Penn State Athletics Planning for Furloughs

Penn State Athletics is preparing for furloughs across the department, Vice President for Intercollegiate Athletics Sandy Barbour told department employees during a Zoom call on Wednesday afternoon.

StateCollege.com obtained a recording of a portion of the call.

‘Furloughs, at a minimum, I believe are in our immediate future,’ Barbour said. ‘I just don’t see how we get through this, how we get our gap or our loan number down to manageable size, a size that doesn’t cripple our department and programs, for years to come.’

Barbour, speaking to the media earlier this week indicated that Penn State Athletics’ current reserve budget is ‘north of $25 million’ and has publicly stated in the past that her department, which hosts 31 different programs, is looking at upwards of a $100 million in revenue shortfall if football were not to be played this fall or upcoming spring.

Additionally, Barbour is planning to guide the department through $15-20 million in expense reductions, some of which will happen organically through things like the lack of travel costs. Penn State spent $8.1 million on travel and lodging during the 2019 fiscal year according to documents, and other savings that will inherently come through the cancelation of the fall sports season.

Even with such cuts, Barbour is still eyeing a revenue shortfalls of $55-60 million. That number would continue to drop if winter sports such as basketball and hockey — which have not yet been canceled by the Big Ten — were to compete. Both programs are cash positive, although limited attendance figures would influence the impact both would have towards such large deficits.

According to Barbour, much of the remaining losses would be covered by a loan, the size of which is undetermined at this time with so many factors still unsettled. Earlier the week Barbour also indicated that the department was not looking to cut athletic programs, yet.

‘I do think, unlike my friends at Tulane who went through Katrina, the rest of the country was not going through that, everybody in the country is going through this,’ Barbour told reporters earlier this week. ‘Now there are going to be differential financial impacts but I do think that we as an industry are going to take a step back and and look at how we do things financially.

‘We’re gonna work really hard to make sure that this has as little impact on our long term competitiveness, as it possibly can. But I also know that whether it’s our opportunities to increase our revenues, to have donors step up and and tell us they want to help us and want to help us through this. You know that’s what we’re going to have to do here over the course of the next nine months, land on our feet, and hopefully 2021 is more of a regular year and gets us heading right back in the right direction.’

Barbour told department employees, many of whom having already taken previously announced pay cuts, that a plan would be put into action in the coming weeks.

Penn State spent nearly $30 million in the 2019 fiscal year on support staff and administrative compensation and roughly $32 million on coaching salaries, benefits and bonuses. Barbour has not indicated publicly which coaches have or have not opted into any salary cuts. Both figures are up several million from fiscal year 2018.

Equally true, Penn State reported a slight decline in revenues in 2019 as spending increased.