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Will Penn State Ever Get the Piper Fully Paid?


An article appeared on Sept. 5 in the San Francisco Chronicle that reported on the ongoing financial costs Incurred by Penn State as a result of the Jerry Sandusky scandal.  As of June 30 the school had spent some $16.8 million to investigate the scandal and to pay for costs associated with legal defense of various actions brought against the school.

The above figure does not include the $60 million fine the school must pay in coming years that the NCAA assessed the school back in June.  It does not include lost revenues from monies that the Big 10 Conference will withhold from the school in its own separate punishment.

The school paid $10 million to some seven firms for work done investigating the facts and for crisis management.  Nearly $4 million was paid for legal services and defense.  The school continues to face a number of civil lawsuits brought by victims of Sandusky’s actions and/or their families.  These lawsuits could drag on for several years and ultimately cost many millions more to defend, plus the costs of any settlements that undoubtedly will be reached.

The school also is saddled with the terms of the severance contract that Joe Paterno secretly negotiated between April and August of 2011.  The details of that settlement only came to light early in 2012.  The school has already made some payments to Paterno’s widow.

It is likely that in coming years some management school will use details of this situation to illustrate what not to do in terms of crisis management—at least prior to details became public knowledge when Sandusky was indicted and arrested back in November, 2011.  Five years or so from now when final bills are tabulated the entire financial burden of this scandal may well cost Penn State over $100 million.  That money could pay for a lot of lab equipment, faculty salaries and academic scholarships.

There will also be other costs the school will have to deal that are not as easily measured.  A total of 12 players have already transferred to other schools under the NCAA rule that states they can transfer one time and be immediately eligible to play.  These players include last year’s primary starting quarterback, the team’s leading rusher and receiver, and the school’s punter and placekicker.  As the football team has started the season with two losses the current placekicker missed an extra point (blocked) and made 1 field goal in 5 attempts this past Saturday in a 20-17 loss to Virginia.

Scholarship limits kick in next year.  The football team is almost certainly looking at finishing this season with a losing record.  Many observers believe that it may be 2016 or 2017 before the program can realistically dream about winning 8 or 9 games, much less seriously competing for Big 10 titles.  As the losses on the field mount up will fans stop filling up the 107,000 seat stadium for every home game?  Will donors eventually stop giving as much money to the athletic program?

Anyone who has followed Penn State football over the past half century cannot help but be saddened by the current state and short-term prospects for the football program.  This scandal and its aftermath should drive home the point that the path between being on top of the mountain and down in the muddy ditches can be very short.  Arkansas experienced some of this on Sept. 8 when its football team blew a 28-7 lead and lost to Louisiana-Monroe 34-31 in overtime.  The Razorbacks are dealing with the consequences of seeing their highly successful coach fired this past spring following revelations that he had an affair with a young woman he had hired for his football administrative staff and that he had lied about it to his bosses.

Winning on the field may really not be the only thing that counts in collegiate sports.  Failing to follow ethical guidelines may have costs that impact an entire university community.  Penn State officials keep saying that they will come up with all of the money they have to pay out without dipping into any general fund revenues.  Given the amount of money we are talking about that statement is difficult to take at face value.

If we reach a point where the misdeeds of leaders in university athletic programs impact the school’s academic programs then we have reached a significant, and troubling, point in our history.  It is imperative that academic leaders at our colleges and universities take control of athletic departments.  This may be easier said than done.

Greg Tyler is, in addition to being the editor of The Sport Digest, the Library Director at the United States Sports Academy.  He also teaches classes, primarily in the area of sport law.  He writes frequently on the intersection between ethical and legal issues in the world of sports.


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