A $60 million fine against Pennsylvania State University by the governing body of college sports, announced Monday, will not immediately affect the long-term ratings on various revenue bonds issued by and for the school, Standard & Poor’s announced on Monday.
Standard & Poor’s rates Penn State’s long-term revenue bonds AA, with a stable outlook, and the short-term rating on the university’s Series 2009B bonds is A-1-plus.
The announcement came shortly after the National Collegiate Athletic Association announced its fine, payable over five years, and other penalties in the aftermath of the child sex-abuse conviction of former assistant football coach Jerry Sandusky and the just-released report by Louis Freeh.
The $60 million represents Penn State's average annual football-related revenue.
Freeh, the former director of the Federal Bureau of Investigation, accused top university administrators and the late football coach Joe Paterno of covering up Sandusky’s activities.
Other penalties included a four-year ban on bowl game participation and a sharp reduction in scholarships.
“We view the initial impacts of the NCAA penalties … as having a minimal impact on financial resources and annual operations. Based on our conversations with management, we recognize the scope of Penn State’s liability has not yet been fully identified,” S&P said in a statement.
“We remain concerned about the financial implications associated with the NCAA consent decree, conviction of Sandusky, the Freeh report, and any related liabilities. We will continue to evaluate these events and management response and will take any rating action that we consider appropriate, based on our criteria.”