The financial impact of massive sanctions is hurting Penn State’s athletic department, leaving the school to consider taking out a loan to keep the program running in the black.
Penn State was fined $60 million by the NCAA as part of the hefty sanctions levied against the university last year. The school is also not eligible for any postseason payouts from the Big Ten, leaving $2.3 million t be split among the eligible Big Ten schools and attendance has dipped since the implementation of a controversial seating program even before the startling revelations and fallout of the Jerry Sandusky scandal. Penn State’s home games still attract a solid number but the capacity percentage of Beaver Stadium continues to drop. With fewer people in the stands, there are fewer programs, hot dogs and beverages being sold. This all adds up and it is beginning to cost Penn State.
Penn State Athletics Director David Joyner has discussed the idea of a $30 million load to help the short-term budget concerns within the athletics department with the financial committee of board of trustees. According to a report by Ben Jones of StateCollege.com, “Penn State’s ending reserve balance over the next five years is projected to dip as low as 5.52 million dollars in the red.” According to the report, Penn State would use $5 to $10 million of the loan to open a line of credit to cover upcoming costs through 2016 while the remainder would be used to cover other short-term needs.
The budget crisis at Penn State may be a short-term problem. The current budget details do not take in to account any money Penn State receives through Big Ten television revenue, which the school is still allowed to receive while under sanctions. Penn State will be allowed to start receiving Big Ten bowl shares after the sanctions are served, and that should help Penn State start to recoup their losses relatively quickly.
