The Cotton Bowl Classic's Million-Dollar CEO, and the Enduring Myth of Nonprofit Sports
On the bulletproof compound of the formidable College Sports Cartel, no one enjoys life quite like the football bowl executive, that shadowy Good Ol' Boy who plans one football game a year in exchange for a mid-six-figure salary and fringe benefits fit for a Florida congressman. And in recent years, few have been rewarded by the cartel bosses quite like Rick Baker, CEO of the Cotton Bowl Classic.
Baker has been with the Cotton Bowl Athletic Association, the nonprofit that runs the game, for a quarter century and has managed to remain basically anonymous outside the tight circle of corporate executives and athletic directors who rule his world. Partly that's because of his "relatively" "modest" compensation: When USA Today dropped a chart on the bowl bosses a year ago, Baker's total pay, pulled from 2010 tax records, was just the sixth-highest in the country, at around $500,000 a year. The guy running the Outback Bowl, previously thought to be an off-menu appetizer, made $750,000, more than any other bowl executive.
But times have changed, for the Cotton Bowl and for Baker. In 2007, he and his 74-person board voted to pluck the game from its namesake stadium in Fair Park, where it had lived since its inception in 1937, and drop it through the sun roof of the Cowboys' new stadium in Arlington. The city of Dallas had pledged millions to expand and polish the game's old homestead, but it could never offer what Jerry Jones could: A billion-dollar stadium, a marketers' dreamscape and a clear path into the cartel's inner circle.
The bowl played its first game in Cowboys Stadium in 2010, the year Baker made his modest $500,000. He was rewarded the next year, in 2011, when records show he made more than $1 million -- more than any executive at any college bowl, and more than the bosses at some of the country's largest and most iconic charities.
Baker wouldn't return my call. Tommy Bain, a Terrell investment planner and chair of the Cotton Bowl board, says Baker's raise that year was the result of a large bonus, a kind of reward for longevity. Michael Konradi, the group's vice president for external affairs, agrees that Baker's bump was the product of a "retention bonus." Bain insists that Baker's increase has been "gradual," and that his pay was around 75 percent of what other bowl bosses make.
Records indicate otherwise. The group's tax returns for 2012 aren't yet online, and Konradi declined to provide specifics about Baker's 2012 pay. But a filing for a related nonprofit shows that the Cotton Bowl paid Baker at least $825,000 last year, still more than most, if not all, bowl executives, and still an outsized nonprofit salary. And still a hefty bump from his days in Fair Park.
Several members of the board, composed mostly of executives and businessmen with ties to the game, declined to comment. Bain, who heads the small committee that sets Baker's pay, says the CEO is worth every penny. "We were making an investment in Rick, because we had our eyes on the big prize, and he was going to be one of the key people in that," he says. The big prize, of course, was a coveted slot as a BCS bowl, and then in the College Football Playoff, which the bowl eventually landed.
Besides, Bain says, Baker no longer runs just one game. The Cotton Bowl Athletic Association also helps "organize" other major college games, including a national kick-off game every August at the recently rebranded AT&T Stadium, where the nonprofit is headquartered. But those games are for-profit enterprises run by ESPN and the stadium, part of a multi-billion-dollar entertainment industry that can more than afford to host a few football games at a stadium built for football games. Helping run those games may technically "foster national or international amateur sports competition," one of the ways an organization can qualify for nonprofit status. But what it fosters most is money for ESPN, Jerry Jones and their business partners, whose employees hold seats on the Cotton Bowl's board.
"I could see the Special Olympics -- that would be the spirit of the law," says Daniel Borochoff, who runs the watchdog group Charity Watch. "It's not for these guys who are practically pro players, but for people that really do need help."
According to chairman Bain, the board has used a compensation study from Ernst and Young to set Baker's salary, which helps explain the excessive sweetness of his gig: That study looks only at the compensation of other bowl executives, whose salaries have long been criticized as excessive.
Bain says the board also looks outside the bowl system, since Baker could be valuable in any number of high-profile college-sports jobs. But even with that broader scope, Baker's take stands out: He made more in 2011 than the athletic directors at SMU, TCU and the University of Texas at Austin, who put on hundreds of sporting events a year. He also made more than the presidents of SMU and TCU, not to mention Harvard and Georgetown.
Spin the spotlight away from the cartel entirely and the comparisons get even more ludicrous. The median compensation for CEOs of nonprofits with the Cotton Bowl's annual revenue -- between $10 and $25 million -- is $188,000, according to a recent study by the charity research group Guidestar. A CEO making $367,000 at an organization the Cotton Bowl's size would be in the 90th percentile. Baker made more than 2.5 times that in 2011. Outside of sports, the only nonprofit employees whose salaries consistently top Baker's seem to be executives at hospitals, and even their tax-exempt status has fallen under scrutiny, despite their tendency to save people from dying.
And what does the community receive in exchange for letting the Cotton Bowl skate on its state, federal and local taxes? The bowl estimates a $30 million economic impact, but studies have shown that civic boosters commonly overstate the economic power of sporting events, and some researchers argue that the net effect is basically a wash. As for charity work, the nonprofit doles out a few million dollars each to the schools that play in the game -- schools that could stage the games themselves and pocket twice that, or more. (Cost of the principal labor: free in either scenario.) Unlike other major bowls, the Cotton Bowl lists on its tax returns no donations outside the money it funnels down the cartel org chart. But they don't have to give, so long as they're "fostering."
That, says Charity Watch's Borochoff, is the problem: Lawmakers across the country have given away billions of dollars in tax revenue to big-business sports entities, from the NFL to pro golf tournaments to college bowl games, all in the name of charity that barely exists. "This doesn't need to be subsidized," Borochoff says. "This needs to be taxed like any other business." Oklahoma Senator Tom Coburn, a Republican, is leading a charge to force such groups to pay taxes, but he's competing with a lot of lobbyists armed with really good seats at really good sporting events.
The arrival next year of the College Football Playoff will only make Baker more valuable to his trustee bosses. When the top bowls were folded into the playoffs, the once-middling Cotton Bowl became an even more powerful marketing machine for the companies that profit from it, and whose executives oversee the bowl: AT&T, Dr Pepper and others. And while the inaugural national championship game in 2015 will be run by the conferences and not the bowl, Baker will play some role. In fact, Konradi says, next month Cotton Bowl executives will jet to Pasadena to shadow the organizers of the 2014 BCS championship game, to learn how to produce a title game.
In other words: There's travel involved! Just like there is for other handsomely paid nonprofit bosses. Like, say, Gail McGovern, the former AT&T executive who now runs the $3 billion-a-year American Red Cross. McGovern gets paid well, too: about $630,000 in 2011, or 37 percent less than Baker. If only she could convince someone to televise the Home Depot Typhoon Bowl. She'd be playing with the big boys in no time.
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