Audit Notes: Too big to fail football, Guardian digital numbers, WaPo

Penn State and the ramifications of a possible NCAA death penalty

It’s not just the banks. Now elite college football programs are too big to fail, as well.

Here’s Bloomberg News on Penn State and a potential NCAA death penalty for its sexual-abuse scandal:

If the NCAA levies the death penalty against Penn State, the financial losses would likely be debilitating, leaving non-revenue teams without funding and saddling the program with debt for years.

In the fiscal year ending in 2010, the football program generated $63.3 million of the department’s $106.6 million operating revenue and turned an operating profit of $49.2 million, according to the school’s revenue and expenses report for that year.

No doubt about it, college football is big business.

Meantime, Joe Nocera has an excellent column arguing that the NCAA should kill Penn State’s program, comparing it to recent NCAA penalties against Caltech’s puny athletic department for technicalities.

But at Penn State, football was of such overweening importance — and Paterno was such a godlike figure — that a sexual predator was allowed to roam free because of his association with football. A janitor spots Sandusky in the shower with a boy but is afraid to say anything because crossing Paterno “would have been like going against the president of the United States.” Sandusky uses the lure of the football program to attract his victims. Paterno and others in the Penn State chain of command, in Freeh’s words, “repeatedly concealed critical facts relating to Sandusky’s child abuse” — to avoid bad publicity for the football program. A great university sold its soul to its football team.

The Guardian gets more than 60 million unique visitors a month to its website but it only brought in about $23 million in digital ads last year—and that was up 26 percent over the last year.

Fortunately it has an online-dating service that brings in more money than online ads, which means the paper’s digital revenue now tops its print advertising revenue by about $3 million:

The Guardian revealed on Tuesday that it had generated £14.7m of digital advertising revenue in the year to March, a subset of the newspaper’s overall digital revenues of £45.7m - which includes income from its online dating service and iPad subscriptions….

The Guardian sold 211,511 copies a day in June, the last month for which figures are available, down 10.7% on the year on a like-for-like basis, while the Observer sold 243,946, a reduction of 10%. Print advertising shrunk 4%, reflecting what Miller described as a “tough market”, at £43.7m.

But the paper still lost scads of money and will slash its newsroom by up to 15 percent.

— Washington Post Company CEO Donald Graham told a Fortune conference that it doesn’t make sense for his newspaper to charge online and talked up its highly annoying social-media app.

When asked why the Post hasn’t put its content behind a paywall like The New York Times and The Wall Street Journal have, Graham explained that 90% of the Post’s audience is outside of the Washington area—but that the paper itself has only local distribution—so the premise simply doesn’t make sense.

I don’t follow this—the paper is only in DC so it can’t charge for the non-paper outside DC?

It’s worth noting that all unique visitors are not created equal. The Post’s most loyal readers, the ones that are really worth money, are going to be located disproportionately in the DC metro area. And that’s who the paper should be focusing on.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum. Tags: , , , ,