Thursday, November 10, 2011

Penn State football scandal will cost school millions - Yahoo! Finance

Penn State football scandal will cost school millions - Yahoo! Finance:

"Their brand has been irrevocably tarnished," said Marc Ganis, head of SportsCorp Ltd., a sports marketing firm. "In a matter of days, they have plummeted from being perceived as the cleanest, most ethical brand in college sports to the lowest of the lows. Moral breaches of this magnitude are not easily forgotten or dismissed in our country."

Ganis said perhaps the most significant near-term dollar risk for Penn State is the damage the scandal -- which cost Hall of Fame coach Joe Paterno his job -- could do to fundraising, which is not included in the reported athletic department revenue.

"They used Paterno like crazy," he said. "This iconic figure was a magnet for fundraising. Now he's radioactive."

Several years ago I helped co-author a paper on what happened when athletes "fell from grace", not surprisingly the stock price of the firms whose goods the athlete sponsored also fell. But in these cases at least some probability of such a fall was built in, I do not think anyone saw this one coming. Universities do not have "stock prices" per se, but this one is going to hurt in all areas. From admissions to athletics and fundraising.

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