Friday, July 6, 2012

The Scandal and Hockey

Last November, I wrote this:
While it's not an easy decision, I do have to be cognizant of the fact that this is a Penn State hockey blog, not a Penn State football or athletics blog, and generally, everything that appears here has a tie with the hockey programs. If there turn out to be ramifications of the situation that touch hockey in other ways, you can be sure they'll be addressed here as appropriate.
I think I've done a decent job of sticking to that, in light of everything that's gone on. Hey, this blog is a distraction for me (distracting myself from Penn State with Penn State...that makes a ton of sense, I know), which played into the editorial decision cited above. Unfortunately, I think it's time to at least think about the potential impacts of The Scandal on hockey. This post won't be able to answer many questions - nobody can at this point - but hopefully it at least puts some of the considerations on your radar.

First, the good news. So far, hockey has largely chugged along as if nothing happened. In the aftermath of the November bombshells, both Guy Gadowsky and Josh Brandwene re-affirmed their commitment to the school, as did Terry Pegula. Recruiting hasn't been affected much, if at all (I'm sure someone, somewhere has had doubts, but PSU didn't lose a single commit when the issue first exploded). The arena is under construction and looks as good as a collection of I-beams in a dirt hole can possibly look. There's really no reason to think any of these things will be affected more than they have, or haven't, been already.

Furthermore, in 2001, Joe Battista was coaching the Icers and was only loosely connected to the athletic department. Billy Downey was playing for Battista. Mo Stroemel was coaching the Ice Lions. Nobody else with any major role specific to the NCAA hockey programs, which removes general athletic department staff from consideration, was associated with the university at the time. The likeliness that the upcoming Louis Freeh report, or anything else for that matter, will implicate a "hockey" person is zero, despite the ridiculous "Battista had to know" argument I had on Twitter a while back (yeah, "Jerry Sandusky is a perv" is right after the mission statement in the athletic department employee handbook...because the first thing you do in a cover-up is tell as many people as possible).

So what might happen?

I think you have to start with dollars and cents as related to football, because it pays so many of the sports-related bills. The athletic department folks say that donations are fine, ticket sales are fine, everything is great. In other areas, the university says application volume is good, as is alumni association membership. I'm skeptical. Before November, I didn't have a sufficient number of Nittany Lion Club points for football season tickets. Now, they're pitched to me every time I contact the athletic department, as no points are necessary to purchase tickets. Something about that doesn't line up with the official accounts. Obviously, they have the data and I don't, but the situation smells a little funny to me.

Financial impact could also come from possible NCAA sanctions. I sincerely don't believe that the NCAA has jurisdiction and do believe that any action would set an extremely dangerous precedent with respect to criminal offenses that have no bearing on the competitive product. Then again, it's not as if rationality reigns supreme right now among the public at large or the media pandering to it, so who knows whether the NCAA gets caught up in the lynch mob mentality. The "positive" side (from a hockey perspective, that's why we're here) is that sanctions would likely only directly affect football and not the entire athletic department. But the potential for indirect effects exists, particularly if football is harmed financially in any significant way.

Of course, there are also the coming civil suits from Sandusky's victims. Since Penn State treats its athletics department as an entirely separate entity from other areas of the university (football money isn't used to subsidize the English department, for example), it's uncertain whether legal expenses would affect the athletic budget as opposed to general funds. This qualifies as a unique situation though, and the issue did involve then-current and former athletics employees, so who knows how it will be handled. Just as a point of reference, here's a list of some of the settlements and awards from the Catholic Church's sexual abuse scandals that seems to indicate that a couple million dollars per victim is a reasonable expectation.

Supposedly, men's and women's hockey, taken together, will be self supporting on a year-to-year basis. File that one under "we'll see." Of the three current Big Ten programs with women's teams, only Minnesota profits on hockey as a whole, and the Gophers are in an entirely different category revenue-wise than any reasonable projection for PSU. We're starting with a good number of endowed scholarships, and that will definitely help in that regard, and some believe that hockey is a great untapped resource for the Big Ten Network...but again, we'll see. Even if hockey does break even, losing some of the beef on the football cash cow might create belt tightening throughout the athletic department. If hockey can indeed break even, maybe they'll be asked to try to kick a couple hundred thousand back into the pot to help other sports.

The athletic department as a whole presently does operate in the black - by roughly $15 million in 2010-2011, according to the just-released Nittany Lion Club Annual Report (see above). Conventional wisdom says that budget surpluses, aided by things like football's Seat Transfer and Equity Program instituted a couple years ago (essentially raising minimum per-seat donations), amounted to planning for a hit in a post-Joe Paterno world. It's great news if that's the case and it's better news if that money buffers most or all of what's coming, although I'm not sure the bean counters were anticipating anything like what has transpired.

