Death of football will not "cripple" the economy at Penn State, or anywhere else...

hangonskokie's picture
July 24, 2012 at 1:41a
13 Comments

I'm writing this post because I'm hearing a lot of people make the claim that sanctions crippling or ending football at Penn State will destory Happy Valley's economy. I believe these statements are wrong.

I grew up in Kent, Ohio. While Kent State is a MAC school in terms of sports, its enrollment is roughly the size of a Big East or Big Ten school. If you go to downtown Kent, you’ll find a flurry of construction as well as shops, bars, and restaurants. Why? Because Kent is home to more the 30,000 students, who are visited by an exponentially greater amount of parents, relatives, and friends every weekend –not just in the autumn. Similarly, KSU is the largest employer in the county creating middle and upper-middle class residents in the area. That’s what supporting the economy, not football.

Think about it, if your business model is depends on 6-7 Saturdays a year and all you’re doing is selling food and t-shirts, you’re doomed no matter how good the Nittany Lions are. (I’ve never been to Happy Valley, but I assume most PSU fans aren’t shopping for high-end cloths and jewelry on game day). No business owner- not even in Happy Valley- is going to bet on football Saturdays as the corner-stone of his or her business. Most “t-shirt shops” in college towns are actually text books and school supply stores; they just sell apparel to make extra revenue during the months when students aren’t buying text books for the upcoming term. Similarly, restaurants and stores are viable not because of an out-of-town crowd that comes in a few times a year, but because of a huge student body and faculty that needs to eat and shop all year round.

Simply put, you’d have to get rid of Pennsylvania State University to destroy the economy of Happy Valley. Getting rid of football will just mean that a few food trucks and port-a-potty distributors will set up at two or three more country fairs instead of Penn State football games, and a few less people will be stopping at Hardee's on their way in to town. The bars might even do better on weekends if the students don’t have a football game to go to.

To conclude, this is true for sports in general. Franchises and stadiums don't really grow or improve an economy because they don't provide a lot of permanent middle and high income jobs. They might shift buinesses, such as restaraunts and bars, from one area of the city to another as owners will seek to capitalize on the increased traffic, but they won't create more commerce on the whole.

I've never been to Happy Valley so, admittedly, I'm just usuing my own experience as a mesuring stick. If anyone has any more insight on football-related commerce at Penn State or on the topic in general, I'd appreciate your comments. 
 

Comments

FROMTHE18's picture

I am not an economist or really do anything related to business but I have been to places like Auburn, Happy Valley, and Tuscaloosa... very small towns that revolve around the university and its football team... I imagine that its pretty simple.. those respective places have very small permanent populations so when saturdays roll around the number of people increases 10 fold bringing in tons of outside money that helps maintain many of the small businesses that regularly receive little attention... take OSU out of Columbus and put it in the middle of nowhere, now take away a successful football/basketball program...places like Conrads and Tommys Pizza would have to shut down, then some of the other bigger businesses would follow because of the massive hit to revenue...if that happens then the place becomes a bit of a ghost town/less attractive to visit which means even less people come...one thing PSU does have however is a very large student body, but if their saturday visitor numbers take a big hit, it could mean bad things for smaller businesses that rely on them... just my understanding, could be wrong/inaccurate... 

CincyOSU's picture

I have to agree with FROMTHE18 - Kent Ohio/Kent State are completely different than State College and PSU. Kent is 15-20 minutes from Akron and 20-30 minutes from Cleveland...two major metro areas. State College is in the middle of nowhere. Additionally, Kent State has nowhere near the amount of fan support both locally and and nationally that PSU has, thus there are FAR fewer local businesses that rely on KSU football as PSU football. Take the hospitality industry for example. In many cases hotels rely on a select few weekends to turn a profit...if you took PSU football out of the equation for a few years many hotels may not be able to survive losing that revenue. And the "t-shirt vendors" and "food trucks" you speak of likely don't sell t-shirts or food as their full time job, but it might be a large portion of their income that would be taken away as they no longer have this large account for extra supplemental income. Do you think the local Hardee's you mentioned wants to see that guaranteed business on those 6-7 saturdays go away? That certainly will affect their bottom line.
This is all a moot point really as this would only be an issue IF the death penalty were enacted. As it is, football(at least some form) will still be played on Saturdays sparing the local economy of any potential financial hits.

