For more than two years, Florida Atlantic University has been searching for the name of a corporate sponsor to adorn its new 30,000-seat, palm-ringed football stadium.
The public university on Tuesday announced an unconventional partner: the nation's second-largest operator of for-profit prisons, the GEO Group Inc. The newly christened GEO Group Stadium came as part of a $6 million donation from the prison company's charitable foundation, which will be paid out to Florida Atlantic over 12 years.
America has a long tradition of unusual corporate athletic sponsorships -- Cleveland's Quicken Loans Arena and Houston's Enron Field (now Minute Maid Park) come to mind. But the GEO Group Stadium puzzled several experienced sports marketing experts.
Stadium sponsorships usually involve a product that a company wants to market to consumers: Cars, in the case of the Mercedez-Benz Superdome in New Orleans; or bank services, with Citi Field in New York. GEO Group's customers are government agencies offering contracts. Prisoners don't have a choice of where they land behind bars.
"It appears to be a charitable gift that is trying to be a marketing vehicle, and it just doesn't make a lot of sense," said Paul Swangard, managing director of the Warsaw Sports Marketing Center at the University of Oregon's business school. "To link themselves with an athletic department when their business is locking people up, it just doesn't connect to me really well."
Critics of the private prison industry said the donation to a public university in Florida falls in line with efforts to gain influence with state and local public officials who decide whether to hand out contracts.
"The company is dependent on public dollars for all of its profits," said Bob Libal, executive director of Grassroots Leadership, a criminal justice advocacy group. "When you look at other things that GEO gives to, it's generally in communities where they either have contracts or are seeking contracts, and certainly Florida is a state where GEO has tremendous interest."
For the last three election cycles, the GEO Group has donated more than $1.2 million to the Florida Republican Party. Republicans in the state legislature last year came close to approving a massive expansion of private prisons in south Florida, a deal that the GEO Group mentioned frequently in calls with investors.
GEO Group revenue has nearly tripled over the last decade, as the company has captured growing shares of state inmate populations and secured contracts to detain hundreds of thousands of undocumented immigrants apprehended by the federal government. Critics have pointed to a string of problems at GEO's facilities in recent years, including at a youth correctional center in Texas, where state inspectors found "filthy" and "unsafe" conditions that included feces on walls.
Officials at the GEO Group and Florida Atlantic University asserted that the naming rights were part of a philanthropic mission, and that the company and its chief executive have longstanding ties with the community. A Geo Group spokesman, Pablo Paez, wrote in an email that the $6 million donation was "consistent with the GEO Group Foundation's commitment to fund educational causes and scholarships."
"Often, companies are criticized for not engaging in enough philanthropic ventures, but we strongly believe in the importance of good corporate citizenship," Paez said, adding that the gift will help "thousands of students attend a first-class institution of higher learning over the next 12 years."
GEO Group is based in Boca Raton, Fla., about four miles from Florida Atlantic Unviersity. The company's chief executive, George Zoley, received his bachelor's and master's degrees from the university and previously was chairman of the university board of trustees.
A university spokeswoman, Lisa Metcalf, wrote in an email that the naming rights are "not a corporate sponsorship" because the company will neither receive tickets nor additional promotional benefits, such as program advertising or television commercials.
But marketing experts pointed out that naming rights are a major marketing move, no matter how the deal is structured. Thousands of people attending games or driving past the stadium, with its ocean view stands, will see GEO Group's name.
"If it's pure philanthropy, you don't ask for your name to go on the stadium," said Don Sexton, a professor of marketing at Columbia University's Business School and president of the Arrow Group, a marketing firm. "The only reason you want your name on the stadium is because you want to get something back."
For GEO Group and its line of work, Sexton said enhanced name recognition may pose problems for the company and the university.
"Before you put your name on a stadium, you should do your due diligence, especially if there might be some controversy," Sexton said. "And most people could have guessed that there might be some controversy here."
Florida Atlantic officials did not respond directly to questions about its choice of a naming partner. Metcalf, the university spokeswoman, wrote that GEO Group had "always been at the top of our list" because Zoley is an alumnus and because the company employs 18,000 people, "many of whom are FAU alumni." Paez, the company spokesman, said, "We would hope that those critics can for one day put aside their criticisms and join us in supporting this important endeavor for the betterment of higher education in the State of Florida."
The university built the $70 million football stadium in 2011, borrowing more than $45 million. Since 2011, the school has been searching for a named sponsor to provide $400,000 annually to pay down the debt.
The university fired the former athletic director, Craig Angelos, due to fundraising issues, according to local news reports.