Hockey does have one ace in the hole in the form of a certain hydrofracking billionaire. Paying for both men's and women's hockey's entire operating budget for a couple years while things settle down would be a tiny fraction of what he's given so far. For $7 million, or less than two Ville Leinos, Penn State would have two very well-funded hockey teams for two years, and in emergency "we're just trying to survive" mode, $5 million would probably suffice (the median DI men's budget is about $1.5 million per year, add a million to that for the average Big Ten school). Obviously, he won't have to do that - I'm assuming literally zero revenue with those numbers - but it is nice knowing that the potential for such a last resort exists.

I realize that a lot of what I've thrown out there is speculative, but that's sort of the point, because nobody really knows how things are going to play out right now. Given the seriousness and number of underlying crimes, and given the administration's knowledge of them for literally a decade, this is more or less an unprecedented situation in college athletics. It's not like I can say "well, when this happened at Michigan, here's how it hurt hockey, and here's how they dealt with it." So yeah, it's a giant unknown right now, likely even for the people who have the information I don't. But I felt that I would be remiss in not at least acknowledging some of the possibilities and how they may impact hockey. I'm just glad I can make it a one-off, as opposed to the football bloggers who have to talk about this all the time.

There is one other thing dangling out there that I haven't addressed, though: the Big Ten.

In December, the conference issued a sort of warning shot, saying that...
It will reserve the right to impose sanctions, corrective or other disciplinary measures in the event that adverse findings are made in the areas of institutional control, ethical conduct and/or other Conference related matters.
ESPN chimed in with this...
The big question is, of course, what type of sanctions the Big Ten is willing to impose on Penn State if it doesn't like the results of these investigations. Rumors have circulated that at least a few league schools were so angry and disgusted by the Jerry Sandusky sex-abuse scandal that they lobbied to kick Penn State out of the Big Ten altogether, and the Nittany Lions don't have the kind of history with the league that would make that impossible.
The conference's move struck me as public relations - I mean, they couldn't say nothing, I suppose - and I didn't even bring it up on TYT until now. Rumors of "a few" schools wanting PSU out are obviously concerning, though.

All of that is old news, sure, but here's the issue: the situation hasn't exactly ameliorated since then. Sandusky has been convicted by a jury of his peers. Information leaks since then make the non-incarcerated individuals involved look pretty awful. The upcoming Freeh report and civil suits might add more to it. We don't know even a significant fraction of the facts of the situation yet related to PSU administration's involvement, so I'll be at the front of the line urging caution in the face of the braying idiots in the national media filling in the blanks with conjecture and reporting it as fact. Still, it would be foolish to ignore the possibility that the university comes out of this looking much, much worse than it did in December.

The recent email leaks drew at least one writer into re-opening the issues of Penn State's Big Ten membership:
For at least 74 percent of the time that Penn State has been in the Big Ten Conference, four of the most powerful figures on campus allegedly chose to focus on protecting their institution and positions of authority at the expense of children already abused — with more victims to come because of their inaction.

Is that how the Big Ten does business? And is that the kind of operation the Big Ten wants to associate itself with?

Those are brutally hard questions. But the discussion needs to happen, and at a level far beyond athletics.
Thanks for that, Mr. Barfknecht (yes, that's his name). Now go back to writing about...whatever it is that happens in Omaha besides USHL and UNO hockey and the College World Series. Unfortunately, though, he's probably not the only person out there with those thoughts.

The conference still might want to stay out of it beyond the PR side of things. The conference could also, independent of any NCAA action, impose sanctions of financial impact. And there's the looming specter of going full Big East/Temple, 2004 (and all Temple did was suck at football). Given that the Big Ten has the most lucrative television arrangement of any conference, this last outcome would be the closest thing imaginable to a doomsday scenario. The likely two backup plan primary conferences, the ACC and the Big East - assuming they want anything to do with Penn State - can't come anywhere close to replacing the Big Ten's revenue. We'd instantly go from possible belt-tightening (or maybe even not, because again, I really don't know how well prepared PSU is to absorb this) to possibly placing sports on the chopping block. Hockey, again largely thanks to the guy with the single largest private donation in Penn State history, would probably not be one of them. In a parallel universe where PSU attempts to go varsity out of the Greenberg while raising money for the arena and scholarships because nobody paid for the whole thing straight away? Probably a different outcome.

