Playoff PAC files complaint with IRS against BcS

When it comes to enemies that would love to see them and their smugness taken down, the BcS is far from lacking. From a majority of fans, the media, some coaches and some very powerful politicians, there is no shortage of individuals and entities that would be very pleased if the current system in determining a national champion went the way of the leather helmet.

One of the most vocal and increasingly powerful challengers to the BcS is Playoff PAC. A federal political committee created in October of 2009, the PAC’s sole goal is, in essence, to take down the BcS and replace it with a playoff system at the Div. 1-A (FBS) level. To that end, Playoff PAC has fired its latest and most notable volley in the back and forth between the two organizations.

According to a press release, Playoff PAC Thursday filed a 27-page legal complaint with the Internal Revenue Service against bowl organizations affiliated with the BCS. The complaint lists significant tax irregularities discovered through a methodical review of over 2,300 pages of tax records and public documents.

The games involved are the Fiesta, Orange and Sugar Bowls. For the complete 27-page complaint, click HERE.

“BCS Bowls all claim to be ‘501(c)(3)’ public charities--the same tax designation as the American Red Cross--to make their revenues tax-exempt and obtain other taxpayer-funded benefits,” Playoff PAC co-founder Chad Pehrson said in a statement. “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.”

One of the biggest areas of concern for Playoff PAC when it comes to the BcS bowls is the “inflated salaries and perks paid from charitable funds”. According to the release, federal law prohibits BcS bowls from abusing their favorable tax status and using their charitable funds to enrich bowl executives. While the release makes it clear that bowl officials should receive “reasonable compensation” for their efforts, Playoff PAC notes several instances of what they consider to be lavish salaries, sweetheart loans and general perquisites.

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 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.

In their complaint, Playoff PAC maintains that the three bowls mentioned had “undisclosed lobbying payments made with charitable funds” and “political contributions made with charitable funds.” The complaint also takes the bowls to task for frivolous spending of charitable funds.

After noting that 23 bowl games run by charitable groups combined to give just $3.2 million to local charities on $186.3 million in revenue, Playoff PAC lists several examples of what they consider to be excessive and extravagant spending.

Gave $1.2 million for “consulting” to one registered Arizona lobbying firm and retained two other registered lobbying firms for undisclosed sums;

Paid $123,637.93 for state officials’ entertainment and out-of-state travel expenses;

The Orange Bowl spent $535,764 on “gifts” in FYE 2006;

The Fiesta Bowl spent $1,325,753 on “Fiesta Frolic,” an “annual weekend golf retreat for college-football officials at a Phoenix-area resort” from FYE 2005 to FYE 2008;

The Orange Bowl paid $331,938 for “parties” and a “summer splash” in FYE 2004;

The Sugar Bowl spent $710,406 in FYE 2007 and FYE 2008 on a mysteriously vague category called “special appropriations;

The Fiesta Bowl spent $91,020 on “travel or entertainment expenses” for “federal, state, or local public officials” in FYE 2009;

The Orange Bowl spent $111,492 on “postage and shipping” in FYE 2008;

The Sugar Bowl paid $201,226 for “gifts and bonuses” and $330,244 on “decorations” in FYE 2008;

The Fiesta Bowl spent $444,948 on “hospitality” in FYE 2009; and

The Orange Bowl paid $42,281 for “golf” in FYE 2004 and FYE 2006.

Playoff PAC closes their challenge of the BcS bowls’ tax-exempt status with the following:

This BCS Bowl spending calls into question the Bowls’ need for the substantial government assistance they receive. If the Orange Bowl can afford to spend $535,764 on “gifts” and $756,546 on travel for its personnel, why does it deserve charitable status and the resulting “free ride” on paying taxes? If the Sugar Bowl shells out $201,226 for “gifts and bonuses” and six-figure sums for its crony-filled “Football Committee,” why has it received $5,448,539 in government grants the past three years? And if the Fiesta Bowl has had the money to spend $331,438 per year on a “Fiesta Frolic,” why did it need a hefty taxpayer-funded subsidy from the State of Arizona? These are among the important questions raised by Playoff PAC’s review.

Neither the BcS title game nor the Rose Bowl are mentioned in the complaint. Playoff PAC co-founder Matthew Sanderson said their group found the Rose Bowl to be “fairly free of these irregularities.”

The Fiesta Bowl told the Associated Press Thursday that Playoff PAC’s allegations are “dated, tired and discredited,” adding, “The Fiesta Bowl is confident that it has always fully complied with tax laws and rules in its operations and activities.” The Orange Bowl said they are “compliant with IRS rules and regulations”, while the Sugar Bowl called the complaint “rehashed information”.

While it seems unlikely that Playoff PAC’s latest attempt will have much of an immediate and drastic impact, we’re all for anything that chips away at the BcS’ facade and helps ultimately lead to its demise.