Millions of people watched the John Hancock (formerly the Sun) Bowl and the Mobil Cotton Bowl last winter, but none were any more interested than some officials of the Internal Revenue Service. The Dallas office was auditing the nonprofit groups that put on the games in an effort to determine whether the big bucks that corporate sponsors give the bowls should be taxed. Last week, in a move that rattled college football like a forearm shiver, the IRS decided it was entitled to some money.
The organizers of the two Texas bowls were told that the sponsorship fees they receive are taxable because they aren't "substantially related" to the nonprofit educational purposes of the organizers. In other words, the IRS believes that when a company contributes money to get its logo plastered all over a stadium and the TV screen, it is employing the bowl as an advertising vehicle.
Not surprisingly, the bowl groups are appealing the IRS decision. Says Jack Mahoney, a sports marketing consultant for John Hancock, "Not only is the money we contribute related to the purposes of the nonprofit organization, but it is essential. If there's no sponsor, then there's no game." If the ruling stands, the bowls would have to give a third of whatever they receive from the sponsors to the IRS. It is possible that all the major bowls will soon become subject to taxation.
Despite the uncertainty generated by the IRS ruling, the Home Shopping Network is talking about creating a bowl game. It recently offered the NCAA $33 million to stage a Division I championship game that would be sold as a pay-per-view TV event.
The NCAA scoffed at the idea, but that's not to say it will never become a reality. After all, who would have thought a few years ago that the big bowl game in Miami would be called the Federal Express Orange Bowl?