In the hockey world, Big Ten ejection has drastic consequences, and not just for Penn State. Unless another league school is prepared to add hockey (or Notre Dame is somehow finally lured in), the Big Ten would be down to five hockey schools, insufficient for an autobid to the NCAA tournament, and likely leading to its breakup. We're too far down the road to just reset the conference landscape to where it is right now, so it's easy to imagine the rest of the Big Ten running off to the NCHC. And where does Penn State go? Excellent question. Let's just hope it never needs to be answered.


  1. Given that all the people known to be at all involved in this situation are no longer working at the University, I don't see any justification for saddling the Whipple athletic department with long term sanctions. Mr Omaha there is an idiot. I could just as easily bring up Lawrence Philips and ask if we want associate with a program that let that psychopath back onto the team for the national championship game.

    Temple did more than suck at football. They weren't bringing in any money or TV viewers.

    1. I think that's exactly it. The Big Ten isn't doing business with known bad guys, and if the standard is that no organization that's harbored such people is worth of being associated with, even after you swiftly remove said bad guys, your going to have a hard time keeping together a Big Ten Conference to kick Penn State out of. There are no hard questions to ask, only stupid people. I think that's how the saying goes.

  2. Whole, not "Whipple."

  3. Spot on with respect to Temple. That's why I think that regardless of the stomach turning apparently occurring in some pockets, the dollar signs will make it all but impossible for the Big Ten to boot PSU. Our market share simply can't be replaced unless Notre Dame suddenly begs to get in.

    Also, those $10-15 million surpluses every year have to be going SOMEWHERE. While this couldn't have been anticipated, the post-legend hangover experienced by schools like Alabama, Nebraska, Notre Dame, etc. could have been predicted, and maybe even expected. If football doesn't string together a decade of 7-5 or so, if attendance doesn't dip by 20,000 a game (IMO winning will cure most ills as it usually does), then that money can be used to help with a different sort of crisis.

    My honest opinion, which I deliberately didn't share in the post proper since I was just trying to poke at possible concerns without passing judgment, is that we'll come out of this okay.

  4. Couple things:
    1. The money used to settle with the victims will come out of a combination of the University's and Intercollegiate Athletics's liability insurance policies. I think it's safe to say that they'll hit the deductible (whatever number that may be). The only operating expense impact would be increased insurance premiums which I'll leave for an actuary to decide if there's any appreciable impact to these entities's risk profiles (my guess is that there isn't due to the fact that doomsday scenarios are built in to the premium cost.

    2. Athletics has been sacking money away the past few years in reserves for capital improvements/replacements and in preparation for the unknown of what the post-Paterno years would be like. In the STEP materials it hinted to these things long before "it" happened.

    3. My prediction is that the conference PR machine just got plugged into an outlet with a little too much voltage. The ramifications for removing a marquee brand (whether they want to admit it or not) are enormous at this point in time. They just hit 12 members, losing 1 would kill the B1GFCG including whatever FOX ended up paying for it. The ABC/ESPN first-tier football rights deal is almost up for bid and while Nebraska isn't technically priced into the deal now what would happen if you lose the East Coast Anchor? Penn State is a full equity member of the conference and BTN (Nebraska is not paid in all the way yet). What are the contract terms for dissolving those ownership pieces? My understanding of B1G contracts is that the members are expected to be members for life, not until the next contract renewal. I imagine that as strong as it is for the conference to hold an unwilling participant there are equal provisions to hold a member in as the general rule of thumb in contract law is all parties are equal members. Now all this considered, if we have an amazing football year and McGloin turns into Peyton Manning I wouldn't expect any voting favors (a la 1994). As far as the B1G Hockey Conference goes, I don't think you can un-ring that bell. Everyone has already re-aligned; there's no CCHA for OSU, Michigan, and MSU to go back to; the WCHA that's left isn't the same. Gut feeling is, it's not worth it. I agree with your assessment, we'll come out OK. It's not like Germany is banned from the Olympics and they had more than 4 people involved in even more egregious crimes against humanity (if there is such a thing as stack-ranking felonies).

    4. Ticket Sales, Applications, et al. - Season ticket sales are down on a quantity basis. My understanding is that with the STEP requirements the income is above previous levels (aka they're selling less tickets but making more money) and that the majority of tickets still available are located in expensive sections. Applications are apparently way down in PA so the Commonwealth Campuses are light on class size but out of state and UP are consistent with prior years (with World Campus also still growing). Alumni Association membership fluctuates from year to year and while it may be up right now, I'm not sure if it is statistically significant.

    Sorry for the ridiculously long post.

  5. My understanding is that the only season ticket sales that are lagging are those in the $400 donation block. Others, including students, are sold out easily. PSU needs to rethink the tiers and create some $200 and $300 ranges, or something like that.