setman's picture

Think of the Happy Valley small businesses like the regular retailers in the United States.  Black Friday is referred to as that because traditionally that is when retailers get out of the red for the year.  (I think to a large case it has been oversensationalized by the media today, especially for retailers like Walmart and others, but there originally was a basis in truth to this)   You have the same factor for small businesses in Happy Valley.  Sure they do business for the rest of the year.  But it is merely hanging on.  They know the influx of people on a home day weekend, for 7- 8 weekends, will bring in sales, revenues that will put them over the top for the year.  And that is why businesses exist is to make a profit.  I would imagine that the inventories and staffing for any retailer or restaurant those weekends are increased by a factor of 3 or 4. 
In short, the businesses hang on for the year.  Football season allows them to generate a profit. 

btalbert25's picture

I can agree with both sides.  While I don't think it would neccessarily cripple the economy of State College it would have an impact.  The jobs that would be lost aren't high end, but they are jobs that a college kid trying to make tuition payments, or locals who don't have much to choose from job wise depend on.  Would it make State College totally depressed and completely collapse the local economy?  Probably not. 
Ohio State has what?  50K students?  Ohio Stadium holds about twice that, but there are far more than 100,000 people out there tailgating, and partying(spending money) outside on game day.  It's conceivable that on a football game day the businesses may do a couple weeks worth of sales.  That's the way I think about it, how would those businesses outside of Ohio Stadium and the surrounding area be impacted if for 7 or 8 Saturdays, that flood of probably 200K or more didn't exist? 
Some would be fine to be sure, but I doubt they would all be able to survive.  In Columbus, it's not such a big deal though, as there's plenty of places to find another Hotel or Restaurant to work at. If you sell T-Shirts or have a food truck you may be able set up shop outside of the arena's or concert venues or get more creative to supplement that income. In State College though, there's no "other side of town" you can run and set up at. 

hangonskokie's picture

Thanks for your thoughts. I think you're right to assume that State College is a unique situation compared to a MAC school, which doesn't generate the type of fan support, and school like Ohio State which is located in a bigger city. Perhaps the combination of isolation and fan- support in Happy Valley has resulted in a lot of "football-dependent" business that would stand to lose if the team disintegrates or falls off the radar significantly.
However, I think you underestimate the economic anchor that a school of that size creates, even in a small community. Take equally isolated Ithaca, NY home to Cornell and Ithaca College, which combined to host about 27,000 students. There are restaurants, stores, and bars, none of which are remotely influenced by the existence of any sports teams whatsoever. Still there were stores selling Cornell tees and sweatshirts and people were buying them and wearing them around. So clearly there is some money in merchandise sales even at places where sports aren’t really a big deal. Similarly, there are obviously enough students, faculty, and staff in the area to support a thriving small-town economy ranging from the typical college dives to higher-end restaurants and boutiques all without any significant impact from sports.
There are those who will argue that this is a cultural thing: people who go to Cornell and live in Ithaca are into fine dining and vintage bookstores rather than football and tailgating -you’d be right, and I think this ties in with why the situation in State College might be unique to other cases.  However, I still think you’re underestimating the diverse impact a university has on a town with or without big-time sports. There has to be a significant amount of faculty who can support nicer higher-end establishments in the area, and there are probably students at Penn State- just like at Ohio State- who don’t really care all that much about sports, but who shop and eat-out none-the-less. 
The key question here is how football is intertwined with culture. If football falls by the wayside, will people stop buying Penn State gear? Will they stop eating breakfast on Saturday mornings? Will they even want to attend Penn State? Or, will they simply find other things to do in State College?
I realize this is a sports blog, so the thought of life without football might seem off-topic. But, this Penn State situation has raised some interesting questions, and I’m interested to hear more responses. How engrained do you think football really is in the economy and culture of a college town/city? Not just at Penn State, but anywhere.

