Oak View Group CEO Tim Leiweke was indicted on a federal criminal conspiracy charge related to allegedly rigging a bid to develop, manage, and operate the University of Texas’ basketball and entertainment arena in Austin, the Department of Justice said Wednesday.
Oak View Group, which will pay $15 million in penalties in connection with the allegations, later Wednesday said that Leiweke “will transition from the position of CEO to” vice chairman of the entertainment venue giant’s board of directors, and remain a shareholder.
Leiweke, 68, is accused in the indictment of conspiring with another would-be bidder on UT’s $338 million Moody Center arena project to induce that second company in February 2018 to drop out of the competition with Oak View Group in exchange for receiving lucrative subcontracts at the 15,000-seat arena.
CNBC has been told the second company was Legends Hospitality, a New York-based venue services company that is majority-owned by Sixth Street Partners, and whose minority owners include the New York Yankees and the Dallas Cowboys.
The indictment in U.S. District Court in Austin says that Leiweke later reneged on that promise to the second company after it dropped its effort to bid on the entire project.
“The arena opened to the public in April 2022, and OVG continues to receive significant revenues from the project to date,” the Department of Justice said Wednesday.
Leiweke “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 of the DOJ’s Antitrust Division, in a statement.
Leweike, in a 2022 interview with CNBC, said that the Moody Center was one of his company’s “two most successful arenas.”
The DOJ also said Wednesday that Oak View Group and Legends agreed to pay $15 million and $1.5 million, respectively, in penalties “in connection with the conduct alleged in the indictment against Leiweke.”
Oak View Group’s website says that the company manages 400 sports, entertainment and other venues.
Lewieke, who is charged with one count of conspiracy to restrain trade, is the former CEO of Maple Leaf Sports and Entertainment. Before that, he served as CEO of Anschutz Entertainment Group.
A spokesman for Leiweke, in a statement to CNBC, said, “Mr. Leiweke has done nothing wrong and will vigorously defend himself and his well-deserved reputation for fairness and integrity.”
“The Antitrust Division’s allegations are wrong on the law and the facts, and the case should never have been brought,” the spokesman said. “The law is clear: vertical, complementary business partnerships, like the one contemplated between OVG and Legends, are legal.”
“These allegations blatantly ignore established legal precedent and seek to criminalize common teaming efforts that are proven to enhance competition and benefit the public. The Moody Center is a perfect example, as it has resulted in substantial and sustained benefits to the University of Texas and the City of Austin.”
Leiweke, in his own statement, said, “While I’m pleased the company has resolved its Department of Justice Antitrust Division inquiry without any charges filed or admission of wrongdoing, the last thing I want to do is distract from the accomplishments of the team or draw focus away from executing for our partners, so the Board and I decided that now is the right time to implement the succession plan that was already underway and transition out of the CEO role.
Oak View Group, in a statement, said, “Oak View Group cooperated fully with the Antitrust Division’s inquiry 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,” Oak View Group said.
CNBC has requested comment from Legends.
Chris Granger, who was president of Oak View Group’s division OVG360, has been appointed as interim CEO of Oak View Group by the company’s board.
Granger previously was group president for sports and entertainment of the Detroit Tigers and Detroit Red Wings, and president and chief operating officer of the Sacramento Kings.
