A President’s Toughest Call

Joe Paterno prefers to stick to a game plan. The head coach of Pennsylvania State University’s football team doesn’t like surprises, although there are times when his enthusiasm gets the better of him.

“He and I were once on a donor visit together,” recalls Graham B. Spanier, the university’s president, in an e-mail message. “We had rehearsed ahead of time that I would describe the project and that Joe would then ask the donor for the lead gift of $3-million, a figure our development folks had determined was the maximum we could ask for.”

When it came time to ask for the donation, Mr. Paterno spontaneously upped the ante by $2-million.

“My heart skipped a beat,” Mr. Spanier says.

The donor, however, pledged the $5-million.

The tale is a testament to the power of Paterno. He asks, and the Penn State loyal give. He is the university’s most valuable fund raiser, as well as a philanthropist in his own right, having given millions of dollars to the university for academic purposes.

But now the legendary coach is on a losing streak, at least on the playing field, and Penn State’s president is in a fix. Firing the coach could alienate Mr. Paterno’s supporters, of whom there are many. Keep him around, though, and the university risks losing football fans. Both camps are rich with big donors, but football generates the profits that keep the athletics department alive.

Losing His Touch

Mr. Paterno’s crusade on behalf of Penn State began 55 years ago, when he arrived as an assistant coach. His life’s work has been to help make Penn State University a household name. His vision was of victorious football teams, athletes who put academics first, and a world-class research institution steeped in tradition.

By most accounts he has succeeded. In 39 years as head coach, Mr. Paterno, who will turn 78 next week, has led his teams to 31 bowl appearances, 20 finishes in the Top 10 in national rankings, and 2 national championships. In a famously clean program -- with few scandals and little tolerance for misbehavior -- his team has consistently earned among the highest graduation rates in the National Collegiate Athletic Association’s Division I-A.

Mr. Paterno is a national icon. The man and the university have become inextricably linked.

But five years ago, the losing seasons began, with only one winning season since. This year Penn State’s Nittany Lions had a record of 4 wins and 7 losses. In 2003 the team was 3-9, Mr. Paterno’s worst season ever.

A quiet grumbling among alumni, students, and other fans has erupted into a public outcry for a coaching change. Joseph C. Korsak, a 1971 graduate, took out a $350 half-page advertisement in the game-day magazine of the Daily Collegian, the student newspaper on the flagship University Park campus, that read: “The talent is there. The coaching is an abomination. Time for Joe to go.”

“I’ve been sitting with the same crew of people at Penn State football games for years,” says Mr. Korsak, a lawyer. “We’ve been collectively moaning about the quality of coaching, and it struck me throughout all of this turmoil that everybody has treated Paterno like the uncle with cancer, talking around the issue instead of addressing it. I was just trying to bring some focus to the dissent.”

Therein lies Mr. Spanier’s greatest challenge since becoming Penn State’s president nine years ago. Firing a coach who is as important to an institution off the field as he is on it is a decision likely to exact a high cost. Dismissing a legend with more than five decades of loyalty to his players, assistant coaches, and the entire institution would be unprecedented.

Mr. Spanier has refused to answer questions about the coaching situation, saying that “season-end discussions” with Mr. Paterno have not taken place. The Board of Trustees maintains that it does not intervene in contract negotiations, and that the matter is Mr. Spanier’s responsibility.

Christopher Simpson, president of Simpson Communications, a marketing firm in Williamsburg, Va., that works with colleges, endorses Mr. Spanier’s decision to stonewall until he has held private talks with Mr. Paterno.

“The bottom line is that he cannot make a decision based on the win-loss record, because there will never be another coach like Joe Paterno again,” says Mr. Simpson, who was vice president for public affairs at Indiana University when Bob Knight was fired as basketball coach there. “Joe Paterno needs to go out on his own timeline. The debt the university owes him extends back decades.”

Mr. Spanier has made plain that the coach’s fund-raising skills are still important to the university.

“It is my desire for Joe Paterno to continue to work with me in this capacity, even after he is no longer a coach,” he says. “Few people have ever had such a remarkable impact on any university.”

His Own Terms

Many observers argue that Mr. Paterno has earned the right to an exit plan of his choosing, at a time of his choosing -- and he agrees.

“I could have had 15 jobs that would have been more lucrative, and a lot of different things through the years in pros and college,” Mr. Paterno says. “I have always felt that Penn State was a place that I was comfortable with, and I wanted to bring my family up here, make the university and football as good as I could make it.”

While college-football fans and Penn State alumni might be familiar with the Paterno legend, others may be less familiar with the coach’s creation myth.

Mr. Paterno went to Brown University, where he played quarterback under Coach Rip Engle. When he graduated, his father had expectations that his first-born son would go on to become a lawyer. Mr. Engle had a different idea when he accepted the head-coaching position at Penn State. He wanted the young man to be his assistant there.

