Bartering aids UT but raises questions

7/8/2007
BY JOE VARDON
BLADE STAFF WRITER

Mike Karabin and his boss, University of Toledo Athletic Director Mike O'Brien, jump into Mr. Karabin's 2007 GMC Yukon and head to a Mancy's restaurant.

Upon arriving at one of Toledo's most famous dining spots, they greet two University of Toledo supporters, and the four sit down to lunch.

Their bellies full on the day's fresh catch, the soup du jour, and Diet Coke, they all head out for 18 holes of golf and conversation.

When it comes time to pay for the meal, the golf, or even Mr. Karabin's Yukon, no money changes hands.

The bills already have been taken care of through barter agreements between UT and local businesses.

Through such agreements, the businesses receive tickets to UT sporting events and/or advertising through the university, and in turn UT athletics receives goods or services of equal monetary value.


"We have a lot of different ways that we need to generate revenues, contributions, and sponsorships," said Mr. Karabin, UT's senior associate athletic director.

One of the ways many college athletic departments, not just UT's, do business is through trade agreements. The ath-letic departments at Ohio State, Bowling Green, Akron, and Kent State, for example, all practice some form of barter-trade agreements, and marketing executives say there are countless other examples throughout the country.

And for Toledo's athletic department, which is facing a budget deficit estimated by UT officials last week at about $1 million, bartering with businesses can help defray costs that otherwise would've counted against the budget.

But UT's president, Lloyd Jacobs, is considering ending or altering the practice at the university.

Last year, UT athletics negotiated $700,000 in trades, according to university records, much of which was used to lower or erase athletic department costs in advertising, printing, and other areas.

The trades also were used to acquire cars for more than two dozen athletic department staff members, enable those staffers to treat clients to meals, and take those clients out for golf.

And, according to university records, $4,050 of a $5,000 trade with Honey Baked Ham in 2004 was used for gift certificates for athletics staff members. Another $500 was used for a staff Christmas party that year.

Dr. Jacobs is concerned some of these trades - especially with restaurants and golf courses - are susceptible to abuse by UT staff members who might be tempted to use them for their own benefit rather than a business purpose.

The UT president and other university officials are also leery of the accounting methods in place to track how these barter agreements are used. An internal assessment into the athletic department is examining the entire barter process.

"On the face of it, [barter agreements] are not illegal, but it is not a great practice," Dr. Jacobs said.

"And I must say, I'm not terribly excited about its continuation. But I've got to look into it and make sure we do the right thing."

Tom Page, UT's chief financial controller, as well as other university officials, told The Blade the internal assessment into the athletic department will address how barter agreements are recorded and accounted for.

Currently, the athletic department submits an annual summary that lists the barter agreements it has signed and vaguely documents the uses for each good or service received.

The 2006 barter summary lists the department's trade agreement with Avenue Bistro, but entries for the restaurant show that Mr. Karabin, among others, used that trade to take "clients" to lunch.

The receipts that actually list which clients accompanied Mr. Karabin remain with the athletic department, according to university officials.

Mr. Page said his department never receives any documentation that proves the barter agreements are being used solely for business purposes. But he also said external auditors have never raised questions about UT's agreements.

Yet a Blade review of documents provided by UT shows that, at least on occasion, staff members eat at restaurants and play golf at courses through these barter agreements without clients present.

According to receipts obtained by The Blade, Mr. Karabin often dined at a Mancy's restaurant with one or more staffers when a donor was present.

Records also show that athletics staffers used the trade at least four times since March 22, 2006, without a client's meal on the bill.

Summaries of barter agreements for 2005 and 2006 show that UT staffers may have dined at the Real Seafood Co., Avenue Bistro, and other local restaurants without a client or donor. But UT spokesman Tobin Klinger said those summaries were not necessarily accurate portrayals of who was present for those meals, and the receipts that would provide such information were not readily available last week.

"It's really important to stress here that the ongoing, internal assessment will examine and help us address these issues, if indeed there is a problem," Mr. Klinger said.

UT athletic department e-mails also discuss free golf for staffers at Tamaron Country Club.

An e-mail from Dave Nottke, assistant athletic director for development, dated April 26, states Tamaron will "again provide complimentary play for our coaches and staff."

Another e-mail, dated May 31 from Paul Helgren, assistant athletic director for media relations, invites all department staff members to play golf at Tamaron on Thursday mornings before work.

