Thursday, July 26, 2012

Football? Penn State may not even be able to keep the lights on

imageForget the bowl ban, the punitive scholarship losses and the 111 vacated wins from 1998 through 2011. Penn State may face a financial crisis that’s worse than any of that.

Jerry Sandusky’s victims are lining up at the courthouse and filing civil claims against Penn State.State Farm is pulling its sponsorship, with others likely to follow. Moody’s may downgrade the credit rating of Pennsylvania’s largest public university.

Oh, and Mark Emmert single-handedly slammed the school with a $60 million fine—the rough equivalent of a single year’s revenue from the football program.

Now, the university’s primary liability insurer seeks to deny coverage.


The motion, filed in common pleas court by the Pennsylvania Manufacturer's Association, says Penn State did not provide it with information relevant to the insurable risk the association assumed. The association has already sued Penn State over the coverage of one of Sandusky's victims' claims against the university, filed in November 2011.

The association has insured Penn State under general liability policies since 1976.

"It would be unlawful and contradictory to public policy to require PMA to provide coverage to PSU under any policy issued to PSU after May 1998 with respect to PSU's concealment of Sandusky's sexually abusive conduct ... and failure to take appropriate action to prevent Sandusky from molesting minors," the motion read.


If PMA’s legal maneuver is successful, it will leave the school solely and completely liable for any judgments leveled against it in the numerous civil liability claims filed by Sandusky’s victims and their families.

If reports are accurate, Sandusky’s abuse stretched for decades and there could be dozens of victims, each with nearly incontrovertible evidence of his direct liability and the school’s culpability in enabling the continued abuse.

Those claims could easily climb into the nine figure range, and could threaten the school’s ability to remain open unless the Pennsylvania legislature steps in with a bailout.

Faced with the choice of seeing its largest public university reduced to the status of your average community college or bailing the school out with hundreds of millions in state appropriations, how would the citizens of the state feel about their tax dollars going to pay the claims against a convicted child molester?

Forget about football. Penn State may not even be able to keep the lights on in Happy Valley.

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2 comments :

Matthew said...

The school has a $1.6B endowment. I think they should be okay.

Muhammad Zahid Iqbal said...

how would the citizens of the state feel about their tax dollars going to pay the claims against a convicted child molester?university of pennsylvania hospital