Allen’s Sports School Fails to Materialize : Orange County Site Not Started Though Nearly $2.7 Million Has Been Spent

When George Allen moved his National Fitness Foundation out of Indianapolis in 1985, he left behind the cornerstone for what he hoped would be the first national fitness academy, a unique center for the coaches who train America’s young athletes.

Three years and millions of dollars later, the cornerstone, still unused in Indianapolis, is all that has been built of Allen’s pet project.

Despite the support of some of America’s most prominent corporate and athletic personalities, including President Reagan, and despite a steady succession of high-profile fund-raising events that have helped bring in more than $2.7 million, nearly all of which has been spent, not a shovel of dirt has been turned at the south Orange County site chosen for the academy.

The foundation hopes to build the U.S. Fitness Academy on a 175-acre patch of rolling meadow in Laguna Hills. But trustees of Allen’s nonprofit foundation recently scaled back the academy’s size substantially and cut its cost from $50 million to $30 million, in part because money has been so difficult to raise.

Details of how the foundation has raised and spent money became clear in a Times review of records collected from nine government agencies in five states and Washington. The review showed that:

--Whatever its problems in launching construction of the academy, the foundation claims on its tax forms to have spent an impressive 84.7% of its revenue--a far greater amount than the standard set by a national charity watchdog agency--on its professed goals of promoting fitness and the academy. This figure includes a substantial amount spent on its annual banquets. But, looked at another way, about 80 cents of each dollar raised went for salaries, fees and travel and conference expenses, according to the tax returns.

--The banquets have helped the foundation raise more than two-thirds of its income. But the banquets themselves have been costly fund-raising devices, with expenses accounting for more than 46% of the proceeds.

--The foundation’s decision to leave Indiana for California also proved costly, even though the foundation refused to return $250,000--its largest single contribution--to the Eli Lilly Endowment when the endowment asked for the money back. After the foundation moved west, the Indianapolis-based Lilly Endowment gave it no more money but instead contributed $6 million to build a different fitness academy that has since opened in Indianapolis.

In attempting to review the foundation’s performance, The Times learned that the foundation’s volunteer board of trustees never adopted a formal budget. Nor has the corporation filed required financial reports in Illinois, California and Orange County.

Foundation officials refused to provide The Times copies of the corporation’s tax returns and financial statements.

Allen, the former pro football coach who is both foundation chairman and chief executive officer, dismissed the corporate filing problems as “a few little things that anybody could overlook.” Those problems, he said, are being corrected.

And he insisted: “There has been a hell of a lot accomplished.”

He said that the academy still will be built, albeit on a smaller scale and in affordable phases, rather than all at once.

And although the foundation has not raised vast sums, Allen said, it has used some of its revenue to establish programs such as summer camps for teachers and students that can operate at the academy when it is completed.

“When we get the academy built, boom, here’s the program!” said Allen, who has maintained his confidence through six lean years of fund raising.

Said foundation Executive Director Hal Trumble: “These things don’t come easy and they don’t come quick. . . . I’ve been here a year now and I’m trying to get this thing on the right track.”

Allen, former coach of the National Football League’s Rams and Washington Redskins, was serving as the unpaid chairman of the President’s Council on Fitness and Sports when he came up with the idea of building a national academy as a training center for coaches and a clearinghouse for fitness research. He wanted to model the facility after similar academies in Europe.

Allen incorporated the private, tax-exempt National Fitness Foundation in October, 1982, in Illinois, intending to raise money to build the fitness academy, something the President’s Council could not undertake because it is a government entity.

“I want to do something that’s bigger than football,” Allen said in a recent interview, explaining his motivation.

But Allen stressed that the purpose of his foundation is broader than simply building an academy. The foundation also exists to finance and promote fitness programs for the public, according to documents on file with the California Franchise Tax Board.

In its early years, Allen conceded, the foundation operated as if it were an adjunct of the President’s Council. Foundation office employees worked on President Council business, and the distinction between the two operations was blurred.

“About ’85 somebody complained,” Allen recalled. “We just figured that since there was a complaint that we better keep everything separate.”

Government records show that while conducting private foundation business, Allen charged expenses to the tax-supported President’s Council. Expense vouchers from Dec. 8, 1982, through Dec. 12, 1984, show Allen charged the President’s Council $5,520 for travel, lodging and meals involving foundation business.

In 1985 Allen stopped charging foundation business to the President’s Council, the expense records show.

Also in 1985 the foundation’s income tax returns first showed a salary for Allen and its new full-time executive director, two-time Olympic decathlon champion Bob Mathias, who since has left the foundation.

And it was during this period that the foundation began spending more money than it brought in, with a deficit for 1985 and 1986 of $358,589.

