A planned agenda item intended to require that any subsidiary created by the Michigan State University administration must be subject to transparency laws was pulled from the agenda by five board members, Trustee Mike Balow said during Friday’s board meeting.
The resolution, proposed by Balow and supported by Democratic Trustees Rema Vassar and Dennis Denno, would ensure that any materials from any entity that the university’s administration created could be accessed through a Freedom of Information Act request and that trustees would be able to freely view the materials.
The resolution was sparked by transparency issues regarding the in-development nonprofit Spartan Ventures, said Balow, the board’s lone Republican. The materials related to the nonprofit, created to “advance, promote and support” the university’s athletic department through fundraising, are not subject to the public’s information requests. In addition, the trustees were asked to sign nondisclosure agreements to view certain documents related to it.
“I don’t think we as elected officials can sign away our responsibility to conduct oversight over any part of this campus, because if we don’t (oversee it), no one else will,” Balow said.
It wasn’t immediately clear why the other trustees decided to take off the agenda item. The board has a 7-1 Democratic majority.
Board Chair Brianna Scott, a Muskegon Democrat, said during the meeting that the MSU Research Foundation, which finances research and supports startups, was formed under a similar affiliation agreement 50 years ago, and such agreements are common in higher education.
The News asked for a copy of the latest affiliation agreement between the university and the MSU Research Foundation last month. In the response, the university said no such document exists. Spokesperson Amber McCann instead provided a copy of the foundation’s Articles of Incorporation.
Scott said in a text to The News that she and the other trustees decided to take the item off the agenda because Balow attempted to get it onto the agenda Friday morning before the meeting. When asked, Balow said he brought it up to the trustees Thursday night and told them he intended to put it on the agenda if two other trustees supported the motion.
What the nondisclosure agreement requires from trustees
A copy of the proposed NDA trustees were asked to sign said any and all information related to Spartan Ventures, including agreements between Spartan Ventures and those with whom it does business, could be deemed confidential, despite the nonprofit being used for the university’s benefit. The Detroit News obtained the nondisclosure agreement.
Information related to Spartan Ventures deemed confidential would only be available to trustees on a “strictly view-only basis at a pre-established meeting time and location,” according to the proposed nondisclosure agreement. The trustees would only be allowed to view the information and could not retain it in any shape or form, including pictures and notes. If the trustees broke the NDAs, they would be fined $250,000 per breach.
MSU President Kevin Guskiewicz said in February the NDAs and fines were necessary to protect “sensitive information” that the university’s board wasn’t technically a party to.
Balow said the trustees weren’t privy to all of the information when they voted to allow Guskiewicz to enter into the Strategic Brand Management Agreement at December’s board meeting.
The board resolution simply said MSU will use Spartan Ventures to seek additional sources of revenue to support athletics through the expansion of business activities, new business lines, investment capital and other activities to increase the value of the athletic brand.
The Strategic Brand Management Agreement stated that by signing, the university would be consenting to allow a subsidiary, Spartan Media Ventures LLC, to receive payment and take on parts of the contracted agreement instead of Spartan Ventures. This could be done “without the need for any further consent or approval from the University,” according to the agreement.
Spartan Media Ventures was started by a $100 million seed investment from Greg and Dawn Williams, and the couple would receive revenue from it, Balow said in December. He added he had concerns surrounding the agreement, not because he didn’t want further investment into the university’s athletic department, but because he hadn’t seen all the legal and financial documents related to the couple and their investments’ role that he’d have liked to.
Blurry lines between university and nonprofit
Guskiewicz said previously the university and the Spartan Ventures are separate entities. But the university’s president, Athletic Director J Batt and the board’s chair ― currently Trustee Brianna Scott ― hold three of the seven seats on Spartan Ventures’ board.
A top athletic department official will be leading Spartan Ventures, documents confirmed. Jon Palumbo, the athletic department’s executive deputy athletics director and chief operating officer, is listed as the CEO of Spartan Ventures on the signature of a Strategic Brand Management Agreement between MSU and the nonprofit. Athletic department spokesperson Matt Larson confirmed Palumbo’s appointment after The News reported it.
Palumbo will work in a “hybrid capacity,” splitting time between the athletic department and the nonprofit, Larson confirmed in a text.
Palumbo was one of Batt’s first hires when he came to the university. Both men previously “worked closely” at Georgia Tech University, Palumbo’s university biography stated, on strategic initiatives and coaching hires.
MSU Vice President for Communications Emily Guerrant said in February that it’s still to be determined exactly what duties, such as ticket sales or sponsorships, would transfer from Michigan State’s athletic department to the other entities.
In totality, though, the university’s athletic department, Spartan Ventures and Spartan Media Ventures would work together, Guerrant said.
satwood@detroitnews.com
This article originally appeared on The Detroit News: MSU transparency proposal for sports nonprofit gets pulled over objection
Reporting by Sarah Atwood, The Detroit News / The Detroit News
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