Are sports scandals a blow for state universities?

April 12, 2013

The firing of Rutgers basketball coach Mike Rice and the surrounding controversy recalls the governance meltdown at Penn State around the Jerry Sandusky scandal. Moody’s downgraded Penn State over that scandal, which involved serious allegations of child abuse and rape. From

In its report, Moody’s said the primary factor that led to the downgrade is the uncertainty over what Penn State can expect financially from the ultimate cost of future settlements and possible judgments stemming from sexual abuse claims made by Sandusky’s victims. Moody’s report said that the stable outlook reflects expectations that the University will ultimately resolve victims’ claims and that it will continue its work to implement substantial governance reforms.

Moody’s has since placed Rutgers on negative watch. The agency said this today in its Weekly Credit Outlook (subscription required):

The controversy is a major distraction for Rutgers as it assimilates two medical schools, steps up its research profile and enters the Big Ten athletic conference. During this largely positive transition, the university now faces increased possibility of government investigations, weaker donor support and legal actions.


Like other universities that have chosen not to take quick and decisive action when confronted with inappropriate behavior by university employees, Rutgers’ initial response highlights inward-looking governance and management practices that are prevalent among US universities. Questionable disclosure practices about many aspects of US university operations, including scandals stemming from athletics, invites increased criticism and government regulation of universities.

Penn State and Rutgers are two nationally recognized universities that have stumbled over their sports programs. Neither has been a body blow to the school, but both scandals raise red flags about school management turning a blind eye to inappropriate or criminal behavior. The bar is being raised for public universities. Special protections for sports and related activities seem to be diminishing. Maybe it’s time to rebalance the role of sports in higher education.

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