Scandal hurts Penn State as a school and a brand

Part of the immediate fallout from the investigation of child sex abuse at Penn State is economic. Sales of hats, shirts, and other items emblazoned with the Penn State name have plummeted.

The unfolding Penn State child molestation scandal has slammed the university's reputation and shaken its loyal fan base that sees the school as more than a campus or a team but a way of life, an identity, a brand.

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Part of the immediate fallout from the still-developing investigation is economic: Sales of hats, shirts, and other items emblazoned with the Penn State name have plummeted about 40 percent overall compared with the same period last year, according to retailers and industry analysts.

"This is the first time I can recall ever seeing a decline of sales right out of the box," said Matt Powell, an analyst with industry research organization SportsOneSource Group. "I have never seen anything this before. But we've never seen a scandal quite like this before."

Former football defensive coordinator Jerry Sandusky stands accused of sexually abusing eight boys, some on campus, over 15 years, allegations that were not brought to the attention of law enforcement even though authorities say high-level people at Penn State apparently knew about them.

College-branded merchandise accounts for more than $4 billion in annual retail sales, and Penn State typically ranks in the top 10 in sales, capturing roughly $80 million annually, Powell said.

"They probably made about $3 million last year from sales of royalty products," he said. "This is a very unusual situation, and my gut tells me it's not going away, at least in the short term."

For the week after the scandal broke, Penn State's slice of the market share was about 1.93 percent. During the same week last year, that figure stood at 2.67 percent, Powell said.

If consumers continue to express their displeasure with their wallets, it could spell huge financial losses to add to Penn State's newly marred reputation.

The ensuing fallout from the scandal has cost coaching legend Joe Paterno and longtime president Graham Spanier their jobs.

Athletic Director Tim Curley has been placed on administrative leave, and Vice President Gary Schultz, who was in charge of the university's police department, has retired. Both are charged with lying to the investigating grand jury and failure to report to police. They maintain their innocence, as does Sandusky.

In addition to the ongoing criminal investigation, Penn State and the NCAA have started their own reviews and the U.S. Department of Education is examining whether Penn State violated federal law by failing to report incidents of sexual abuse on campus.

Source: http://rss.csmonitor.com/~r/feeds/csm/~3/troLq5zblAk/Scandal-hurts-Penn-State-as-a-school-and-a-brand

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