Upper Deck View by Larry Leonard
Penn State Ticket Plan Swaps Loyalty for Cash
Yeah, yeah, we all understand. It’s an “Arms Race” in big league college football. Ohio State and Michigan have already done it, so we’re already behind. College football is “big business,” and big piles of money aren’t enough. They always need more.
But there really is no way to sugarcoat it. The new “Seat Transfer and Equity Plan (STEP)” announced for the 2011 football season is Penn State Athletics’ way of kicking out the fans who built the program into one of America’s richest in order to make room for even richer fans. Loyalty is not about devotion or any kind of personal relationship between fans, team and university. Loyalty is measured by the size of “contributions.”
They’re “transferring” your seat to someone who will give them a lot more money. Athletic Director Tim Curley told the Centre Daily Times that only about half of Penn State’s 75,000 season ticket holders would be affected. The half with good seats. According to Curley, allocating seats according to the size of the check is only “fair.”
It’s not that tickets to Penn State football are cheap right now. At $55 a throw they’re more than the average ticket price to see an NFL Bills’ game at Rich Stadium just up the road in Buffalo. More than the average Red Sox ticket at venerable Fenway Park in Boston. More than the average ticket price for the entire NBA.
And that’s before the new “Equity” plan kicks in.
The irony of this announcement is that it came on the same day Northeastern University, a school of 20,000 students and a member of the FCS/1-AA powerhouse Colonial Athletic Association (national champion Richmond, #2 Villanova, Delaware, et al), announced that it would be dropping football after 74 years, saying that it’s too expensive to maintain.
If Penn State Athletics was in NU’s position, struggling to stay afloat, the new STEP plan could be justified. But it’s not.
Instead, Penn State is already one of the richest and most profitable athletic programs in the nation, racking up a $19 million profit in the past fiscal year on income of $96 million. In this rough economy, most for-profit companies in State College would kill to make a 20 percent profit margin.
For the record, Penn State Athletics is corporately separated from the university, and is therefore “self-sustaining.” As Joe Paterno told the Associated Press, “We don’t get a nickel from the university for anything.” So it is important to bring in enough money to cover expenses. But, as a non-profit, the athletic department gets a tax break from the IRS for operating as a non-profit. And in non-profit accounting, the goal is to break even. Surpluses are not illegal, but at a certain point excess profitability should make clear-thinking adults question either the tax-free status or the pricing tactics.
If Penn State is losing money, raise the prices. But if Penn State is rolling in cash, where is the compelling rationale for this?
And that is where the rub is. Penn State Athletics brings in so much revenue that they can’t seem to spend the money fast enough to merely just break even. Despite comfortably supporting 29 intercollegiate sports, living like celebrities and paying themselves salaries appropriate for the Captains of Industry, athletic department executives have so much money pouring in that they can’t possibly spend more than they make.
In justifying the STEP program to the press, department officials have emphasized football’s role in supporting the entire athletic program and have also cited an additional $11 million in annual debt service excluded from yearly operating expense reports. But that may be disingenuous. The 29 programs are in such good shape that the department has tens of millions left over each year. The debt is accounted for as a capital expense, and is supported through separate capital campaign funding, so it’s not part of the P&L equation.
So, why do they need to double the price of your football tickets?
As far as anyone can tell, this is an idea that has been swirling around college athletic departments for a number of years, the spawn of NFL seat-licensing scams, and borrowed by other high-profile college programs in both football and basketball in order to maximize the take created by high demand and limited supply. As Penn State Associate AD Greg Myford clarified for AP, the STEP plan isn’t exactly a “seat license,” but instead a mandatory annual “contribution.” Besides, Penn State already has “seat licenses,” in the Club Seat section.
Think of it as Free Enterprise Capitalism as practiced by non-profit intercollegiate sports. In his 2008 book “Counterfeit Amateurs,” Penn State alum and former Notre Dame lineman Allen Sack says the phenomenon is a parallel to what he calls “academic capitalism,” an invasion of academia by entrepreneurs. Students have been reduced to “customers.” And college athletics have been reduced to “entertainment,” with little or no relationship to the school next door. Sack also contends that players have been reduced to “employees,” without the normal benefits afforded other American workers, such as worker’s compensation for injuries suffered on the job.
And, at very low wages. The tuition, fees, room, board and books for scholarship athletes at Penn State amount to only about $25,000 for an in-state resident—or $10 an hour, considering a football player’s year-round average 48-hour weekly schedule (NCAA rules aside)—paid in barter, not cash. Not even “pizza money.”
So the kids are getting squat while the athletic department is rolling in dough, but it’s still not enough.
Penn State’s ultimate excuse for doing this boils down to “everyone else is doing it.” Well, not Northeastern—but, you know, the other Big Time College Football schools.
They’re really doing it because they think they can.
Gordon Gekko’s “Greed is Good” speech in the 1987 film “Wall Street” was supposed to be a moral tale delivering the opposite lesson, but some folks just don’t get irony. For Penn State Athletics it seems to have become a motto.
Regardless of whether STEP makes the cash register ring even louder for Penn State football or not, the announcement of this plan demonstrates for too many Penn State fans a startling truth.
At Penn State, loyalty is a commodity to be bought and sold to the highest bidder. In their own words, it is only “fair.”