Loss of Paterno, Potential Loss of Profits for Penn State
Penn State football had the fifth highest revenue and second highest profit for a college program, $72.7 million and $53.2 million respectively. Penn State athletics had an additional $24.1 million that came mostly from merchandise sales and sponsorships — with companies like Nike (NYSE:NKE) and Pepsi (NYSE:PEP) — that could be attributed to Penn State football’s popularity. But, amidst the scandal, that money is at risk.
Penn State had a clean and ethical brand, and, as with any brand, tarnish is bad news. Merchandise sales and sponsorship money is in the most danger for the short-term, as long-term television contracts and such are unlikely to be immediately affected.
The damage to revenue seems likely to fall like dominoes if it falls at all. Joe Paterno will not be around to boost fund-raising earnings, and the scandal may affect long-term sponsorship deals, which could damage Penn Stat’s recruitment, leaving the team weaker in the future and diminishing its popularity. A decline like that would hurt ticket sales and could eventually affect television contracts.
Only time will tell what lies ahead for Penn State in the wake of scandal.