At Penn State, Cost Cutting Ultimately Could Involve Cutting Sports

Penn State will explore "every available measure" to compensate for financial losses resulting from COVID-19.
Author:
Publish date:

Penn State Athletic Director Sandy Barbour left the option on the table: Without a football season, the athletic department has to consider a variety of cost-cutting measures, which could include cutting varsity sports programs.

"We have a long history and tradition of comprehensive excellence across a fairly large number of sports," Barbour said on a recent media call. "And certainly one of my goals would be to consider that tradition and continue that as one of our long-held values. But having said that, obviously this is going to be a very difficult financial situation, and I have tasked our team in ... looking at every available measure to close the gap of whatever revenue it is we're going to lose."

Penn State has projected an athletic department revenue drop of as much as $100 million if football is not played before the 2021 fall season. The impact could be lessened if Penn State is able to play some sort of spring semester season. And Penn State already had budgeted for significant losses were it able to play, since the athletic department initially planned to hold games without fans this fall.

Penn State sponsors 31 varsity sports, three of which generate a revenue surplus for the athletic department: football, men's basketball and men's ice hockey. Barbour said during the spring that cutting sports was not being discussed.

Since then, Penn State's athletic department has asked some employees to take pay cuts (Barbour took 15 percent) and has undertaken several cost-cutting measures. Statecollege.com reported that the department planned to implement furloughs.

Last Friday, Iowa announced that, facing a similar budget deficit as Penn State, it will cut four varsity programs: men and women's swimming, men's tennis and men's gymnastics. Asked last week whether Penn State would consider cutting sports programs, Barbour left open the possibility.

"Obviously we're getting a grip on that, but how much can we close that [financial] gap?" Barbour said. "And then we'll just need to make sure to be fiscally responsible from a leadership standpoint. I've got to put everything on the table and then analyze and understand the impacts on our department, on our organization and then the impacts to the bottom line. And we'll have to decide which of those measures we take."

Penn State's athletic department, which is self-funding, carries more than $25 million in surplus, Barbour said. The department continues to pay into the $48 million fund created out of the fine that was part of the NCAA's 2012 sanctions. Penn State's athletic department also borrowed $30 million from the university in 2013 to help cover expenses after the sanctions were announced.

During an appearance on the "Representation Without Taxation" podcast, Barbour described the athletic department's situation in stark terms. She said Penn State must "pare back everywhere we possibly can," offering one example.

The Pegula Ice Arena houses two ice sheets: one in the main arena, which seats 5,782 fans, and one in the community rink. If the hockey teams cannot play later this year, Penn State might use only the community-rink ice sheet until games resume.

The financial situation also brings into question how much Penn State can continue to implement the 20-year Athletics Master Plan it unveiled in 2017. The plan featured several new facilities, including a Center For Excellence that would become the hub of Penn State's athletics campus. The master plan also includes a significant refurbishment of Beaver Stadium.

"There are lots of things we can do," Barbour told podcast host Jill McBride Baxter, who also is Barbour's agent. "But again, when you're talking about [a potential loss of] 60 to 100 million dollars, you're not talking about cutting five to 10 million out of your budget. We've already done that."

To compensate, Barbour said that the department likely will explore a loan to bridge revenue gaps created this year.

"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," Barbour said during the conference call last week. "But I also know that, 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: land on our feet and hopefully 21-22 is more of a regular year and gets us headed back headed in the right direction."

Get the latest Penn State news by joining the community. Click "Follow" at the top right of our AllPennState page. Mobile users click the notification bell. And please follow AllPennState on Twitter @MarkWogenrich.