Internal Revenue Service income tax returns show that Allen’s salary was $78,126 in 1985 and $125,000 in 1986.

But Allen and foundation treasurer Willard Harris, who also signed the tax returns, said in interviews that Allen actually was paid only about $30,000 to $40,000 in salary over a two- or three-month period. The balance was donated back to the foundation, they said.

“I could see that if I continued to take a salary we weren’t going to make it, so I said forget about the salary,” Allen recalled.

Indeed, Allen said, heading the foundation has cost him money.

“I just took a trip for the foundation and didn’t charge 15 cents,” said Allen, who in May traveled to Czechoslovakia, representing the foundation at an international symposium. “This has been the most costly financial thing I’ve ever gone through.”

Much of the foundation’s money has been spent trying to raise money.

The foundation’s largest source of income--its annual banquets--have honored dignitaries such as First Lady Nancy Reagan and comedian Bob Hope.

At one of them, on Oct. 16, 1986, in Irvine, foundation treasurer Harris said: “As you all know, all of the proceeds from tonight’s event are earmarked for construction of the Fitness Academy . . . right here in Orange County.”

Harris, a Newport Beach developer, said in an interview that the Irvine dinner proceeds were used to pay consultants working on the academy.

But first there were other bills to pay.

Tax returns show the foundation received a total of $1,585,344 from the Irvine dinner and four other annual awards banquets held in New York from 1982 to 1986.

However, the net proceeds were only a little more than half the take--$845,947.

The foundation’s tax returns for 1987 have not yet been filed, but Madelon Marfield of Projects Plus, Inc., the New York fund-raising firm that organized the New York banquets, said the 1987 dinner raised $408,350. Marfield refused to say how much was left after paying expenses.

Allen estimated that the foundation had about $250,000 in the bank before this year’s awards dinner, which was held last June 14 at New York’s Waldorf Astoria Hotel.

Lagging fund-raising has made it impossible for Allen to make good on his promise to President Reagan that the U.S. Fitness Academy would be built before the end of his administration in January, 1989.

In 1984 the foundation announced that it had obtained “seed money” for the academy from the Eli Lilly Endowment of Indianapolis, the nation’s fifth largest private foundation. In its promotional literature, the National Fitness Foundation said that the Lilly grant had “influenced the site selection” of the proposed academy.

But in 1985, lured by the promise of free public land in Orange County, the foundation moved its offices west and decided to build the academy in Laguna Niguel.

The Lilly Endowment had donated $250,000 of a promised $400,000 to the foundation, but the foundation’s move prompted the endowment officials to ask for their money back.

Foundation trustees decided not to return the money, and since then, the Lilly Endowment has contributed nothing more to the National Fitness Foundation. Instead, it donated $6 million toward the construction of an alternate project, the recently completed $12-million, 125,000-square-foot National Institute for Fitness and Sport in Indianapolis. The facility provides many of the services planned for the U.S. Fitness Academy.

“Maybe we shouldn’t have moved the academy from Indianapolis,” Allen allowed recently.

The National Fitness Foundation now operates out of offices in El Segundo and El Toro, which are staffed by Allen, Trumble and three assistants.

Architectural fees and related expenses account for only a portion of the $2.3 million spent by the foundation through 1986, the period for which tax returns are available.

Nearly 80 cents of each dollar raised went for salaries, fees and travel and conference expenses, according to tax returns.

The foundation paid $959,381, or 41% of its revenue, in salaries and fees to officers, consultants, attorneys, accountants, public relations representatives and other employees, according to tax records.

Another $848,965 was spent on travel and conferences, for the most part the expenses of the annual banquets, records show.

Over the years, the foundation has discontinued some activities, which, although they provided public exposure and promoted fitness, produced little if any income.

Among these was the National Fitness Classic in Houston, during which celebrities, former sports stars and others teamed up in a variety of physical tests and competitions.

According to California Franchise Tax Board documents, foundation officials decided the Fitness Classic was too expensive and “there was not substantial income to warrant its continuation.”

Because of its move to California, the foundation also canceled plans in 1985 for fitness workshops for senior citizens after investing “substantial time, effort and money” preparing for the workshops, according to the records.

However, Allen said, the senior citizen workshops will be held this summer at Cal State Fullerton.

The foundation also will continue an annual fund-raising golf tournament in Laguna Niguel, despite only breaking even on the inaugural tournament last year.

Ralphs Grocery Co. has pledged to sponsor the event, which is expected to raise $1.6 million over the next six years.

“A lot’s been done that no one knows about,” said Allen, who made 30 speaking engagements and 73 public appearances on behalf of the foundation in 1987 alone.

He also said, however, “There were a lot of costs that we didn’t think of.”