.

The 2018 Legion Field Stadium Agreement provided the following payments, which were also split on a 50/50 basis: (a) $650,000 in 2019, (b) $700,00 in 2020, (c) $750,000 in 2021, and (d) $800,000 in 2022.

In total, the city paid ASU and AA&MU $3,725,000 to play in the Magic City Classic during this six-year period. The Bruno Event Team's 20% commission on the city's support money, alone, would equal $748,725.

 How did this outcome come to pass? Watkins explains:

Reportedly, Gene Hallman considered the city's support payments as "sponsorship money" which, in his view, was subject to a 20% commission for his Bruno Event Team. To the consternation of Gene Hallman, AA&MU did not share this view. This matter was never resolved.

During this period, the Alabama Sports Council increased its "management fees"from $448,980 in 2017 to $770,469 in 2021, even though the number of major sports events under management by the Council remained the same.

What is more, the financial statements provided by the Bruno Event Team to AA&MU for 2021 showed total expenditures of $2,937,188 for the Fall and Spring Magic City Classic events that year. However, the Alabama Sports Council's tax return for 2021 reported total Magic Classic expenses of $3,269,979.

The $332,791 difference between the amount of expenses reported on the tax return and the amount reported in the financial statement provided to AA&MU is not explained or reconciled in the documents.

The participating schools never have audited the financial books related to the Magic City Classic, apparently trusting the promoters to handle matters appropriately. Was that trust well-placed? Maybe not, Watkins reports:

From 2017 to 2022, neither ASU nor AA&MU has ever audited the financial books and records of the Bruno Event Team or Alabama Sports Council with respect to Magic City Classic revenues and expenses. The universities simply trusted the two sports promoters to do the right thing during this period.

To this date, there has been no independent audit by a qualified and capable sports-accounting firm on what the actual revenues and expenses were for Magic City Classic events from 2017 to 2021. [Tax returns and financial reports for the 2022 Magic City Classic are not publicly available.]

The Bruno Event Team, together with the chairman of the Alabama Sports Council from 2016 to 2020 (Nick Sellers), ran up a $15-million deficit with their management of the World Games 2022. The city, together with Jefferson County, the state of Alabama, and other entities, had to bail out the World Games with a $15-million debt-relief package.

Yet, no official at the city of Birmingham, or ASU, or Jefferson County, has pushed to audit the books and records of the Alabama Sports Council or Bruno Event Team with respect to the revenues and expenses related to the Magic City Classic.

No public reason or justification has ever been provided for why the Magic City Classic's financial books and records have never been properly audited by certified public accountants who specialize in sports accounting.

Why is that? To shine light on that question, Watkins takes us to what he calls Magic City "Grifting" -- and it is not a pretty story. In fact, the following eight paragraphs might make you want to retch, so we encourage you to brace yourself:

Interestingly, some public officials whose actions, or lack thereof, financially benefited the Alabama Sports Council, the Bruno Event Team, and World Games 2022 saw a significant upturn in their personal financial well-being between 2017 to 2021.

In one case, a key public official experienced substantial debt relief in his personal finances, even though no new income or revenue was reported on his ethics forms as a source for reducing his personal-debt obligations.

These public officials also saw lucrative Magic City Classic event contracts awarded to their tight circle of friends, family members, surrogates, mistresses, and lovers, with little to no deliverables expected or provided.

Some of these officials enjoyed free access to luxurious beach homes, hotels, and resort accommodations for romantic getaways, private jet rides, fine dining, and other valuable perks that are not disclosed on their Alabama Ethics Commission annual disclosure forms.

The endless stream of tangible economic benefits that flowed to certain public officials involved in the Magic City Classic financial decisions, which benefited the event's producers and promoters, appears to follow the Clarence Thomas model of "gifting" and "grifting."

Finally, the Bruno Event Team is known to have provided certain public officials and “influencers” who were NOT part of Magic City Classic game-day operations with free admission tickets, parking passes, and VIP access beyond the number authorized in the Agreement between the city and the participating universities. The public officials in this category also worked to thwart public accountability and transparency with respect to the financial books and records of Magic City Classic events.

In an upcoming article in this series of investigative articles, we will tell you who got the the money from the 2021 Magic City Classic events, how they got it, and why they did not want their names revealed in the annual financial statements that were eventually provided to ASU, AA&MU, and the city of Birmingham.

Stay tuned!

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