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For Big-budget Penn St, Fine Not as Big as Seems

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Beaver Stadium is seen on July 23, 2012 in State College, Pennsylvania. As an outcome of the university's mishandling of the allegations of child-sexual abuse by former coach Jerry Sandusky, Penn State was fined $60 million, was stripped of all its football wins from 1998 through 2011, barred from postseason games for four years, and lost 20 total scholarships annually for four seasons. (Photo by Patrick Smith/Getty Images)

Beaver Stadium is seen on July 23, 2012 in State College, Pennsylvania. As an outcome of the university’s mishandling of the allegations of child-sexual abuse by former coach Jerry Sandusky, Penn State was fined $60 million, was stripped of all its football wins from 1998 through 2011, barred from postseason games for four years, and lost 20 total scholarships annually for four seasons. (Photo by Patrick Smith/Getty Images)

NEW YORK (AP) — The $60 million fine levied on Penn State by the NCAA doesn’t look so big next to the scale of the athletic department’s finances.

Penn State plans to pay the fine, part of sanctions announced Monday over the child sexual abuse scandal, in five annual installments of $12 million.

The Penn State athletic department had more than $116 million in revenue to more than $84 million in expenses for the 2010-11 school year, according to data reported by the school to the U.S. Department of Education. The expenses don’t include debt service or capital expenditures.

Penn State won’t be able to save money by making cuts in other sports. The NCAA specifically prohibited that as part of the punishment.

Instead of simply cutting costs, the athletic department can make up for any shortfalls in another way: raising money.

Major college athletic departments receive significant financial support from booster clubs. The Nittany Lion Club took in more than $82 million for the 2011 fiscal year, according to its annual report. That includes $34 million in special gifts for facilities. Its annual fund brought in $17 million, and donations for suites and club seats at Beaver Stadium totaled $12 million.

There were 50 contributors who gave at least $20,000 each.

Bob Harrison, Class of 1962, has donated more than $250,000 to Penn State in his life. Frustrated that the NCAA based its sanctions on what he considers a deeply flawed Freeh report, Harrison’s support for the school and the athletic department has not wavered. And he believes he’s not the only booster who feels that way.

“I would say a high percentage supporting the athletic program will continue to,” said Harrison, who worked for Goldman Sachs for 28 years.

Pennsylvania Gov. Tom Corbett demanded assurances from the university that taxpayer money would not be used. Penn State said it would cover it with its athletics reserve fund and capital maintenance budget and, if necessary, borrow money.

The reduction in football scholarships handed down by the NCAA will save the athletic program some. The accompanying bowl ban could also reduce costs, because schools often lose money on lower-level bowls.

The NCAA said the $60 million represented the average annual gross revenue of the football program. The money will go toward outside programs devoted to preventing child sexual abuse or assisting victims.

The Big Ten also announced that Penn State would not be allowed to share in the conference’s bowl revenue during the postseason ban, an estimated loss of about $13 million.

At Penn State, the men’s basketball team had profits of nearly $5 million in 2010-11, according to the Department of Education report. Teams other than football and men’s basketball had about $23 million in expenses, and the athletic department spent another $36.5 million on expenses not allocated to a particular sport. Football cost $19.5 million.

Of course, football revenue could lag if the team struggles badly on the field as a result of the sanctions, and ticket sales decrease.

The university said earlier this month that its fundraising was strong over the past year despite the scandal. Penn State received more than $208 million in donations for the fiscal year that just ended, the second-highest total in school history.

(© Copyright 2012 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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