“My dad says to me, ‘What are you doing thinking about coaching? Do you think you can have an impact on anybody?’” Mr. Paterno says. “I said, ‘I think I can have an impact on this university ... I am going to work my butt off to try to make them understand that Penn State can be a special place.’”

It took some time before Mr. Paterno, a Brooklyn, N.Y., native, adjusted to his new surroundings in rural Pennsylvania, in an area dubbed “Happy Valley.” The football stadium seated just 30,000 people.

He served as an assistant coach until Mr. Engle’s retirement, in 1966, when he took over as head coach. It wasn’t long until Mr. Paterno began what he called a “Grand Experiment,” which has focused on making sure that his athletes possess strong moral values and exemplary character, and place a higher priority on academics than they do on sports.

While donors were needed and appreciated, Mr. Paterno insisted that their money could not compromise the integrity of the institution, or of the athletics program. “We want your dollars,” the coach once told a group of benefactors, “but we don’t want your two cents.”

While winning national championships and bowl games, Mr. Paterno also pushed the trustees to focus on the kind of fund raising that could help Penn State become as famous for high-quality academics and research as it is for football.

He and his wife, Sue, have donated $4-million, all of it for professorships, fellowships, scholarships, and an interfaith spiritual center. They also led a campaign to raise $36-million for the university’s libraries, giving $250,000 toward a new wing that bears the Paterno name.

The Paternos’ gifts have given him a platform from which to ask others to give. Mr. Paterno served as a chairman of the “Campaign for Penn State,” which raised more than $300-million in the 1980s and early 1990s, and as an honorary chairman of the seven-year “Grand Destiny” campaign, which raised $1.3-billion by 2003.

“As an honorary chair for the last campaign, he rarely missed a meeting and was active in asking for gifts,” says Rodney P. Kirsch, vice president for development and alumni relations. “It’s kind of difficult to separate out who is responsible for donations, which makes it hard to judge just how much he’s brought into the university. But he is an integral part of what we do.”

When deciding on the most recent campaign’s goal, officials concluded that $800-million would be the most they would probably be able to raise. “But from day one Joe said, ‘Folks, we’re raising a billion dollars,’” Mr. Kirsch says. “When he’s leading the charge, he is putting his money where his mouth is.”

Mr. Simpson, the consultant, says one way to avoid alienating donors is to end the speculation as quickly as possible: “If he’s removed because of the team’s record, the long-term reputation of the institution could be harmed. Whatever the future is, it needs to be clarified quickly, because the university is not benefited by uncertainty for a long period of time. The president needs to bring it to an end.”

John Lippincott, president of the Council for Advancement and Support of Education, says it is important for Penn State to prepare its fund raisers for Mr. Paterno’s eventual departure.

“Certainly lots of universities go through changes in presidents and coaches who are strongly associated with their institutions,” Mr. Lippincott says. “There’s no way to downplay the importance of Joe Paterno. But ultimately the motivation of a donor is the good of the university, and that doesn’t usually change.”

Pride and Tradition

There’s a reason why Beaver Stadium is called “The House That Joe Built.” As the team flourished on the gridiron, the stadium’s capacity grew. Today it is the second-largest college stadium in the country, according to the NCAA, seating 107,000 people.

The fans who gather at each home game come for more than football. The weekends ooze pride, loyalty, and tradition. Players don the same blue-and-white uniforms that their predecessors wore decades ago, without names on the backs of the jerseys. Mr. Paterno still roams the sidelines wearing rolled-up khaki slacks, black Nikes, and bottle-thick glasses.

Part of that tradition had always included winning. The fans’ current frustration may be most notable in the form of empty seats. Attendance for home games has dipped by an average of about 2,000 in the last year, generating financial concerns throughout the region.

An average football weekend pumps more than $4-million into the economy around State College, Pa., which makes the future of Penn State’s football program the concern of more than just the athletics department. Hotel rooms that are otherwise priced around $89 per night can go for more than $200 per night, with a two-night minimum. Weekend visitors spend thousands of dollars on tickets, concessions, and gift-shop items in the campus bookstore.

The athletics department, a self-supporting unit, receives no state support or funds from the university’s operating budget. Football generates most of the profits, which finance the 29 other varsity sports. When attendance at games decreases and the team isn’t appearing in postseason bowl games -- which bring millions of dollars in additional income -- there are more than a few uneasy people around University Park.

To offset potential revenue shortfalls and rising costs, the athletics department is now trying to raise $100-million to pay its bills.

The effort, named “Success With Honor: A Campaign for the Penn State Way,” is a nod to Mr. Paterno’s philosophy. The coach is not serving on the campaign committee; he prefers to focus on fund raising for academics, officials say. John Powell, associate athletics director for marketing and corporate sponsorships, says that with 29 sports to support, the campaign will “need to raise a significant amount of money going forward.”

