Penn State Sponsors Anxiously Watch How Events Unfold at University

PHOTO: In this Oct. 8, 2011, file photo Penn State president Graham Spanier, left, and head football coach Joe Paterno chat before an NCAA college football game.
Copy has withdrawn its sponsorship of ESPN's Saturday Afternoon College Football for the next two weeks, which includes Penn State games, making it one of the first companies to distance itself after the recent arrest of former defensive football coach Jerry Sandusky.

After a Penn State student riot over coach Joe Paterno's firing, the university may soon see more corporate sponsors rebelling against its brand.

A spokeswoman for said that the move was "due to the recent allegations surrounding the Penn State football program."

"As a proud, longtime supporter of ESPN College Football, it's important to us that we're building our brand in a way that celebrates the sport, its fans and the dedication of its student athletes," she said in a statement.

The company said it worked with ESPN to redistribute its commercial ad units during these games.

The university-wide athletics program has dozens of sponsors, like Pepsi and AT&T, who are closely watching the university's next move. The school's football program is considered its crown jewel, bringing in $72 million a year, according to the Philadelphia Inquirer.

Sponsors Chevrolet, PNC Financial, John Deere, State Farm Insurance, the American Red Cross and healthcare company Highmark told ABC News they are not jumping ship yet.

Since former assistant coach Jerry Sandusky was arrested on 40 criminal counts on Saturday for allegedly abusing at least eight boys over 15 years, no sponsor has publicly canceled its contract with Penn State.

Sandusky has been reportedly released on bail of $100,000.

The university's board of trustees fired legendary head football coach Joe Paterno on Wednesday. Interim coach Tom Bradley will take Paterno's place during the school's last home game on Saturday against the Unversity of Nebraska. The board also fired university president, Graham Spanier, Wednesday evening.

Spanier, college president for 16 years, said in a statement his "heartfelt sympathies go out to all those who may have been victimized" and "he would never hesitate to report a crime if I had any suspicion that one had been committed."

It is too early to tell whether Penn State's corporate sponsors will bail on the university, said Scott Rosner, professor of legal studies and business ethics at the Wharton School of the University of Pennsylvania. Though the logo of paint company and Penn State sponsor Sherwin Williams was no longer on the press conference backdrop behind interim coach Tom Bradley on Thursday. Sherwin Williams did not return a request for comment.

Before the scandal broke on Saturday, Penn State was one of the most "undermonetized stars" in college sports, said Rosner, also associate director of Wharton's Sports Business Initiative.

"It was a paradigm with safe, conservative, and tremendous values that were the best of collegiate athletics," he said.

Pepsi has had a major partnership with Penn State, including a $14 million 10-year deal from 1992 that named it the official beverage on campus. Indra Nooyi, PepsiCo CEO since 2006, gave the Penn State commencement address in August 2010 and was awarded an honorary degree. The company didn't return a request for comment.

Rosner said the school's brand was strengthened by the football program and its reputation had a "halo effect" on not just the athletics department but the rest of the university as well. Rosner said the most important next move even more so than the next university president, is who they appoint as permanent head football coach, because of the importance of the football program.

Unlike other college scandals that have been contained within a particular college sport, or a university athletic department, the Penn State scandal has broad university-wide implications because of possible irresponsibility from a university leader, he said. Rosner suggested one way the university can begin to help the situation is to donate its ticket sales from Saturday's football game to a charity for sexual abuse victims or a sexual abuse awareness campaign, or starting their own initiative. Penn State alums have already begun fundraising for victims of sex crimes.

Penn State did not return a request for comment.

Rosner said some sponsors may not be able to exit from deals with the university unless their contracts included a "morals clause." A term like that would allow particular moral turpitude to void a sponsorship agreement.

But even if the football program were to lose all of the reported $72 million it receives from football ticket sales, fundraising and media deals with the Big Ten conference, Rosner said that is just a drop in the bucket compared with its reported $4 billion a year budget.

"Sponsors at root like to avoid controversy. The real question is whether Penn State is toxic yet," said Stephen Greyser, Harvard Business School professor emeritus specializing in the business of sports.

"Tiger Woods got toxic in a hurry," Greyser said of the pro golfer who took a break from competing as the media reported multiple alleged sexual affairs two years ago. Within the first three months of Wood's car accident that eventually led to stories of his affairs, AT&T, Accenture, and Gatorade dropped their sponsorship deals with the athlete. Gillette did not renew its endorsement deal with him when it ended in December 2010.

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