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Morrisey advises WVU to rebid media rights contract

CHARLESTON, W.Va. - With state Attorney General Patrick Morrisey saying significant errors were made, West Virginia University will scrap bids for its athletic department's multimedia rights and start over. 

Morrisey released a 24-page report of findings from a five-week review of WVU's media rights bidding process during a press conference Monday.

While his office found "significant errors and sloppiness" in the bidding process, Morrisey said it found no evidence of "intentional wrongdoing."

WVU Board of Governors Chairman Drew Payne and board member David Alvarez should have recused themselves from any participation, he said.  

Both Payne and Alvarez have financial ties to West Virginia Media Holdings, a company that was poised to subcontract with potential bid winner IMG Media for some athletic broadcasts.

Morrisey said Payne also improperly received information and commented publicly on the process. But he said none of those errors had a significant impact on the outcome.

"We didn't think that there was any intent to steer something inappropriately," Morrisey said. "What we saw here was that there was a lot of errors and there was sloppiness, but we didn't see any intent to pre-cook a result."

After a seven-month request-for-proposal process, WVU sent a letter of intent to media firm IMG College on Jan. 13 to begin contract negotiations regarding the school's Tier 3 multimedia rights, which include radio sports broadcasting and some televised football and basketball games.

WVU was one of only a few schools that had continued to manage Tier 3 broadcasting and marketing in-house, mainly through its Mountaineer Sports Network.

Sources have said IMG and WVU were set to agree on a 12-year, $110 million contract that would have netted the university about $5 million more per year than its current Tier 3 media arrangement.

IMG's proposal was one of six submitted.

Morrisey said enough errors were made that he thought the university should start over. 

"It's our recommendation that all current proposals should be rejected and that the multimedia rights matter should be re-bid," he said.

Morrisey spoke with WVU President Jim Clements Sunday night.

Shortly after Morrisey's press conference, Clements confirmed the university would rebid the Tier 3 media rights "in the near future."

"It is clear from this report that mistakes were made in the procurement process, and we will take proactive steps to fix them," he said in a statement released by the university. 

"Starting over is simply the right thing to do."

Raese's complaints

WVU suspended its procurement process with IMG on Feb. 20 after Morgantown businessman John Raese raised a series of questions and complaints.

Morrisey was asked to provide outside legal advice on March 5.

Raese owns the West Virginia Radio Corp., which currently handles radio broadcasts of WVU games and also bid on the Tier 3 rights.

His complaints centered on the apparent pending partnership between IMG College and Bray Cary's West Virginia Media Holdings, which produces basketball and football coach talk shows and has aired WVU spring football games in recent years.

Raese said Payne's current status as a West Virginia Media shareholder created an "appearance of impropriety."

Payne has said he and the WVU board "stayed completely away" from the contract, letting Athletic Director Oliver Luck take the lead role. He said Raese was acting to preserve his current broadcasting deal with the university.

Morrisey said Monday his office is also looking at current contracts between the WVU athletic department and both West Virginia Media and West Virginia Radio.

He is also examining previous scoreboard donations and purchases, football spring game contracts and university compliance with the Solicitation of Charitable Funds Act.

He said findings from those investigations would be released at a later date.

Key Findings

Morrisey's report on the media rights bid process included several key findings:

* Morrisey said since the media rights contract is "revenue generating," neither state code nor WVU purchasing rules require it to be placed through a competitive request-for-proposal process.

State law requires the bid process for all purchases exceeding $25,000, and WVU procurement rules require bidding only for purchases in general. Since the university is making money, not spending it, Morrisey found the athletic department did not have to follow the RFP process.

However, since the WVU officials decided to use the RFP process to bid the multimedia rights, Morrisey said they should have complied with university procurement rules.

* The review found enough evidence to support the university's decision to engage in contract negotiations with IMG for the Tier 3 rights.

"Our review found that the record supported the decision to select the IMG College proposal as the most advantageous to the University based upon the substantive terms of the proposal," the report said.

* The report also said the process to evaluate and select proposals was flawed, incomplete and not handled according to university procurement rules.

Morrisey said the RFP evaluation committee was improperly expanded from three to six people in the middle of the process. Also, two of the original three-person committee - Mike Parsons, deputy athletic director, and Mike Szul, associate athletic director for business operations -- did not vote to approve the winning IMG proposal.

The report said Luck did not adhere to confidentiality and non-disclosure rules when he passed along status updates and non-substantive information to Payne.

However, the report said these conversations did not affect the outcome of the process.

* Finally, Morrisey found that Payne and Alvarez should have recused themselves from any discussions or proceedings involving the process due to their financial ties to West Virginia Media.

In the future, he said the university should do a better job of identifying potential conflicts of interest.

"We believe the university should more proactively evaluate and assist its Board of Governors members, officers and employees in adherence to the recusal requirements in avoiding participation in matters in which members my have a potential financial conflict of interest," Morrisey said. Going Forward

The university released statements saying Luck, Payne and Alvarez had accepted Morrisey's findings and promised to do a better job going forward.

Luck agreed his communication with Payne during the process was "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. "The department looks forward to the rebid." 

Payne said he is committed to "fine-tuning our board processes so we can do a better job of identifying possible conflicts or problems going forward."

He also reiterated Morrisey's conclusion that "there was no evidence of improper use or benefit of the information or of improper disclosure of information to the benefit of a proposer."

Alvarez said he understands his obligations to recuse himself from board meetings or presentations where the current MSN contract or future outsourcing of the multimedia rights contract are being discussed.

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

Raese's attorney, Bob Gwynne, did not respond to a request for comment Monday.

Andrew Giangola, vice president of strategic communications at IMG College, said Morrisey's report "confirms that IMG College submitted the best proposal and is the best partner for representing West Virginia University's multimedia rights."

Giangola also pointed to the finding that the multimedia rights contract is revenue generating and therefore does not need to go through the competitive bid process.

He said IMG officials are ready to renew discussions with WVU to handle the school's multimedia rights.  

"We have already offered a plan receiving unanimous praise that provides the best team and platform to pursue programming, content, sponsorships and significant revenue growth for the University," Giangola said.

"Should the university follow the report's primary findings and appoint IMG College -- the partner it endorses -- we would be eager to immediately complete discussions with WVU athletics and begin serving WVU as (the) Mountaineers' football season quickly approaches."

WVU is likely to proceed quickly with the media rights process. Should the university not have a new Tier 3 partner in place by May 15, its current radio broadcast contract with West Virginia Radio will automatically be renewed for another year.

Morrisey said he believed the university now could move the process along "expeditiously."

"There's no substantive reason why the issues raised in this report can't be remedied quickly," he said. "The fact is that the university deserves an opportunity to secure the most favorable contract terms for its media rights." Contact writer Jared Hunt at business@dailymail.com or 304-348-4836.


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