Penn State Athletics to Lead Nation in Debt With $700M Borrowing Plan, as Donations Fallout From Penn State Betrayal of Paterno Continues

Board of Trustees to Vote on Borrowing Plan

Penn State will likely become number #1 in one area of college sports this week.

The Board of Trustees is expected to pass a resolution authorizing the university to borrow $700 million to spend on Beaver Stadium renovations. If passed, the resolution will give Penn State the distinction of having the highest debt-to-income ratio of any university among those with major competitive sports teams – even higher than California’s bankrupt athletics.

Penn State’s plans to borrow $700 million for the renovation project, which some say is hodgepodge of egregiously overpriced and motley improvements, will include “upgrades” to the west sideline structure, removal of low-to moderate-priced seating to make room for luxury suites and boxes, and concession and restroom “upgrades.”

Up until now, Penn State’s intercollegiate athletics has been self-supporting. With the new debt, Penn State may have to use tuitions to fund the enormous annual repayment requirement, paid over 30 years.

Big Spenders

Penn State Athletics currently has $250 million of debt paid by athletics revenue. The university backs the debt, guaranteed by tuition revenue. If the athletics department does not generate sufficient capital to pay the debt, taxpayers or students will pay. In 2022-23, Penn State reported $202 million in revenue, which, with its debt of $250 million, is a debt/ revenue ratio of 122%.

That is already higher than most public universities in the Big 10. The average is 98%.

If the board approves the $700 million borrowing plan, Penn State athletics’ debt would jump to $877 million, or 434% of annual revenue, and become by far the highest in the nation.

One trustee is outspoken in his opposition to the debt.

Trustee Barry Fenchak cites several reasons for not supporting the borrowing plan. One is simple:

“We don’t have the cash,” Fenchak said in a post on his website. “…. the athletic department has only a minimum cash balance. They must request the university borrow money for relatively minor projects that our competitors routinely pay with cash from reserves.”

The renovation project, for which Penn State will borrow $700 million, strangely and perhaps illegally, went out for bid in January 2024. Penn State administrators reportedly awarded most of the contract for a project that the Board has yet to approve legally.

The Office of Physical Plant website reportedly removed documents related to the Beaver Stadium construction project recently.

Penn State administration and certain board members to cover their lack of transparency have argued that Penn State must borrow the money, and that they have considered other renovation options.

There is no record of Penn State Trustees deliberating alternative plans.

This suggests the fix is in; lucrative contracts have already been promised/awarded to contractors, engineers, architects, planners, designers, retailers, wholesalers, brokers, financiers, bankers, and others. It is the probable reason for the conspiracy of silence by administrators and select finance-driven members of the Penn State board.

Before voting to incur this enormous debt, ethical members of the Board of Trustees should conduct a vigorous conflict of interest investigation. Trustees should examine every contract awarded and to be awarded. Trustees should pay special attention to the consultant’s recommendations and the validity of their so-called feasibility studies. 

Trustees should delve into potential connections to administrators and certain board members who seem to be irrationally pushing this plunge into unsustainable debt based on what appears to be a lot of speculative whimsy. Frankly, these administrators and trustees are producing disturbingly misleading numbers and using projections based on rank speculation.

What is worse is the lack of transparency and their dependence on a know-nothing majority on the board.

This is no accident. It might be criminal.

My guess is that a transparent study will show that there are more inflated contracts, handouts, and clever crafting of scope and specs to narrow the bidders and inflate the price on this dubious endeavor than even one of Governor Shapiro’s notorious RFPs—well-known to land just where it will do him the most good. 

Luxury Suites to Replace Affordable Seating and Donations Imagined

The last time Penn State upgraded Beaver Stadium was in 2001, adding 12,000 seats. The $700 million project will not add seating, but will focus on increasing revenues with premium amenities.

In the fine print, it appears Penn State does not expect athletics to fully pay the debt after all. The borrowing advocates believe that a better stadium with luxury suites will attract wealthier alumni who will make donations. It is unclear how they have calculated this outside of magical thinking.

The facts point in the opposite direction.

Donations have been dramatically down since 2011, and it has nothing to do with the stadium or the number of luxury seats.

Donations dropped from $50 million annually to $14 million since Penn State’s spectacular disgrace.

Penn State Disgrace

In 2011, Penn State trustees sold the innocent Jerry Sandusky, Graham Spanier, Gary Shultz, and Tim Curley down the river—they threw them under the bus.

Sold short on morality and bought long on people forgetting.

And, of course, kicked the dying man, that king of good ethics, the man who built the reputation of Penn State and prompted more donations than anyone – Joe Paterno – to the curb, and no sooner than he died, spat on his grave and took down his statue.

There is a direct connection to the decline in donations and the betrayal by Penn State trustees of Joe Paterno.

Either way, as Fenchak pointed out, trustees should not depend on donations to pay for their boondoggle. That dried up with the desecration of the man who started the drive to get donations.

Fenchak said, “We don’t have the philanthropic support. Quite frankly, since 2011, donations to Penn State athletics have fallen off a cliff. In 2022, Penn State athletics was able to gather only $14.2 million in donations while Ohio State netted $55 million and the University of Alabama $115 million.

Link to Fenchak’s Debt Ratio tracking spreadsheet 

For those who do not know, 2011 was the year when Penn State ignominiously fired Joe Paterno and, in doing so, destroyed any semblance of the presumption of innocence for Jerry Sandusky, who is now 80, and in his 12th year of 30-60 year prison sentence.

Penn State Chairman Matt Schuyler seeks big debt and no debate.Penn State Board of Trustees Chairman Matt Schuyler appears oblivious to the connection between the disgrace of putting innocent men in prison or dishonoring their memories, and falling donations.

And no one believes in the law of karma. That what goes around comes around; that the sins you commit two by two, you pay for one by one.

It is not that there is no support for renovating the stadium. Most trustees agree that Beaver Stadium needs renovations and that football games have an economic impact in the area. What has not been debated by this stealth borrowing operation is how much money should it cost to reach specific goals?

Fenchak’s study of debt ratio

The Finance, Business, and Capital Planning Committee will meet on Tuesday, May 21st, 2024, at 10:30 a.m. EDT. They do not want the public to tune in. But they are required to make the meetings available to the public. If no technical difficulties ensue, the public can watch live via Zoom.

Tuesday, May 21, 2024 BOT Executive Session and BOT/FBCP Public Meeting

If you wish to be on our email list to get information and new stories on the wrongful conviction of Jerry Sandusky and/or add your name to the growing list of supporters requesting Penn State Trustees to examine the evidence, email me at FrankReport76@gmail.com.

Frank Parlato

Frank Parlato is an investigative journalist, media strategist, publisher, and legal consultant.

Frank Parlato

Frank Parlato is an investigative journalist, media strategist, publisher, and legal consultant.

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