1901 was when the first Rose Bowl was played. It was between Michigan and Stanford, with Michigan winning 49-0 after Stanford quit after the 3rd quarter. It wasn't played again till 1916, with Washington state Universtiy beating Brown University. After that, it became an annual game.
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As of the 2009 matchup between Penn State and USC, USC has played in the most Rose Bowls (32, 2009 will be their 33rd) and won the most Rose Bowls (23).