June 2015 Archives

Who are the Real Champions of Sports Corruption?

Guest Post by Thomas Mattera

Though FIFA’s corruption scandal dominated headlines for weeks, the inevitable has happened: the revelations have slowed to a trickle and sporting world has started to move on. Most previously captivated onlookers will return to the scene of these crimes again for one of only two reasons: to see if the next two World Cups will be moved or if FIFA President Sepp Blatter will mercifully fulfill his currently hollow promise to resign.

In turning the page, many in the United States are confident that the sports they enjoy domestically are free from misconduct contained in the FIFA accusations.

Unfortunately, this is a serious misconception. Though FIFA and its Cups have deservedly garnered the spotlight for alleged misappropriation of public funds, cover-ups, and labor violations, American sports have many of the same issues. The important difference: here they have been legalized and, gradually, normalized.

It shocks the world when kickbacks and campaign finance illegalities facilitate a taxpayer-funded, $900 million World Cup stadium in Brazil that currently functions as a bus depot. Meanwhile, this is public policy as usual in the United States as massive amounts of American public dollars annually go to a small group of billionaires, leaving stadium boondoggles with features like a multimillion dollar aquarium behind home plate.

Heads roll at its Zurich headquarters when FIFA is accused of suppressing incriminating evidence. Across the pond, the National Football League never has to admit guilt as it litigates away its cover up of the discoveries it made regarding the serious health implications of playing football professionally.

Finally, there is no shortage of international coverage surrounding the fact the World Cup generates billions in profit while the impoverished, unrepresented construction workers who make it happen risk serious injury for almost no compensation. Strangely enough, there is an eerie American equivalent that, although often criticized, continues on mostly unchanged.

This is not to say that American sports are free from unsanctioned trespasses. One only has to look at the recent revelation that the St. Louis Cardinals of Major League Baseball allegedly hacked into the database of a rival team to be reminded of that.

Nor is futbol’s governing body without its own maneuvers that operate dubiously yet legally. Case in point: like the NFL did for decades, FIFA has billions in the bank yet still masquerades as a nonprofit to claim tax-exempt status.

However, the fact remains that the FIFA allegations captivated the the sporting world while events in American sports that yield similar outcomes go unpunished and comparatively unnoticed every day. Though their sport suffered great embarrassment over the past two weeks at least, world soccer fans can at least find solace in the fact that the sources of their sporting injustice have been revealed, reviled, and now hopefully redeemed. Unfortunately, that is far more than can be said for the everyday injustice of the sporting landscape of their fellow sports fans stateside.

Dual Perils Confront the ACA

scylla-and-charybdis-bookpalace The Affordable Care Act is a Rube Goldberg-like contraption based on both private-sector competition and government subsidies. Both of those elements are in danger of collapse.

The disappearance of the federal subsidies that enable millions of lower-income people to purchase the coverage they are now required to have is, of course, a possible outcome of an imminent Supreme Court ruling. It is mind-boggling that the King v. Burwell case, a brazen effort by diehard Obamacare opponents to exploit an obvious drafting error in the ACA, has gone this far and might actually succeed. It says a lot about the mangled state of public policy in this country that we see a front-page story in the New York Times about the growing panic among conservatives that they might win and be held responsible for the ensuing chaos. Apparently, they forgot there is a difference between taking meaningless votes in the House and bringing a case to a high court with a significant contingent of Justices inclined to take ideological posturing seriously.

Also at risk is the system in which private insurance carriers are supposed to compete against one another to provide coverage in the exchanges to their expanded pool of captive customers. In many places, that competition was not very robust to begin with, but now it may become even more diminished.

According to reports in the business press, the biggest for-profit health insurance companies are looking to gobble up their slightly smaller rivals. The Wall Street Journal says UnitedHealth Group has its eye on Aetna, which in turn is said to be exploring some form of cooperation with Humana, whose success in selling supplementary insurance to Medicare enrollees is attractive. At the same time, the Journal reports, Anthem has been in negotiations with Cigna, which is also said to be talking to Humana.