    1. That's consistent with what I've heard, my definition is any ticket over the $100 tier (since all tickets were $100 in the pre-STEP era). BTW, thanks for not giving me a TLDR response :-)

  6. Good insights guys, thanks for sharing!

  7. I hope I never see the photo at the top of this post again. I cringe every time I see it now. What was once a happy photo now makes me sick to my stomach.

    On the B1G talks. I'm sure they don't want to lose the PA market. The Big Ten Network likely rakes in a lot of money from PA viewers. Throw on top the TV's around the country that wouldn't have the BTN without Penn State (my brother in CA for one). As long as nothing else really comes out that paints the picture even worse, I bet most of this is blown over by this time next year. We have a brand new coach, a new president and AD. People won't see Paterno on TV and therefore won't have anything to talk about -- unless they just like to repeat themselves over and over.

  8. The picture is pretty bleak now and talk of "the death penalty" is getting more realistic. I still don't see the BigTen letting that happen. It would be a disaster for every member and most of the columnists calling for it don't know what the hell they're talking about on a number of levels. That is, of course, why they're sports columnists. They are too lazy to be a real sports reporter and too dumb to write about something that actually matters.

    But the NCAA doesn't care about how many people it puts out of a job or how many non-football players might lose their scholarships or that sanctions now will not do anything to reduce child abuse on this planet. They care about their perception - which is odd since everyone already knows it's a joke of an organization. So the worst may come to worst.

    I don't think hockey will suffer much if that happens. PSU has already too much invested in it and Pegula has bankrolled the program for a while. I think a massive NCAA crackdown could actually lead to more private giving to athletics because the Anthony Lubranos of the world will want revenge.

    The people who will suffer will be the sports that are a lot lower on the totem pole. At a guess, I'd say swimming - the only sport with a crappy facility at PSU - could suffer. Tennis, golf, etc. I don't think baseball and softball will take a hit given that they just got new facilities. Long awaited upgrades for lacrosse and soccer will just be put off longer, but they can manage without them for now. Basketball will be even more emphasized.

    Wrestling will keep chugging along. Cael said that meets are going to be held outdoors in January on a frozen lake, the guys would do it and 5000 people would still show up to watch.

    If PSU were actually tossed from the Big Ten - extremely unlikely - some other conference would be glad to have us or some new conference would come into being as a result. But that's extremely unlikely.

    Then again, all of what has happened with this is extremely unlikely.

    1. Great definitely does seem as if the lynch mob is picking up steam. I still believe that football will take a hit, but not THE hit. The NCAA has to do something I suppose, but in light of what we know about SMU post-death penalty, there's really no reason to impose something like that on people who had nothing to do with any of this, while the people who did remain untouched by whatever the NCAA does because they're no longer PSU employees (or won't be, soon enough). It would be beyond irresponsible. But then again, it's the NCAA.

      I think the other sports largely could survive the death penalty for football. The higher-profile others (volleyball, basketball, wrestling, now hockey) will circle the wagons, and there may be a retaliation effect, like you mentioned. Basketball, as the interim alpha sport, might be a big deal. Hockey could see some of that. I always go back to the Cleveland Indians, when they were selling out 455 in a row in the 90s. The new stadium and great teams were obviously vital to that, but so was the Browns decline and move.

      Sure, $50 million is a huge blow to the budget. But when considering the $10-15 million being set aside for a while (and taking that out of the 2013-2014 budget, or whenever this would happen), and the possible gains to other sports, especially basketball, we can make it through for a year or two. Beyond that might be tough without some trimming.

      The Big Ten thing...I can't even fully wrap my brain around it at this point. Just in hockey, if that were to cause the conference breakup and we were able to reset everything and join the CCHA as the 12th team, great. That can't happen though, we're too far down that road to go back. If the Big Ten's other five go to the NCHC, which seems like the most likely outcome, no way we're going there. Hockey East and the ECAC would be the next choices, but would they add a 13th team with PSU's baggage? Hope so, because independence isn't an option. The WCHA and AHA would gladly take us, but they're minor conferences (and only 12 scholarships in AHA)...

  9. I think "the baggage" PSU brings is a massive national audience. Money talks. I hope.

    Anyway, I hope I live long enough to see the NCAA dissolved. It really is a terrible operation. It should be replaced with the following.
    1) Each sport run by it's relevant national sanctioning body.
    2) The end of conferences. A national commissioner and national council for each sport. Leagues set up in a rational regional fashion, sport by sport.
    3) Players are at least represented in all decisions, if not given full collective bargaining power like a proper players union. Treated as part-time/semi-pros.
    4) When TV and internet merge, every school can cut it's own TV deals.