Pay to play

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Pay-to-play, sometimes pay-for-play or P2P, is a phrase used for a variety of situations in which money is exchanged for services or the privilege to engage in certain activities. The common denominator of all forms of pay-to-play is that one must pay to "get in the game", with the sports analogy frequently arising. [1]

Contents

In broadcasting

The term also refers to a growing trend in which individuals or groups may purchase radio or television airtime, much like infomercials, to broadcast content promoting the payer’s interests. While these types of shows are typically shows that have little sponsor support and have no substantiated audience, some major program producers do purchase airtime to "clear" their programs in certain major markets.[ citation needed ] This type of format is particularly common among religious broadcasters (televangelism), where the related term pay-for-pray is used. [2]

In corporate finance

Pay-to-play is a provision in a corporation's charter documents (usually inserted as part of a preferred stock financing) that requires stockholders to participate in subsequent stock offerings in order to benefit from certain antidilution protections. If the stockholder does not purchase his or her pro rata share in the subsequent offering, then the stockholder loses the benefit(s) of the antidilution provisions. In extreme cases, investors who do not participate in subsequent rounds must convert to common stock, thereby losing the protective provisions of the preferred stock. This approach minimizes the fears of major investors that small or minority investors will benefit by having the major investors continue providing needed equity, particularly in troubled economic circumstances for the company. It is considered a "harsh" provision that is usually only inserted when one party has a strong bargaining position.

In engineering, design, and construction

Pay-to-play in the engineering, design, and construction industry can refer to:

  1. monetary and gift exchanges to persuade decision makers such that they make decisions in favor of those offering the money or gifts;
  2. exchanges of money or gifts and providing sponsorships such that the engineering, design, or construction company gets considered for work that would not otherwise be available (this in essence becomes a type of pre-qualification for work—contracts; and
  3. illegal acts of bribery.

Pay-to-play might also be used to explain the appearance of engineering, design, and construction public work being done not in an open and fair manner.

In finance

In the finance industry, the term pay-to-play describes the practice of giving gifts to political figures in the hopes of receiving investment business in return.

In the U.S., after discovering that this practice was not uncommon and was undermining the integrity of the financial markets, U.S. Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA) and the Municipal Securities Rulemaking Board (MSRB) severely regulated and limited the interactions and gifts-giving practices between the investment industry personnel and politicians and candidates. This can be seen most notably in Rule 206(4)-5 of the Investment Advisers Act of 1940 and Rules G-37 and G-38 of the MSRB Rule Book. [3]

Pay-to-play occurs when investment firms or their employees make campaign contributions to politicians or candidates for office in the hope of receiving business from the municipalities that those political figures represent. It usually applies to investment banking firms that hope to receive municipal securities underwriting business in return or to investment management firms that hope to be selected for the management of government funds such as state pension funds.

An example of this form of corruption or bribery is the 2009 probe by then New York State Attorney General Andrew Cuomo into private equity funds payments to placement agents with political connections to obtain business with the New York State Common Retirement System. [4] [5]

In music

The term also refers to a growing trend, where venue owners charge an up-front fee to performing artists for the use of their facilities. The practice began in Los Angeles, California, during the 1980s. It has become common in many U.S. cities at low-turnout all-ages shows where performers are required to guarantee a minimum attendance through pre-show ticket sales. [6] Pay-to-play gigs are a contentious practice in the UK, and some of the largest pay-to-play gig organisers have generated large amounts of discussion and criticism. [7]

The term pay-to-play was also used as the title to a song by the band Nirvana (later renamed to "Stay Away"). The refrain referred to the practice of a band or their record label paying radio stations to put a song into heavy rotation. The phrase is also the title to a song by the band Cringer, in which they denounce the practice.

Music Supervision is a booming field in the music industry, whose professionals place music in many kinds of film, television, commercial, web-based and other live and recorded media cues. While some music supervisors are paid only by their employer or per-project, some companies use a pay-to-play model wherein artists pay to submit tracks for consideration to a variety of media concerns, only to have to pay the Music Supervision intermediary again at a cost of half of its earning for the track placement should it win a placement.

