Monthly Archives: September 2010

PlayoffPAC Files IRS Complaint Against BCS Bowls

I’ve written previously on Playoff PAC, the principle opposition group to the BCS.  They’re making the news again, this time with an IRS complaint they have filed against the BCS Bowls.

In a 27-page complaint, Playoff PAC alleges that the bowls are not complying with their 501(c)(3) charitable status.  A 501(c)(3) is tax-exempt and is the designation given charitable organizations like the American Red Cross and Susan G. Komen for the Cure.

Playoff PAC co-founder Chad Pehrson had this to say about the filing:

“Playoff PAC’s review uncovered a disturbing pattern of BCS Bowl organizations using their charitable funds to enrich Bowl executives, pay registered lobbyists without disclosure, fund political campaigns, and heap frivolous benefits on Bowl insiders.  The BCS Bowls’ activities raise important concerns under federal tax laws and we anticipate that the IRS will give these issues due attention.”

Take a look at some of the practices Playoff PAC uncovered:

  • The Sugar Bowl’s top three execs received $1,225,136 in FYE 2009 on revenue of $12.7 million, meaning that just three people skimmed almost $1 of every $10 the Bowl earned.
  • Fiesta Bowl CEO John Junker received $317,717 in FYE 2009 for working just 21 hours per week from the Arizona Sports Foundation, the Bowl’s lead entity.  Mr. Junker’s total compensation package from all Fiesta Bowl-related entities was $592,418 for FYE 2009, nearly quadruple the CEO pay at similarly sized charities.
  • The Fiesta Bowl gave two Bowl executives $240,000 in unsecured interest-free loans, reportedly to pay for their personal memberships in a private golf club.
  • Sugar Bowl Exec. Dir. Paul Hoolahan received $645,386 in FYE 2009, a year in which the Sugar Bowl lost money despite receiving a $1.4 million government grant.  Mr. Hoolahan collected $25,000 more than the Rose Bowl’s top three executives combined.
  • BCS Bowls use charitable funds to fly Bowl execs and spouses first-class, pay private club dues, and foot the bill for employees’ personal income taxes.  The Orange Bowl, for example, spent $756,546 on travel in FYE 2009 for its employees.

I’m not a tax expert, but I’m guessing the bowls can argue these things are all part of your average compensation package for these types of executives.

Perhaps a little more difficult to explain are the undisclosed lobbying efforts uncovered by Playoff PAC.  The Fiesta Bowl reported that it did not engage in lobbying efforts on its federal tax return.  However, Playoff PAC uncovered $1.2 million going to one lobbying firm for “consulting” and at least two other known lobbying firms receiving undisclosed sums.  The Fiesta Bowl also registered with the Arizona Secretary of State as a “principal” for the past five years, a designation that would allow it to employ lobbyists to “attempt[ ] to influence the passage or defeat of … legislation by directly communicating with any legislator.”  In addition, it appears the Fiesta Bowl backed legislation that allowed it to keep its profits from a bowl held in a state-ownd stadium while taxpayers were burdened with the costs of the game.

While the Orange Bowl was also cited as having engaged in undisclosed lobbying activities, it seems the Fiesta Bowl has been continually pushing the limits.  Five Fiesta Bowl employees made donations to political campaigns and were seemingly reimbursed by the Fiesta Bowl.  Charitable organizations are not allowed to make political contributions, so this would have been a circumvention of the 501(c)(3) regulations.  This situation was first reported by The Arizona Republic and since the Secretary of State has opened a criminal investigation.

Playoff PAC hopes their IRS filing will show that the BCS Bowls are not charitable organizations in need of government assistance (in the form of tax exemption and government grants).

This article offers the personal observations of Kristi Dosh, and does not represent the views of her law firm or its clients. Any information contained herein does not constitute legal advice. Consult your own attorney for legal advice on these matters.

Is the BCS Fixed?

The BCS is fixed.  No, not as in repaired. Playoff PAC, which bills itself as the principal opposition to the BCS system, unveiled a new ad today showing how the BCS is fixed, as in rigged.

Playoff PAC notes that between 91 and 86 percent of BCS revenues are split between the six automatic qualifying (AQ) conferences and Notre Dame in a typical postseason. Perhaps you’re a doubter and those numbers seem implausible?  They come from the 2009-2010 BCS Media Guide.

In the past six seasons, the six AQ conferences took home $521 million more than the other five Division I conferences. Is that because the AQ conferences garner higher television ratings or boast higher attendance? It doesn’t appear that way.  Playoff PAC points out that twice in the past three post-seasons a bowl game featuring a non-AQ conference team posted the second highest ratings.  In 2010, the Boise State – TCU game had an 8.23 share, dwarfing the Iowa-Georgia Tech 6.8 share, and in 2009 the Utah-Alabama came in at a 7.8 share as compared to Virginia Tech and Cincinnati’s 5.4 share.

Although I agree with Playoff PAC’s general argument here, I do feel the need to point out that Boise State and TCU played in the Fiesta Bowl, which creates higher ratings than the Orange Bowl (where Iowa and Georgia Tech played) virtually every year.  And don’t underestimate the ratings power of the SEC in that Alabama-Utah matchup.

Back to Playoff PAC’s point, the system still creates unfair outcomes, as we all know.  One such example involves the 2009 Washington Huskies, who were playing in an AQ conference, and the Utah Utes, who played in a non-AQ conference.  The Huskies suffered a winless year while the Utes completed an undefeated season.   Yet, who brought home the bacon?  The AQ-conference Huskies, of course.

I think it’s clear to everyone except the BCS that a new system is needed.  I wish the Playoff PAC the best of luck with their campaign to open eyes and enrage fans and schools alike.

This article offers the personal observations of Kristi Dosh, and does not represent the views of her law firm or its clients. Any information contained herein does not constitute legal advice. Consult your own attorney for legal advice on these matters.