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Sponsorships may dwindle as scandal sets in

| Friday, Nov. 11, 2011

Amid a child sex abuse scandal that led to the firing of Penn State head football coach Joe Paterno, Liberty Mutual Insurance Co. has pulled a banner ad touting its sponsorship of a coach of the year award from the university's athletic website and related Penn State fan websites.

One market research analyst said it could become a "far-reaching" problem for Penn State. A dozen sponsors have banner ads on, including AT&T, Highmark Inc., PepsiCo Inc. and PNC Financial Services Group Inc..

Liberty Mutual spokesman Glenn Greenberg said the Boston-based insurer runs banner ads for the coach of the year award on many college football websites. He said the decision to pull the ad on Wednesday was made before Penn State's board of trustees announcement that it severed ties with university President Graham Spanier and Paterno.

Spanier and Paterno lost their jobs as part of the scandal related to the indictment of former assistant coach Jerry Sandusky, who has been charged with 40 counts of child sex abuse. Athletic Director Tim Curley and a vice president, Gary Schultz, were arraigned on charges related to inaction in handling the allegations.

"Out of respect to the victims of the alleged abuse and the surrounding circumstances, we have elected to remove banner ads from the Penn State athletic website and related Penn State fan websites for this," said Greenberg, who noted that Paterno is no longer eligible for the award because he is not actively coaching.

Matt Powell, analyst for market research firm SportsOneSource, warned that Liberty Mutual could be the first of many sponsors to distance itself from Penn State.

"We're starting to hear that this is a systemic problem, so the impact from advertisers could be more far-reaching," Powell said. "I think as an advertiser you have to be very careful of who you are endorsing. They're endorsing the team, the program, the school.

"It depends on the circumstance of the transgressions. If it's a recruiting kind of thing, people don't like it, but it's certainly common. In this case, the program is going to be under a shadow for a long time. Every company has got their own reaction to this. Every company has their own internal compass about where they stand in the marketplace."

What will be interesting to see, Powell said, is how Nike responds. The shoe and apparel company has a university-wide sponsorship with Penn State's athletic programs and has counted Paterno among its coaching clients.

"Nike has a history of standing with their athletes when they get into trouble," Powell said, noting that the company did not sever its ties to golfer Tiger Woods when news of his infidelity broke and it recently reunited with Philadelphia Eagles quarterback Michael Vick, whom Nike dropped when he was convicted of federal dog fighting charges. "If you have the ability to disassociate yourself early on without any penalty, I think that would be a prudent path to take."

Nike told The (Portland) Oregonian that it has no plans to change the name of the Joe Paterno Center, a child day care facility at its corporate headquarters near Beaverton, Ore. Nike President and CEO Mark Parker is a 1977 Penn State graduate.

"Our relationship with Penn State remains unchanged," Nike spokeswoman Erin Dobson told the newspaper. "We are deeply disturbed by the claims brought forth in the indictments. We will continue to monitor the situation closely."

Pittsburgh-based PNC and Highmark also don't plan to end sponsorship agreements with Penn State.

"PNC supports the students and alumni at Penn State, including the thousands who work and bank at PNC throughout the country," said PNC spokesman Fred Solomon, noting the bank has had an advertising relationship with Penn State since 1982.

Added Highmark spokesman Aaron Billger: "We're constantly evaluating all of our sponsorships. At this time, we see no immediate change. We are clearly saddened by the current allegations linked to the athletic program and also saddened by any harmful impact (on) any young people who have participated in Second Mile activities through the athletic program."

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