Mr. Powell says giving to athletics has been flat since 2001, when the program received a total of $19.5-million. In 2003 contributions totaled $18-million, but dues from the Nittany Lion Club, the department’s booster group, pumped in $9.2-million, up from $8.5-million in 2002.

“It’s too soon to tell if the last losing season has affected the campaign,” he says. “But the four previous losing seasons haven’t affected our giving, which has held steady.”

But an unscientific online survey in November by the region’s local newspaper, The Centre Daily Times, indicated that the defeats may have hurt giving. Asked if the losing season would affect how much they would give to Penn State football or how many tickets they would buy, 46 percent of 483 respondents said they would give about the same, and 38 percent said they would give less.

Wade Malcolm, a Penn State junior who covers football for the student newspaper, says that kind of attitude may spill over to his generation -- some of whom are among the few people in the university’s history who haven’t experienced a winning football season there.

“I think the environment here is different when we’re winning,” he says. “People are more enthusiastic about Penn State in general. When we’re winning, on a game day the town is buzzing, people are yelling ‘We are -- Penn State!’, the student section is filled by kickoff.”

This year the university had to entice students to arrive at games on time by raffling off free airline tickets and other prizes for those who were in their seats by kickoff time.

In his weekly football column this fall, Mr. Malcolm has often expressed concern about the team and its coaching, musings that have generated a lot of response from alumni, he says.

“Every week e-mails would pour in from alumni saying that students are being cheated, describing these magical experiences of their undergraduate years,” he says. “After the Iowa and Northwestern games, the tide had really turned. Every alumni I was in contact with started calling for Joe to quit.”

Mr. Untouchable?

If Mr. Paterno were anyone else, coaching anywhere else, he probably would have been fired by now. In recent weeks 15 coaches in the NCAA’s top Division I-A have been canned.

After three consecutive losing seasons, Indiana University fired Gerry DiNardo, and Brigham Young University released Gary Crowton. David Cutcliffe had his first losing record in six years at Mississippi and was dismissed. Tyrone Willingham, at the University of Notre Dame, and Ron Zook, at the University of Florida, were fired as well, Mr. Zook with a 7-4 record.

Mr. Korsak, the 1971 graduate, says he e-mailed Mr. Spanier before the season started, aggravated that Mr. Paterno had received a four-year contract extension after 2003’s losing season. The contract’s terms are not public, but it does include a performance clause, according to sources within the university. Mr. Korsak wanted to know if there was a plan for the day when the coach was no longer around. A Penn State spokesperson did not offer him any information about how the university would proceed with an eventual coaching transition, he says.

“This is big business for the university and for the downtown, so I can’t believe there isn’t a Plan B in place,” the alumnus says. “At the end of the day, he’s just an employee of the institution. He’s not the institution.”

But many feel otherwise. Jim Meister, president of the State College Quarterback Club, a booster group that raises money for an annual banquet to honor the seniors on the football team, says Mr. Paterno is “special.”

“He put Penn State on the map,” says Mr. Meister, who is also a donor to the university and was hired to help lease skyboxes during the stadium’s most recent expansion. “You can go anywhere in the world and mention Penn State and people will say, ‘That’s where Joe Paterno is.’ He deserves to be handled differently than anybody else. He’s a legend.”

Mr. Paterno, however, is the only Penn State official commenting publicly on his future.

“I’m planning to be back next year,” he said following Penn State’s final game of the season, a victory against Michigan State University last month. “I’d like to be able to put together a scenario where I can pick the time I want to leave and have somebody in-house ready to take over.”

Mr. Spanier has always maintained that when the time comes to find a new head coach, the university will conduct a national search, although there are indications that the defensive coordinator, Tom Bradley, is a top contender for the job.

For now, Mr. Paterno remains adamant that the team has a shot at sustained success, starting as soon as next season. Few of the team’s best players will be departing, and recruiting prospects seem good. On the campus, expectations are high that next year will bring a winning record, a bowl game, and perhaps a happy ending to Mr. Paterno’s career as a coach.

As he ran off the field at the end of the 2004 season, rumors were swirling that it might be his last jog through the tunnel. But Mr. Paterno, in his sometimes abrasive style, let everybody know in no uncertain terms that he’d be back.

“What do you mean, ‘What are my plans?’” he shot back to an ESPN2 reporter who had the audacity to pose the question. “I’m gonna coach, for crying out loud. ... I’d rather be doing this than cutting grass.”

When you’ve built the house, it’s difficult to turn in the keys.

Erin Strout, a Chronicle staff reporter, is an alumna of Penn State.

http://chronicle.com Section: Money & Management Volume 51, Issue 17, Page A31