We can see where all this is going. Unless antitrust regulators show some backbone, the current private health insurance oligopoly could turn into a duopoly. The non-profit portion of the market does not provide much help. The 37 independently owned companies that make up the Blue Cross and Blue Shield network are increasingly inclined to divvy up markets and avoid competing with one another, according to lawsuits now pending in federal court. The litigation charges that the behavior of the Blues, some of which are controlled by for-profits such as Anthem, is driving up premium costs for customers while at the same time pushing down payment rates for physicians and other healthcare providers. These predatory practices threaten both the ACA and traditional employer-provided plans.

In the eyes of the Administration, the big insurers are the good guys. Initially suspicious of the ACA, the companies came to accept the law and even turned into major boosters. They embraced ACA’s Medicaid expansion component, seeing opportunities for managed care business in some states, and supported the Administration’s position in King v. Burwell. A SCOTUS ruling in the other direction would take a big hit on their soaring stock prices.

That’s where mainstream healthcare reform has left us — caught between predatory insurance providers on the one side and nihilistic ideologues on the other.

Eliminating the Burden of Predatory Student Debt

student debt strike The Obama Administration has done the right thing in forgiving the debts of students who attended the schools run by Corinthian Colleges, the for-profit education racket that recently shut down and filed for bankruptcy amid widespread charges of fraud and a $30 million federal fine. Yet the action should have come much sooner and should be much wider in scope.

Over the course of 20 years, Corinthian, once a Wall Street darling, built an empire of some 100 schools offering dubious post-secondary career training programs to hundreds of thousands of students across the country. The company deceived applicants into signing up for expensive degrees of questionable value in landing good jobs, much of which made possible by the availability of what amounted to predatory federal student loans.

There have been questions about Corinthian’s practices for more than a decade. By 2004 the company was being investigated by the U.S. Department of Education and the attorney general of California, where the company was based. A narrowly focused SEC probe went nowhere, but more state cases were launched, along with student-initiated lawsuits.

California finally brought suit against Corinthian in 2013, accusing it of false and predatory advertising, securities fraud and intentional misrepresentations to students. At the same time, however, a federal appeals court ruled that the plaintiffs in the separate student lawsuits had to take their claims to arbitration, a process known for favoring corporations.

In 2014, under pressure from federal and state regulators, Corinthian began selling off its campuses or phasing them out. The company was then sued by the federal Consumer Financial Protection Bureau for illegal predatory lending. This helped bring about an announcement by Zenith Education Group, which had purchased many of Corinthian’s remaining properties, that it would forgive 40 percent of outstanding student loans.

Yet that was not enough. There were growing calls to cancel all the debt of Corinthian students. Some of those students did not wait for officials to act; they launched a debt strike. It was in this context that the Obama Administration’s action finally came, though the strikers are disappointed that the Education Department is not simply discharging the debt outright but is instead setting up a bureaucratic application process.

It may be hard to believe but there was once a movement called Wages for Students, which argued not only that those in school should not have to take on debt but they should in fact get compensated for the time spent being prepared to be more useful for a future employer. That view lost out to the ideology of personal responsibility and the mistaken notion that the average person can borrow his or her way to prosperity — a notion was exploited by predatory operators such as Corinthian using the federal government as their enablers and their collection agencies.

It is a positive development that the discussion has shifted from simple debt alleviation to the alternative of debt cancellation, but the process should not stop with Corinthian, which was egregious but not unique. There are plenty of other for-profit educational companies that have saddled students with debt for degrees of questionable value, or in many cases no degree at all.

The federal government did a lousy job addressing the predatory lending in the housing sector that contributed to the financial meltdown and seriously damaged the economic well-being of much of the population. Now it should make up for that failing by doing an aggressive and thorough job of eliminating abusive student debt once and for all.