In online gaming

The term is also used as slang to refer to Internet services that require that users pay to use them. Usually, it refers to MMORPGs, where players must pay to maintain a playing account, as is the case with Eve Online or World of Warcraft . This is in contrast to free-to-play games. Many formerly pay-to-play MMORPGs have switched to a free-to-play model, including EverQuest , Star Wars: The Old Republic , Aion: The Tower of Eternity , and The Lord of the Rings Online . The game RuneScape features both free accounts for no money or pay-to-play accounts, with a much larger list of features.

The term may also refer to something like the online game Habbo Hotel , where there are games inside the game, which you may pay-to-play to join into a game whilst it is in progress.

In politics

In politics, pay-to-play refers to a system, akin to payola in the music industry, by which one pays (or must pay) money to become a player.

Typically, the payer (an individual, business, or organization) makes campaign contributions to public officials, party officials, or parties themselves, and receives political or pecuniary benefit such as no-bid government contracts, influence over legislation, [8] [9] political appointments or nominations, [10] [11] special access [12] or other favors. The contributions, less frequently, may be to nonprofit or institutional entities, [13] or may take the form of some benefit to a third party, such as a family member of a governmental official. [14]

The phrase, almost always used in criticism, also refers to the increasing cost of elections and the "price of admission" just to run for office and the concern "that one candidate can far outspend his opponents, essentially buying the election". [15]

While the direct exchange of campaign contributions for contracts is the most visible form of pay-to-play, the greater concern is the central role of money in politics, and its skewing of both the composition and the policies of government. [16] [17] Thus, those who can pay the price of admission, such as to a $1000/plate dinner or $25,000 "breakout session", gain access to power and/or its spoils, to the exclusion of those who cannot or will not pay: "giving certain people advantages that other[s] don't have because they donated to your campaign". [18] Good-government advocates consider this an outrage because "political fundraising should have no relationship to policy recommendations". [19] Citizens for Responsible Ethics in Washington called the "pay-to-play Congress" one of the top 10 scandals of 2008. [20]

Incumbent candidates and their political organizations [21] are typically the greatest beneficiaries of pay-to-play. Both the Democratic and Republican parties have been criticized for the practice. Many seeking to ban or restrict the practice characterize pay-to-play as legalized corruption.

The opposite of a pay-to-play system is one that is "fair and open"; the New Jersey Pay-to-Play Act specifically sets out bid processes that are or are not considered fair and open, depending upon who has contributed what to whom. [22]

Because of individual federal campaign contribution limits in the wake of the Bipartisan Campaign Reform Act (McCain-Feingold), pay-to-play payments of "soft money" (money not contributed directly to candidate campaigns and that does not "expressly advocate" election or defeat of a candidate) donations to state parties and county committees have come under greater scrutiny. This method refers to money that is donated to an intermediary with a higher contribution limit, which in turn donates money to individual candidates or campaign committees who could not directly accept the payor's funds.

Pay-to-Play practices have come under scrutiny by both the federal government [23] and a number of states. [24] In Illinois, federal prosecutors in 2006 were investigating "pay-to-play allegations that surround Democratic Illinois Gov. Rod Blagojevich's administration". [25] The allegations of pay-to-play in Illinois became a national scandal after the arrest of Gov. Blagojevich in December 2008, on charges that, among other things, he and a staffer attempted to "sell" the vacated U.S. Senate seat of then-president-elect Barack Obama. [26] [27]

Many agencies have been created to regulate and control campaign contributions. Furthermore, many third-party government "watchdog" groups have formed to monitor campaign donations and make them more transparent.

