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Big-Bucks Donors Are Game-Changers

Philadelphia — Just 28 months ago, ice hockey was a successful but obscure club sport at Penn State. Its players shared ice time with broomball teams and its arena held slightly more than 1,000 fans, which hardly mattered since few ever came to hockey games.

Then Terry Pegula opened his wallet and, poof, humble hockey was magically transformed into a princely Division I program with a 6,000-seat, amenities-laden arena on the way.

On Saturday night, Penn State’s hockey team, 9-12 in its first Division I season, defeated Vermont, not at its cramped Ice Pavilion but in an NHL arena, the Wells Fargo Center in Philadelphia. Next season, the Nittany Lions will play in the new $89 million Pegula Ice Arena, an on-campus facility funded entirely by a gift from the natural-gas billionaire and equipped with sleek luxury suites, hydrotherapy and weight rooms, and two ice sheets.

The story of Pegula’s money and its role in the creation of big-time men’s and women’s hockey at Penn State is hardly unique in college sports, which is increasingly affected by this kind of checkbook enchantment.

In a constant quest for new revenue, athletic departments have stepped up the search for these megabuck Merlins who can make their alma maters’ deficits and losing records disappear with the stroke of a pen. It’s a process intensified by the ever-rising costs of competing and a decrease in public funding.

“These large gifts for athletics are fairly recent, and most come from people who are graduates of the schools who have a natural affinity for them,” said Al Checcio, a longtime Philadelphian who as Southern California’s senior vice president for university advancement is in the midst of a $6 billion fund-raising campaign, $500 million of which is earmarked for athletics.

“It’s my sense that they understand the importance athletics, like it or not, plays in the life of a university.”

While Pegula, a publicity-shy 1973 Penn State grad who also owns the Buffalo Sabres, has become Penn State’s benefactor, other ambitious sports schools have their own:

Though Nike founder Phil Knight apparently couldn’t dissuade Chip Kelly from departing Eugene for Philadelphia, his fortune and his hip athletics-gear company have transformed Oregon into perhaps the sexiest program in college sports.

T. Boone Pickens has donated at least $235 million to Oklahoma State, where, not surprisingly, the football stadium bears his name and the athletic director is a friend.

The deep pockets of Under Armour founder Kevin Plank, according to Forbes magazine, may have facilitated Maryland’s recent shift to the Big Ten, an ambitious move that cost Plank’s alma mater a $50 million departure fee from the Atlantic Coast Conference.

At Oregon, the reported $300 million Knight has contributed has sparked a complete reconstruction of facilities and attitudes for the once-lame Ducks. And the futuristic football uniforms Nike created for the school have helped make Oregon a national phenomenon.

“As a result of what Knight has done at Oregon, a lot of things that have happened there have enhanced Oregon’s brand nationally,” Checcio said. “Now more kids are applying. They’re getting a higher caliber of students applying. You even see Oregon shirts on the East Coast now.”

The story is similar at Oklahoma State, where Pickens, an avid sports fan who grew weary of his alma mater’s dismal showing, donated $70 million to athletics in 2003 and another $165 million three years later. It’s no surprise that the school in remote Stillwater now has facilities that rival any college’s — and a much better win-loss record.

Every school,” said Tom Drew, a North Carolina-based fund-raising consultant, “would love to have a T. Boone Pickens.”

Still, there are many, particularly on the academic side, who view the trend as potentially dangerous, who believe these multimillion dollar gifts invariably come with strings attached.

James Earl, the cofounder of the Coalition on Intercollegiate Athletics, said Knight, who reportedly can monitor Oregon’s in-game play-calling, “controlled the athletic department.”

ESPN has reported that Plank is “heavily involved behind the scenes with board members” at Maryland.

And while Pegula and his money have not yet been linked publicly to football or basketball at Penn State, they became an issue recently when he reportedly offered to intervene on behalf of the university’s efforts to keep football coach Bill O’Brien, who was briefly pursued for NFL head coaching positions in early January.

Just what kind of promises and influence these huge donations evoke remains unclear. Legally binding gift agreements ensure both the pledge and its material rewards — most often naming rights. While no one can quantify how much influence such contributions bring, the answer seems obvious.

“When you raise serious money from anybody, whether it’s for academics or athletics, people become involved in your program,” Checcio said.

