Thursday 29 December 2011

Penn State case highlights power of money-making football

By Bloomberg News
Joe Paterno sat in his kitchen one morning in March 2002 as a graduate assistant described a locker-room shower encounter he saw between a boy and a longtime friend and colleague of Penn State University's football coach. Paterno slumped in his chair, "shocked and saddened," according to court testimony.
Mike McQueary's words couldn't have come at a worse time. Paterno was trying to fix the Nittany Lions' money-making football program he built on a motto of "success with honor," after the low point of his coaching career. The State College, Pa., university was near the end of a $1.4 billion fundraising campaign, six years removed from the opening of a $55 million basketball arena and had just expanded the football stadium to the nation's second-biggest.
Paterno, in his 37th year as coach, told McQueary he had done the right thing describing what he saw involving Jerry Sandusky, a former Nittany Lions defensive coach. The biggest man on campus then sent the case to his immediate bosses and did nothing else. That set the stage for his firing nine years later, 11 days after his record 409th win, amid a scandal over alleged child-sex abuse and coverup that has echoed far beyond the Central Pennsylvania region known as Happy Valley.
"The revenue opportunities are so substantial that the pressure placed upon the athletic department and coach, specifically, make it ever more difficult to pursue a school's mission," Warren Zola, 44, assistant dean of graduate programs at the Carroll School of Management at Boston College, said in a telephone interview from his Chestnut Hill, Mass., office.
Paterno, who turned 85 on Dec. 21, was unable to comment for this story because of health issues, said Dan McGinn, a spokesman. Paterno is being treated for lung cancer found after his firing and broke his pelvis in a fall at his home this month.
The dependence of universities on sports to help fund everything from money-losing gymnastics teams to general scholarships has created a system where the needs of coaches and their programs supersede the educational values of their institutions, said Robin Harris, executive director of the Ivy League, whose schools don't give athletic scholarships.
It also creates an environment where a coach like Paterno, a Brooklyn native known as "JoePa" whose bronze statue stands outside 107,000-seat Beaver Stadium, had the power to tell the university's president that he wouldn't help raise another penny if the school's top disciplinarian wasn't fired for being too strict with his players.
"There is so much money tied into big-time college athletics that it forces some people to make bad decisions," Harris said in a telephone interview. "They may be people affiliated with a program, or coaches and administrators who do things purposely wrong, or turn a blind eye, because they are focused on generating revenue and not necessarily the integrity of the enterprise."
Paterno and Graham Spanier, 63, Penn State's president, were fired by the school's trustees on Nov. 9, four days after Sandusky, 67, was charged with sexually assaulting eight boys from 1994 to 2009. While neither Paterno nor Spanier was charged in the case, the trustees said the two leaders should have done more.
Athletic Director Tim Curley, 57, was placed on administrative leave and Gary Schultz, 62, a vice president in charge of finance and the campus police, retired after they were accused of lying to a grand jury about what McQueary told them about Sandusky's actions. Sandusky, Curley and Schultz all have denied wrongdoing.
McQueary, 36, testified at a Dec. 16 preliminary hearing for Curley and Schultz that he went to Paterno's house the day after the shower incident and told the coach what he had seen, although he didn't offer explicit details. About 10 days later, McQueary met with Curley and Schultz and told them he had seen Sandusky and a boy, both naked, in the shower.
"I conveyed to them that I saw Jerry with a boy in the showers and that it was severe sexual acts going on and that it was wrong and over the line," McQueary testified.
Educators said they see plenty wrong with big-time college sports.
Winning generates money from television, ticket sales, sponsors and alumni, according to a 2010 report by the Knight Commission on Intercollegiate Athletics, an independent, non- profit group dedicated to reforming college sports.
Networks including ESPN and Fox will combine to pay the top five conferences and the Bowl Championship Series that determines the national football title about $14 billion in rights fees through 2032.
ESPN is an investor in the Longhorn Network, which guarantees the University of Texas an average $15 million annually for 20 years. Texas had a nation-leading operating profit of $70.1 million last year, according to data compiled by Bloomberg. Penn State football generated $63.3 million in fiscal 2010, about 60 percent of the athletic department's revenue.
Coaches like Paterno are the most powerful people at their universities, including the presidents, said Lewis Katz, a former owner of the NBA's New Jersey Nets who donated $15 million to Penn State and whose name appears on a campus law building.
