Wednesday, January 4, 2012

Football Gold Mine

Bowl games: fun for fans, lucrative for the people who run them.

Posted By on Wed, Jan 4, 2012 at 1:22 PM

It's the extended bowl season once again: three weeks down, one more to go before the national championship game.

There are 35 bowl games this year, including the AutoZone Liberty Bowl in which Cincinnati beat Vanderbilt. The announced attendance was 57,000, and even if the actual crowd was several thousand less than that, it was still a good day for Memphis.

"At Blues City Café, we had our biggest New Year's Eve ever," said Kevin Kane, head of the Memphis Convention & Visitors Bureau and part-owner of the restaurant. "It was a perfect storm: Saturday night, New Year's Eve, and spectacular weather. It was huge for Beale Street and the Peabody."

With or without a football playoff, bowl games are also huge for the people who run them and earn mid-six-figure salaries in many cases. The bowls operate outside the NCAA, unlike all other college championships. They are run by nonprofit organizations in cities such as Memphis and Nashville that fancy themselves tourist destinations. Promoters work with sponsors, universities, and media to create the best match-ups and drum up as much holiday enthusiasm as they can over five days of events. As nonprofits, the organizations must make their federal tax returns public.

On GuideStar, an organization that reports on U.S. nonprofits, I looked at tax returns for a sample of 10 major and mid-level bowl games. Although the returns are the most recent available, they are one or two years old, and this season's numbers may be different. As a benchmark, University of Memphis athletic director R.C. Johnson's salary is $316,725.

Tostitos Fiesta Bowl: a major bowl with $17 million in revenue and a $9.7 million payout. John Junker, CEO, earned $673,888 in 2009. But Junker got caught with his hand in the Tostitos jar. He was fired by the Fiesta Bowl in 2011 and the bowl was fined $1 million after an investigation of inappropriate spending.

Allstate Sugar bowl: $12.5 million in revenue and a $6 million payout in 2009. Paul Hoolahan, CEO, earned $593,718.

Bridgepoint Holiday Bowl: $10.8 million in revenue in 2010 and a $4.2 million payout. CEO Robert Binkowski earned $283,095.

Cotton Bowl: a golden oldie with $10 million in revenue, $6.75 million payout. CEO Rick Baker earned $470,147.

Outback Bowl: $9.6 million in revenue, $6.6 million payout. CEO Jim McVay earned $615,840. Gator Bowl: $8.7 million in revenue and a $4.5 million payout in 2009. CEO Richard Catlett earned $348,629.

Hyundai Sun Bowl: $6.5 million revenue and a $4.1 million payout in 2010. Executive director Bernie Olivas earned $170,423.

Franklin American Mortgage Music City Bowl: $6.8 million in revenue, $3.6 million payout. CEO Scott Ramsey made $310,715.

Alamo Bowl: $4.3 million in revenue, $3.6 million payout. President Derrick Fox earned $419,000.

The Liberty Bowl is unusual. Its financial reporting is the least transparent of the bowls I checked. Executive director Steve Ehrhart and associate director Harold Graeter are not paid by the nonprofit Liberty Bowl Festival Association. They work for businessman Billy Dunavant. Ehrhart is on the tax form as an unpaid board member.

The 2010 form lists revenue of $6.23 million, mainly from ticket sales ($2.5 million), television and radio rights ($2 million), and sponsorships ($1.2 million). The "management fee" was $2.357 million, nearly as much as the team payout of $2.65 million. In 2009, the payout was $3.65 million, and the management fee was $2.37 million. In 2008, the payout was $3.5 million, and the management fee was only $1.23 million.

The Liberty Bowl Festival Association describes its charitable purpose as "promoting the social and economic welfare of the Mid-South and its citizens" along with American universities.

Ehrhart said his compensation is included in the management fee, but he declined to say how much it is. He said the Liberty Bowl was restructured in 1994 when "it was struggling to make ends meet" and several expenses were lumped together. He said payouts declined when the game fell in the pecking order for team selection. This year's payout will be roughly $2.8 million.

Under Ehrhart's leadership, the Liberty Bowl has enjoyed good games, good crowds, good ratings, and good weather that would make Bear Bryant roll over in his grave at the memory of his last game on that icy night in Memphis in 1982.

Ehrhart came here from the Colorado Rockies to work for Dunavant and the Memphis Showboats in 1985. Whatever the sport, he knows the score. The trend in any business these days is pay what you will, but you must have transparency. The Liberty Bowl needs to get with the program.

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