This is the final part of a three-part series about college football’s bowl system, the Bowl Championship Series. Read Part 1 and Part 2.

Alabama trounced LSU 21-0 in last night’s Bowl Championship Series National Championship game, earning the school’s 14th national championship. But while the game settled questions regarding who receives college football’s top prize, many other questions about the BCS remain unresolved.

The BCS, a consortium of the 11 Football Bowl Subdivision conferences and the University of Notre Dame, manages college football’s five biggest bowl games — the Rose, Fiesta, Orange, and Sugar bowls and the BCS National Championship. Because those bowls are set up as tax-exempt, nonprofit charities, they pay little, if any, taxes on huge profits, even as they receive millions in taxpayer subsidies from state and local governments.

Amid recent scandals and reports involving the Fiesta and Sugar bowls, critics have raised questions about why the games are classified as charities and whether they should continue to be classified that way in the future.

The question of whether bowl games should or should not be classified as nonprofit charities is ultimately up to the IRS. But recently, public scrutiny toward the BCS has intensified. The Department of Justice is investigating whether the BCS violated federal antitrust laws, and after scandals involving potentially illegal political donations from Sugar and Fiesta Bowl employees to officials in Arizona and Louisiana, anti-BCS group PlayoffPAC asked the IRS to investigate multiple bowls. That bowl CEOs are making, on average, more than $500,000 a year and spending money on lavish trips for executives, donors, and other affiliates has raised even more questions and prompted an internal investigation at the Fiesta Bowl.

Bowl games claim that they are nonprofit charities by touting the fact that they generate hundreds of millions of dollars in economic benefits for state and local economies, help universities, and provide aid to charities in the communities that host the games. But separate investigations into such claims have found that the bowls provide much less aid than they claim, particularly to public universities and local charities. An HBO Real Sports investigation, for instance, found that while bowls claim to give “tens of millions” to charity, they actually gave just $4 million in 2009 — despite generating $261 million in revenue.

BCS officials did not respond to requests for comment on the bowls’ nonprofit statuses. But Dan Wetzel, author of Death To The BCS, laughed off the notion that the BCS games were comparable to smaller, more traditional charities. ”They classify themselves as charities, and say they give a certain percentage to local charities,” Wetzel told ThinkProgress. “But the idea that this is the homeless shelter down the street is ridiculous. It’s not.” Of the bowls’ classifying as nonprofit charities, Wetzel said, “It’s a sleight of hand.”

Meanwhile, the games are generating huge profits and giving CEOs huge salaries. The Sugar Bowl, which hosted its own bowl and the BCS title game in New Orleans this week, made $11.6 million in tax-free profits in 2007, the last time it hosted both games. And the schools that participate, most of which are taxpayer-financed public universities, continue to lose money at alarming rates just to play in the games.

Calls for changes to the BCS from fans, newspaper columnists, and even President Obama have thus far gone unheeded, though there are signs that changes in structure could come when the organization’s current contract with the six major athletic conferences ends in 2014. But when it comes to using their nonprofit status to avoid paying taxes, the bowls may have too sweet a deal to change unless the IRS forces it upon them.

“Just like most things in America, there’s a problem, and somebody is profiting off of it,” Wetzel said. “It’s a massive boondoggle.”

This is the second part of a three-part series on college football’s bowl system, the Bowl Championship Series. You can read the first part here.

Bowl season, college football’s month-long end-of-season extravaganza, generates millions in revenue and often millions in profits for the organizations that run each bowl game. But because many of those bowls are classified as nonprofit charities, they often pay little, if any, taxes on those earnings.

The largest bowls — the five that make up the Bowl Championship Series — dole out huge salaries to their CEOs and send executives on lavish trips. At the same time, several of them have received millions of dollars in tax subsidies from the states that play host to them, and the taxpayer-financed public universities that play in the games often lose money by participating. That has fueled questions about why the bowls are classified as tax-exempt nonprofits and whether they should be in the future.

