Missing money: California officials hit with new pay cut because box offices aren’t calculated right
By Zach Arnold | August 14, 2014
With two lawsuits and a major Federal indictment alleging extortion of individuals trying to keep the California State Athletic Commission alive, you would think that Monday’s CSAC meeting in Los Angeles would have been a quiet affair. Instead, Executive Officer Andy Foster made a startling & troubling admission that has inflamed the core of officials who work as referees, timekeepers, judges, and doctors at Athletic Commission regulated combat sports events.
One of the major changes being proposed by Andy Foster is a change to the current tier system used to pay officials working shows. Roy Englebrecht, a famous California promoter, argued on Monday that the tier system is unfair.
“It’s always amazed me that no other pro sport pays their officials based on the hard work of the owners and the promoters and we’ve had it in year in and year out.”
The current six-tier pay scale for California official is as follows:
- $0-$10,000: Referees $200, Judges $150, Timekeepers $125
- $10,000-$20,000: Referees $275, Judges $200, Timekeepers $150
- $20,000-$30,000: Referees $300, Judges $225, Timekeepers $175
- $30,000-$75,000: Referees $450, Judges $325, Timekeepers $250
- $75,000-above: Referees $650, Judges $550, Timekeepers $275
- PPV events: Referees $1000, Judges $900, Timekeepers $500
The new proposed three-tier pay scale will look like this:
- $0-$49,999: Referees $350, Judges $300, Timekeepers $200, Doctors $550
- $50,000-$99,999: Referees $450, Judges $350, Timekeepers $250, Doctors $650
- $100,000-and-above: Referees $650, Judges $550, Timekeepers $300, Doctors $750
Additionally, changes are coming in the amount paid out to doctors working events. Also, boxing referees assigned to title fights will be working undercard bouts just like MMA referees do.
On the surface, these aren’t earth shattering changes that would provoke major outrage. However, the process in which this this new pay scale was formulated, who was behind it, and the reasons for why it is being implemented has set off the alarm bells.
At Monday’s Los Angeles Athletic Commission meeting, Andy Foster stated that he approached both John McCarthy and Jack Reiss about the new pay scale plan.
Question: What legal authority do they have? They represent themselves. They’re not the ones taking a pay cut because they get the top bookings and have most-preferred status. There is no union for officials in California because they are licensees and licensees are independent contractors.
While that irritated quite a few officials in the state, what really provoked anger was Foster’s publicly-stated rationale as to why the pay scale for officials needed to be changed:
“As the commission is aware, the commission is charged to set these pay scales from time to time. So, a little bit of historical perspective on why the reason behind doing this and doing it now and why we’re doing it the way we’re doing it. There’s some confusion at the end of the night.
“Well, first of all, we have six pay scales currently, six different levels of pay, OK? There’s six different standards. 0-10, a 10-30, a 30-75, a 75-100, a 100-125, and 125-and-up. What we’ve done is we’ve changed this pay scale so that there’s three scales and the reason this was done is for two reasons.
“It makes it much easier for a promoter to budget the appropriate amount of funds for an officials packet and then…
“B, and probably more importantly, at the end of the night it puts a lot of pressure on our inspectors to calculate the box office correctly. And often times what we’ve been seeing happen is when the box office gets to Sacramento, there’s errors. OK. There’s errors because the box office is not calculated correctly at the event and it causes me to call the promoter up and to say, you need to send out more money to all these people or we have to get refunds…”
Commissioner Martha Shen-Urquidez, a consigliere of sorts for Andy Foster & John McCarthy, added:
“It will take a lot of the burden off the inspectors.”
Calculating the payoffs to officials IS THE EASY PART.
It doesn’t matter if you have a three-tier pay scale, a six-tier pay scale, or a 50-tier pay scale. The amount that you pay officials is based on the calculated box office. All you are doing, either by hand or by Excel spreadsheet formula, is taking the box office number at the end of the night and matching it up with the pay scale to give the officials their payoffs.
The current tier system for paying officials has no connection to problems related to errors calculating box offices.
Something is rotten in the state of Denmark
The admission by Andy Foster that he is having to call promoters up to either ask for more money from promoters or offer refunds means that the internal auditors know that the lead athletic inspectors being booked by Andy Foster & Mark Relyea are not doing their job right.
- If refunds are being offered, it means that promoters in California are paying too much.
- If promoters are being told after the fact to pay more money to officials, it means that the box office was undervalued and that the promoter owes extra money to both officials and the state of California for missed taxes.
Question: If promoters are being called by Andy Foster to give more money to pay officials based on improperly calculated box offices, are those same promoters being asked to pay additional taxes because the box offices were originally undervalued?
If internal auditors at Consumer Affairs are detecting a substantial amount of box office errors, imagine what the auditors are not able to detect in missing money from improperly calculated box offices due to massive incompetence or corruption at the show venues. In short, the state of California and Consumer Affairs is not receiving the full amount of money owed to them by promoters.
