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Penn State Football: James Franklin Addresses the Financial Impact of the Coronavirus

by on March 25, 2020 9:35 PM

A healthy Penn State — and State College — depends on a healthy, and successful, football program.

That’s not to say public safety doesn’t come first. It does.

But on Wednesday, seventh-year head coach James Franklin acknowledged the role that Penn State football plays at the university and in the community.

“This is a major challenge,” Franklin said on a Zoom call with reporters. “No. 1 is health and safety. No. 2 is making sure that we can do things from a financial responsibility, from an economic perspective, for our community, for our state and then specifically for our university as well.”

Penn State’s overall operating budget in 2019-20 is $6.8 billion, counting the Hershey Medical Center and the Penn State commonwealth campuses. In terms of annual revenue, Penn State would rank around No. 443 on the Fortune 500 list, just head of such name brands as Wayfair, Ulta, Ralph Lauren and Marathon Oil.

And while revenues for Penn State intercollegiate athletics in 2019 were $164.5 million — “just” 2.5% of that overall $6.8 billion — you could make a case (a favorite Franklinism) that athletics, especially football, is far more valuable to Pennsylvania’s only land grant university than any other entity.

It is the front porch to Penn State. It helps drive enrollment.

I’ve been teaching at Penn State for 20 years, and through thick and thin, in classes big and small, with students pursuing over 25 different degrees. I always ask, “Who came to Penn State because of the football team?” And, consistently, for two decades — through Big Ten titles and losing seasons and scandal and rejuvenation — nearly half the class always raises their hands.

Football markets Penn State better than anything else.

It is a rallying point for 700,000 living and loving alumni. It endeavors to embody the values of higher education. It is the economic engine for the entire central region of the state.

As Franklin correctly pointed out on his call, it’s “the hotels, the businesses, the restaurants, the bars.” Not just the ones in State College, but the ones in surrounding counties on home football weekends. And the ones on campus, where for seven weekends a year hotel rooms go for $500 a night and there are lines, and dollars, everywhere.

And it picks up the tab for one of the best, largest, most well-rounded and successful intercollegiate athletic programs in the nation. In pure dollars and cents, in 2019 Penn State football accounted for 61% of gross revenues for Barbour’s athletic department — $100.5 million of $164.5 million.

As Joe Paterno, who had a stint as AD, used to say in a way that was not meant pejoratively, football pays for a lot of field hockey sticks and balls.

It’s that obligation — as much as the delayed install of Kirk Ciarrocca’s new offensive scheme — that keeps Franklin, as well as his boss, Sandy Barbour, awake at night.

Franklin, who makes $6 million a year, is well aware of his fiscal, and not just football, responsibility. He’s paid to win games. But he’s also paid to fill Beaver Stadium. He’s been a good investment. Only Nick Saban and Dabo Swinney have won more college football games over the past four years. And Beaver Stadium attendance has been No. 2 in all of college football over the past two seasons, trailing only Michigan.

WHAT FRANKLIN SAYS

Franklin understands the financial implications of COVID-19.

“Those were conversations from Day One,” he said on Wednesday.

“Obviously, if this continues to roll into the fall, it is going to have significant impacts. I think everybody is aware of that. There have been a lot of discussions already between myself and my staff, to prepare them for that. There have been a lot of discussions between Sandy and me… We’ve had these conversations.”

Penn State football revenues were essentially flat in 2019, showing a paltry increase of $265,000 from 2018 — an increase of a quarter of a percent. Meanwhile, the bottom-line showed a dip of over $750,000. Overall, Penn State athletics saw a drop of almost $6 million from its bottom line, from $10.2 million to $4.15 million. Not the trend you want heading into a nationwide crisis.

Nevertheless — and kudos to Barbour & Co — Penn State is just one of a handful of a major college sports programs that is self-sustaining, meaning it pays its own bills off of what it generates without aid from the overall university.

That could be in peril.

SHADES OF GRAY

In Penn State’s favor is the longtime working relationship among Franklin, Barbour and president Eric Barron, who have been together longer than any other such troika in the Big Ten other than Northwestern. That matters.

“…the thing that I think has been a positive as well,” said Franklin, “is Penn State, our administration — not only (our) athletic administration but our administration for the university; president Barron and David Gray and everybody involved — also understands the impact that this has on the community.”

No surprise that Franklin mentioned David Gray by name. A Penn State alum with both undergraduate and grad degrees, Gray has been Penn State’s senior VP for finance and business/treasurer since February 2012. He is an invisible Gorilla Glue for PSU, a Dr. Fauci in his own right.

The good news: Gray has seen Penn State through the financial and reputational challenges of the Sandusky scandal.

The bad news: In December, he announced that he is retiring in August.

The good news: Earlier this week, Penn State shared that Gray has agreed to stay on through the end of the year. He's uniquely positioned to help Penn State financially through this crisis.

These days, you look for the good news where you can find it.

2020 VISION

It’s way too early to know what the implications of the c-virus will have on the country, Penn State, PSU athletics or Nittany Lion football.

This is true: Barbour’s task is a tougher one than Franklin’s. Penn State has 31 varsity sports to support. Ohio State has 35, while Alabama has 22, LSU has 20 and Clemson just 15. A reduced revenue stream would be a major challenge. In other words, a low tide impacts all ships.

No matter how you look at it, though, even if the Nittany Lions’ 2020 football season-opener on Sept. 5 against Kent State in Beaver Stadium goes off as scheduled — boy, it’s hard to imagine #107k jammed in together — the challenges will be unprecedented.

Days, these days, move slow.

But that season opener is just around the corner — only 163 days away. Time is of the essence.



Mike Poorman has covered Penn State football since 1979, and for StateCollege.com since the 2009 season. His column appears on Mondays and Fridays. Follow him on Twitter at http://twitter.com/PSUPoorman. His views and opinions do not necessarily reflect those of Penn State University.
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