The Penn State Jerry Sandusky child sex abuse scandal is the worst scandal in the history of college athletics and has now drawn unprecedented NCAA sanctions. The sanctions were handed down by the NCAA because the evidence from the Freeh Report along with the criminal trial of former coach Jerry Sandusky indicated that "Penn State's leadership failed to value and uphold institutional integrity, breaching both the NCAA Constitution and Division I rules."
On November 10, 2011, I stated that, "between legal fees, settlements, judgments, possible fines etc... it is possible that this scandal may cost Penn State $100 million dollars or more. This does not factor in the damage to its reputation along with the loss of future economic opportunities." It appears that this scandal may end up costing Penn State closer to $150-$200 million dollars now that the NCAA has taken unprecedented action.
Digital evidence from more than ten years ago appears to have persuaded former FBI Director Louis Freeh that there was a systematic cover up regarding the Sandusky matter. The emails that the Freeh Report uncovered may have been the determining factor that led to the NCAA's sanctions against Penn State.
According to the NCAA's website, Penn State's sanctions include:
-$60 million fine. The NCAA imposes a $60 million fine, equivalent to the approximate average of one year's gross revenues from the Penn State football program, to be paid over a five-year period beginning in 2012 into an endowment for programs preventing child sexual abuse and/or assisting the victims of child sexual abuse.
-Four-year postseason ban. The NCAA imposes a four-year postseason ban on participation in postseason play in the sport of football, beginning with the 2012-2013 academic year and expiring at the conclusion of the 2015-2016 academic year.
-Four-year reduction of grants-in-aid. For a period of four years commencing with the 2013-2014 academic year and expiring at the conclusion of the 2016-2017 academic year.
-Five years of probation. The NCAA imposes this period of probation, which will include the appointment of an on-campus, independent Integrity Monitor and periodic reporting as detailed in the Corrective Component of this Consent Decree.
-Vacation of wins since 1998. The NCAA vacates all wins of the Penn State football team from 1998 to 2011.
-Waiver of transfer rules and grant-in-aid retention. Any entering or returning football student-athlete will be allowed to immediately transfer and will be eligible to immediately compete at the transfer institution, provided he is otherwise eligible.
-Individual penalties to be determined. The NCAA reserves the right to initiate a formal investigatory and disciplinary process and impose sanctions on individuals after the conclusion of any criminal proceedings related to any individual involved.
The Big Ten has also weighed in on the matter. According to The Patriot-News, Penn State will not be eligible to receive at least $13 million dollars in bowl revenue over the next four years. Therefore, Penn State will lose at least $73 million dollars in revenues related to the Sandusky matter before legal fees and expenses, civil settlements, judgements, etc... are factored into the entire cost of the situation.
This matter should be a warning to every NCAA institution. If a school employs a social media monitoring company to track its students and/or employees and it learns about a Tweet or post that may indicate illegal activity and the university does not immediately report it to the proper legal authorities it may be fined tens of millions of dollars by the NCAA.
The bottom line is that schools that listen to self-described experts/leaders/consultants, etc... who create fancy marketing materials and digital presentations that provide the false impression that they understand NCAA compliance, public policy, student education issues, and the law, may be in for a huge shock in the near future.
To learn more about these issues you may contact me at www.shearlaw.com.
Copyright 2012 by the Law Office of Bradley S. Shear, LLC. All rights reserved.