When Che Guevara was still in power as Chief Athletic Inspector, we wrote about the problems the state of California had in collecting missing money that was owed due to improperly calculated box offices. Monday’s admission by Andy Foster about box offices still being improperly calculated means one of three things:
- The athletic inspectors are too stupid at math and shouldn’t be calculating box offices.
- The athletic inspectors are not receiving enough training to calculate the box offices accurately. This, combined with a lack of on-the-job experience, is costing the state money.
- There’s possible on-going corruption possibly involving promoters or athletic inspectors.
It could be one of those three reasons or it could be all three of those reasons. Something is very wrong.
There are plenty of ways to skirt around paying the Athletic Commission the money that is owed to them. A few examples:
- Promoters cut deals with sponsors, give tickets in exchange. Tickets are then claimed as comps at shows.
- People with tickets sneak into shows and don’t give ticket stub to athletic inspectors.
- Containers with ticket stubs not sealed or padlocked by athletic inspectors, allowing for the possibility of tampering.
- Promoter tells inspector they sold tickets at a discounted rate but don’t produce physical tickets over-stamped with the discounted price. Inspector takes promoter at their word. Promoter didn’t really sell tickets at a discount but wanted to claim a discounted rate in order to pay less taxes. Example: Promoter sells tickets at face value of $50 but claims to inspector they were discounted and sold at $25 but there’s no proof of stamping those tickets as discounted. Instead of paying taxes on $50 tickets, the promoter pays taxes on $25 tickets according to the inspector’s paperwork.
- Promoter tells inspector that they have unsold tickets but don’t produce those unsold tickets for auditing purposes. The inspector takes the promoter at their word. Those “unsold” tickets may have been sold after all and therefore the promoter gets away with paying no taxes on those “unsold” tickets that were really sold.
Additionally, some athletic inspectors decide to rush & complete the box office before a show is over in order to get the officials their pay offs immediately rather than making them wait after a show.
All of this presents a scenario where promoters or inspectors have the means, motive, and opportunity to miscalculate a box office and not collect the full amount that is owed to the state of California.
Why is it the fault of officials and why should they take a pay cut?
Andy Foster is claiming that officials getting a haircut on pay via a three-tier pay scale system will help the front office because the athletic inspectors are screwing up box office calculations. This makes zero sense. If the box offices were calculated properly, then the officials would be paid accurately. It doesn’t matter what kind of tier system you use. Linking an officials pay scale to calculating a box office is a non-sequitur.
Why should officials in California take a pay cut because the athletic inspectors Andy Foster is booking aren’t collecting the right amount money owed to Consumer Affairs?
One official at Monday’s Athletic Commission meeting in Los Angeles took a stand and called out this faulty logic.
Dr. Lou Moret, top California boxing referee
Lou Moret, a top California boxing referee, called out Andy Foster & Roy Englebrecht for their remarks about the pay scale for officials. Moret put everyone on alert and warned that if his speaking out resulted in retaliation that there would be an investigation.
Lou Moret is the one official that no one at the Athletic Commission should want to piss off. He has political connections and can make things happen. Moret was on the board of CalPERS, California’s massive retirement pension system. He was also former Chief of Staff to state Assemblyman Richard Alatorre. Moret was named in a lawsuit where he was accused of arranging a $48 million dollar garbage contract in Los Angeles county. If you have political clout in Los Angeles, you have political clout anywhere in California. Lou Moret has friends in high places.
Lou Moret knows how Sacramento works. He can make phone calls to get favors done. With two inspector lawsuits against the Athletic Commission along with a Federal indictment alleging extortion against individuals trying to keep CSAC alive, the last thing the commission needs is more enemies. Amazingly, they are finding creative ways to make more enemies.
Blaming the current six-tier pay scale for officials on box offices being improperly calculated is completely wrong. The pay scale has nothing to do with calculating the box office.
By changing the pay scale from a six-tier system to a three-tier system, it increases the financial range in which athletic inspectors can screw up calculating a box office when determining payoffs to officials. Instead of working with a margin of error in the hundreds of dollars, the new margin of error will be in the thousands of dollars.
Officials working mid-level and big-level events will be taking a pay cut while club show promoters will be paying more for officials. This new policy not only protects the incompetency of lead athletic inspectors improperly calculating box offices, it also punishes promoters on the grass roots level. It will simply drive more shows to states like Arizona and Nevada. A top-down rather than bottom-up growth policy.
The California State Athletic Commission broke even in Fiscal Year 2013-2014. Imagine what the finances would look like if the lead inspectors Andy Foster & Mark Relyea booked were calculating box offices right and collecting all of the money that is owed to Consumer Affairs & the state of California.