Florida Atlantic described the $6 million GEO Group donation as the "largest one-time gift in the history of FAU athletics," and said it will be used to support the stadium, the school's intercollegiate athletic program, scholarships and "academic priorities."
1. Martin L. Grass
> Company: Rite-Aid<br> > Current status of the company: Still active<br> In 1999, Rite-Aid (NYSE: RAD) CEO Martin L. Grass, the son of company founder Alex Grass, was forced to resign from the post he had held for just four years. Grass was formally indicted in 2002, along with several other high-ranking executives at the drugstore chain, for conspiracy to defraud, making false statements, as well as accounting fraud. In 2004, Grass pleaded guilty and reached a plea agreement to serve at least eight years in prison and pay a $500,000 fine, as well as waive $3 million in owed salary. In 2009, Grass moved into a halfway house and was subsequently released in 2010.<br> <a href="http://247wallst.com/2012/05/17/top-ten-ceos-sent-to-prison" target="_hplink">Read more at 24/7 Wall St.</a>
2. Joseph Nacchio
> Company: Qwest<br> > Current status of the company: Acquired<br> In March, 2005, telecommunication company Qwest's CEO Joseph Nacchio and several executives were indicted by the SEC. The charges included inflating revenue estimates, lying about nonexistent forthcoming government contracts, and illegally profiting from the run-up in the stock price. In 2007, Nacchio was sentenced to six years in prison. He was also ordered to pay a $19 million fine and forfeit an additional $52 million he had made through illegal trading. Nacchio appealed several times, losing his final appeal in the U.S. Court of Appeals for the Tenth Circuit. He began serving his term in February, 2009, but even now his legal team is petitioning to be heard in the Supreme Court.<br> <a href="http://247wallst.com/2012/05/17/top-ten-ceos-sent-to-prison" target="_hplink">Read more at 24/7 Wall St.</a>
3. Walter Forbes
> Company: Cendant<br> > Current status of the company: Split up<br> In 1998, Hospitality Franchise Systems, a platform used to purchase hotel chains, merged with direct marketing company Comp-U-Card International to form Cendant. The new corporation soon discovered, however, that Walter Forbes, CUC's former CEO and the CEO of the newly formed Cendant, had grossly misrepresented the financial status of CUC. He reported at least $500 million in nonexistent profits. Forbes, who insisted he knew nothing about the situation, was forced out. By 2002, the ex-CEO was indicted under fraud charges, and in 2007, after years of appeals, he was sentenced to 12 years in prison and $3.28 billion in damages. In 2005, Cendant split up and spun off into several different companies.<br> <a href="http://247wallst.com/2012/05/17/top-ten-ceos-sent-to-prison" target="_hplink">Read more at 24/7 Wall St.</a> Read more: Top Ten CEOs Sent to Prison - 24/7 Wall St. http://247wallst.com/2012/05/17/top-ten-ceos-sent-to-prison/#ixzz1vEd1RweC
4. Richard Scrushy
> Company: HealthSouth<br> > Current status of the company: Still active<br> Richard Scrushy, former CEO of HealthSouth (NYSE: HLS), has 20 years of illicit practices to his credit. Scrushy authorized the firing of whistle blowers, bribed and threatened HealthSouth execs and was complicit in illegal accounting practices. In November, 2003, Scrushy was indicted on charges of conspiracy, securities fraud, money laundering and mail fraud. However, the slippery Scrushy was acquitted on all charges in June, 2005. Less than four months later, he was indicted once again, this time on 30 counts of extortion, obstruction of justice, money laundering, racketeering and bribery. In June, 2007, Scrushy was finally sentenced to six years and 10 months in prison.<br> <a href="http://247wallst.com/2012/05/17/top-ten-ceos-sent-to-prison" target="_hplink">Read more at 24/7 Wall St.</a>
5. Bernard "Bernie" Ebbers
> Company: WorldCom<br> > Current status of the company: Bankrupt and acquired<br> The fall of Bernard "Bernie" Ebbers, former CEO of WorldCom, began once the telecommunication company's proposed merger with Sprint (NYSE: S) fell through in June 2000 due to antitrust laws. WorldCom's stock subsequently plummeted and Ebbers and his executive team continued to rearrange the books to the tune of $11 billion in a desperate attempt to cover up losses. In 2002, the fraud was discovered by internal auditors and Ebbers ousted. In March 2005, Ebbers was convicted of conspiracy, securities fraud and seven counts of filing false reports with regulators. He's currently serving a 25-year sentence in a Louisiana jail.<br> <a href="http://247wallst.com/2012/05/17/top-ten-ceos-sent-to-prison" target="_hplink">Read more at 24/7 Wall St.</a>
6. Jeffrey Skilling