“The people that make these transformational gifts, whether it’s for medicine or athletics, become partners with your institution. Nobody gives that money away and says, ‘Hey, have a blast. Go to it.’ ”

And so whenever there’s a major conference shift or coaching change at one of these schools, the names of Knight, Pickens, Plank, and, most recently, Pegula, are bound to arise. For good reason, said some college sports watchdogs.

“(Athletic directors) and presidents in need of money assume that the next big athletic donor will be different,” said Scott Kretchmar, a Penn State professor who was that school’s NCAA faculty representative for a decade. “But, in my experience, this is as naive as thinking that a high school recruit with a rap sheet the length of his arm is going to turn virtuous the second he arrives on a college campus. It doesn’t work that way. Money buys influence. The donors expect it.”

So far, Pegula’s gifts to Penn State — which now total at least $102 million — have been directed at hockey. However, during O’Brien’s recent flirtation with several NFL teams, including the Eagles, the businessman’s name and potential influence came up.

The Harrisburg Patriot News reported that Pegula had offered to donate $1.3 million toward O’Brien’s reworked salary, something O’Brien has denied.

Penn State trustee Anthony Lubrano, who made a multimillion-dollar donation to the construction of the baseball stadium there, suggested the donor instead let it be known that if money were going to lead O’Brien out of Happy Valley, he’d be willing to get involved.

“I don’t think Terry imposed his will,” Lubrano said. “I wasn’t there for the conversation, but it’s my understanding that he said that if it came down to a question of needing more money (to keep O’Brien there), he’d be prepared to donate more.”

Pegula, who rarely talks to the media, initially agreed to be interviewed for this story. But at the last minute, a Penn State fund-raiser issued a statement on his behalf.

“On the day his gift was announced in 2010, he referenced the biblical philosophy of ‘to whom much is given, much is required’ without seeking anything in return,” said Rodney P. Kirsch, senior vice president for development and alumni relations. “I have never found him to be interested in leveraging his generosity to wield power at Penn State.”

Pegula came to make his $89 million contribution — the largest single gift in the university’s history— after numerous conversations over a period of years with Joe Battista, a longtime coach when Penn State played club hockey and now, perhaps not coincidentally, a fund-raiser there.

The two men had many conversations about bringing Division I hockey to their alma mater. A longtime supporter of the hockey team, Pegula at one point toured other college hockey facilities with Battista and then-Penn State president Graham B. Spanier. Not long afterward, the 61-year-old, who lives in Boca Raton, Fla., decided to put his money where his heart was.

“I bawled my eyes out,” Battista said.

That process and the time it took, Checcio said, was typical of big contributors.

“People who make mega-gifts are almost always individuals who are already engaged with the institution,” said Checcio, who also raised money for Temple and his alma mater, Drexel. “They rarely helicopter in with eight- and nine-figure commitments. All have started making smaller gifts ... the cultivation or gestation period can take anywhere from one to three years, on average.”

Whether Pegula’s largesse eventually extends to other sports at Penn State, where a $60 million fine in the wake of the Jerry Sandusky scandal has cast a shadow over athletic finances, remains to be seen.

Perhaps, as has happened in at least one bizarre college fund-raising twist, he will even end up coaching.

At Coastal Carolina, the football coach is a retired Wall Street billionaire. That school is betting that Joe Moglia, who coached before he went into finance, will use his knowledge and his money to launch its 10-year-old program to the next level.

If Penn State, Oregon, Maryland, and Oklahoma State can find these super-donors, why can’t other schools? Sheer numbers, Checcio explained, could be part of the reason. All those schools are large public institutions that produce lots of graduates.

“If you look at Penn State, they’ve been mass-producing alumni for how many years now? Eventually these alums are finding their way into the executive suites of Fortune 500 companies,” Checcio said. “So their schools are raising money based on that. That’s how they’re able to expand the quality of their programs. In some ways it’s a bit of a disadvantage for smaller private schools to compete.”

Related

Letter: Those Deep-Pocketed Benefactors

Friday, January 25, 2013

To the Editor: I read with amusement the Jan. 23 article in the Valley News about “big-bucks donors” of athletic facilities at universities, focusing particularly on a large gift to Penn State by Terry Pegula to build a new hockey rink and jump-start the hockey program there. This phenomenon is by no means new, nor is it pernicious. Most of …