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.