Penn State loses one sponsor, others could follow

STATE COLLEGE, Pa. — State Farm is pulling its ads from Penn State football broadcasts, while General Motors is reconsidering its sponsorship deal and Wall Street is threatening to downgrade the school's credit rating, suggesting the price of the sexual abuse scandal could go beyond the $60 million fine and other penalties imposed by the NCAA.

Bloomington, Ill.-based State Farm said it had been reviewing its connection to Penn State since the arrest of retired assistant football coach Jerry Sandusky last November. The insurance company said it will pull ads from broadcasts of Nittany Lions home games but continue to advertise during Penn State's away contests.

"We will not directly support Penn State football this year," State Farm spokesman Dave Phillips said Tuesday. "We just feel it was the best decision."

State Farm had no immediate information on how much money is at stake.

The NCAA imposed unprecedented sanctions against Penn State on Monday, including the fine, a four-year bowl ban and a sharp reduction in the number of football scholarships it may offer.

The governing body also erased 14 years of victories, wiping out 111 of coach Joe Paterno's wins and stripping him of his standing as the most successful coach in the history of big-time college football.

NCAA president Mark Emmert said he relied on a report by former FBI Director Louis Freeh, who found that Paterno and three top officials concealed child sexual abuse allegations against Sandusky more than a decade ago to protect the school and its powerful football program.

With Penn State's once-sterling reputation in tatters, the university could face a loss of sponsors unwilling to have their brands linked to scandal, said Kevin Adler, founder of Chicago-based Engage Marketing Inc.

Adler said he would advise current sponsors to pull out of their deals with Penn State, adding that most contracts have morality clauses giving advertisers an out.

"I think the public perception is pretty clear and definitive at this point. That brand is damaged beyond the point of short-term repair. It is the sponsorship partner's obligation first and foremost to look after the health of their own brand," Adler said. "None of the sponsors owe Penn State anything."

So far, though, Penn State appears to be hanging on.

GM spokesman Pat Morrissey said the automaker is reviewing its sponsorship but has not made a decision.

Other sponsors said they plan to stick with Penn State, including Purchase, N.Y.-based PepsiCo Inc., Pittsburgh-based PNC bank and Pennsylvania's largest health insurer, Highmark Inc.

Penn State loses one sponsor, others could follow 07/24/12 [Last modified: Tuesday, July 24, 2012 11:26pm]

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