In a series of academic research articles, Christopher Cotton shows how selling access may lead to better policy decisions compared to other means of awarding access. [28] He also illustrates how wealthy interest groups are not necessarily better off from having better access to politicians. [29]

The U.S. Securities and Exchange Commission has created a rule that puts some restrictions on asset managers when they make campaign contributions. The New York and Tennessee Republican parties filed a lawsuit against the SEC in August over the 2010 rule, arguing that it impedes free speech, seeking a preliminary injunction against the rule. U.S. District Judge Beryl Howell questioned whether the parties have standing to bring the case, noting they failed to name the potential donors and did not cite any investment advisers who are upset about the rule. [30]

In stand-up comedy

In a pay-to-play gig, the performer will either pay the promoter some money to be allowed to perform at the show, or will have to offer some in-kind payment. In a conventional comedy club, the promoter will pay the acts for their performance, and will raise the money to stage the gig by charging the audience. Some clubs offer open mic slots, where newer acts are allowed to learn the craft, unpaid; this is not the same as pay-to-play. Many comedians are against pay-to-play schemes, which they consider exploitative. [31]

Pay-to-play was cited as a cause of major damage to the quality of the New York comedy scene. [32] In economic terms, a pay-to-play strategy elevates those people who can afford to perform for nothing, or can afford to pay for their stage-time, which has nothing to do with their quality as an act. The pay-to-play promoter is able to profit from the goodwill and desire to perform of the acts, while discouraging appearances by those who cannot afford to perform without payment.

In some shows, the performer is asked to bring a certain number of paying audience members. As a payment in kind policy, this has caused similar controversy to pay-to-play. [33] A show where the acts are obliged to bring the audience is called a bringer. [31]

In the visual arts

Similar to the trend cited above in music, pay-to-play is the practice of visual artists paying gallery owners, dealers, curators, publishers, festival and contest sponsors, and better-established artists to critique, review, judge, exhibit, collect, or publish works created in such disparate media as painting, photography, video, and sculpture. Pay-to-play is a type of vanity gallery. Pay-to-play is characterized by cash flow that moves away from visual artists. Pay-to-play is sold to visual artists and justified by visual artists as "an investment in future sales" [34] and may be self-victimization. [35]

See also

Related Research Articles

Campaign finance laws in the United States have been a contentious political issue since the early days of the union. The Bipartisan Campaign Reform Act (BCRA) of 2002, also known as "McCain-Feingold" is the most recent major federal law affecting campaign finance, the key provisions of which prohibited unregulated contributions to national political parties and limited the use of corporate and union money to fund ads discussing political issues within 60 days of a general election or 30 days of a primary election, until BCRA's provisions limiting corporate and union expenditures for issue advertising were overturned in Federal Election Commission v. Wisconsin Right to Life.

Political corruption Use of power by government officials for illegitimate private gain

Political corruption or Malpolitics is the use of powers by government officials or their network contacts for illegitimate private gain.

Bribery Corrupt solicitation, acceptance, or transfer of value in exchange for official action

Bribery is defined by Black's Law Dictionary as the offering, giving, receiving, or soliciting of any item of value to influence the actions of an official, or other person, in charge of a public or legal duty. With regard to governmental operations, essentially, bribery is "Corrupt solicitation, acceptance, or transfer of value in exchange for official action." Gifts of money or other items of value which are otherwise available to everyone on an equivalent basis, and not for dishonest purposes, is not bribery. Offering a discount or a refund to all purchasers is a legal rebate and is not bribery. For example, it is legal for an employee of a Public Utilities Commission involved in electric rate regulation to accept a rebate on electric service that reduces their cost for electricity, when the rebate is available to other residential electric customers. However, giving a discount specifically to that employee to influence them to look favorably on the electric utility's rate increase applications would be considered bribery.

Campaign finance

Campaign finance, also known as election finance or political donations, refers to the funds raised to promote candidates, political parties, or policy initiatives and referenda. Political parties, charitable organizations, and political action committees are vehicles used for fundraising for political purposes. “Political finance" is also popular terminology, and is used internationally for its comprehensiveness. Political donations can also refer to funds received by political parties from private sources for general administrative purposes.

