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<div class="timestamp">July 14, 2012</div>
<h1>Paterno Won Sweeter Deal Even as Scandal Played Out</h1>
<h6 class="byline">By
<span>
<a href="http://topics.nytimes.com/top/reference/timestopics/people/b/jo_becker/index.html" rel="author" title="More Articles by JO BECKER">JO BECKER</a></span></h6>
<div id="articleBody">
<p>
In January 2011, <a href="http://topics.nytimes.com/top/reference/timestopics/people/p/joe_paterno/index.html?inline=nyt-per" title="More articles about Joe Paterno." class="meta-per">Joe Paterno</a> learned prosecutors were investigating his longtime assistant coach <a href="http://topics.nytimes.com/top/reference/timestopics/people/s/jerry_sandusky/index.html?inline=nyt-per" title="More articles about Jerry Sandusky." class="meta-per">Jerry Sandusky</a>
for sexually assaulting young boys. Soon, Mr. Paterno had testified
before a grand jury, and the rough outlines of what would become a giant
scandal had been published in a local newspaper. </p>
<p>
That same month, Mr. Paterno, the football coach at <a href="http://topics.nytimes.com/top/reference/timestopics/organizations/p/pennsylvania_state_university/index.html?inline=nyt-org" title="More articles about Pennsylvania State University" class="meta-org">Penn State</a>,
began negotiating with his superiors to amend his contract, with the
timing something of a surprise because the contract was not set to
expire until the end of 2012, according to university documents and
people with knowledge of the discussions. By August, Mr. Paterno and the
university’s president, both of whom were by then embroiled in the
Sandusky investigation, had reached an agreement. </p>
<p>
Mr. Paterno was to be paid $3 million at the end of the 2011 season if
he agreed it would be his last. Interest-free loans totaling $350,000
that the university had made to Mr. Paterno over the years would be
forgiven as part of the retirement package. He would also have the use
of the university’s private plane and a luxury box at Beaver Stadium for
him and his family to use over the next 25 years. </p>
<p>
The university’s full board of trustees was kept in the dark about the
arrangement until November, when Mr. Sandusky was arrested and the
contract arrangements, along with so much else at Penn State, were
upended. Mr. Paterno was fired, two of the university’s top officials
were indicted in connection with the scandal, and the trustees, who held
Mr. Paterno’s financial fate in their hands, came under verbal assault
from the coach’s angry supporters. </p>
<p>
Board members who raised questions about whether the university ought to
go forward with the payments were quickly shut down, according to two
people with direct knowledge of the negotiations. </p>
<p>
In the end, the board of trustees — bombarded with hate mail and
threatened with a defamation lawsuit by Mr. Paterno’s family — gave the
family virtually everything it wanted, with a package worth roughly $5.5
million. Documents show that the board even tossed in some extras that
the family demanded, like the use of specialized hydrotherapy massage
equipment for Mr. Paterno’s wife at the university’s Lasch Building,
where Mr. Sandusky had molested a number of his victims. </p>
<p>
The details of Mr. Paterno and his family’s fight for money seem to
deepen one of the lasting truths of the Sandusky scandal: the
significant power that Mr. Paterno exerted on the state institution, its
officials, its alumni and its purse strings. </p>
<p>
Since Mr. Paterno’s death in January, Mr. Paterno’s family, lawyers and
publicists have mounted an aggressive campaign to protect his legacy.
The family and its lawyers have hammered the university’s board of
trustees, accusing members of attempting to deflect blame onto a dying
Mr. Paterno. This week, they angrily disputed the conclusions of an
independent investigation that asserted Mr. Paterno and other top
university officials protected a serial predator in order to “avoid the
consequences of bad publicity” for the university, its football program
and its coach’s reputation. </p>
<p>
On Friday, Wick Sollers, a lawyer for Mr. Paterno and his family, said
that it was Penn State that last summer proposed the lucrative
retirement package, and that many of the aspects of the proposal — use
of the plane, the luxury box — had existed in prior contracts. </p>
<p>
Information about the salary paid to Mr. Paterno, one of the longest
serving and most successful college football coaches in history, had for
many years been hard to come by. In recent years, though, it became
fairly common knowledge that he earned about $1 million annually, not
counting his television deals and his contracts with shoe and apparel
companies. </p>
<p>
But speculation about just how long he was going to remain the
well-compensated coach of Penn State had been going on for a decade or
more. Mr. Paterno survived an attempt to force him into retirement in
2004, and before the Sandusky revelations, his most recent deal ran
through the end of 2012. </p>
<p>
According to university records, Mr. Paterno first expressed a desire to
revisit his contract in January 2011. It was very early in that month
that he learned he had been subpoenaed to testify before the Sandusky
grand jury. </p>
<p>
But it was not until summer — after Mr. Paterno, the university
president and two other senior officials at the university had all
testified before the Sandusky grand jury — that the idea that Mr.
