Questioning bowl finances
Re-examine money-losing trips by schools and tax exemptions for events
By the time the dust settles on tonight's matchup between Alabama and Notre Dame, 35 bowl games will have been played and, if the past is a guide, just about every team in them will have lost money.
We're told that this is money well spent. A bargain, really, when you think about all the free publicity schools get, the spikes in alumni donations and the once-in-a-lifetime memories players take home. Considering the fact that athletic departments squander millions in guaranteed salaries when they cut losing coaches, you could make the case that spending a couple of hundred grand is a cheap way to drape yourself in postseason glory.
But it's exactly that kind of upside-down thinking that has allowed college football's postseason to become a runaway example of corporate welfare and tax abuse.
A terrific story in USA Today last month by Brent Schrotenboer underscored the issue by noting that the average bowl CEO now makes $438,000 for putting on a single game a year. That's double the salaries paid by the 15 oldest bowls a decade ago.
What's pernicious about this is that the bowls function inside a bubble. Athletic directors get bonuses for sending their teams to bowls that require the schools to buy huge blocks of tickets as a way of subsidizing them. Those subsidies are then used to pay for wining and dining the athletic directors, who in turn convince their college presidents to foot the bill so they can earn their bonuses.
Schrotenboer studied all 70 postseason reports that bowl teams filed with the NCAA after the 2010-11 season and found the average team lost $169,226, mostly from tickets it couldn't unload.
And things look like they're going to be much worse this year. Florida reportedly sold only 7,000 of the 17,500 tickets it had to buy for the Sugar Bowl, which meant 10,000 fans were spared having to see the Gators get routed 33-23 by Louisville, which managed to sell 15,000 seats. The Franklin American Mortgage Music City Bowl drew more fans than the Sugar Bowl.
The crowd for the (TaxSlayer.com) Gator Bowl, meanwhile, was the second smallest since 1960. And the Capital One Bowl's announced crowd of 59,712 for Georgia-Nebraska was its fourth lowest in the past 24 years.
When you bring this up to people inside the bubble, they tell you there's still plenty of money to go around. The Pac-12, according to the Los Angeles Times, stands to net about $31.2 million for placing Stanford in the Rose Bowl and Oregon in the Fiesta Bowl. Since conferences give each member a share, non-playing teams make a tidy profit.
The playing ones assume everything will even out in the years when they stay home.
The reason this is brilliant is that it co-opts just about everyone in the system. College presidents, snowed by the fiction that bowl games help with marketing and "student spirit," quietly take their cuts and refrain from speaking out. That allows athletic spending to outpace academic spending by between four to 11 times across the FBS, according to the Knight Commission on Intercollegiate Athletics.
"There's no convincing evidence that going to a bowl has any significant effect on alumni giving or fundraising," says William Kirwan, chancellor of the University of Maryland system and co-chair of the Knight Commission. "There's also no reason that a 6-6 team should be going to a bowl. Instead of these games being a reward, they've become meaningless and a financial drain on our institutions."
My problem isn't with the bowl executives making an average of $438,000. This is America. Make what you can. My problem is with the college presidents letting them make it. You want to stand for something? How about standing for less spending, more charitable giving and not fleecing the American taxpayer?
Because that's what's happening. By virtue of these bowls being able to masquerade as not-for-profits, they're escaping paying taxes on revenues that can reach $25 million for the top-tier bowls. (The exception is the nine bowls that are run for profit, including seven owned by ESPN.)
The problem, as Kirwan notes, is that "the bowls are half in and half out" of the reach of the NCAA. In other words, it has little practical say over the policies of game organizers. Even though the bowls need a license from the NCAA to operate, it's generally kept its questions to whether the bowls are financially solvent, not how they spend their money.
But before we throw up our hands and absolve everyone of blame, how about remembering that pressure actually works?
Example 1: When a Washington, D.C.-based lobbying group named Playoff Pac discovered that members of the NCAA's bowl licensing committee were accepting gifts from the same Fiesta Bowl officials whom they regulated, the NCAA's red-faced president, Mark Emmert, convened a task force to look into oversight in May 2011. Eventually, Emmert abolished the old sub-committee stacked with insiders and handed the all-important licensing job to the NCAA's in-house professionals.
More broadly, Emmert promised to conduct random audits with an outside auditor. According to a spokesman, the first of the audits will be started "later this year," giving the NCAA leverage it didn't have before.
Example 2: For two years, Arizona Republic reporter Craig Harris methodically peeled back the opaque layers of the Fiesta Bowl to reveal, among other things, the excessive partying habits of its then-CEO, John Junker. Embarrassed by the attention -- and a series of criminal probes that resulted -- the bowl's board axed Junker and conducted a top-to-bottom overhaul in 2011.
As a result, the new leadership gave $400,000 to 23 area charities in the most recent grant-giving cycle, bringing its total over the last 17 months to a very healthy $2.2 million.
Other innovations being tested around the country, and not just in sports, include capping the salaries of charitable executives at $200,000, and using volunteers instead of highly paid patronage extras, as the new Heart of Dallas Bowl is doing.
My question is where are the college presidents when it comes to demanding many of the same things?
Personally, I'd like to see the whole not-for-profit charade eviscerated. The Sun Bowl may be doing good work by bringing tourism into El Paso in December. But it's far from clear that the Orange Bowl does a damn thing for Miami.
While its IRS tax forms claim that it injected $100 million into South Florida's economy in the 2010-11 fiscal year, the host of tonight's title game is fuzzy about how much of that came via "direct spending" that would not otherwise have occurred and "media added value," whatever that means.
It also reported paying CEO Eric Poms more than it distributed to community groups around Miami in fiscal 2010. Forty-three individual charities got $424,325. (Most, like the West Boynton Football League, received between $5,000 and $10,000.) Poms got $492,535.
(The bowl's gross income from interest and investments, it bears mentioning, was $771,292 in the period.)
Former Fiesta exec Junker, who pleaded guilty to soliciting illegal campaign contributions in February 2012, hasn't been sentenced yet. And that suggests he's been cooperating with federal prosecutors in an ongoing look at the whole bowl structure. Playoff Pac has also filed a complaint with the IRS, questioning all the bowls' tax exemptions.
In the meantime, here's a memo to college presidents: How about using today as a teaching moment to show that these bowls have become like farm cooperatives or military contractors, relying on corporate welfare that we can no longer afford?
At a time when tuition costs are skyrocketing and the average college senior is graduating with $27,000 in student debt, it's time to stop going along with the fiction that losing money on a bowl game is a really a good thing for our universities.
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