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Tag:Playoff PAC
Posted on: March 30, 2011 7:58 pm
Edited on: March 30, 2011 8:03 pm
 

PAC: Other BCS bowls guilty of irregular spending

Posted by Adam Jacobi

On the heels of the nightmare investigative report released by the Fiesta Bowl yesterday, there's been a great deal of consideration as to whether the Fiesta Bowl should retain its BCS status, or whether the controversy surrounding the bowl is too much for the BCS to deal with.

The BCS has established a task force on the issue and has tasked the Fiesta Bowl with proving that it deserves its BCS status, which certainly seems appropriate, but now the question is whether the rest of the BCS bowls are clean, or if the abuses are more systemic. Thus, the BCS finds itself in the difficult position of deciding whether or not to subject the other BCS bowls to heightened, public scrutiny. If the other bowls can survive an investigation, it makes the BCS look better, but if they can't we may have a house of cards situation, and one of the BCS's main priorities has always been self-preservation.

Unfortunately for the BCS, the Playoff PAC has no such compunction about whether to publicly scrutinize the BCS bowls, and recently released this statement about curious spending practices at those institutions. There's no allegations of campaign finance abuse, but if that's the best thing you can say about the bowls' case, they're not in a good spot. The release is printed in its entirety below.

The BCS's Fiesta Bowl fired its long-time CEO yesterday after an internal investigation revealed that the BCS Bowl used its charitable funds to unlawfully reimburse employees' political contributions and pay for top executives' weddings, four-day junkets to Pebble Beach, and four personal country club memberships.  The Bowl's internal inquiry was initiated to "investigate the myriad allegations raised by Playoff PAC" in the PAC's legal complaints filed with the Arizona Secretary of State and the Internal Revenue Service.

Playoff PAC co-founder Matthew Sanderson said: "In the interest of self-preservation, the BCS is now painting this Fiesta Bowl scandal as isolated misconduct. This is wrong. Public records show the BCS's Orange Bowl and Sugar Bowl are also legally and ethically troubled. Any BCS effort to expel the Fiesta Bowl would be a hypocritical act, given the documented irregularities at these other BCS Bowls. And who's to say we won't find the same type of shockingly questionable behavior when the curtain is peeled back at the BCS's Orange Bowl and Sugar Bowl?"

THE BCS'S ORANGE BOWL AND SUGAR BOWL IRREGULARITIES

Playoff PAC found the following with respect to the BCS's Orange Bowl and Sugar Bowl, which have both organized themselves as public charities to obtain federal tax benefits:

  • The Orange Bowl sponsors an annual Caribbean Cruise that the Bowl itself describes as a "complimentary getaway" for Bowl staff and college football officials that features no business meetings.
  • One out of every $10 that the Sugar Bowl takes in ends up in the hands of its top 3 executives.
  • Sugar Bowl Exec. Dir. Paul Hoolahan received $645,386 in FY 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 FY 2009 for its personnel.
  • The Orange Bowl spent $331,938 on "parties" and "summer splash" in FY 2004, $42,281 on "golf" in FY 2004 and FY 2006, $535,764 on "gifts" in FY 2006, and $472,627 on "gifts" in FY 2008.
  • The Sugar Bowl benefited its insiders by paying six-figure sums for Bowl meetings and an average of $432,723 for "Football Committee" expenses the past three years.
  • The Sugar Bowl spent $201,226 on "gifts and bonuses" and $330,244 on "decorations" in FY 2008.   

Aside from these expenses, both BCS Bowls repeatedly describe expenses with vague verbiage. Given the Fiesta Bowl's revelations yesterday about questionable expenses that were once tagged with similarly indistinct labels, both BCS Bowls should fully account for these items.

  • The Sugar Bowl spent $710,406 in FYE 2007 and FYE 2008 on a mysteriously vague category called "special appropriations."
  • The Orange Bowl spends over $100,000 per year on "postage and shipping" (ten times the amount that other BCS Bowls spend annually).
  • The Orange Bowl spent $1,189,005 on unspecified "entertainment" and "catering" in FY 2009, $1,017,322 on undifferentiated "event food" and "entertainment" in FY 2008, and $75,896 on "recruitment" in FY 2008. 

QUESTION OF THE WEEK: WHICH BCS "TASK FORCE" MEMBERS ATTENDED FREE BOWL JUNKETS?

After the Fiesta Bowl scandal, the BCS trumpted a new task force to investigate the Bowl's findings. Records obtained by Playoff PAC show that at least one task force member (So. Mississippi's Richard Rianni) received a "complimentary getaway" in the Caribbean from the BCS's Orange Bowl last year--the same type of trip that will be the subject of any Fiesta Bowl investigation.

  • Will Mr. Rianni recuse himself from the BCS task force's deliberations?
  • Which other BCS task force members have accepted free trips from BCS Bowls, such as the Fiesta Bowl's annual "Fiesta Frolic"?

QUOTES OF THE WEEK: "FULLY COMPLIANT"

  •  "I'm disappointed because I just think it's a waste of state resources and our time as well." -- Fiesta Bowl Chairman Duane Woods, commenting in July 2010 on news that the state Attorney General would investigate the Bowl based on Playoff PAC's legal complaint. 
  • "The Fiesta Bowl is confident that it has always fully complied with tax laws and rules in its operations and activities." -- Fiesta Bowl statement in September 2010, reacting to Playoff PAC's filing of a tax-law complaint with the IRS.
Posted on: October 5, 2010 7:41 pm
 

Playoff PAC takes aim at three BCS bowls

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.

 
 
 
 
The views expressed in this blog are solely those of the author and do not reflect the views of CBS Sports or CBSSports.com