BCS Football is Mired in Shady Financial Transactions

The college football bowl season will kick off on Saturday, December 17. For fans, it’s the best time of year but for others it’s just a reminder of a college football system that has gone wrong. Terribly wrong.

For the sinners (i.e, university athletic directors and staff), it’s the school’s students and taxpayers who pay for this extremely dirty system.

What are some of the sins the “players” in this game have done?

How about the Orange Bowl? The nonprofit organization that runs the storied game had been named in a 2010 complaint by the Internal Revenue Services for their lavish spending habits: $535,000 on gifts, more than $40,000 on golf outings, and a $1 million-plus salary for top executives.

Only a fraction of the bowl’s cash goes to local charities.

The sketchy expenses were uncovered by Matt Sanderson, attorney and head of the Playoff Pac sound of the findings, “To claim that items like this Caribbean cruise are ‘business expenses’ for a nonprofit is just a ridiculous abuse of the taxpayers’ trust.”

Bowl execs dispute the numbers and say that the bowl game brings South Florida millions of dollars and helps youth football leagues, using this as argument that the bowl gives back the community.

The Orange Bowl isn’t alone; there’s also the Fiesta and Sugar Bowl. These bowls have schools buy up game tickets and then end up using a middleman to sell the tickets are higher prices.

Then there’s the inflated salaries by bowl executives.

This can be as high as $600,000 while the bowl games give bonuses to coaches, athletic directors and the corporate suits who oversee this staff.

Outback Bowl President Jim McVay takes in $808,000 annually. The bosses for the Cotton and Alamo bowls make $419,000 each. Just for staging one game a year.

Perhaps its greatest offender was the fired Junker, the previous CEO of the Insight and Fiesta bowls. He was his own top charity.

According to lawyers reviewing Junker’s actions, he spent $33,000 for his own Pebble Beach birthday party and $19,000 for three country club memberships in different states. He liked the ladies, spending up to $1,200 in strip joints and wanted to rub elbows with the famous by bidding $90,000 in a charity auction to play golf with Jack Nicklaus.

Where’s the  money come from? Money that should have gone to U.S. colleges. His downfall came after the Arizona Republic called himfor illegally reimbursing employees for donations to his political allies.

Postseason Revenues

In addition to bloated salaries and ridiculous expenses, colleges see postseason revenues.

Ticket Sales

Depending upon the bowl, schools are required to buy anywhere from 10,000 to 17,500 up front. So begins the seasonal hemorrhaging.

The deal starts with a presumption of failure. Even powerhouses such as Ohio State rarely sell that many tickets. When the Buckeyes played the Fiesta Bowl in 2009, they failed to sell more than 7,000 seats. Price for this bath: $1 million.

Auburn, last year’s national champion, was still stuck with $781,000 in unsold tickets from the title game.

What’s worse is that the seats depreciate from the moment of purchase. Though crowds for most games are a smattering of capacity, the schools still pay bloated face-value prices. Their “friends” aren’t about to grant them bulk discounts.

So when the colleges can’t sell these seats to their fans, the market is flooded with more than 200,000 bowl tickets a year.

What happens to the schools? They lose money. Lots.

Virginia Tech lost $400,000 on last year’s trip to the Orange Bowl — despite getting $1.2 million from the Atlantic Coast Conference. Though Auburn claimed last season’s BCS crown, financial records show it still lost $600,000 — even after a $2.2 million bailout from the Southeastern Conference.

Hotels

Some bowls have also found a way to scam schools on hotels. Because the bowls usually arrange lodging, athletic directors assume their “friends” are negotiating the best group deals. But that’s not always the case.

Under Junker’s rule, the Fiesta Bowl required schools to purchase 3,750 room-nights at about $200 a pop. According to the contract, the schools had to pay whether they used them or not.

But what Junker wasn’t telling his “friends” was that he had arranged a side deal with the Scottsdale Convention & Visitors Bureau. In exchange for funneling teams to Scottsdale resorts, the city’s tourism arm agreed to kick the Fiesta Bowl $8.2 million over the 20-year pact, according to a contract discovered by the Arizona Republic.

The Sugar Bowl — which pays executive director Paul Hoolahan $645,000 — also received “voluntary commissions” from New Orleans hotels. Other bowls have been accused of similar arrangements.