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The Southern Methodist University football scandal (also known as Ponygate) was an incident in which the football program at Southern Methodist University was investigated and punished for massive violations of NCAA rules and regulations. The most serious violation was the maintenance of a slush fund used for "under the table" payments to players from the mid-1970s through 1986. This culminated in the NCAA handing down the so-called "death penalty" by canceling SMU's entire 1987 schedule. SMU was allowed to return for an abbreviated 1988 season, but opted to sit that season out as well after school officials determined it would be impossible to field a viable team.
The severity of the penalty left the SMU football program in ruin. The Mustangs had only one winning season over the next 20 years and failed to make another bowl game until 2009. To date, it is one of the most severe penalties ever imposed on a Division I program, and the only time the NCAA has canceled a football-playing school's entire season at any level.
The SMU Mustangs had won the 1935 national championship (as determined by the Dickinson System), 10 Southwest Conference titles, and had attended 11 bowl games. They also had numerous All-Americans including a Heisman Trophy winner (Doak Walker in 1949). From 1980 to 1984, SMU enjoyed its most successful era since the late 1940s and early 1950s. They posted a record of 45-5-1 and won three Southwest Conference titles. They nearly won their second national title in 1982, when they finished the season as the only undefeated team in the nation. However, the team lost its shot at a title when it settled for a tie against Arkansas in the last game of the season in order to lock up the conference title and a spot in the Cotton Bowl, rather than risk a two-point conversion that could have won the contest. For most of the first half of the 1980s, the Mustangs played at Texas Stadium, then the home of the NFL's Dallas Cowboys.
SMU was the second-smallest school in the Southwest Conference (only Rice was smaller) and one of the smallest in Division I-A, with a total enrollment of just over 9,000 students in 1986. From the 1950s onward, SMU found it difficult to compete against schools that were double (or more) its size. Prior to the 1980s, SMU had tallied only nine winning seasons since 1949. The effort to keep up with the bigger Southwest Conference schools resulted in SMU straying very close to the ethical line and in many cases going over it. While SMU was not the only SWC school to be sanctioned for recruiting violations— in fact, at one point five of the conference's nine member schools were on some form of probation— SMU's violations seemed to be the most egregious. According to the 2010 ESPN documentary film "Pony Excess", many of these violations took place with the full knowledge of school administrators.
As a result of their attempts to compete with the larger schools in the SWC, SMU's football program was under nearly constant scrutiny from the NCAA from 1974 onward. SMU was placed on probation five times between 1974 and 1985, and had been slapped with probation seven times overall—more than any other school.
The most recent probation came as the result of an investigation into the recruiting practices of several assistant coaches and team boosters. Sean Stopperich, an offensive lineman from Pennsylvania who was part of the 1983 recruiting class and who had initially given an oral commitment to the University of Pittsburgh Panthers, told investigators that he and his family had received several thousand dollars from SMU boosters and assistant coaches to renege on that commitment and sign with the Mustangs. Stopperich would later go on to drop out of SMU after suffering a series of injuries which ended his football career, as well as a desire to return home to the Pittsburgh area.
SMU, which had just come off of a season that saw them finish eighth in the country and win the Aloha Bowl against Notre Dame, was banned from bowl games for 1985 and 1986 and was also kicked off live television for 1986. It appeared that the sanctions had some effect on the Mustangs. They struggled to a 6-5 record in 1985 after entering the season ranked third in the AP Poll. Things didn't get much better in 1986, a season that saw the Mustangs lose four of their final five games after a 5-1 start which saw them ranked as high as #18. And even though SMU had already started to drop back, the bad situation was about to get much worse for the university.
In June 1986, John Sparks, a producer at the Dallas-Fort Worth Metroplex's ABC affiliate, WFAA-TV, received a tip about further wrongdoing at SMU. Sparks' investigation eventually led him to David Stanley, a member of the same recruiting class that included Sean Stopperich. Stanley had played linebacker for SMU during the 1983 and 1984 seasons, but due to a substance abuse problem he was kicked off the team. Stanley tried to convince SMU to allow him to finish his degree but university administrators ruled against him and his scholarship was rescinded.