Bipartisan Campaign Reform Act

The Bipartisan Campaign Reform Act of 2002 is a United States federal law that amended the Federal Election Campaign Act of 1971, which regulates the financing of political campaigns. Its chief sponsors were senators Russ Feingold (D-WI) and John McCain (R-AZ). The law became effective on 6 November 2002, and the new legal limits became effective on January 1, 2003.

Rod Blagojevich Former Governor of Illinois

Rod Blagojevich, often referred to by his nickname "Blago", is an American former politician, political commentator, and convicted felon who served as the 40th Governor of Illinois from 2003 to his 2009 impeachment following charges of public corruption for which he was later sentenced to federal prison. A member of the Democratic Party, Blagojevich previously worked in both the state and federal legislatures. He served as a congressman for Illinois from 1997 to 2003 and an Illinois state representative from 1993 to 1997.

Buckley v. Valeo, 424 U.S. 1 (1976), was a landmark decision of the US Supreme Court on campaign finance. A majority of justices held that limits on election spending in the Federal Election Campaign Act of 1971 § 608 are unconstitutional. In a per curiam opinion, they ruled that expenditure limits contravene the First Amendment provision on freedom of speech because a restriction on spending for political communication necessarily reduces the quantity of expression. It limited disclosure provisions and limited the Federal Election Commission's power. Justice Byron White dissented in part and wrote that Congress had legitimately recognized unlimited election spending "as a mortal danger against which effective preventive and curative steps must be taken".

Michael Madigan American politician from Illinois and the Chair of the Illinois Democratic Party

Michael Joseph Madigan is an American politician who is the former speaker of the Illinois House of Representatives. He was the longest-serving leader of any state or federal legislative body in the history of the United States, having held the position for all but two years from 1983 to 2021. He served in the Illinois House from 1971 to 2021. He represented the 27th District from 1971 to 1983, the 30th district from 1983 to 1993, and the 22nd district from 1993 to 2021. This made him the body's longest-serving member and the last legislator elected before the Cutback Amendment.

Campaign finance in the United States is the financing of electoral campaigns at the federal, state, and local levels. At the federal level, campaign finance law is enacted by Congress and enforced by the Federal Election Commission (FEC), an independent federal agency. Although most campaign spending is privately financed, public financing is available for qualifying candidates for President of the United States during both the primaries and the general election. Eligibility requirements must be fulfilled to qualify for a government subsidy, and those that do accept government funding are usually subject to spending limits on money.

Corruption Dishonest or fraudulent conduct by those in power

Corruption is a form of dishonesty or criminal offense undertaken by a person or organization entrusted with a position of authority, to acquire illicit benefit or abuse power for one's private gain. Corruption may include many activities including bribery and embezzlement, though it may also involve practices that are legal in many countries. Political corruption occurs when an office-holder or other governmental employee acts in an official capacity for personal gain. Corruption is most commonplace in kleptocracies, oligarchies, narco-states and mafia states.

Antoin Rezko is an American businessman. He was a fundraiser for Illinois Democratic and Republican politicians. After becoming a major contributor to Rod Blagojevich's successful election for governor, Rezko assisted Blagojevich in setting up the state's first Democratic administration in twenty years and as a result he was able to have business associates appointed onto several state boards. Rezko and several others were indicted on federal charges in October 2006 for using their connections on the state boards to demand kickbacks from businesses that wished to engage in dealings with the state. While the others pleaded guilty, Rezko pleaded not guilty and was tried. He was found guilty of 16 of the 24 charges filed against him and on November 23, 2011, he was sentenced to 10.5 years in prison.

