Posted by Adam Jacobi
One of the most intriguing subplots of last bowl season was the hot water the Fiesta Bowl found itself in for allegations of political tomfoolery, which is a no-no for a tax-exempt organization. The allegations, in a nutshell, were that director John Junker would privately urge employees to make campaign contributions to specific candidates or PACs, and the employees would be reimbursed with bonus checks. The allegations didn't really go anywhere, since that type of conduct is awfully hard to prove, but it was a signal that the heat is on the BCS bowls.
That heat's being felt at the highest levels, too; when senators Orrin Hatch (R-UT) and Max Baucus (D-MT) sent a letter to the BCS with several inquiries about the particulars of the BCS arrangement, BCS exectuive director Bill Hancock responded with a (and we're being charitable here) dismissive statement, saying "Congress has more important things to do" than investigate the BCS. That type of statement, from the director of an organization that oversees the distribution of tens of millions of dollars, is usually a giant red flag signaling that Congress might have a reason to investigate.
The scrutiny continues today, as Playoff PAC -- a PAC dedicated to busting up the BCS system in place -- recently issued a wide-reaching challenge of the tax-exempt status of three of the BCS bowls, alleging financial misdeeds by the Fiesta Bowl, Sugar Bowl, and Orange Bowl:
- Paul Hoolahan, CEO of the New Orleans-based Sugar Bowl, received a $645,000 salary in 2009, a nearly $200,000 increase from his 2007 salary.
- John Junker, CEO of the Arizona-based Fiesta Bowl, received a salary of nearly $600,000 from the bowl and related organizations in the fiscal year ending in 2009, a hefty bump from his 2006 salary of $415,000. Also, Junker and the bowl's then-vice president for marketing, Doug Blouin, both received $120,000 worth of zero-interest loans in the early 2000s, and Junker received an additional $4,500 loan whose interest level was not disclosed.
The AP independently confirmed the figures by reviewing the tax returns.
Naturally, citing the CEOs' salaries on their own would seem to be a contentious idea, inviting a reflexive "what do you have against rich people" from some who are well-versed in today's climate of identity politics. The context doesn't really help the bowls' case -- especially considering the complaint declines to allege misdeeds by the other two bowls, whose executives average $320,000 in annual salary:
Playoff PAC argued that the executive salaries are "above market" and "an abuse of their organizations' favorable tax status." The PAC cited a 2009 NonProfit Times survey, which calculated an average chief executive salary of $185,000 at nonprofits with similar operating budgets ($10 million-to-$25 million).
The biggest issue, though, would be the use of money on lobbying, and like with the no-interest loans, the primary offender here would be the Fiesta Bowl:
The complaint accuses the Fiesta Bowl of not disclosing lobbying activities. The IRS says that an organization can't qualify for 501(c)(3) status "if a substantial part of its activities" involves lobbying, although some lobbying is allowed.
The PAC noted that the Fiesta Bowl reported paying around $1.2 million in fees over the last five years to lobbying firm Husk Partners Inc., yet in each of the last five tax returns, the bowl checked "no" on whether it engaged in lobbying activities or attempted to influence legislation. In addition, the Fiesta Bowl registered with the Arizona Secretary of State lobbying disclosure system during this period.
Tax-exempt organizations are also forbidden from making campaign donations. Former Rep. J.D. Hayworth listed the Arizona Sports Foundation - the entity for the Fiesta Bowl - as making a $2,000 donation to his legal defense fund, prior to his unsuccessful challenge to Arizona Sen. John McCain in the GOP primary. The PAC said Hayworth was testing the waters for a Senate race, making the contribution suspect.
Today, four Congresspeople -- all representing districts containing or close to Mountain West schools -- urged action on this complaint, and it's entirely possible that the IRS moves forward. Is it politically motivated? Of course it is.
But Playoff PAC had better hope that if action is taken, it directly leads to the implementation of a playoff system. After all, even if these bowls are in the wrong, if they fix their problems and say "all better," what then? This isn't really an argument for a playoff at all, and it doesn't seem as if the BCS is going to be any more amenable to co-existing with a playoff afterwards than it was before.