Penn State sponsorship, merchandise sales slip
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Two years ago, fans bought $80 million worth of Penn State licensed merchandise, loading up on sweatshirts, key chains and paw print window stickers to publicly flaunt their Nittany Lions love.
This year, that number could drop below $50 million, said Matt Powell, a Scarborough, Maine-based analyst with SportsOneSource, a company that tracks the sporting goods industry.
It's not the typical response following a university athletic scandal, he said. Generally when schools get in trouble, sales of licensed gear improve as students and alums rally round. But that tends to be the response to things like recruiting violations by coaches or players caught selling memorabilia.
"In many ways, we've never seen anything like this before," said Mr. Powell.
The child abuse scandal and the fallout around how university officials responded last November is unknown territory both for the school and for the marketers that like to connect with sports-crazy crowds.
Some of the sponsors that stuck with Penn State after the initial allegations came out are now taking another look, especially following a critical report from independent investigator Louis Freeh that led to the NCAA's decision this week to issue harsh penalties, including banning the school from post-season games for four years.
State Farm insurance will not "directly support" Penn State football this year, a spokesman confirmed, although it will continue as a sponsor of NCAA football. General Motors is reviewing its sponsorship. Weis Markets, a 160-store supermarket chain based in Sunbury, Pa., is "reviewing its options," a spokesman said.
Others like PNC Financial Services, insurer Highmark and soft drink giant PepsiCo are hanging in there, even as they express disappointment with the revelations.
"We are deeply disturbed by the findings of the investigation and the conduct of certain individuals at Penn State University, but will continue to honor our long-standing contract as a campus beverage provider," said a statement from PepsiCo this week.
PNC's involvement with the school ranges from sponsoring men's and women's athletic programs to providing on-campus banking services. The Pittsburgh bank said that will continue.
PNC's official statement said, "The actions described in the Freeh report should never be excused, but we believe that the university will learn from this experience and become stronger as it pursues the educational excellence that is its true legacy."
Highmark issued a statement that said its partnership with Penn State is about health and wellness. "While we routinely evaluate all of our sponsorships, we plan to continue at this time."
Other sponsors whose logos appear on the Penn State athletics website included AT&T, Chesapeake Energy, AAA, Dietz & Watson and the Pennsylvania Lottery. The lottery staff confirmed the sponsorship but couldn't say if anything would change. Other sponsors either declined comment or could not be reached.
Sponsors will need to figure this one out in their own way, said Eric Wright, president and executive director of research at Joyce Julius & Associates Inc., an Ann Arbor, Mich., company that measures the impact of sponsorships and promotional programs.
"There isn't a template for this," said Mr. Wright. "They'd have to look internally and make some judgments."
In June, former Penn State assistant football coach Jerry Sandusky was convicted of 45 counts of sexual abuse of children. The Freeh report, issued earlier this month, found that officials, including former football coach Joe Paterno, had opportunities to stop Mr. Sandusky but did not.
Mr. Wright noted that Baylor University has worked hard to rebound from scandal and devastating sanctions about a decade ago and is now seen as a model athletic program.
The last year's precipitous fall for the athletic program seems evident on the Wayback Machine, an Internet tool that caches older versions of websites. On July 25, 2011, PSU's website listed dozens of sponsors. Now the sponsorship page simply says, "Penn State Athletics would like to thank its Corporate Partners for their support."
"I've got to believe this is going to have a significant impact on the school for a while," said Mr. Powell, whose data show a continuing slide in demand for Penn State licensed merchandise so far this year.
Even if the school's support has slipped, it still seems strong compared to its peers, based on data from the Collegiate Licensing Co., an Atlanta licensing agency that claims to represent more than 200 schools.
Penn State ranked eighth place out of 75 universities in the three months ended Dec. 31, 2010, according to the agency. In the three months ended March 31, 2012, the school's ranking had slipped to 12th place, but that was still ahead of No. 17 West Virginia University and No. 46 University of Pittsburgh.
First Published July 26, 2012 12:00 am