September 29, 2011
BCS Bowl Executives' Salaries Stand Out
By Craig Harris
Compensation for the highest
positions at the Fiesta,
Orange, Rose and Sugar
bowls has more than doubled
since the bowls became part
of the Bowl Championship
Series in 1998-99, with
average annual executive
compensation now exceeding
$500,000.
Records compiled by The
Arizona Republic show that
average executive pay at BCS
bowls is in the top 2 percent
of compensation for the more
than 6,500 non-profits that
have similar budgets. They
are in the top 9 percent when
compared to non-profits with
budgets up to twice their size.
Average pay for BCS top
executives mirrors or exceeds
that of university presidents,
and bowl execs earn more
than counterparts at publicly
held companies with similar
or more revenue.
Sugar Bowl Chief Executive
Paul Hoolahan, the longestserving BCS executive, has
seen his income increase by at
least 270 percent, to
$593,718, since the BCS
began 13 years ago.
Louisiana Lt. Gov. Jay
Dardenne - who has been
president or chairman of 10
non-profits - is critical of the
pay for BCS bowl executives,
saying it is out of line for nonprofit organizations.
Critics say excessive pay
could hurt the bowls' taxexempt status because nonprofits are prohibited by law
from enriching individuals.
Excessive salaries can be
considered an improper
enrichment. Playoff PAC, a
group hoping to dissolve the
BCS, has filed a complaint
with the Internal Revenue
Service asking it to examine
bowl compensation.
"It struck me as ridiculous the
amount of money he's paid,"
Dardenne said of the Sugar
Bowl CEO's salary. "It's
reflective of the fact that
intercollegiate athletics are
big business. We are seeing
skyrocketing salaries for
coaches and athletic directors.
It's consistent in what you see
in those areas, but in my
estimate it's way too much."
Sugar Bowl spokesman John
Sudsbury said a bowlcompensation committee
works with consultants to set
salaries. Bowls also say their
compensation is marketdriven, with top BCS
executives needing certain
skills critical to stage major
sporting events, manage staffs
and host related events yearround.
Executives' pay increases
The BCS is a partnership
among 11 college-football
conferences, the University of
Notre Dame and four major
bowls - Fiesta, Orange, Rose
and Sugar. The system selects
teams to play in each of the
four major bowls plus a fifth,
rotating game that determines
a national champion.
The bowls generate their
income from the games,
sponsorships and TV
contracts. Last year, the
combined BCS payout was
nearly $182 million, with
roughly 80 percent of the
money going to the six
conferences that created the
BCS.
Revenue jumps during years
that the bowls host a second,
September 29, 2011
championship game, which
began in 2007. Around that
time, the BCS bowls saw a
spike in executive
compensation during or after
years they hosted two games.
Junker made $200,000
annually when the BCS began
in 1998-99. By the time of his
exit, his total compensation
had increased nearly 237
percent.
But while the bowls' revenue
typically returns to lower,
normal levels a year later,
executive pay is not adjusted
accordingly. In some
instances, it has continued to
increase, records show.
Pay for Junker's replacement,
former University of Arizona
President Robert Shelton,
could approach his
predecessor's. Shelton
receives a $455,000 salary,
plus about $30,000 for his
retirement account. He has the
potential to earn another
$135,000 in incentives,
bringing his total potential
compensation to $620,000.
Like Junker, Shelton also will
manage the Insight Bowl,
which the Fiesta Bowl
acquired in 1997. But the
Fiesta Bowl board eliminated
many past perks such as CEO
golf-club memberships.
At the Fiesta Bowl, former
Chief Executive John Junker's
pay jumped by $62,515 to
$477,550 in the fiscal year of
the bowl's 2007 double
hosting. The next three fiscal
years, Junker's pay kept rising
- to $561,210, $592,418 and
then $673,888.
During the double-hosting
year, Fiesta revenue more
than doubled to $49.9 million.
But it fell to $27 million and
$28 million the following two
years.
Junker declined comment. He
was fired in March after an
internal investigation alleged
he misspent bowl funds and
was part of an illegal scheme
in which employees were
reimbursed for making
political-campaign
contributions.
"Dr. Shelton's compensation
was the result of a great
amount of research and
extensive consultations with
experts," said Fiesta
spokesman Andy Bagnato.
"We think it is a very fair
package."
Salary records show:
- Chief executive Hoolahan's
pay at New Orleans' Sugar
Bowl rose nearly $140,000 to
a record $645,386 in fiscal
2008-09, after the bowl
hosted the second,
championship game. In fiscal
2009-10, his pay dropped to
$593,718, which is 270
percent more than his
$160,500 salary when the
BCS began.
Compensation for the Sugar
Bowl's assistant executive
director/chief operating
officer hit a high of $398,023
in 2008-09, dropping to
$352,360 the next year.
Though it declined, it was 339
percent more than when the
BCS began.
- At Miami's Orange Bowl,
compensation for the top job
increased 117 percent from
$233,400 to $506,599.
Eric Poms, promoted to CEO
from COO in 2006, saw his
salary rise nearly $150,000 to
just more than $500,000 in
fiscal 2009-10, the year after
a double hosting. The Orange
Bowl raised the salaries of
three other executives above
$250,000 in 2009-10.
