The CEO of the finalist developer that LSU enlisted to potentially build a new arena on campus has been indicted in a federal case saying he rigged the bidding process over a similar project at the University of Texas at Austin.
The U.S. Department of Justice announced Wednesday that Oak View Group founder and CEO Timothy J. Leiweke was indicted by a federal grand jury "for orchestrating a conspiracy to rig the bidding process," the DOJ said.
Records obtained last year by The Advocate | The Times-Picayune showed that Oak View Group and ASM Global were the finalists for an LSU arena project that university officials pitched as a replacement for the Pete Maravich Assembly Center. LSU Athletic Director Scott Woodward said in late May that LSU had locked in on working with the Oak View Group and that ASM was out of the running, though he did not give a reason why.
Both companies are tied to the indictment against Leiweke, who was working for Oak View while he was accused of coaxing competitors from Legends, which acquired ASM last year, to drop their bid for the Moody Center at UT Austin.
Previously, LSU officials repeatedly said they hoped to model the new arena after the Moody Center.
LSU estimated the project to cost $400 million, and has considered using public land at the LSU Golf Course to house it, along with a potential tax from a new economic development district. One of the architects of the plan, Baton Rouge developer Charles Landry, previously said there would be no public bid process for the arena deal.
Reached Wednesday, Landry did not answer questions about how the indictment would affect the LSU arena project. The LSU Foundation referred comment to the LSU Athletics Department, who said "we’re aware of today’s news and will continue to monitor developments." They referred further comments to Landry.
While Landry and LSU leaders have pointed to the Moody Center as their inspiration, the federal indictment says the process for building the Moody Center was rigged.
“Timothy Leiweke allegedly led a scheme designed to steer the contract for entertainment services at a public university's arena to his company," said FBI Assistant Director in Charge Christopher G. Raia in a statement. "Public contracts are subject to laws requiring an open and competitive bid process to ensure a level playing field."
Oak View Group head allegedly convinced competitor to 'back down'
As Leiweke set his sights in 2017 on building a new arena for UT, he emailed others saying he was surprised that another company — Legends — was bidding against them, according to the indictment filed in the Western District of Texas. Leiweke mused in his emails about getting the other company "to back down."
"More than happy talking to them about not bidding and doing [food and beverage], but no interest in working with them if they intend on putting in a bid," he wrote, according to the indictment.
Leiweke allegedly reached an agreement with the competitor to stand down in vying for the project, and agreed instead to award them subcontracts. The Oak View Group submitted the sole qualified bid to build the Moody Center, which opened in 2022, and the DOJ said the company continues to reap revenues from it.
A spokesperson for Leiweke denied that he'd done anything wrong on Wednesday and said he would "vigorously defend himself." She said the DOJ case seeks to criminalize a common practice of teaming efforts between companies, which she said both enhance competition and benefit the public.
"The Antitrust Division’s allegations are wrong on the law and the facts, and the case should never have been brought," said Ellen Davis, a spokesperson for Leiweke, in a statement. "The law is clear: vertical, complementary business partnerships, like the one contemplated between OVG and Legends, are legal."
Companies agree to pay fines
Neither the Oak View Group nor Legends Hospitality were prosecuted, but both agreed instead to pay civil fines to the DOJ. OVG agreed to pay $15 million in penalties related to the case, while Legends agreed to pay $1.5 million in penalties.
Legends now manages both the Caesars Superdome and the Smoothie King Center in New Orleans through its ownership of ASM Global.
OVG said in a statement Wednesday that the company fully cooperated with the DOJ investigation "and is pleased to have resolved this matter with no charges filed against OVG and no admission of fault or wrongdoing. We support all efforts to ensure a fair and competitive environment in our industry and are committed to upholding industry-leading compliance and disclosure practices."
OVG did not answer a direct question about how the case would affect plans for the LSU arena project.
LSU officials agreed in late May to create a subdistrict that would levy a 1-cent tax on sales at the new arena. They've also signed off on plans to collect another 1-cent sales tax within a broader LSU economic development district.
The DOJ said the public and taxpayers suffered from the bidding process involved in the Moody Center.
“The defendant rigged a bidding process to benefit his own company and deprived a public university and taxpayers of the benefits of competitive bidding,” said Assistant Attorney General Abigail Slater in a news release. “The Antitrust Division and its law enforcement partners will continue to hold executives who cheat to avoid competition accountable.”