Internal Audit uncovers extensive mismanagement in WSU Athletics

An internal audit has revealed extensive mismanagement in Washington State University Athletics.  The review from WSU auditors was initially intended to only examine tickets.  The audit came about following a risk assessment to ensure that regulations were being followed regarding tickets and passes to Cougar games.  The probe ended up expanding after additional problems were discovered with contract management, ethics training, attendance data, benefits for ahtletics employees and cash handling in the ticket office.  The audit concluded that, “The environment within Athletics did not support a culture of compliance or fiscal responsibility.”

The initial focus of the audit examined complimentary tickets for the 2016 home football game against Arizona.  Auditors determined that the Cougar Athletics Compliance Office does not receive comprehensive information on who gets free tickets.  The report notes that incomplete information on who receives free tickets could result in NCAA violations, since proper use of those tickets can’t be assured.  The audit found that the ticket office was “denied” complete information regarding who gets free football tickets.  In one specific instance, 4 premium club seats for the 2016 Arizona game were given away to “cultivate donors”.  Athletics was unable to report who received those free tickets because former Deputy Athletics Director Mike Marlow had destroyed those records.

Mismanagement of WSU Athletics major marketing contract was also discovered.  Since 2006, WSU has contracted with IMG for sports broadcasting, advertising and marketing.  Auditors found an amendment to the contract that wasn’t put out for competitive bidding as required.  IMG was given more football tickets than what’s in their contract.  Auditors found that IMG received over 40,000 dollars in free tickets above what’s required in their agreement for the 2016 season.  One amendment to the IMG contract was approved improperly by the former Director of the Cougar Athletic Fund Uri Farkas.  Other improper contract changes for IMG involved verbal deals made by staff which was outside their authority.

The audit’s scope was expanded further once examiners found that Marlow was inflating home football game attendance.  For the 2016 Arizona game, Marlow reported a near sell out crowd of almost 33,000 when only about 26,000 tickets were scanned for entry.  Later that season, Marlow reported that the Apple Cup against Washington was a “sellout” when actual scanned attendance was only around 27,000.  The audit notes that accurate attendance numbers are important for budgetary and facility planning purposes.

The audit also found potential violations of state law regarding special benefits and privileges for athletics staff regarding football tickets.  Employees have taken advantage of discounts to upgrade to the premium club seating area of Martin Stadium.  Those discounts weren’t offered to the public or to any other university employees which could be an illegal special privilege.  Auditors calculated that the possible illegal discounts potentially cost WSU over 130,000 dollars in lost revenue for the 2016 football season.  That discount has been in place since 2012.  The audit also discovered that over half of athletics staff who took advantage of the questionable discount for the 2016 season didn’t fully pay for their seats, including one staffer who owed nearly 3,000 dollars.  WSU Athletics has now ended that exclusive staff discount.

The problems uncovered in the audit came under former WSU AD Bill Moos who suddenly left for the AD job at Nebraska in mid-October.  The specific staff members identified in the audit by their positions left WSU following Moos’s departure.  Deputy Athletics Director Mike Marlow left for the AD job at Northern Arizona in December.  In January, Marlow hired Cougar Athletic Fund Director Uri Farkas to lead his external operations and development.

The general response from Cougar Athletics in the audit states that, “all aspects of the organization structure of WSU Athletics are being evaluated and will be restructured as appropriate by the new Director of Athletics.”  Pat Chun was hired by WSU President Kirk Schulz in January to be the Cougar’s new AD.

The extensive audit will be presented to the WSU Regents Finance and Compliance Committee during their meeting Thursday in Spokane.  You can view the full audit and the responses from Cougar Athletics here the report starts on page 15.