Penn State Scandal: Financial Fallout From Sex Scandal Could Be Huge

In the span of less than a week, Penn State lost a legendary football coach and a university president. And that's before taking into the account the money.

At stake? Tens of millions of dollars in profits annually. Penn State raked in $72.7 million in revenue from football last season, ranking fifth out of all college programs in the country, according to CNNMoney. In addition, the school's Athletic Department, took home another $24.1 million in revenue not designated to a specific team or sport -- a sum that came mostly from merchandise sales and sponsorships.

And the program is already taking a hit. Ticket resale prices for Penn State's upcoming home game against the University of Nebraska had already dropped more than 20 percent by Thursday morning, less than 24 hours after the school's board of trustees fired Joe Paterno, Penn State's football coach of 46 years, according to Bloomberg.

Paterno was fired in the wake of a scandal that rocked the campus and the nation when the football team's former assistant coach Jerry Sandusky was charged Saturday with sexually abusing 8 boys over a 15-year period. Paterno and other Penn State officials -- including the school's president Graham Spanier, who was also fired Wednesday -- have been roundly criticized for not doing enough to forward reports of Sandusky's sexual abuse on to authorities.

Penn State's athletic department is financially independent from the rest of the university, which means a drop in ticket prices or t-shirt sales won't affect academic buildings or professor salaries at the school. Still the scandal will likely dampen Penn State's fundraising efforts.

The school often trotted out the iconic Paterno at fundraising events, according the Patriot-News, a central Pennsylvania newspaper, and he rarely came back empty handed. Rod Kirsch, the school's senior vice president for development and alumni relations, said in 2009 that he couldn't put an exact estimate on how much Paterno brought in for the school, but threw out guesses like $50, $100 and $500 million, the Patriot-News reports.

The school raised $170.5 million from individuals in the 2010-11 academic year, the Philadelphia Inquirer reports. The school has already cancelled fundraising events this week including a pre-game tailgate Saturday, and while small donors may be more hesitant to give the school money in the wake of the scandal, some experts told the Inquirer that large supporters may want to throw more financial weight to help the school cope with the crisis.

Still, athletic scandals rarely end well financially for the athletes or programs involved. After professional golfer Tiger Woods was found to have cheated on his wife with a slew of women, the phenom lost millions of dollars in endorsement deals; in addition, the scandal affected tournament sales and other financial-generating means from the PGA Tour, according to USA Today.

Comments

[nopilikia]

06:09 PM on 11/12/2011

Don't know about the sex scandal cost.....but rape of a child will be huge.

[littlebrowngirl]

10:00 AM on 11/12/2011

This is what should happen to Penn State. Everyone who knew about the abuse should be fired and criminally charged. The NCAA should shut down the football program for at least a year.

[littlebrowngirl]

09:54 AM on 11/12/2011

The fact that people are thinking about the cost of this scandal to Penn State illustrates the underlayimg problem. There are children who will suffer the damage of this abuse for the rest of their lives. Thinking about Penn state and football is the reason that no one at penn state had the courage to stop this on going abuse. All the more reason for the NCAA to shut down this program for at least one year, if not longer.

[littlebrowngirl]

09:34 AM on 11/12/2011

I think the NCAA should ban Penn state for at least one year. It is obvious that this school does not have it's priorities in order. No way in the world should they be even be thinking on playing football right now.

[edvince]

10:09 AM on 11/12/2011

NCAA is also a domino in the cover-up. Don't be naive. How could their organization not know of the rumormills at one of the most winningest teams in American college football. If they are not given a sapenia to appear in court, then we all know the cover-up continues. Its too much money involved for NCAA officials not to have known the inner workings of what was happening with Sandusky especially after no college in US would hire him after his forced retirement from Penn State which we are not learning came from President Stainer, in order to continue the cover-up and keep this under the rug

[Count of Anjou]

08:44 AM on 11/12/2011

PSU has covered this abuse of children for at least 9 years. I'm still waiting for sanctions by the NCAA. How about a 9 year ban on college football at PSU. Seems fair to me.

[frank1946]

08:40 AM on 11/12/2011

Why did Paterno or somebody not call the Police ?

They are all accessories to all these Crimes !

Felonies no less. No Plea Bargains !

[Count of Anjou]

08:36 AM on 11/12/2011

Who cares how much this is going to cost Penn State, what I care about is how much it has already cost those that were abused. That is what is important.

[hazelsjam]

08:36 AM on 11/12/2011

It's a sad day when adults put sports ahead of children's welfare!

[wordaxle]

12:42 AM on 11/12/2011

In a way it is a sex scandal between consenting adults. Sandusky, an adult, asked if it would be okay to have sex with young boys, and Paterno, and adult, consented...at least implicitly.

[Sharon Williams]

10:08 PM on 11/11/2011

NCAA needs to step in with major sanctions NOW.

[AMERIKA]

09:33 PM on 11/11/2011

This isn't a sex scandal. It's a scandal that a chicken would not step in to stop a criminal action and nor would the "powers that be". A sex scandal would be about something that happened between consenting ADULTS. Anything else is simply a crime.

[MizLiz]

07:58 PM on 11/11/2011

Penn State had better funnel many millions to a victims' fund...those boys are going to need all the help and support they can get.

[bamberg77]

07:07 PM on 11/11/2011

The loss of Prestige, Funding that PSU suffers soon is NOTHING compared to the trauma , pain and shame felt by those young victims. perhaps a restructure of a new, smaller PSU from the ashes minus a SPORTS PROGRAM in the future would allow the school to fucus on EDUCATING.

the NCAA should lifetime ban PSU, any funds in the football program should be escrowed NOW to help the young victims.

[Pod-gers]

06:41 PM on 11/11/2011

There will be many 'costs' to this tragedy. Settlements andlow contributions won't be all.

imagine this....

Top linebacker from Penn State, where does he endup in the draft?

What advitizers want to tie their brand to penn State's brand?

[MizLiz]

01:09 AM on 11/12/2011

You know, when compared to the misery these young boys have gone through, the plight of the poor football player moves me not at all.

It's only a game.

[Pod-gers]

11:37 AM on 11/12/2011

My guess is that understanding the cost of ignoring a pedophile might make the leaders of institutions take action even when they cannot otherwise find the motivation to do the right thing.

[reader1]

05:43 PM on 11/11/2011

This is a tragedy, however, we need to start to talk about Rape in this country, whether it's women or men, and certainly children. My heart goes out to the victims, but how many victims are there that we will never know. The empire is crumbling. Is there not one institution in the United States that is functioning. Greed has made us collectively lose our moral compass. The trustees and the authorities at Penn State were not about to lose any money over a small thing like rape. And these are the people we entrust our children to. I am sure the political process in this country has contributed to the neglect of the disadvantaged. Sandusky was able to take advantage of these children because they were from homes that were already broken. Tragic! Pray for them all!