Paterno might retire in exchange for a multimillion-dollar payout gained
traction. </p>
<p>
By August, a deal had effectively been reached, though it and the idea
that Mr. Paterno might make 2011 his last season had not been announced
at the time. Details of the agreement were known to a handful of board
members but not shared with the full board, according to people with
knowledge of the events. </p>
<p>
On Nov. 5, 2011, Mr. Sandusky was arrested, and two Penn State
administrators — men who were Mr. Paterno’s superiors — were indicted on
charges of failing to report to the authorities a 2001 allegation that
Mr. Sandusky had attacked a young boy in the football building’s
showers. </p>
<p>
Quickly, it became clear that Mr. Paterno, too, had failed to go to the
authorities or even to confront Mr. Sandusky after he had been told in
person of the episode. The prospect that Mr. Paterno, a revered figure,
might be fired by the board of trustees was suddenly real. </p>
<p>
Mr. Paterno quickly issued a statement saying, in effect, that the board
need not act, that he would resign at the end of the season. Neither he
nor the university revealed that he had effectively agreed to do so
already, in return for an expensive financial package. </p>
<p>
The board fired him anyway, a decision that caused rioting and led to an
angry and often very personal backlash against the trustees, but it
agreed to honor his contract. It was then that the full board came to
find out what the university was obligated to pay Mr. Paterno. </p>
<p>
Over the ensuing months, as revelations about the role Mr. Paterno and
other university officials played in the scandal mounted, a schism
developed among the board members, according to several people with
knowledge of the events. </p>
<p>
There were some who argued that it was unseemly to pay the remainder of
the money and other perks owed to Mr. Paterno, according to several
people with knowledge of the discussions. They wondered whether, given
Mr. Paterno’s failings, it might be possible to nullify the contract, or
at least renegotiate it and reduce the payout, the people said. </p>
<p>
Others worried about the hostility they would face if they tried to
strip Mr. Paterno, still beloved in many quarters of the campus, of
money that he was contractually owed — a prospect that grew even more
worrisome after he died on Jan. 22 this year. During a conference call,
one board member worried aloud that failure to make good on what was
owed to the Paterno estate could lead to another “reign of terror” by
Mr. Paterno’s supporters, according to a person who was on the call.
</p>
<p>
With rumblings that the Paterno family was thinking of suing the board
of trustees for defamation, the board dispatched its lawyer to negotiate
the final payments. All the board wanted in return was a release
protecting the university from such a lawsuit. </p>
<p>
The Paternos refused. Mr. Sollers said in his statement that “the
retention of their legal rights in a case of this magnitude and
complexity is customary and appropriate.” </p>
<p>
The board of trustees ultimately agreed to make good on the full package
anyhow, and in April paid what was owed to the Paternos. Additional
demands, like the desire by Mr. Paterno’s wife to make use of the
athletic department’s hydrotherapy facilities, were met. The board did
draw the line at the family’s request to use the university’s corporate
jet, arguing that the contract limited that use to the coach himself.
And it refused the family’s demand to retain use of the stadium box next
to the university president’s, the one reserved for the head coach,
offering the family the choice of two other suites on a different floor.
</p>
<p>
Still, Frank T. Guadagnino, a lawyer hired by the board in November to
handle a variety of aspects of the scandal, suggested that the board
felt it did not have much maneuvering room when it came to the
discussions with the Paterno family. </p>
<p>
“We were providing for payments due under the contract,” he said in an
interview Friday. “So we weren’t really negotiating.” </p>
<p>
He added that, given revelations in the independent report released this
week that suggest that Mr. Paterno knew about allegations of child
abuse involving Mr. Sandusky as far back as 1998, the question over
whether the university could rightfully renege on paying the Paterno
family what was owed under the August amendments was “complicated,” and
one that “we haven’t looked at.” </p>
<p>
At a board of trustees news conference Friday, Karen B. Peetz, the
board’s chairwoman, made clear that the issue would not be revisited.
“Contracts are contracts,” she said. </p>
<div class="authorIdentification">
<p>Tim Rohan contributed reporting.</p> </div>
<div class="articleCorrection">
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