Penn State Nittany Lions has been known throughout the US for their strength and talent in the football world. The team has maintained healthy relationships with sponsors and a strong image as a competitive and professional football team until now. The University of Pennsylvania’s sex abuse scandal has devastated the football team’s reputation and media image, severely damaged its sponsor relations and incurred heavy financial losses.
Penn State’s reputation has caused leading sponsors, fans and partners to rethink their involvement with the once prestigious football team. In 2011 it was recorded that, “Nittany Lions generated $73 million in revenue and earned a profit of $53 million for the university” and thus functions similarly to a businesses. It is vital for any business to maintain healthy relationships with individual stakeholders – in this case particularly the sponsors (financiers). Penn State’s sex abuse scandal has left irreparable damage to sponsor relationships causing, “State Farm Insurance [to pull] direct sponsorship of Penn State football for the 2012 season… and General Motors [to consider] doing the same”.
The undeniable link between marketing and finance presents itself within Penn State’s dilemma as their now ruined image from a marketing perspective has seriously compromised its financial status. Penn State now has to pay “$60 million fine, is banned from postseason play including bowl games for four years and will vacate its 112 wins from 1998-2011”. The scandal has not only affected the football team in the ways aforementioned but also its partners. Media partner Learfield Sports has committed to remain loyal to Penn State, even though Learfields association with Penn State may put their reputation in jeopardy.
The once, “third most valuable college football program with $100 million” according to Forbes is now facing a feature that is not as promising. This demonstrates that no matter how established or elitist a business/organization is, preserving healthy stakeholder connections and good reputation/image is extremely important. The link between marketing and finance, especially in this case, cannot be ignored.
Citation:
Channick, Robert, and Kathy Bergen. “State Farm May Not Be Only Sponsor to Step Away from Penn State Football.” Chicago Tribune. N.p., 25 July 2012. Web. 1 Oct. 2012. <http://articles.chicagotribune.com/2012-07-25/business/ct-biz-0725-state-farm-20120725_1_penn-state-state-farm-ncaa-sanctions>.