Penn State’s Self-Funded Athletics Presents A Unique Situation For Student-Athlete Compensation Debate
Turn on any sports talk show at any given time and there’s a pretty good chance that the conversation will take a turn to the hottest topic in sports: whether student athletes should be financially compensated. The idea is a flawed system and the question may never have a right answer because of an un-level playing field of schools, teams, and athletes.
But while arguments against the pay-for-play policy persist, an athletics program like Penn State’s is a bit confounding, considering it is self-funded and actually turns a profit. In comparison, fellow Big Ten school Rutgers, which is of a similar size, broke even in 2015 with nearly $24 million or over 1/3 of its athletics budget funded by the university.
In order to better understand the unique situation that Penn State presents, we broke down the finances of Nittany Lion athletics to show both the roles that student athletes play as assets for the university and what they actually get out of suiting up in the blue and white so you could develop a better informed opinion about the polarizing issue.
One Person Able To Reap The Benefits: Jame$ Franklin
Ironically, in September, there were articles about how much it would cost Penn State to buy out James Franklin’s contract and less than three months later, new ones tallying up all the bonuses that he would be collecting after his team won the conference and secured a trip to the Rose Bowl.
Ever since he has taken over the Nittany Lions, Franklin has had an annual salary over $4 million, with a $100,000 raise every year. During 2014 and 2015, Franklin raked in $400,000 in bonuses despite his teams finishing a collective 14-12. This past season however, he cashed in $650,000 of bonuses and was a debatable College Football Playoff ranking away from landing as much as another $500,000.
While Franklin brought in $350,000 for his team’s Big Ten Championship win, his players, only “got a t-shirt and a hat” as one Twitter user put it after North Carolina’s NCAA Tournament win last week. Likewise, the team’s Rose Bowl bid tacked on another $300,000 for Franklin while his players received a nice, albeit disproportionate, stay in California and collection of new licensed swag.
Franklin’s full incentive-based contract is publicly available online.
They May Not Be Paid, But They At Least Seem To Be Taken Care Of
Although Franklin has yet to introduce an upgrade to Lasch Building with laser tag and a playground slide like Clemson’s Dabo Swinney, Penn State has continued to supply its student athletes with better resources each year, as of late. While the resources don’t include compensation, Penn State athletics has increased its spending in each of the last three years with a particular focus on its student athletes.
The 2015-16 report justified the drop in profit and increase in expenses to additional spending on scholarships, better student-athlete meals and nutrition, as well as increased game day expenses for more security and staffing. Additionally, the new athletic facilities master plan, which was released last month, laid out plans for The Center of Excellence to better accommodate student athletes.
In the 2016 fiscal year, only three teams turned a profit: football, men’s hockey and men’s basketball. While basketball had a profit of approximately $5 million and hockey reeled in $764,349, football logged nearly $40 million. Football’s financial success primarily supported the athletic program and allowed it to be solvent.
As a department, Penn State Athletics made nearly $3 million in 2016. That figure is a bit skewed considering football accounted for $75.5 million of the department’s $132.2 million revenue, or 57% in a year where Penn State played in the TaxSlayer Bowl and had a sub-100,000 average attendance. That 7-6 team brought in nearly $6 million per game.
Playing in the TaxSlayer Bowl actually generated $2 million for the department, or in other words, about as much money as the revenue of men’s volleyball, both tennis teams, both golf teams, and both fencing teams.
The 2016 Financial Report will be released next February with the gross income of this past season, which was much more successful both on the field and in the checkbooks. This season’s extra game, better ticket sales, Big Ten Championship, trip to the Rose Bowl, and what James Franklin is hoping is a #107kstrong Blue-White Game could move the annual revenue north of $100,000,000.
#WeAre Self-Funded, But How Profitable Are We?
The USA Today reports that in 2015, Penn State was one of only 11 schools in the country to have a self-funded athletic program. The only other Big Ten schools to do so are Ohio State, Nebraska, and Purdue.
As impressive as the Nittany Lions are in funding 31 varsity teams essentially on one team’s dime, they really don’t compare to some of the nation’s other financial juggernaut athletic programs. Although Penn State is self-funded, it turned the ninth lowest profit out of the eleven schools on the list in 2015 with $3.4 million. In comparison, Texas A&M, the most lucrative athletics program in the country, generated $192,608,876 in gross income against $109,313,651 of expenses in 2015. The Aggies’ yield was by far the largest, but Texas, Ohio State, LSU, Oklahoma, Tennessee, and Arkansas all profited by over $10 million.
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