- At the Rose Bowl in
Pasadena, Calif., CEO
compensation was much
lower than other BCS bowls
until P. Scott McKibben was
hired in late 2009. The former
newspaper executive said his
annual base pay was
$425,000, and he had the
potential to earn a $200,000
September 29, 2011
bonus. He said he received a
bonus this year, but he
declined to disclose the
amount.
McKibben's time at the bowl,
however, will be short: The
bowl announced this month
he is resigning effective Nov.
8. McKibben told The
Republic he had personal and
philosophical differences with
the bowl.
USA Inc., an online
information service with a
database of 6.1 million tax
returns filed by 1.8 million
non-profits.
Non-profits that run the BCS
bowls had annual budgets or
expenses ranging from $12.3
million to $27.7 million in
fiscal 2009-10, according to
figures confirmed by the
bowls.
McKibben replaced John M.
Dorger, who was making
$282,195 in fiscal 2009-10.
When the BCS started, the top
executive at the Rose Bowl
earned $131,854. The pay for
that job will have increased
374 percent if McKibben
received his full bonus.
Compensation that fiscal year
for top executives at BCS
bowls ranged from $282,195
to $673,888, averaging
$514,100.
The story isn't much different
at non-BCS bowls, according
to their 2009-10 IRS filings.
Gary Cavalli, executive
director of the Kraft Fight
Hunger Bowl, earns
$361,950. Cotton Bowl
President Rick Baker:
$470,147. Outback Bowl
Chief Executive Jim McVay:
$693,212.
GuideStar examined salary
records for 6,576 chief
executives of non-profits with
budgets of $10 million to $25
million. Their pay averaged
$225,239. The bowl
executives' compensation was
in the 98th percentile of this
group.
Outpacing peers
Average BCS executive pay
exceeds that of other nonprofits with similar budgets,
according to the most recent
annual study by GuideStar
That compensation outpaced
non-profit groups of
comparable size.
The bowl salaries were high
even when compared with
larger non-profit groups,
those with revenue of $25
million to $50 million. The
2,548 top officers in that
group had an average pay of
$309,466, according to
GuideStar. The bowl
executives' compensation was
in the 91st percentile of this
group.
Chuck McLean, GuideStar's
vice president for research,
said that by any objective
standard the pay for BCS
executives was high, on par
with doctors at health-care
institutions or university
presidents.
"That's pretty rarefied air,"
McLean said.
Compensation for top BCS
executives roughly mirrors or
exceeds the median pay for
presidents at 185 large public
universities, which The
Chronicle of Higher
Education this year calculated
at $444,487.
Sandra Miniutti, chief
financial officer for Charity
Navigator, a New Jerseybased organization that rates
charities, said records she
compiled at the request of The
Republic indicate BCS bowls
are paying their top
executives the equivalent of
what non-profits with budgets
of $200 million to $500
million pay their top
executives.
"When you are reaching a
half-million and up for salary,
is that appropriate for a nonprofit?" said Miniutti. "Some
September 29, 2011
put a stake in the ground and
say they shouldn't be earning
more than the president."
President Barack Obama
earns $400,000 a year.
When compared with the
private sector, compensation
for top BCS execs exceeds
average total pay for chief
executives running U.S.based, publicly held
companies with similar or
higher revenues, according to
Morningstar Inc., a Chicagobased independent
investment-research firm.
Morningstar, at the request of
The Republic, calculated that
total compensation averaged
$355,965 for chief executives
of 177 companies with annual
revenues between $10 million
and $25 million.
Compensation - salary,
bonuses, restricted stock
awards, option awards and
pensions - averaged $445,014
for chief executives at 173
companies with revenues
between $25 million and $50
million.
Unique jobs
The job that top bowl
executives do is not simple:
They oversee mega-events
and their logistics. They
manage staff. They must
maintain close relationships
with top college-football
officials. Those
commissioners and athletic
directors helped create the
BCS, and have the power to
preserve or end a bowl game's
position in the BCS.
There is nothing wrong with
BCS executives earning big
salaries for unique jobs, said
Allen Sack, a specialist in
sports business and interim
dean of the College of
Business at the University of
New Haven.
"It's free enterprise. It's supply
and demand. If you have a
good quality product, you
make the money you can,"
said Sack, a member of Notre
Dame's 1966 nationalchampionship football team.
The small but influential
group called Playoff PAC,
which wants a national
playoff system, doesn't agree.
In September 2010, Playoff
PAC filed a complaint with
the IRS alleging the nonprofits running the Fiesta,
Orange and Sugar bowls
provided excessive
compensation to their
executives.
The IRS will not comment on
the status of the complaint.
In weighing what constitutes
a reasonable non-profit salary
under federal tax laws, the
IRS would consider the "fairmarket value for services
rendered," said Wayne Henry,
a former IRS trial attorney
who specializes in non-profit
charity law. But that can be
difficult to determine.
"There is nothing wrong, per
se, with paying a lot of money
if it's equal to the value of
services performed," Henry
said. "In those cases when it's
very large, it could set off a
red flag with the Internal
Revenue Service."