The Bowl Championship Series was formed in 1998 as a consortium of the 11 Football Bowl Subdivision conferences and the University of Notre Dame. At the end of the season, 10 schools send teams to the five BCS bowls — the Rose, Orange, Fiesta, and Sugar Bowls and the BCS National Championship game. 57 of the 67 schools that make up the six major conferences that receive automatic invites to those games are public universities that depend on taxpayer funds. But many of them lose substantial sums of money from expenses incurred traveling to and participating in BCS games.

In 2011, Virginia Tech’s athletic department lost more than $420,000 from the school’s appearance in the Orange Bowl. Had the Atlantic Coast Conference, of which Virginia Tech is a member, not helped cover its losses, the school would have lost $1.3 million in 2008, $2.2 million in 2009, and $1.6 million in 2011, all years in which it appeared in a BCS bowl. Tech isn’t alone: over a three-year span, universities lost an average of $331,137 in BCS bowls, according to the Arizona Republic. The average loss in non-BCS games in 2011 was $139,604.

The BCS does, in theory, provide money to schools in other ways to help them make up those losses. Athletic conferences that have a participant in a BCS game receive payouts from BCS bowls — the six major conferences will split a total of $145.2 million this year — that is then divided between the schools. But as HBO Real Sports found during an investigation into the bowl system, those payouts often aren’t as lucrative as the bowls claim.

In an interview with HBO, a tax adviser to 23 bowls set up as charities said most bowls “pay out 75 to 80 percent of all revenue to schools.” HBO’s investigation, however, found that reality was much different. Out of 16 nonprofit bowls that provided complete records, none gave 75 to 80 percent of their revenue back to schools. The average percentage payout was in the mid-50s, and the Humanitarian Bowl (which is not affiliated with the BCS) gave less than 30 percent of its revenue to schools.

At the same time, multiple bowls take taxpayer-financed subsidies from state and local governments, including the Sugar Bowl, which tonight will host this year’s edition of the BCS National Championship. The Sugar Bowl has taken $11 million in subsidies from Louisiana since the BCS began, including $1.4 million in 2009, even as the state cut spending on many public programs to fill a budget gap. Such deals faced scrutiny from local lawmakers and residents and have since stopped. Tempe, Arizona, meanwhile, will pay the Fiesta Bowl $6.45 million through 2013 to host a smaller bowl game, the Insight Bowl.

The BCS and its advocates counter that bowl games provide economic boons for the cities that host them. An Arizona State University study found that Tempe saw a $355 million economic boost from hosting the Insight Bowl, Fiesta Bowl, and BCS National Championship in 2011. Still, the arrangement begs the question: at a time when states are cutting spending to vital programs, including funding for state universities, are taxpayers getting a fair shake from bowls that utilize tax-funded universities and, at times, public subsidies to earn millions in profits that are often tax free?

This is the first post in a three-part series about the college football’s bowl system, the Bowl Championship Series.

When Louisiana State University and the University of Alabama meet in tonight’s Bowl Championship Series (BCS) National Championship game in New Orleans, college football’s top prize will be on the line. More than 75,000 will be in attendance, and millions will watch on TV. The Sugar Bowl, host to this year’s game, stands to make millions of dollars in profits. And little, if any, of it will be subject to federal taxes.

That’s because the Sugar Bowl and the championship game, like the three other bowls that make up the BCS, are classified as tax-exempt nonprofit charities, set up with missions to do public good with the money they earn and spend. In 2007, the last time New Orleans hosted both the Sugar Bowl and the BCS title game, the games generated $34.1 million in revenue — $11.6 million of that was tax-free profit.

The BCS, a consortium of the 11 Football Bowl Subdivision conferences and the University of Notre Dame, has been in place since 1998 and manages the five biggest bowl games — the Rose, Orange, Fiesta, and Sugar Bowls, and the BCS National Championship Game. The revenue generated by the BCS games and other nonprofit bowls — $261 million in 2009 — along with lavish trips for executives, large compensation packages for their CEOs, and scandals involving potentially illegal political donations have raised questions about why the bowls are classified as nonprofit charities and whether they should continue to be in the future.