> Company: Enron<br> > Current status of the company: Dissolved<br> Along with Chairman Kenneth Lay, former Enron CEO Jeff Skilling was instrumental in the Enron mega-scandal. Skilling encouraged the use of mark-to-market accounting, which appraises holdings based on expected values. In Enron's case, the lack of concrete pricing data for energy allowed it to act on overly optimistic forecasts. This accounting tactic resulted in Enron grossly overvaluing its holdings and sometimes even reporting gains on contracts that resulted in losses. Adding to his rap sheet, Skilling signed off on Chewco, a subsidiary of Enron that essentially served as a closet in which the company could stuff any debt it was trying to conceal. When Chewco's accounting practices were discovered, Enron was forced to adjust the company's books to reflect $405 million in additional losses; it was the beginning of the end. In May, 2006, Skilling was convicted of conspiracy, securities fraud and making false statements to auditors. He was sentenced to 24 years and four months in prison.<br> <a href="http://247wallst.com/2012/05/17/top-ten-ceos-sent-to-prison" target="_hplink">Read more at 24/7 Wall St.</a>
7. John Rigas
> Company: Adelphia<br> > Current status of the company: Paying creditors before dissolving<br> In 2002, John Rigas was forced out of his position as CEO of cable provider Adelphia after being indicted of securities, bank, and wire fraud. Six other executives were also charged in the incident, including his two sons, Timothy and Michael. It became apparent during the trial that Rigas and his sons had used corporate funds for personal expenses. They had also concealed several billion dollars in owed loans. In 2003, a year after the incident began, Adelphia was still a member of the Fortune 500 companies. By 2006, the scandal had finally caught up with it, and the corporation had spiraled into bankruptcy as a direct result of the scandal. Rigas was sentenced to 15 years in federal prison, and is scheduled to be released in 2018.<br> <a href="http://247wallst.com/2012/05/17/top-ten-ceos-sent-to-prison" target="_hplink">Read more at 24/7 Wall St.</a>
8. Dennis Kozlowski
> Company: Tyco<br> > Current status of the company: Still active<br> In 2002, CEO Dennis Kozlowski and chief financial officer Mark H. Swartz, were accused of illegally siphoning off roughly $600 million from Tyco (NYSE: TYC). Kozlowski is mostly famous for his unabashed opulent spending of the monies he stole, shelling out for $6,000 shower curtains, expensive artworks and lavish corporate parties. He also threw private parties at the company's expense, including a Sardinia bash that included ice sculptures and a performance by Jimmy Buffett. Kozlowski was charged for receiving bonuses he claimed were paid at the direction of Tyco's board of directors. A judge disagreed and in June, 2005, convicted Kozlowski of theft. He was sentenced to serve a minimum of eight years and four months and a maximum of 25 years.<br> <a href="http://247wallst.com/2012/05/17/top-ten-ceos-sent-to-prison" target="_hplink">Read more at 24/7 Wall St.</a>
9. Sanjay Kumar
> Company: Computer Associates<br> > Current status of the company: Still active, renamed<br> Sanjay Kumar, former CEO of Computer Associates, led a $2.2 billion fraud at the company almost entirely via cooking the books. He and his fellow execs utilized sometimes comically simple tactics such backdating contracts and adding an extra week to the financial reporting period -- "the 35-day month." Kumar escaped prosecution for more than five years. His fraud started before 2000, but it was not until 2006 that he was finally indicted on charges of obstruction of justice and securities fraud. He was convicted and is currently serving a 12-year prison sentence.<br> <a href="http://247wallst.com/2012/05/17/top-ten-ceos-sent-to-prison" target="_hplink">Read more at 24/7 Wall St.</a>
10. Martha Stewart
> Company: Martha Stewart Living Omnimedia<br> > Current status of the company: Still active<br> Implicated in the ImClone insider trading scandal, former Martha Stewart Living Omnimedia (NYSE: MSO) CEO Martha Stewart is the most famous entry on this list. Stewart's troubles began Christmas Day, 2001. That is when Samuel D. Waksal, CEO of ImClone Systems, found out that the company's experimental cancer drug Erbitux had been denied Food and Drug Administration approval. Waksal passed the information to friends and family, including his broker, Peter Bacanovic. He, in turn, tipped off Stewart, who dumped her shares before the news became public knowledge. Stewart was charged and ultimately convicted -- not of insider trading, but of perjury. She was sentenced in July, 2004, to five months prison time and two years probation.<br> <a href="http://247wallst.com/2012/05/17/top-ten-ceos-sent-to-prison" target="_hplink">Read more at 24/7 Wall St.</a>