pcon258's picture

@original poster
I think you bring up a great point. I don't think it would cripple the economy of state college; most businesses will have a more stable source of income than 7 saturdays in the fall. hotels will probably take the biggest hit, because beyond penn state football, there arent many reasons that people would want to go to state college (parents visitation is really the only thing that comes to mind). 
i will say though, that while football cannot completely support a local economy, other sports can. Take for example, the neighborhood around yankee stadium in the bronx. most of those places are geared entirely towards fans who show up for games. unlike football however, baseball season has somewhere around 100 home games a year, as opposed to 6 or 7. 

Run_Fido_Run's picture

Hangonskokie: sorry, I see your argument as being a strawman.
The sanctions do not have to "cripple" the PSU/State College economy to have very considerable economic ramifications. PSU is one of the most valuable products in cfb. If they go from top 5, to something like the 25th most valuable cfb product, that is a very heavy drop, and yet the football program and/or local economy might not be "crippled."  
Many of the reverberating effects from the sanctions will extend well outside PSU/State College, the region, and even the state of PA.

hangonskokie's picture

You're right to point this out. It's probably a matter of degrees; certainly there are those who will stand to lose if the value of Penn State football drops dramatically. My reaction was toward the tone used by posters and media commentators, before and shortly after the announced penalties, who suggested that punishing the program too harshly would leave leave the town in shambles, without considering all the factors the actually influence the local economy. But as more people have thought about it a chimed-in this sentiment has faded; most realize the situation is more complex. Beyond that we know there will be football, even if it's not the draw as it once was... 
My thinking is that State College would ramain a decent place with a thriving college-town atmosphere with or without a competitive or popular football team.   
 

Run_Fido_Run's picture

I think we're at least partly on the same page, then.
One my questions/concerns about the NCAA jumping-the-line with sanctions, as other parties (courts, government regulators, etc.) were still going through a deliberative process on how to deal with PSU, is that NCAA attempts to reorient a university's "institutional culture" on a grand scheme, which might have very significant socioeconomic ramifications, is tantamount to the NCAA becoming a major public policymaker.  
The NCAA, in this case, will possibly influence the economy of the region and the State of PA in more profound ways than much of the legislation being passed in the PA Statehouse this year - all over a matter that is most certainly connected to PSU's fball program but which wouldn't ordinarily fall under the purview of the NCAA. How often do we see decisions with such profound public policy and/or socioeconomic ramifications made with such complete lack of deliberation, public input, etc.?
So, even if the sanctions do not cripple the local/regional/state economy, the NCAA is setting a potentially worrisome precedent.

Crimson's picture

I know I'm being an optimist, so you can criticize me for that as you like.  However, let's remember that the NCAA had unanimous consent from all university presidents, and that Penn St accepted the sanctions.  Yes, worrying about it as a precedent is valid, and I don't necessarily trust Emmert either, but it's hard to see the NCAA pulling this again, unless we have rapes or murders covered up by a university for years.

CincyOSU's picture

@HANGON - I don't think anyone has said that the local ecomonies will suffer because of the announced NCAA sanctions, but rather the potential ramifications IF PSU were issued a 1-2 year "death penalty" instead. Anyone STILL arguing about potential economic loss is probably overreacting a bit. But IF, and I say IF, the program were to shut down for a few years there would have been definite economic consequences, esp for a region like Central PA. As it is, this argument is really no longer relevant...PSU is still playing football.

Boom777's picture

Simply put Kent has no football program to compair to PSU. Kent is not a sports college! I work in Kent all the time, south and east is country but if you go north or west you hit a few big or bigger cities. They are not comparable. I agree Kent is not a little college but not a sports school.

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