Monday, January 10, 2011

Oh No, Not the Bowl Games, too

by Gary Snyder

Corruption and deceit seem to be watchwords for the Bowl Champion Series (aka BCS) according to the authors of Death to the BCS: The Definitive Case Against the Bowl Championship Series. In just one chapter (#3) charges are leveled on the CEO of the Alamo Bowl Derrick Fox’s testimony in front of the House Energy and Commerce subcommittee in May 2009. Fox stated before Congress, “Almost all postseason bowl games are put on by charitable groups, and since up to one-quarter of the proceeds from the games are dedicated to the community, local charities received tens of millions of dollars a year.”
The book’s authors, Dan Wetzel, Josh Peter and Jeff Passan, who used a two-year investigation of tax records, bowl contracts, university documents, and dozens of interviews with the power players of college football, to go to town destroying this argument with facts and figures:
“*The 23 tax-exempt bowls produced $186 million in revenue, including $141 million in net assets, but combined to give just $3.2 million (1.7 percent of revenue) to charity. More than half of that charity came from just two bowls, the Orange and Chick-fil-A.
*27 bowls enjoy not-for-profit status and do not pay taxes
*Not a single bowl game is run by a group that can be considered a charity. They are businesses first and foremost.
*23 bowl games with public records received $7.5 million in direct government handouts.
*The Sugar Bowl received $3 million in funding from Louisiana in 2007 and has its own lobbying firm to ensure its public financing. The organization brought in $34.1 million in revenue and gave ZERO money to charity, despite pulling $11.6 million in tax-free profit and $37 million in assets.
*Sugar Bowl executive director Paul Hoolahan received $607,500 in compensation for fiscal 2008. Associate executive director Jeff Hundley took in $375, 732.
*The Sugar Bowl cronies live lavishly spending thousands of dollars every year including, $494,177 for “entertainment” in 2005, $201,226 for “gifts and bonuses” in 2007, $330,244 for “decorations” in 2007, plus many, many more.”
The rest of the chapter deals with the ”corruption that is starting to spring up as bowls like the Fiesta are reportedly contributing to political friends and allies to protect the Cartel system.” The Fiesta acknowledges spending $4 million since 2000 “on lobbyists, trips, dinners, and golf retreats to build relationships with athletic officials who control the BCS and to garner support from politicians.” The Arizona attorney general is currently investigating the matter. The authors deride this and claim the $4 million could be sitting in coffers of colleges and universities, but instead it is wasted to protect the current BCS.
Update from EO Tax Journal: In an IRS complaint against the Orange Bowl Committee, an organization affiliated with the BCS, the BCS's Orange Bowl, which is organized as a public charity, used its charitable funds to treat Orange Bowl executives and college athletic directors to a four-day "complimentary getaway" aboard Royal Caribbean's Majesty of the Seas earlier this year. As shown by the detailed agenda, this Caribbean cruise was a junket. No business meetings were held. Attendees were instead occupied with full-day excursions to Atlantis Resort and CocoCay, a private island, according to Playoff PAC. Also there is more information on bowl spending:
Recent Orange Bowl Spending Examples
-- $331,938 on "parties" and "Summer Splash" in FYE 2004;
-- $1,189,005 on unspecified "entertainment" and "catering" in FYE
2009;
-- $1,017,322 on undifferentiated "event food" and "entertainment"
in FYE 2008;
-- $756,546 on Bowl personnel travel in FYE 2009;
-- $535,764 on "gifts" in FYE 2006;
-- $472,627 on "gifts" in FYE 2008;
-- $111,492 on "postage and shipping" in FYE 2008;
-- $75,896 on "recruitment" in FYE 2008;
-- $60,000 on "governmental relations" in FYE 2008; and
-- $42,281 on "golf" in FYE 2004 and FYE 2006.
Fiesta Bowl Spending
The Fiesta Bowl spends $331,438 per year on "Fiesta Frolic," a golf weekend for college athletic directors and Bowl officials.
• The Fiesta Bowl has doled-out $124,500 in interest-free loans to its executives.
• The Fiesta Bowl has paid $1,217,081 to Arizona lobbying firms.
• The Fiesta Bowl spent $91,020 for "travel and entertainment expenses for public officials" in FY 2009.
Another update from Rick Cohen @ NonprofitQuarterly.org where he summarizes Time Magazine and Business Week articles in which he says bowl organizations are nonprofits – and they pay their CEOs exceptionally well for their nonprofit service. Some examples include Paul Hoolahan of the Sugar Bowl at $645,386, John Junker of the Fiesta Bowl at $592,418, Rick Baker of the Cotton Bowl taking home $490,433, Derrick Fox of the Alamo Bowl earning $438,044. “These bowls are high in the execs' salaries but low on the nonprofitness scale”.
More on how others are looking at it in the NYT.
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