Analyzing ‘Death To The BCS’ : Chapter Three

With the Miami Hurricanes sitting out a bowl game in 2011, there’s definitely some downtime this post-season and with the BCS looking as messy as ever, now seemed as good a time as any to revisit “Death To The BCS”, the book touted as ‘the definitive case against the Bowl Championship Series’.

“Death To The BCS” is a an eighteen-chapter read. Last week we focused on Chapter Two : What Could Have Been. Next up; Chapter Three : Obstruction Of Justice.

– Derrick Fox, CEO of the Alamo Bowl, spoke in front of Congress on May 1st, 2009 a Cartel representative, explaining why a playoff system would fail.

Fox, alongside ACC president John Swofford, stood in front of a House Energy and Commerce subcommittee and attempted to sell the concept that bowl games weren’t “football contests” but “altruistic endeavors” that involve kids playing a game.

“Almost all post-season 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 receive tens of millions of dollars a year,” said Fox.

– The reason for Fox’s embellishment (which bordered on ‘perjury’, according to Rep. Joe Barton of Texas) – The Cartel wanted to scare congress regarding the ‘catastrophe’ that would ensue from a playoff system, employing the old “if it ain’t broke” mentality, even though it was in need of an overhaul.

– By tying the system to ‘charity’, Fox created a backstory that would “cause a politician to pause and the public, which would read the unchecked comments in news accounts, to see the pro-bowl argument in a new light”.

– Truth be told not one single bow game is run by a group that could be described as a charity under any commonsense definition. Bowls are controlled by executive directors who are highly paid, party and who “treat their business cronies to lavish swag”.

Eight of the thirty-five bowl games in 2009 are privately owned – six of them by ESPN – meaning over a quarter of these post-season games are the opposite of charity; they exist purely for profit and even pay taxes.

– The remaining twenty-seven bowls enjoy 501(c)(3) not-for-profit status from the IRS, allowing them to avoid paying federal, state and local taxes, as well. The “not for profit” loophole simply means an organization is mainly devoted to a public purpose that does not distribute its surplus.

No one specific personal or company owns a bowl game, meaning the can’t be sold – but those in charge can drain every last penny of revenue out of a non-for-profit as unspent revenue goes into reserves that can be tapped later.

– Major bowl games have major investment portfolios. As of 2009, the Sugar Bowl alone had $34.6M, which can obviously produce millions in returns while not having to pay taxes on investment income allows bowl directors an extra revenue stream, which accounts for “high salaries, unnecessary costs and general mismanagement”.

– Fox’s second exaggeration, regarding one-quarter of game proceeds being dedicated to the community, was also misleading.

The twenty-three games with records publicly available received $7.5M in straight cash through direct government handouts (according to their tax filings), which doesn’t factor in estimated millions from police and fire department detail work, traffic control, clean up and other public services donated to games by local governments that assume overtime costs.

– The Sugar Bowl received $3M in direct funding from the Louisiana state government, according to a 2008 tax filing. This money is so important to the bowl that it pays a lobbying firm in Baton Rouge to ensure public financing.

– When you talk about over $34M in revenue, “one quarter of that” is roughly $8.5M which should be then donated to charity and the Sugar Bowl didn’t cough up a dime. Not to Hurricane Katrina reconstruction effort (within a few years of the storm), not to the New Orleans after schools program. Not to Habitat For Humanity.

One of the richest bowl games in existence didn’t give a penny to help its struggling state – even after hogging over $3M in taxpayers’ money.

– Of the over $34M in revenue, upwards of $22.5M was offset by expenses, making for an almost $12M in tax-free profit, ending the fiscal year with $37M in assets. Where did that money go?

Executive director Paul Hoolihan received $607,500 in total compensation in 2008. Associate executive director Jeff Hundley took in $375,732. Three other employees pocked $118,663 each, as well.

Other annual expenditures random years between 2005 and 2007: $494,177 on “entertainment” … $475,771 on “special appropriations” … $330,244 on “decorations” … $201,226 on “gifts and bonuses” … $447,817 on “Sugar Bowl event-related entertainment” … $810,884 on “BCS Championship-related entertainment” … $260,062 on “other expenses” … all of which are completely legal as the bowls can spend the money any way they want.

– Two existing Sugar Bowl committees : “committee on golf” and “special subcommittee on ladies’ entertainment”. Seriously.

– The total payout to charities regarding the twenty-three tax-exempt bowls in 2008; a combined $3.2M. A far cry from Fox’s overinflated “tens of millions of dollars a year” claim and much closer to an estimation of 1.7 percent of annual bowl revenue.

(Note: more than half the charitable contributions came from just two bowl games, the Orange and the Chic-Fil-A. Conversely, the Florida Citrus Sports Association donated a mere $10,570 of the $12.4M that comes in from two Orlando-based bowl games.)

– Fox’s rant was “calculate exaggeration meant to confuse Congress and the public”, according to DTTB authors.

–  While some in Washington saw through Fox’s comments (even BCS officially backed away from his stance, not attempting to defend the ‘charitable’ suggestion), bowl-wise nothing has changed.

In December 2009 The Arizona Republic reported that Fiesta Bowl employees were *encouraged* by then-executive director John Junker to make “contributions to politicians friendly to the bowl” and were later “reimbursed by the bowl” in the form of bonus checks – an act that could violate both state and federal campaign finance laws.

Employees explained that they made donations on the same day – and to the same candidates as Junker – and were soon paid back with checks in the form of merit pay. The Arizona attorney general is investigating the matter.

The Fiesta Bowl claimed is spent $4M “on lobbyists, trips, dinners, and golf retreats to build relationships with athletic officials who control the Bowl Championship Series and to garner support from politicians”. Money that could’ve gone to colleges or charities and was instead another multi-million dollar endeavor that inevitably protects The Cartel.

– Here’s an article that ran earlier today regarding where things currently stand with the Fiesta Bowl, post-scandal.

– Next up; Chapter Four : Lies, Damn Lies, and Bowl Payouts. Stay tuned.

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