For second time in 7 years, Sandy Barbour faces financial crisis at Penn State athletics

The (Wilkes-Barre) Times-Leader (TNS)
A packed Beaver Stadium is shown for a recent Penn State football game. The fall football season at Penn State will not he held in 2020, leaving a large financial hole in the school's athletic budget.

In 2014, Sandy Barbour took over an athletic department staring down financial peril.

On the ledgers, Penn State had taken out a $48 million loan to pay off the fine levied by the NCAA and payable to child sex-abuse issues in Pennsylvania as part of its punishment for the Jerry Sandusky scandal.

In the coffers, it had $30 million earmarked to cover a significant slate of operating expenses for a few years. In terms of reserves, there was nothing.

Rebuilding the proud athletic department with a football program still reeling from sanctions and a national perception of disgrace didn’t promise to be an easy task.

Today, Penn State is staring down fiscal issues that, potentially, are bigger than the ones Barbour inherited.

In her seventh year at the head of the athletic department, the vice president for Intercollegiate Athletics said Penn State could lose more than $100 million if coronavirus concerns prevent football from being played this academic year, and they’ve already been postponed by the Big Ten this fall.

Sandy Barbour

That number would only drop, she said, to the tens of millions of dollars if games are held without paying customers in the seats.

“We have a long history and tradition of comprehensive excellence, across a fairly large number of sports, and certainly one of my goals would be to continue that tradition and continue that as one of our long-held values,” Barbour said. “But having said that, obviously, this is going to be a very difficult financial situation.”

Ways to mitigate financial strain: So as athletic departments such as Penn State’s merely cross fingers when it comes to a potential spring football season that could help alleviate some of the burden, they have already begun thinking of ways to mitigate the strain.

Some funds will come in naturally. Money that would have been spent this fall for programs to travel to road games won’t be spent at least until spring. Penn State also mandated graduated-scale pay cuts for coaches and others in the athletic department earlier in the summer. Earlier this month, Barbour said she took a 15% pay cut on the $1.269 million base salary she was scheduled to earn in the 2020-21 school year.

Last year, the Big Ten paid each of its member institutions in excess of $55 million, money earned by the conference mainly through media rights agreements. Barbour said the athletic department already has evaluated how much of that money it can expect if games are played and televised in the spring, as well as if they aren’t played at all.

Money in reserve: Barbour also noted that in the years since she has been in charge, the athletic department built more than $25 million in reserves.

That money was earmarked for facilities improvements Barbour has planne and touted for years, but she said it will now have to be put toward narrowing any fiscal gap created by sports that can’t be played.

Fundraising and loans: As Penn State did in the wake of the Sandusky scandal, Barbour said the department will rely on several outside possibilities to help blunt financial issues.

Things such as fundraising efforts will have to be counted on, as will the generosity of donors. She also didn’t rule out the likelihood of having to take out another loan like the one that covered the NCAA fine — Barbour said Penn State is still working to pay that off — to help make ends meet.

“Everybody in the country is going through this,” she said. “I do think that we as an industry are going to take a step back and look at how we do things financially, but we’re going to work really hard to make sure that this has as little impact on our long-term competitiveness as it possibly can. Whether it’s our opportunities to increase our revenues, enhance our revenues, to have donors step up and tell us they want to help us through this, that’s what we’re going to have to do here over the course of the next nine months.

“Hopefully, ‘21-22 is more of a regular year and get us headed back in the right direction.”