State Farm Drops Sponsorship of Penn State Football Post-Scandal

State Farm Insurance is dropping its sponsorship of Pennsylvania State University’s football program, including its stadium and radio advertisements.

Arlene Lester, a spokeswoman for the U.S.’s largest automobile insurer, said the decision was made following the child sex scandal and ensuing coverup involving former assistant football coach Jerry Sandusky and school officials.

The National Collegiate Athletic Association punished the school yesterday by levying a $60 million fine, banning it from postseason play for four years and reducing the number of scholarships it offers football recruits by 20 a year. A school- commissioned investigation led by former Federal Bureau of Investigation Director Louis Freeh found that former coach Joe Paterno and other school officials tried to cover up the abuse.

“We think this is the best thing to do right now to show our support for the victims,” Lester said. “We’ve been having this conversation for quite some time. It was not tied to the Freeh report or the NCAA sanctions.”

Lester said State Farm is only canceling its football sponsorships. It will continue its other ads with Penn State, including the men’s basketball team, and will continue to sponsor college football nationally.

Lester said she didn’t know how much the company spent on the football sponsorship.

$55.2 Million

Penn State’s athletic department earned $55.2 million from royalties, licensing, advertisements and sponsorships for the fiscal year ending June 30, 2011, according to school documents.

An e-mail and phone message left for sports information director Jeff Nelson about other companies that have dropped sponsorships wasn’t immediately returned.

The Big Ten conference said yesterday that the school won’t be eligible to receive its share of the Big Ten’s bowl revenue, about $13 million annually, during its four-year postseason ban.

According to the school’s financial records, Penn State received $23.7 million from NCAA and conference distributions in fiscal 2011.

The 68-year-old Sandusky, a football assistant coach for 31 years, was convicted last month on 45 criminal counts tied to the abuse of 10 boys over a 15-year period starting in 1994.

In fiscal 2011, Penn State’s athletic department generated $116.1 million in operating revenue and posted a $14.8 million operating profit, according to records for the State College, Pennsylvania-based school. The football team, which was 9-4 last season, had an operating profit of $43.8 million on $58.9 million in revenue.

To contact the reporter on this story: Curtis Eichelberger in Wilmington, Delaware at ceichelberge@bloomberg.net

To contact the editor responsible for this story: Michael Sillup at msillup@bloomberg.net

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