Penn State's endless fountain of money

Owing to Sean Keeley's take on this subject, I felt obligated to go back and flesh out my thoughts here. Penn State lured away Cornell's lacrosse coach last week for, presumably, a major bump in salary. That's on the heels of hiring wrestling coach Cael Sanderson from Iowa State, which was doubly impressive considering he was an ISU alumnus, and they have a top wrestling program.

This all of course is possible because Penn State's football program is a cash cow. Detailed financial records of PSU's athletic department are not available owing to its status as a "state-related" institution, garnering exemption from state open records laws. That distinction is unique to the state of Pennsylvania, and also applies to Pittsburgh and Temple. The trio are best thought of as somewhere on the spectrum in between public and private universities.

It's not hard to come up with a decent estimate of how things are going though. Beaver Stadium averaged slightly over 107,000 per game in attendance last year. That figure isn't completely composed of season tickets, but their cheapest season ticket costs $435. Even with considerable expenses, that's a recipe for a hefty profit, especially considering PSU's plans to shake loose some more change.

For years, Penn State season-ticket holders have had to make an upfront minimum contribution of $100 per seat to the Nittany Lion Club to be eligible to purchase season tickets. Starting in 2011, the minimum contribution will increase to $400 for most seats from the goal lines to the 30-yard lines, and to $600 for most seats between the 30s.

  And to think they were already making money hand over first before the Big Ten Network came along.

Penn State's 2004 football expenses of $10.7 million yielded $33.2 million in revenues, a profit of $22.5 million generated from a team that posted its third losing season in four years.

The problem? That same year, their athletic department supposedly only made $570,000, and that's with a moribund basketball program actually in the black (bolded emphasis mine).

"The cost of administering intercollegiate athletics goes up all the time," Spanier said. "We try to give salary increases to our coaches. While we don't pay exorbitantly at Penn State, we want to be competitive."

"The cost of travel, health care, employee benefits, everything keeps going up. So to keep up on the revenue side, we have to figure out ways to bring income into the university."

Thus an impetus to go personnel shopping. There's a lot of interesting stuff in that Altoona Mirror piece about season ticket holder complaints, and Graham Spanier's reasoning and comparisons that brings to mind similar discussions on our end.

Brian Cook made the point as to why that is the case well the other day: non-revenue sports are expensive, and are as much or even more of a financial burden than big-time football and basketball. For a useful illustration of this, take a look at the institutional support figures at the Indianapolis Star's 2004 NCAA Financial Reports database. Unfortunately, the USA Today's newer database doesn't have the Indy Star's vital sport-specific breakdown.

The Big Ten Network surely has improved their balance sheet, but the Nittany Lion football team scheduled eight home games last year in part for reasons that had nothing to do with on-field performance.

"We are one of the larger schools in regard to the number of sports we sponsor, so we have more bills to pay, and football is the primary revenue source for that," Curley said. "It becomes very important to fill up Beaver Stadium to the overall budget process and other Penn State teams."

Every year, Penn State schedules at least seven home games to create enough revenue to meet the annual budget.

Fewer games would be detrimental to Penn State athletics.

"We need the money from these home games and couldn't do it with just six," said associate athletic director for football Fran Ganter. "We would probably have to cut a sport if we didn't have that seventh game."

This leads to the afore-mentioned Twitter discussions about whether or not something even bigger could be in the works down the line. It's irrelevant that PSU's athletic director is considered a proxy for Joe Paterno. The new hires, along with the latest Director's Cup standings (an aggregate of all department athletic programs), prove that Penn State is committed to investing in sports other than football. If this was merely a question of resources, they'd be set. Penn State opened a 15,000+ seat basketball arena in 1995, and seemingly has to do something with their share of the increased Big Ten Network profits from the past several years.

"I think we've had great success across the board at Penn State. There's no reason why we can't enjoy that type of success in men's and women's basketball. We've seen some flashes of success in men's basketball. I have great hopes as we move ahead. We have a great coach right now in Ed DeChellis. He does everything right at Penn State. We were disappointed, I was, along with everyone else, in the type of season. It was disappointing. No one cares more than Ed does. He's going to work on it. We're going to give him all the support we can to improve basketball and have the kind of long-term success we've enjoyed in some of the other sports."

Clearly though there must be be other preconditions to success beyond having the means and wherewithal, as a quick glance towards the last decade of Notre Dame football can attest. Within the physical borders of Pennsylvania, Philadelphia produces its fair share of men's basketball talent, although there's certainly plenty of competition for those players. Maryland and Washington D.C. aren't too far away, and Pittsburgh has had extraordinary success over the past decade by luring the best and the brightest stars from New York City and New Jersey.

One hangup there is that State College and the surrounding area of Central Pennsylvania is very rural, and has fairly homogeneous demographics. That isn't necessarily a problem for some top programs located elsewhere across the country, but Penn State basketball also has to deal with another inherent disadvantage with its relative lack of basketball tradition and success. Playing in the Big Ten, the program doesn't really get much of an opportunity to showcase itself to traditional hoops hotbeds along the Eastern Seaboard either.

Likewise, could PSU ever attract a proven commodity as head coach? They seem rather content with the status quo now, but what if the athletic department had the chance to go after a big fish? I'd imagine that they would eschew names with baggage like a Billy Gillispie. Any interested candidates would have to accept playing second fiddle to the legacy of Joe Paterno and his football program. Occasionally a Tubby Smith will hit the open market though. Or, alternatively, they could emulate the wrestling/lacrosse hires, offer up an extremely generous financial package, and see if there are any takers.

No, potential doesn't always translate into action. Texas could be in a brand new conference today, but in the end wasn't willing to set the wheels in motion towards college football Armageddon. That illustrates a useful point here: a vague, generalized objective won't be enough. A direct course of action is necessary, along with the determination to see that through without hesitation. Conceivably, Penn State could tap its reserves and make an outlandish gamble. That move would be out of character though, not that the wrestling and lacrosse hires don't fly in the face of everything one usually expects from that athletic department.

Perhaps this possibility is on the horizon, once the two initial test cases start to bear fruit. As implausible and outlandish as the idea sounds, Happy Valley's bankroll should make athletic programs throughout the Northeast wary. They're all still trying to overcome decades of Penn State subjugation in football. Considering the general misery of living under the dual yokes of PSU and Notre Dame, it would be a mistake to dismiss that horrific, dystopian nightmare completely out of hand.

Postscript/update: H/T to mgoblog for this. There's a rumor that PSU will actually be adding hockey.

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