BCS Fiasco: College Football's Bowl Non-Profit Status Fumbles
Last fall, the Internal Revenue Service, at the behest of Congress, began investigating college football’s sacred cows — bowl games. Congress’ interest peaked because the majority of college football’s bowl games are currently deemed non-profit entities. While a number of these smaller bowl games do generate much needed tourism for cities like Mobile, Alabama, El Paso, Texas, and Shreveport, Louisiana, many of these non-profits are not spending revenue entirely on charitable initiatives, paying their directors in excess of $300,000 a year. And in addition to excessive salaries (especially by non-profit standards), Congress has expressed concern over a black cloud settling over the top games in the past two seasons — the advent of undisclosed lobbying.
Striping bowls of their nonprofit status is currently on the table as deficit-laden states nationwide have begun creatively attacking their budget gaps, which has included asking nonprofit institutions to voluntarily pay taxes. If museums and hospitals are on the financial chopping block it is safe to assume bowl games aren’t safe either. The initial premise that bowl games would stimulate local economies enough to warrant not paying taxes has reached its end. And with an unlevel playing field it is unlikely that the BCS will survive.
John Junker, the former president of the Fiesta Bowl, became the poster child for bowl misconduct as he was recently fired for regularly approving inappropriate expenditures and political donations. Some of the noteworthy items included $33,000 for his birthday party at Pebble Beach, $13,000 for a wedding and honeymoon of an associate, and $1,200 at a local strip club. Yet despite the obscene amount of money he was billing to the bowl — in addition to his personal "non-profit" salary of $592,000 — the real watershed moment came when it was reported that $45,000 of Fiesta Bowl cash had made its way to Arizona politicians. Untaxed political donations, junkets, and other forms of lobbying may give Congress and the IRS the kind of leverage they need to strip college football’s major bowl games of their non-profit status.
The Fiesta Bowl, one of the rotating venues for the high-revenue college football championship game, paid a meager $1 million fine for their transgressions. The BCS oversight committee cited their illegal campaign contributions as their major infraction, with the fine being donated to local Arizona charities. And while this is a minor fine in the grand scheme of things, this should be the beginning of the end for the cash cow “non-profits.”
The BCS’s power derives from two revenue sources. The first is the bowl games themselves, which generate millions in ticket sales, merchandise, and corporate sponsorships, which then should be distributed back to the schools that compete. The payouts to the schools ensure their continued support of a system that openly discriminates against programs and conferences they believe to be less profitable.
The second revenue stream comes in the form of TV contracts. These contracts deliver nearly $125 million to the BCS annually and allow them to lavishly spend on lobbyists, junkets, and the aforementioned CEOs of the bowls themselves.
As the country attempts to make hard choices regarding education, entitlements, and labor it seems clear that it is time to remove the nonprofit label from these bowls. States like Louisiana, Arizona, and California all have major budget deficits and cannot allow this opportunity to slip away. In the case of the Fiesta Bowl their political donations alone are grounds for losing their nonprofit status immediately, which would add revenue to a cash-strapped state budget.
This also gives the government and the NCAA the public relations leverage to eliminate the BCS altogether. Losing their nonprofit status would jeopardize their revenue stream as well as their relationship with the six major conferences in college football. While the BCS' public goal of identifying the two best teams in the country has oftentimes been met, the unintended consequences have run roughshod over the sport. Now is the time to eliminate the BCS, thereby opening the doors to all FBS teams to truly compete for a national championship. The current system is clearly broken.
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