Contributions to the Razorback Foundation fell in a 12-month period affected by covid-19 while the foundation's legal fees topped $450,000, according to the latest IRS return submitted by the organization that supports University of Arkansas, Fayetteville athletics.
The foundation in May submitted its Form 990 return for the 12-month period that ended June 30, 2021, a time when a legal battle with former Razorback head football coach Bret Bielema led to a flurry of court filings in a dispute over payments owed to Bielema after his 2017 firing.
"The legal issues relating to former Coach Bret Bielema occurred over more than one fiscal year, and those fees were approximately $477,422 in full over two fiscal years," Meredith Pettigrew, a spokeswoman for the foundation, said in a written statement.
At the same time, total giving fell to its lowest level in more than 10 years for the foundation, which reported contributions and grants of about $25.7 million. The total decreased by about 5.1% from the $27.1 million collected the previous year.
Gifts to the foundation, whether tax-deductible giving or made to secure tickets, are used by the foundation to contribute annually to operating expenses for Razorback athletics -- including salaries paid to coaches and some administrators -- as well as construction and renovation projects.
"As you know, Razorback Athletics does not receive appropriated tax dollars or mandatory student fees to operate its program. As we have shared previously, a major reason for that success is the tremendous support provided by Razorback Foundation members who make gifts to our Annual Fund drive, capital projects, and other initiatives," Pettigrew said in the statement.
Pettigrew described foundation fundraising initiatives as "successful" during a 12-month period when seating capacity was reduced at UA athletic venues because of concerns about the coronavirus.
The time period covered by the most recent IRS return included weeks of uncertainty about the 2020 fall football season given the emergence of the coronavirus earlier in the year and the lack of any covid-19 vaccines at that time. The Razorbacks played a shortened season of 10 games in 2020, down from the normal 12 -- with 5 home games instead of 7 -- and covid-19 protocols limited attendance to about 23% of venue capacity.
"With regard to the 2020-21 athletics season, limited capacity within our venues due to the pandemic had an impact on corresponding revenues and donations associated with those sports," Kevin Trainor, a UA spokesman, said in an email. "Despite those challenges, the strength of support from Razorback Foundation members allowed the department to operate through the pandemic without cutting sports or eliminating staff."
The legal battle between the foundation and Bielema reached its most fevered pitch in the months before the April 2021 announcement of a settlement deal.
Bielema, the head Razorback football coach for five seasons, in the weeks after his firing had worked out a "release agreement" with the foundation that would pay him up to $11.9 million over three years.
But the legal dispute that led to a lawsuit filed by Bielema -- and then a counterclaim filed by the Razorback Foundation -- centered on the coach's subsequent employment.
Bielema, in his lawsuit filed June 12, 2020, in U.S. District Court in Fayetteville, stated that the foundation stopped making payments to him after January 2019, alleging a breach of contract.
But the Razorback Foundation in its court filings alleged that Bielema and agent Neil Cornrich worked together to suppress Bielema's earnings as a pro football assistant coach, among other claims.
In December 2020, the University of Illinois hired Bielema as its head football coach.
The settlement deal, as announced in April 2021, called for Bielema to receive a total of about $8.1 million in buyout money and for both sides to pay their own attorneys' fees.
Both sides agreed Bielema would receive a final payment of $3,529,167, and that amount is listed in the foundation's IRS return as a legal settlement contributing to the foundation's total expenses during the 12-month period.
The foundation listed $457,539 paid in legal fees for the 12-month period. The IRS return does not list who received the payments, but in the dispute with Bielema the foundation was represented by attorneys from the law firm of Friday, Eldredge & Clark, LLP, which has offices in Little Rock and Rogers.
In the previous year's IRS return, the foundation listed $69,802 in legal fees as an expense. The time period for the foundation's 2020 return overlapped with less than the first month of the legal dispute with Bielema.
Over the time period covered by the most recent IRS return, the foundation provided $7.7 million to UA for "operational funding" and $6 million for building and facilities projects, the document states. The foundation also provided $201,866 for scholarships.
Trainor said the foundation is providing more funding support for UA employees than in the past.
"As compensation has increased, additional private funds have been utilized to fund salaries over line-item maximum," Trainor said, referring to salary limits set by the state Legislature.
He did not directly respond when asked what portion of the $7.7 million provided by the foundation went to university employees as compensation.
Trainor said the UA athletic department "is fiscally strong and remains one of less than 20 financially self-supporting programs in the nation," thanking donor members of the Razorback Foundation, season ticket holders and other UA fans.
"The continued success of private donations through the Razorback Foundation and generated revenues have enabled Razorback Athletics to enhance the experience for more than 465 student-athletes while also providing the financial resources for various capital projects," Trainor said.
In the previous fiscal year -- which included the first months of the pandemic -- the foundation had seen contributions fall by about 13%.
But despite the downward trend in giving, the foundation's fiscal year 2021 saw total revenue of $26.1 million, which included $435,573 in investment gains, exceeding its total expenses of $21.7 million.
The foundation's report listed $241,688 in "reportable compensation" paid in 2020 to Scott Varady, the foundation's executive director, a decrease from the previous year when Varady was paid $250,824, according to the foundation's earlier IRS return.
The foundation, as of June 30, 2021, had about $72.2 million in net assets, up from a year earlier when the foundation reported having assets of about $62.4 million.