California Schemin’

la stadium (2) — Rendering of proposed Rams Inglewood stadium

Guest Blog by Thomas Mattera

Most of the hot air released at last month’s National Football League owners meeting in San Francisco had nothing to do with ball deflation. Instead, the hyper-exclusive club, with three dozen members and a cumulative net worth of $77,000,000,000, discussed something much more important long-term than a month without Tom Brady’s chiseled jaw: the possible move of several teams to the Los Angeles area as early as the 2016 season.

The star-struck franchises in question, the St. Louis Rams, Oakland Raiders, and San Diego Chargers, have each ramped up their efforts in the last few months. The Rams have wasted no time imploding historic structures to make room on a plot of land in suburban Inglewood recently acquired by team owner Stan Kroenke. Meanwhile, the Raiders and Chargers are proposing a joint $1.7 billion stadium in nearby Carson, to be paid for largely by a certain vampire squid’s creative accounting.

These maneuvers are nothing new. Threatening to move your team to Los Angeles is as ubiquitous in the NFL as unpunished domestic violence and long term tax dodging. Since the league left the City of Angels in 1995, an owner claiming to be interested in moving there has become a perennial event, with more than half of the league’s franchises using the football-vacant city as leverage at one point or another. The playbook at this point is tried and true:

Claim your current stadium is too old to compete for paying customers and is fast becoming structurally unsound.
Insist taxpayers bear the cost of a new stadium or large-scale repairs to your old one.
If demands are not immediately met, float the possibility of moving to Los Angeles.
Champion the idea that a new stadium will bring much needed economic development to a struggling area. Pay no mind to the overwhelming evidence debunking this theory.
(optional) If local officials still wont capitulate, fly in a theoretically impartial high ranking NFL official to seal the deal.
When area politicians inevitably cave, announce that you will be staying because of your undying loyalty to the hardworking fans of (insert city here).
Reap the near instant private rewards as the value of your team skyrockets while the city deals with the decades-long impacts of unforeseen construction costs and hundreds of millions in public debt.

The owners of the Rams, Raiders, and Chargers have shown no interest in deviating from this well-worn gameplan. Kroenke, a billionaire six times over who built his empire by marrying into the Walton family and developing shopping centers (many of them subsidized projects anchored by Walmarts), has yet to even sit bother to sit down with officials in St. Louis to try to broker a compromise. Yet this has not stopped the cash-strapped city from offering a new stadium deal replete with public financing.

Not to be outdone, the owners of the Chargers and Raiders recently announced in a joint statement that “If we cannot find a permanent solution in our home markets, we have no alternative but to preserve other options to guarantee the future economic viability of our franchises.” Unlike the Rams, however, both current California teams face fierce pushback against public funding for new stadiums from legislators and residents. These cities are indicative of how American municipalities are slowly realizing the error of their ways and beginning to demand an end to subsidized billion-dollar boondoggles.

If the people of Oakland and San Diego stay organized in their resistance, the owners of the Rams and Chargers may be forced have to skip all the way down to the fine print at the bottom of the owners playbook:

If you cannot sufficiently extort a wildly favorable deal from your current city, just move to Los Angeles.

After all, teams do occasionally follow through on their threats and actually relocate. Case in point: The Rams left L.A. for St Louis 20 years ago, in large part because of the construction of the Edward Jones Dome, a building for which Missouri taxpayers still owe millions a year in annual maintenance payments for the next decade, even if the Rams move back West.

Additionally, there is an obvious reason teams have and continue to make the L.A. threat even if, for them at least, it is almost always an idle one. America’s largest traffic jam is the nation’s No.2 media market and in the past has shown it will support professional football. Moving there may be the best way for NFL owners to support their real favorite team: The Greenbacks.

These factors are not lost on the Rams, Raiders, or Chargers. Any of the three could ultimately decide to move past hypotheticals and formally propose a move at the next owners’ meeting in August. It is here where they will face a group significantly less generous than a bunch of local political pushovers. Any move to L.A. needs to be approved by 24 of the NFL’s 32 franchises, which figures to be a tall order. After all, with the L.A. vacancy filled what will the rest of the owners do the next time they feel the hankering for a shiny new stadium? Negotiate in good faith? Or..gasp..actually pay for it themselves?

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