Advertisers, vendors reassessing university's brand amid scandal
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On Thursday, thousands of copies of a special legacy poster honoring Penn State University legends of the past 125 years were reprinted at the request of Iron Workers Local Union No. 3.
The original version of the posters to be given out today at the Nittany Lions football game in State College included a face with which the Pittsburgh-based sponsor was not comfortable having its logo associated, said Mark Thomas, business manager of the union local. He declined to name the individual edited out but said university officials were very cooperative in making the last-minute change.
In the past week, a number of once-proud names associated with Penn State's storied football program have taken on distasteful connotations since a former assistant coach was charged with sex abuse involving children, two athletic department officials were accused of perjury, the university president resigned and head coach Joe Paterno was fired.
Fallout from the accusations, and media storm, are forcing those linked to the university through marketing connections from advertising to licensed merchandise sales to take note.
Even as they express sadness over the situation, they concede there will be repercussions ranging from an immediate hit to the overall Penn State brand to potential long-term changes across the industry in sponsorship contracts with colleges.
Cars.com, an online car shopping site owned by a collection of media companies, moved quickly when the allegations were revealed. The sponsor told ESPN on Tuesday morning -- before Mr. Paterno was fired -- that it was withdrawing from involvement in this week's Nebraska vs. Penn State telecast, in addition to the team's game next week against Ohio State.
"As a proud, longtime sponsor of ESPN College Football, it's important to us that we're building our brand in a way that celebrates the sport, its fans and the dedication of its student athletes," said the statement issued by Cars.com spokesman Ron Hall.
Liberty Mutual, meanwhile, moved to stamp out reports that it had been involved in a Penn State sponsorship and ended it. Instead, the Boston-based company has been running online banner ads to promote a College Football Coach of the Year contest.
Earlier this week, the company decided the ads should not pop up on Penn State-related sites, Liberty Mutual spokesman Glenn Greenberg said. "We haven't taken any actions that will have a financial impact on Penn State," he said, adding that the company has a program marketing its services to the university's alumni.
Since the news broke last weekend, sales of licensed Penn State gear through Web stores run by Fanatics -- a sports merchandise company in Jacksonville, Fla. -- have dropped between 25 and 50 percent on a year-over-year comparison basis, said Brian Swallow, vice president of sales and marketing. Fanatics supports online sales through Penn State's own website, as well as those of numerous other colleges around the country.
While the immediate impact is hard to miss, he said his company has not been focusing on the issue even if this is start of the peak season for sales of licensed collegiate merchandise.
Fanatics has taken a step back from pushing Penn State gear. Fans of other colleges might start seeing more email offers this time of year, but those in the Nittany Lions group should not. "We're just trying to be sensitive to what the Penn State community is dealing with," he said.
It's a large and dedicated community, something that marketers typically love.
The Collegiate Licensing Co. earlier this year ranked Penn State at No. 8 in its ranking of the 75 top-selling universities based on royalties on all collegiate merchandise sold in the last three months of 2010.
No. 1 was the University of Texas at Austin, while the University of Nebraska came in at 11, West Virginia University ranked number 15 and the University of Pittsburgh came in at 42.
In August, Collegiate Licensing -- which claims to represent more than 200 schools, conferences and bowl games -- estimated the overall industry was worth $4.3 billion in annual retail sales.
Iron Workers has been a part of that for several years, and, despite this week's poster changes, the union expects to continue the relationship, Mr. Thomas said.
"Those kids did nothing wrong up there," he said. "It's sickening what's happening."
He said he believes the investments the union has made raised awareness of the Iron Workers organization and benefitted Penn State students and athletes. In addition to having its name on various sports materials, he said the union gave money to promote a bridge-building event for engineering students.
"If everybody walks away from it, the students are ... the ones who suffer the most," he said.
Pittsburgh-based insurer Highmark, too, is not abandoning the relationship with Penn State that began in 2007 and includes signage at various facilities. "This particular sponsorship, like all the others, we routinely evaluate on a regular basis," Highmark spokesman Aaron Billger said.
The insurer has no plans to change the contract, he said.
The sponsorship industry in general may be taking another look at contracts as a result of the damage caused this week by something that had little to do with wins and losses on the field.
First Published November 12, 2011 12:17 am