Bill Kline, head golf pro at Tamaron, said UT athletic department members who play there are asked to pay only for the golf carts they use.

In exchange, Mr. Kline said, Tamaron gets an assortment of tickets to UT sporting events.

Officials from both sides said this agreement has existed for years, but it is not documented in writing. "If the golf turns out to be a problem, we'll deal with it," Dr. Jacobs said.

While UT's president is skeptical of barter-trade agreements, he is also aware they are used to help promote the athletic department.

When asked about Mr. Karabin, who records show has dined at Mancy's Steakhouse and Mancy's Italian Grill at least 52 times since March, 2006, and golfs with businessmen and potential donors at area courses, Dr. Jacobs said: "That's legitimate. That's his job."

Mr. Karabin cultivates many of UT's relationships with sponsors and supporters - work that is not always done inside an office.

Mr. Karabin said the ability to take clients to eat or to play golf helps build those relationships and said the same about striking barter agreements.

He said some businesses don't have the capacity to pay for season football tickets or advertising in cash but can donate a good or service and smaller amounts of money - which ultimately helps the university.

"The trades help us get our message across," Mr. Karabin said.

"It helps us get our ticket brochures or schedule cards printed. We have a tremendous amount of trade with our outdoor billboard companies. The list goes on and on."

The single biggest trade UT had last year, according to university records, was with The Blade.

In exchange for advertising panels inside the Glass Bowl and Savage Hall, 100 reserved football season tickets, and other items, UT received $82,400 worth of advertising space in The Blade in 2006, which equates to 800 column inches, or about seven full-page ads.

And UT also had a trade agreement worth $19,520 with cable television station BCSN, which like The Blade is owned by Block Communications Inc.

There are also numerous agreements with hotels, printing companies, and car dealerships.

Records show the athletic department has cut deals with many area car dealerships, totaling $123,322 last year.

The agreements allow 27 coaches and staff members to drive everything from men's basketball coach Stan Joplin's Lexus RX 300 to football coach Tom Amstutz's beefy Honda Ridgeline.

Greg Brown, president of Learfield Sports, a national firm that recently signed an agreement to represent UT in obtaining and maintaining corporate sponsorships, said these barter agreements are vital to many college athletic departments.

"These trades are just as valuable as cash components in many cases," Mr. Brown said.

Mr. Brown also said many businesses that enter into these agreements would otherwise refrain from paying anything to advertise with UT.

Tony Czerniakowski, a manager at Bedford Hills Golf Club, agreed, saying his club has greatly reduced the amount of money it spends on advertising.

"We don't do much advertising with anyone, so the answer is no, we probably wouldn't [pay to advertise] with UT," Mr. Czerniakowski said.

Instead, through its trade agreement with UT, Bedford Hills received a half-page ad in the football and basketball program, and season tickets for football and men's basketball.

Mr. Czerniakowski said the club uses those tickets to reward employees or thank customers for their patronage.

At Ohio State, where the athletics department is self-sufficient and does not rely on student fees as at UT, barter agreements are used differently.

David Brown, associate athletic director for marketing and promotions at OSU, said his institution often enters into agreements in which it receives a product in exchange for membership in the Buckeye Club, which enables the business to purchase football season tickets.

Mr. Brown said the average monetary value of OSU's trade agreements wasn't immediately available last week, but he said the university seldom uses its agreements to take clients out to eat or golf.

"If I'm taking a client out, the university usually pays for it," he said.

"And if I'm at a lunch with just my staff or [other OSU officials], I cannot ask to be reimbursed for it. We have to pay for it ourselves. That's just part of being a state employee."

Hunter Yurachek, senior associate athletic director at Akron, said his institution engages in trade agreements totaling about $270,000.

He said these agreements are primarily to acquire Adidas clothing and gear, courtesy cars, and airline tickets.

Mr. Yurachek said Akron only has one trade agreement with a restaurant to take clients out to eat, but the university has to split that account with the marketing firm it hired to represent Akron with its corporate sponsors.

As for golf, Mr. Yurachek said there is one local course the university has a loose agreement with, but no coaches or athletic department staff members have country club memberships paid for by Akron.

"There just really isn't a call for those kinds of things in our department," Mr. Yurachek said.

Contact Joe Vardon

at jvardon@theblade.com

or 419-410-5055.