The reason bowl profits aren’t taxed “is because it’s supposed to be serving a public purpose,” Gary Roberts, dean of the Indiana University School of Law-Indianapolis, told the Arizona Republic. The bowls, Roberts said, are not supposed to “squander this money that is not taxed.”

And yet, since the BCS began, average pay for the CEOs who run each bowl has more than doubled and now exceeds $500,000 a year, the Republic found. The Sugar Bowl, which has cash reserves in excess of $34 million and until recently benefited from tax subsidies from the Louisiana government, pays its CEO more than $593,000. In 2007, when the Sugar Bowl also hosted the BCS championship, it paid its CEO more than $645,000. Average executive pay at BCS bowls ranks in the top 2 percent of pay among nonprofits with similar budgets, and in the top 9 percent among nonprofits with budgets twice their size, the Republic found.

“If you’re running these bowls, it’s an opportunity to do good, not to do well,” Dean Zerbe, who investigated charitable exemptions while on the staff of Sen. Chuck Grassley (R-IA), told HBO Real Sports. “You can pay yourself a reasonable salary…and after that it has to go to a charitable purpose.”

Charitable purpose, however, likely doesn’t include lavish trips for executives and guests, another area that has drawn criticism. Executives at the Fiesta Bowl spent more than $100,000 on a corporate golf trip, and former CEO John Junker spent more than $1,200 at a strip club, according to an investigation into the Fiesta Bowl after a scandal enveloped the bowl in 2009. The bowl spent $3.3 million on The Fiesta Frolic, an annual trip for sponsors, executives, and others involved in the game, since the start of the BCS. In the same time frame, the Orange Bowl hosted a similar trip, The Summer Splash, at an average annual cost of more than $111,000.

The bowls, in some ways, have come to resemble America’s corporate structure: huge profits, high executive pay, and little, if any, taxes paid to the government. At the same time, the bowls depend on the participation of taxpayer-financed public institutions and, at times, taxpayer subsidies. As Sharon Schneider, a director at a Connecticut-based company that runs nonprofit foundations, told the Republic, “(The bowls) are saving millions, and the states and federal governments are losing millions with these four bowls on tax revenue they would collect if they were not nonprofits.”

For the last two days, Democrats in the Indiana legislature have prevented the consideration of a “right to work” bill, which would make Indiana the first state in the U.S. industrial belt to allow non-union workers to free-ride on union contracts, which obviously undermines the ability of the union to do its job. Today, the National Football League Players Association called on the Indiana GOP to drop its bill in advance of the 2012 Super Bowl, which is being played in Indianapolis, saying that the NFL’s biggest game “should be about celebrating the best of what Indianapolis has to offer, not about legislation that hurts the people of Indiana“:

To win, we have to work together and look out for one another. Today, even as the city of Indianapolis is exemplifying that teamwork in preparing to host the Super Bowl, politicians are looking to destroy it trying to ram through so-called “right-to-work” legislation.

“Right-to-work” is a political ploy designed to destroy basic workers’ rights. It’s not about jobs or rights, and it’s the wrong priority for Indiana. [...]

As Indianapolis proudly prepares to host the Super Bowl it should be a time to shine in the national spotlight and highlight the hard working families that make Indiana run instead of launching political attacks on their basic rights. It is important to keep in mind the plight of the average Indiana worker and not let them get lost in the ceremony and spectacle of such a special event. This Super Bowl should be about celebrating the best of what Indianapolis has to offer, not about legislation that hurts the people of Indiana.

Conservatives love to claim that being “right to work” helps a state boost its economy. But according to the Economic Policy Institute, “right to work” laws, far from helping workers, actually:

– reduce wages by $1,500 a year, for both union and nonunion workers, after accounting for different costs of living in the states;

– lower the likelihood that employees get healthcare or pensions through their jobs—again, for both union and nonunion employees;

– have no impact whatsoever on job growth

Indiana Republicans have, so far, not backed down in their desire to move the bill through the legislature. But as MSNBC’s Rachel Maddow put it, the GOP may want to rethink that strategy considering that “”America’s most celebrated union members (the NFL players) and a whole lot of national media are coming to town.”