"Football trumps everything at Penn State," Katz said. "There's nothing that comes close to second."
JD Reive is in his second season as the men's gymnastics coach at the University of Iowa, where the football team accounted for 52.6 percent of athletic department revenue last year. The gymnastics team lost almost $600,000 in fiscal year 2010, according to university figures obtained through open- records laws. Reive said his program might disappear if the football team falters.
"There isn't a gymnastics coach in the country that doesn't worry about what happens if the football team doesn't make a bowl game," Reive, 35, said in a telephone interview. The Hawkeyes play in the Insight Bowl on Friday against Oklahoma.
Ohio State University's football program had an operating profit of about $18.2 million last year. It hired Urban Meyer, a two-time national title winner at the University of Florida, as coach last month at $4 million a year, more than triple the $1.3 million paid in the fiscal year ending June 2010 to Gordon Gee, the Columbus, Ohio, university's president.
Meyer, 47, succeeded Jim Tressel, who quit in May in a memorabilia-selling scandal involving top players. Tressel produced a national championship at Ohio State before the NCAA said he kept information about rule-breaking from school administrators for more than nine months. Asked early in the case if he was going to fire Tressel, Gee, 67, responded, "I hope he doesn't fire me."
Gee, through a university spokeswoman, declined to comment for this article. The NCAA on Dec. 20 banned the Buckeye football team from postseason play next year.
Behind Paterno's Coke-bottle eyeglasses and grandfatherly exterior was a bully, said Vicky Triponey, Penn State's former standards and conduct officer who said in a 2005 email to Spanier that Paterno believed she should have no interest in holding players accountable to general student standards.
"I do not support the way this man is running our football program," Triponey, 54, said in emails first reported by the Wall Street Journal last month. "We certainly would not tolerate this behavior in our students, so I struggle with how we tolerate it in our coach."
Triponey also said she was told by Spanier that the coach had given the president an ultimatum: Fire her or Paterno would stop raising funds for the university. Spanier told Triponey that he would pick her, though he didn't want to have to make that decision.
The content of the emails was confirmed to Bloomberg News by Triponey's husband, Michael Meacham, a former Penn State professor. Triponey, through her husband, declined to comment further.
Raymond Marsh, a spokesman for Penn State's Office of University Development, wouldn't say how much total money Paterno had helped to bring in.
"Penn State clearly raised more funds because he was involved," Marsh wrote in an email response to questions.
Spanier declined to comment through Bill Mahon, a university spokesman. The former president remains a tenured professor in the College of Health and Human Development and the College of the Liberal Arts.
Triponey quit in September 2007, a month before the university limited the ability of its judicial-review process to end a student's participation in activities, including sports.
Walter DeShields, a 2004 graduate of Penn State and head of the Philadelphia chapter of the African American Alumni Organization, said in a telephone interview it was clear during his time at the university that football and basketball players were given more leeway when it came to behavior and punishment.
"But playing on Saturday in a multimillion-dollar business is the only thing that matters," he said in a telephone interview.
John L. Lahey, president of Quinnipiac University in Hamden, Conn., said the biggest headaches in college sports seem to come from the more visible and valuable teams.
"When any part of the university, in this case athletics, becomes so important to the university, to the university's brand, image, resources, as certainly is the case with the Penn State football program, it can cloud the better judgment of people with high intelligence and integrity," Lahey said at the IMG Intercollegiate Athletics Forum in New York this month.
Of 53 universities surveyed by Bloomberg this year, 46 diverted money to sports in their fiscal years ended in 2010, based on financial reports to the NCAA obtained from state schools under open-records laws.
Bobby Bowden took Florida State to 31 bowls in 34 years and won 76 percent of his games. Toward the end of his tenure, Bowden, who went 33 years without a losing season, said he began receiving office visits from university administrators voicing concerns about empty seats on game day. He left under pressure after the 2009 season with a total of 377 victories.
"At the end, I didn't win enough," Bowden, 82, said in a telephone interview from his home in Tallahassee, Fla., where the university is based. "You can bet your life if you're not winning and filling the stadium, got to sell those seats. Football pays 90 percent of our bills. Got to win to get those TV contracts."
With reporting by Curtis Eichelberger, Sophia Pearson, John Lauerman, Aaron Kuriloff and Heather Perlberg.
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