Case Analysis

Fact Sheet on Penn State NCAA Sanctions

Below please see information regarding recent decisions surrounding the NCAA-imposed

sanctions on Penn State.

How Does the NCAA Work?

 The NCAA is a membership and a rules-based organization―rules which a member institution

must abide by to join. The NCAA’s rules can be found at www.ncaa.org. NCAA enforcement staff

holds member institutions accountable by seeking out and processing information about

possible violations of NCAA rules. i The NCAA controls member institution ability to participate.

 Institutions fulfill their membership obligation by fully cooperating with enforcement staff,

Infractions and Infractions Appeals Committees; disclosing to the enforcement staff all relevant

information regarding potential violations; and protecting the integrity of the investigation (i.e.,

limiting information disclosure relevant to the investigation). ii

NCAA Sanctions Overview

 On July 23, the NCAA announced their penalties and corrective actions against Penn State which

include:

o A University payment of $60 million over five years into a special endowment created to fund

programs that prevent child sexual abuse and assist victims of child sexual abuse.

o A four year ban on post-season football games, and a scholarship reduction. All Penn State

football wins from 1998-2011 will be vacated.

o The University must enter into an Athletic Integrity Agreement and engage a third-party

monitor to oversee compliance with the AIA and the NCAA’s constitution and bylaws. Former

Maine Senator, George Mitchell, was named as the NCAA’s third-party monitor.

o A five-year probationary period.

NCAA Consent Decree Acceptance

 Penn State President Rodney Erickson, with input from legal counsel and members of the

executive committee of the Board of Trustees, accepted the NCAA-imposed penalties.

 After much deliberation and many discussions with the NCAA and legal counsel, it was clear that

there was no real opportunity for negotiation and that accepting the Consent Decree was the

best outcome achievable.

 Both the Consent Decree and Mark Emmert’s statement at the press conference clearly state

that a multi-year death penalty was being considered by the NCAA. The University seriously

considered and accepted the NCAA’s Consent Decree to avoid greater penalties, including a

multi-year death penalty.

 As part of the choice between the Consent Decree or not to play football, the University chose

the former. While a painful decision, it was ultimately the best course to accept the imposed

ruling and begin implementing the necessary changes to move forward.

Consultation with the Board of Trustees

 President Erickson conferred with the Board of Trustees’ executive committee before accepting

the consent decree as a painful―but ultimately better―alternative to a likely multi-year ban on

football.

 Given the timing of the NCAA ruling, NCAA-imposed confidentiality restrictions, and the risks of

damaging leaks from broader dissemination, it was not practical to convene the full board.

 Executive committee members, after hearing the terms of the consent decree, supported the

decision to accept the ruling. A vote was not required and none was taken.

 On July 25, the Board of Trustees issued a statement saying that the “punitive sanctions are

difficult and the process with the NCAA unfortunate. But as we understand it, the alternatives

were worse.”

Payments

 Penn State expects to pay the fine out of football reserves, the deferring of capital and

maintenance expenditures and an internal Athletic Department loan.

 The University fully expects that these funds will satisfy the $60 million, and it is impossible to

speculate beyond the life of the Consent Decree.

 Penn State will not use state or philanthropic money to pay the fine, and the fine is expected to

have no impact on the scope and quality of the University’s academic enterprise or on student

tuition costs. Great care will be given to developing a budget that will protect all of our students.

 Penn State remains committed to keeping opportunities affordable, as evidenced by the recent

approval of tuition increases far below the national average at public universities.

Student Athletes

 A primary concern of the University was to limit the impact of the sanctions on our student

athletes, many of whom were barely in high-school when Sandusky committed his

atrocious acts.

 Our football team will still be able to play every on Saturdays in Beaver Stadium in front of

108,000 fans and on TV, and have the opportunity to learn and compete under Coach

O’Brien.

 None of our other student athletes will be hurt by this consent decree―and no programs

will be cut.

i NCAA.org ii NCAA.org