Fiesta Scandal Lays BCS Bare

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At its founding in 1971, and through the succeeding decades, the Fiesta Bowl was a fair-to-middling operation, typically fielding teams with solid but unspectacular records. But by the mid-1990s, the Fiesta had rocketed to the top of the college football world: in 1998, it "earned" a coveted spot in the Bowl Championship Series rotation. In doing so, the Fiesta beat out other notable bowls and matched the success of more historic bowls such as the Rose and Sugar.

Until recently, this rise to power appeared to be an inspirational story of hard work and good fortune; the Bowl's success stood as a credit to the Fiesta's operational team and the hospitality of the Sonoran Desert.

However, in the past week, this façade crumbled in the face of evidence of the more proximate cause of the Fiesta's rise: limitless expense accounts to funnel bribes (errr ... perquisites) to university decision-makers, boldfaced lies, and a "creative" approach to compliance with federal and state laws.

To understand the situation, some background is necessary. In December 2009, Craig Harris of the Arizona Republic published a series of articles that included allegations that Fiesta executives had violated campaign finance laws by reimbursing "personal" donations made by employees. In response, the Fiesta feigned outrage: it hired a local attorney to conduct an investigation, announced that all accusations were spurious, and publicly affirmed its complete innocence. This entire cycle - surprise, outrage, investigation, and exoneration - occurred in about one week!

Fortunately, some in the public sensed that the Fiesta's frenetic response signaled fear. On Dec. 28, 2009, Playoff PAC filed a complaint with the Arizona Secretary of State. The Complaint asked the state to investigate the reports of possible violations of Arizona law. In response, Arizona launched an investigation and asked the Fiesta to turn over records related to its investigation. The Fiesta refused to cooperate, and even claimed that no records existed from its earlier "thorough" investigation. Mid-investigation, in July, Fiesta chairman Duane Woods boldly drafted a memo to the Fiesta board, announcing that the state's entire investigation was a "waste of time."

Fortunately, the state didn't share the chairman's attitude: the investigation ramped up. In response, the Bowl appointed a special independent committee, which then hired a law firm to conduct a more thorough investigation. Last week, that law firm released 283-page report detailing financial mishandlings and violations of law. For instance, top Fiesta executives required employees to donate to local politicians, and then provided bonuses to those employees as reimbursement; moreover, those executives apparently lied about the reimbursements, and encouraged others to do so as well.

Additionally, Fiesta executives feasted upon the Bowl's money, reveling in lavish parties and perquisites. Even more troubling, the Fiesta lavished perquisites upon university administrators, such as the annual "Fiesta Frolic" golf weekend for college administrators, a "dream foursome" with Jack Nicklaus for a Southeastern Conference executive, and a college savings account for the grandchildren of a former Big 12 Commissioner. Suddenly, the Fiesta's rapid rise to prominence is making more sense.

As part of its self-imposed punishment for these missteps, the Fiesta fired its CEO John Junker and accepted the resignations of its COO and VP of Marketing. The former CEO refused to admit wrongdoing, and even defended his 30-plus-year campaign of spreading money to bigwigs to advance the Fiesta's cause. In response to investigators, Junker adopted a defiant tone: "[It] is always best to have the blessing of legislators" and "we have managed a successful business."

Editorialists, university presidents, and other power brokers have weighed in on this debacle. For instance, the Arizona Republic's Doug MacEachern wrote: "But a still-unfolding part of the Fiesta Bowl's steroidal spending scandal is a story of spending gone wild throughout the post-season college-bowl system."

Even prescient observers, aware of the gravity of the Fiesta's sins, have failed to understand the larger implications of the story. For instance, NCAA president Mark Emmert acknowledged a crisis of integrity throughout college sports. This diagnosis is correct, but his cure is an equal mixture of naïvete and foolishness. Emmert imagines increased enforcement by the NCAA: "if there are things that are awry, we will put them right," but then parrots BCS talking points in the face of documented irregularities at other BCS bowls, arguing that "[y]ou can't indict the entire bowl system because of what's gone [on] out there [in Arizona]."

Even if Emmert did somehow transform college football into a police investigative state, one lesson from both distant and recent history is that where a system and its actors are inherently corrupt, even vigorous enforcement will always remain one step behind. The Securities and Exchange Commission is always 3 to 5 years behind the market manipulators. Similarly, college football cops will always be 5 to 7 years behind BCS bowl CEOs. Consider further that our country spent much of the 20th century crafting finely tuned laws that prohibited discrimination in the workplace. Has that eliminated discrimination? Or has it simply made corporate actors more careful in covering their tracks and creating pretexts?

In short, the Fiesta is not a bad apple; it's the only type of apple that the current bowl system will ever produce. In fact, the Fiesta is the model apple. The Fiesta showed precisely how to rise from nothing to everything in 25 years flat; all other bowl wannabes will attempt to follow course. As proven by this most recent scandal, the BCS system, as a bizarre and incestuous marriage between public and private interests, incentivizes and rewards exactly this type of bad behavior. And while the current Fiesta embarrassment will probably make bowls more careful in the near-term, it won't alter the fact that under the BCS and the bowl system, bribery and boondoggles are the best method for getting results.

In time, even long-slumbering university presidents will be forced to wake up to crimes that are occurring under their watch; their fiduciary duties to their institutions will obligate them to act. Our universities are the bulwarks of society and purport to stand for everything that is good about our culture. Yet college football has drifted into orgies of crime, cruises, massages and golf tournaments.

One hopes that these presidents, the true powers in college football, will wake up and pursue the logical course of importing the relatively graft-free post-season systems used in every other college sport - a playoff. It's the simple answer, and like most simple answers, the best. It may not be perfect, but at least it will prevent future Fiesta CEOs from wielding an AMEX straight to the top.

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