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State College may pay price for PSU problems

| Sunday, July 22, 2012, 12:45 a.m.

Any other year, the Lions Pride apparel store in State College would be loading up on merchandise for the upcoming Penn State football season.

Now, among the blue and white gear, there is uncertainty, sized XXL.

“Until we hear what the NCAA is going to do, we're going to cut back on some of our purchasing,” Manager Steve Moyer said. “If they come down with the death penalty thing, no football this fall, I have no way of paying for it.”

There are calls to shut down the Penn State University football program, whether by an NCAA-mandated “death penalty” or a self-imposed suspension. The economic impact on State College in Centre County would be severe.

“All you have to really do is stop and think about it,” said Betsey Howell, executive director of the Central Pennsylvania Visitors and Convention Bureau. “There's no football. It's a huge trickle-down effect on a community.”

The possible sanctions, as a result of the Jerry Sandusky child sex abuse scandal, could cost local businesses more than $50 million per year.

NCAA President Mark Emmert said last week that he wouldn't rule out imposing sanctions on Penn State after a report by former FBI Director Louis Freeh concluded that top university officials had shown a “total and consistent disregard” for the victims. The NCAA said it will decide whether to take action at the “appropriate time,” though the 2012 season is in jeopardy only if the school decides to halt play.

Sandusky, a former football assistant coach, is in jail awaiting sentencing on 45 counts of child sexual abuse involving 10 victims. Many of the assaults occurred in athletic facilities.

College football is a big business, especially in small towns surrounding campuses like Penn State's.

“As soon as the football schedule is posted and you have the dates, hotels start filling up,” said Catherine Sutton, executive director of the Montgomery County Chamber of Commerce, on the impact of Virginia Tech football on Blacksburg, Va., population 42,600.

State College is one of the relatively small football-crazed college towns that earn significant revenue from home football weekends, joining places like Blacksburg, Va.; Morgantown, W.Va.; Auburn, Ala.; and Starkville, Miss.

“It's huge,” said Kathleen Crumbacker, the innkeeper at The Lake Manor in Morgantown. “It's guaranteed income.”

Seven or eight weekends every fall, blue and white-clad Penn State fans pack 107,282-seat Beaver Stadium, the world's fourth largest stadium. It requires about 3,000 people to staff the stadium, which had an average attendance of 104,234 last year. Hotel rooms fetch $300 to $400 or more per night, and restaurants are packed. Gas stations, convenience stores, parking lots and merchandise stores all prosper.

A cottage industry was born, with locals offering to rent their homes for more than $1,500 for the weekend.

George Postell, the owner of the Crenshaw House Bed and Breakfast in Auburn, estimates he earns about 40 percent of his revenue during the seven weekends each fall when 87,000-people jam into Jordan-Hare Stadium a couple of miles down the road.

“It would be devastating to me, absolutely devastating,” the 59-year-old retired federal worker said. “Football keeps this place viable as a business. I might be overstating it. But I'm sure it's not that much different out there (at Penn State).”

So how much does the borough of State College (population 42,499) rely on Penn State football for its economy?

The overall impact on Centre County is $100 million per season, according to “a variety of local studies,” said Jim Fay of State College, a financial planner. Overall impact is generally 2 to 2.5 times the direct economic impact, which is money that would not have been spent without football.

A study by the Strip District firm Tripp Umbach found that Penn State football in 2008 had a “business volume impact” of $161.5 million on the state while directly and indirectly generating more than 2,000 jobs.

Because it is difficult to quantify the economic impact of football on a college town, State College's potential losses are uncertain. An August 2011 study by Business of College Sports found a direct economic impact of $2.5 million to $3.8 million per game for schools in the Atlantic Coast Conference, the Southeastern Conference and the Big Ten.

A study that same month by a Clemson professor determined the school brings in $1.96 million to that area of South Carolina and $4.2 million to the tri-county region for each home game in 80,031-seat Memorial Stadium.

Auburn has a direct impact of about $6 million per game, according to a study by Auburn economist Keivin Deravi. That research was done before the Tigers won the national championship in 2010.

“It is an imprecise measurement,” he said. “There is an error in the estimate somewhere.”

The Penn State football program, which Forbes magazine rated as the third-most valuable in the NCAA, netted about $53.2 million for the 44,000-student university in 2010, according to the federal Office of Postsecondary Education database. With no television revenues, and because the football team helps pay the bill for many other sports, Penn State would likely have to cut some non-revenue sports if there were a prolonged suspension.

In 2010, the non-revenue sports at Penn State (everything except football and basketball) had a combined operating loss of $11 million, according to the government.

The only death penalty imposed by the NCAA to a football program was Southern Methodist University in the late 1980s for major infractions and improper benefits. After a one-year suspension, SMU decided not to play in 1988, before resuming football. The program took two decades to recover — it had one winning season between 1989 and 2008 — but the financial effect was minimal in Dallas, one of the nation's largest metropolitan areas.

State College, on the other hand, essentially gets “found” money because so many of the fans who descend on Happy Valley on fall Saturdays are out-of-towners.

Allen Sanderson, a sports economist from the University of Chicago, said that's why big-time Division I football means much more to small college towns.

“If it turned out the only people who went to Penn State football games were the students, the professors and the townspeople, you wouldn't have any substantial economic impact,” he said. “The economic impact of Northwestern football is pretty minimal. Why? Chicago is a big area and if I don't go to a Northwestern game, I will go spend money on something else instead. (With SMU's death penalty), the economic impact on Dallas was zero.”

Vanderbilt professor John Siegfried, an officer for the Nashville-based American Economic Association, said the effect of no football in State College wouldn't be as severe as it might appear.

“All of these economic impact studies tend to exaggerate and overhype,” he said. “It's seven or eight weekends a year. Life goes on, and the (consumers) will find other things to do. People will adjust. That's what a free market economy does. We adjust.”

Siegfried, who earned a master's degree in economics from Penn State in the late 1960s, said the money typically spent on football weekends would enter the economy in other ways, almost all within Pennsylvania.

“It moves things around a little bit,” he said. “That's all.”

Staff writer Bob Cohn contributed to this report. John Grupp is a staff writer forTrib Total Media. He can be reached at jgrupp@tribweb.com or 412-320-7930.

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