Political funding in Australia

Political funding in Australia deals with political donations, public funding and other forms of funding received by politician or political party in Australia to pay for an election campaign. Political parties in Australia are publicly funded, to reduce the influence of private money upon elections, and subsequently, the influence of private money upon the shaping of public policy. After each election, the Australian Electoral Commission distributes a set amount of money to each political party, per vote received. For example, after the 2013 election, political parties and candidates received $58.1 million in election funding. The Liberal Party received $23.9 million in public funds, as part of the Coalition total of $27.2 million, while the Labor Party received $20.8 million.

Corruption in China Institutional corruption in the country

Corruption in China post-1949 refers to the abuse of political power for private ends typically by members of the Communist Party of China (CPC), who hold the majority of power in the country. Corruption is a very significant problem in China, impacting all aspects of administration, law enforcement, healthcare and education. Since the Chinese economic reforms began, corruption has been attributed to "organizational involution" caused by the market liberalization reforms initiated by Deng Xiaoping. Like other socialist economies that have undertaken economic reforms, such as post-Soviet Eastern Europe and Central Asia, reform-era China has experienced increasing levels of corruption.

Rod Blagojevich corruption charges 2008 indictment of the then-Governor of Illinois Rod Blagojevich with corruption

In December 2008, then-Governor of Illinois Rod Blagojevich and his Chief of Staff John Harris were charged with corruption by federal prosecutor Patrick Fitzgerald. As a result, Blagojevich was impeached by the Illinois General Assembly and removed from office by the Illinois Senate in January 2009. The federal investigation continued after his removal from office, and he was indicted on corruption charges in April of that year. The jury found Blagojevich guilty of one charge of making false statements with a mistrial being declared on the other 23 counts due to a hung jury after 14 days of jury deliberation. On June 27, 2011, after a retrial, Blagojevich was found guilty of 17 charges, not guilty on one charge and the jury deadlocked after 10 days of deliberation on the two remaining charges. On December 7, 2011, Blagojevich was sentenced to 14 years in prison.

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Citizens United v. Federal Election Commission, 558 U.S. 310 (2010), was a landmark decision of the Supreme Court of the United States concerning campaign finance. It was argued in 2009 and decided in 2010. The Court held that the free speech clause of the First Amendment prohibits the government from restricting independent expenditures for political communications by corporations, including nonprofit corporations, labor unions, and other associations.

Corruption in Georgia Institutional corruption in the country

Corruption in Georgia had been an issue in the post-Soviet decades. Before the 2003 Rose Revolution, according to Foreign Policy, Georgia was among the most corrupt nations in all Eurasia. The level of corruption abated dramatically, however, after the revolution. In 2010, Transparency International (TI) said that Georgia was "the best corruption-buster in the world." Low-level corruption has been virtually eliminated in recent years. Transparency International's 2017 Corruption Perception Index ranks the country 46th place out of 180 countries.

Corruption in Vietnam Institutional corruption in the country

Overall, corruption in Vietnam is characterised by a weak legal infrastructure, financial unpredictability, and conflicting and negative bureaucratic decision-making. Surveys reveal that petty corruption has decreased significantly throughout the country, while high-level corruption has increased. Corruption is considered an obstacle for doing business in Vietnam, and the use of facilitation payments are widespread when dealing with frontline civil servants. Corruption has moved up the political agenda in Vietnam, and the legal framework for tackling corruption is now better developed.

Corruption in Myanmar Institutional corruption in the country

Corruption in Myanmar is an extremely serious problem. Owing to failures in regulation and enforcement, corruption flourishes in every sector of government and business. Many foreign businesspeople consider corruption "a serious barrier to investment and trade in Myanmar." A U.N. survey in May 2014 concluded that corruption is the greatest hindrance for business in Myanmar.

Corruption in Tajikistan Institutional corruption in the country

Corruption in Tajikistan is a widespread phenomenon that is found in all spheres of Tajik society. The situation is essentially similar to that in the other former Soviet republics of Central Asia. Reliable specifics about corruption can be difficult to come by, however, as can hard information about the effectiveness of supposed anti-corruption initiatives.

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