Financial Implications From the Penn State Abuse Scandal
For those of you who've been under a rock the past few days, former Penn State Defensive coordinator, Jerry Sandusky has single handedly brought down the illustrious Penn State Football program. As an alumnus of the MBA program I am particularly distressed by this.
How Did One Man Destroy the Penn State Football Program?
Jerry Sandusky has allegedly been abusing young boys from his charity, the Second Mile, for decades. Although previously investigated, nothing seemed to stick. Even the eye witness report of an assistant coach did not create much of an uproar. The famous Joe Paterno, did the minimum when informed of the abuse and reported the incident to the Penn State athletic director.
The investigations were superficial and the police were not involved. After all, Penn State certainly did not want to endanger its million dollar coach, football program, and reputation!
Today, 40 abuse victims and counting have come forward. Civil and criminal suits continue to pour in. Coach Paterno and President Spanier have been summarily fired. Most current recruiting candidates have pulled out.
The Money Message
Abuse scandals are not new, look at the Catholic Church. Yet, whenever financial gain is placed ahead of public welfare, the institution suffers. Had these incidents been properly handled years ago, the financial and public image damage could have been moderated. Instead, experts predict that Penn State will take at least a decade to recover.
Alumni will certainly curtail their giving. The top football players will sign with other universities. Football revenue will substantially shrink. And university enrollment is certain to decline.
There are scandals of every variety every day. Eventually they all come to light. Putting money and reputation above the welfare of innocent children leads to gigantic societal and institutional costs.
(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.