The head of the BCS put the Fiesta Bowl on notice Wednesday: "Follow the letter of the law" or lose its place in college football's lucrative championship system.
BCS officials challenged the Fiesta Bowl to persuade them that extravagant and improper spending behind the firing of longtime CEO and President John Junker will never happen again.
Otherwise, the BCS said it can kick out the Fiesta Bowl altogether. There are plenty of others eager to jump in.
"They know that if they want to do business with us, they need to follow the letter of the law," BCS executive director Bill Hancock told The Associated Press. "If they fail to do so, they do it at their own peril."
The Fiesta Bowl released an internal report on Tuesday that uncovered hundreds of thousands, perhaps even millions of dollars, in "excessive compensation, nonbusiness and inappropriate expenditures and inappropriate gifts."
Arizona prosecutors are looking into possible criminal charges, focusing on accusations that top officials pressured employees into donating money to favored political candidates and then reimbursed them with bowl funds.
Fiesta Bowl officials placed the blame squarely on Junker, who made $600,000 a year as the affable face of the organization. Over the past two decades, he led the upstart bowl from just another postseason game to one of the largest and most prestigious.
"I must say that the actions undertaken and orchestrated by John Junker and others are shocking and completely unacceptable," said Duane Woods, the Fiesta Bowl chairman. "Their actions, unfortunately, have tainted the stellar reputation that the Fiesta Bowl has worked so hard to maintain for more than 40 years."
The Bowl Championship Series also includes the Rose, Orange and Sugar bowls, and draws tens of millions of dollars a year in television revenue, ticket sales and merchandise. Frito-Lay, whose product "Tostitos" is the Fiesta Bowl's title sponsor, said it was "disappointed" and was monitoring the situation.
The scandal rekindled long-standing criticism of the BCS, one of three organizations whose polls crown national champions. The others are the AP and ESPN/USA Today.
Matthew Sanderson, co-founder of Playoff PAC, a group advocating a playoff system to determine a national college football champion, accused the BCS of making the Fiesta Bowl a scapegoat.
"Any BCS effort to expel the Fiesta Bowl would be a hypocritical act, given the documented irregularities at these other BCS bowls," he said. "And who's to say we won't find the same type of shockingly questionable behavior when the curtain is peeled back at the BCS's Orange Bowl and Sugar Bowl?"
Hancock said he had "absolutely no indication" of similar behavior by the BCS' other three bowls.
The BCS set up a task force to help determine if the leaders of major college football want to continue doing business in Arizona.
"We want to send a clear and very strong signal to the public," Pac-10 Commissioner Larry Scott told the AP, "about the standards and values the conferences that make up the BCS stand for."
The Fiesta Bowl, played at University of Phoenix Stadium in Glendale, Ariz., is in the second season of a four-year deal to be one of the four bowls that rotate hosting the national championship game.
Asked if he was confident there is nothing in the contract to stop the BCS from ending the relationship immediately, Hancock replied: "Yes, I am confident."
Of the $4.8 million charged to Junker's American Express card over the 10 years he was president and CEO, investigators deemed less than half the expenses "appropriate."
Tuesday's report said the bowl spent $33,188 for a birthday bash for Junker in Pebble Beach., Calif., and $13,000 for the wedding and honeymoon of Junker's assistant.
Junker picked up a $1,200 tab at a Phoenix strip club for himself and two others, including a sheriff's lieutenant who worked for the Fiesta Bowl on the side. Junker wrote on his American Express bill that the meeting was for "security site planning."
Junker took some or all of his family on 27 trips, the report said.
The Fiesta Bowl also paid for his membership in four elite private golf clubs.
The scandal began to unravel when The Arizona Republic reported in December 2009 that five former or current Fiesta Bowl employees had been reimbursed for political donations they were encouraged to make.
A brief investigation by former Arizona Attorney General Grant Woods, no relation to the board chairman, led to the conclusion that there was no credible evidence to support the allegations.
Now the board says that report was "flawed."
Duane Woods said that last September, an employee — identified in the report as Junker's executive assistant, Kelly Keough — went to his office and told him that indeed the reimbursements had been made.
The bowl began another investigation led by a three-person panel headed by a retired Arizona state supreme court justice.
Most of their report centers on the contribution scheme, in existence since at least 2002, where top officials would strongly urge employees to make contributions to favored candidates, including Republican Sens. John McCain and Jon Kyl.
The reimbursements were listed as at least $46,539.
Duane Woods has said the system violated state campaign finance laws and endangers the bowl's nonprofit status.
"The lesson here really is that we placed too much trust in a single individual," Woods said.
Also, two top officials — chief operating officer Natalie Wisneski and vice president of marketing Jay Fields — resigned last week.
Arizona state prosecutors are also conducting a probe into possible criminal wrongdoing.
Junker's attorney, Steve Dichter, declined to comment Wednesday.
In its report, Fiesta Bowl officials listed a number of reforms to prevent a repeat, including hiring a chief financial officer and a general counsel/compliance officer. The compliance officer will report directly to the board of directors.
All compensation to "senior-level employees" will be reviewed by the board of directors.
The BCS task force will include university presidents, conference commissioners and school athletic directors and conduct its own investigation. It will make recommendations to the 11 commissioners of the major conferences that participate in the arrangement.
Hancock expects a decision to come quickly but gave no timeframe.
If last season's Auburn-Oregon game turns out to be the last BCS game the Fiesta Bowl organizers host, there will be no shortage of bowls looking to grab its lucrative spot.
Cotton Bowl organizers have clearly stated a desire to be part of the BCS. They moved its game to the Dallas Cowboys' lavish stadium in Arlington, Texas, last year and even secured a primetime television slot on Fox to raise its profile.
Cotton Bowl president Rick Baker declined to comment on the Fiesta Bowl situation and what it could mean for his game.
Capital One Bowl executive director Steve Hogan has said he would aggressively pursue any vacant spot in the BCS lineup for his Orlando, Fla.-based game.
The Gator Bowl, based in Jacksonville, Fla., and the Chick-fil-A Bowl, based in Atlanta, could also be candidates.
Russo reported from New York. AP sports writer Tim Dahlberg in Las Vegas contributed to this report.