Sparks and WFAA's sports director, Dale Hansen, decided to follow up on the tip and brought the former Mustang in to speak with them regarding this newest set of allegations of impropriety by SMU. Stanley claimed that SMU athletic officials paid him $25,000 to sign with SMU in 1983 and continued to pay him monthly while he played for the Mustangs. If these claims were proven true, this would have meant that SMU was still paying players after assuring the NCAA that payments had stopped.
More ominously, a new set of rules had been put in place that would have jeopardized the future of the program. Earlier in 1986 the NCAA had called an emergency meeting in New Orleans to deal with a rash of violations that had been uncovered in the late 1970s and early 1980s. At that meeting, the NCAA Council implemented several new rules to combat the problem. Among the decisions made at that meeting was to reinforce the NCAA's power to shut down athletic programs found guilty of egregious violations--a power popularly known as "the death penalty." The new bylaw stated that if a school had been found guilty of two major violations within five years, it could be barred from competing in the sport involved in the second violation for up to two years. In cases where the so-called "death penalty" was warranted for a so-called "repeat violator," the NCAA now had to either hand down the penalty or explain why it chose not to do so. (It should be noted that three SWC schools--SMU, Houston, and Texas--voted against the new guidelines; at the time Houston, like SMU, was being investigated for paying players and Texas had been penalized twice for major violations in the previous decade.)
Any investigation of SMU carried considerable risk, as the school's alumni had long dominated Dallas' business and social scene. For example, the Dallas Times Herald suffered serious losses in advertising revenue when it broke the Stopperich story. At that time, the Times Herald was already struggling to maintain competition with its rival paper, The Dallas Morning News, and the backlash cost it even more advertising revenue. Though the paper was eventually vindicated when SMU was placed on probation, the lost revenue never returned, and eventually led to the paper's folding after A.H. Belo Corporation, owner of both the Morning News and WFAA, purchased it in 1991.
Had SMU's alumni chose to retaliate in the same manner as they had with the Times Herald, Belo risked losing twice as much advertising revenue, if not more, due to the dual ownership of the newspaper and television station. Sparks and Hansen were well aware of this. However, they pressed on, as they had concrete evidence of further wrongdoing. 
On October 27, Hansen confronted athletic director Bob Hitch, head coach Bobby Collins and recruiting coordinator Henry Lee Parker with Stanley's allegations. Hitch, Collins, and Parker denied everything, as Hansen had expected. Hansen then produced several envelopes that had been allegedly sent to Stanley and his family with money inside. One of the envelopes was particularly implicating as it had come directly from the recruiting office with Parker's initials, HLP, printed in black ink on the upper left corner. When Hansen showed Parker the envelope he initially said it was sent by him, but after a second Parker paused to put his reading glasses on and perused the envelope again. This time he backtracked, claiming that the handwriting on the envelope was not his and that someone else had printed his initials on it. Hansen later said this was the moment where he "had him", as he had not specified to Parker what would have been in the envelope and therefore had no need to cover his tracks as he did. To confirm that Parker was lying, Hansen consulted a handwriting expert. After showing her a sample of Parker's writing and the envelope, the expert said that there was no doubt that the initials were written by Parker. She further stated she would affirm it in court.
On November 12, 1986, Hansen's report was aired as part of a 40-minute post-news special on WFAA. The report also revealed that Stanley had also talked to the NCAA, and that an NCAA investigation was well under way.
Two days later, the Morning News revealed that starting tight end Albert Reese was living rent-free in a Dallas apartment. The rent was being paid by George Owen, one of the boosters who had been banned from the athletic program for his role in the events leading up to the 1985 probation. Reese was suspended for the last two games of the season pending an investigation.
On November 19, 1986, 200 professors submitted a petition calling for the end of "quasi-professional athletics" at SMU—including a ban on athletic scholarships. SMU Board of Governors Chairman Bill Clements, who was about to leave SMU to begin a second non-consecutive term as Governor of Texas (having been defeated by Mark White for reelection in 1982), announced that the school would tighten its admissions standards for all athletes. He also said that school officials would drop football entirely if necessary to restore the school's integrity.
Eventually, the NCAA investigation revealed that in 1985 and 1986, 13 players had been paid a total of $61,000 from a slush fund provided by a booster. Payments ranged from $50 to $725 per month and had started only a month after SMU had been handed its latest probation. The Times Herald later identified the booster as Dallas real-estate developer Sherwood Blount, Jr., who played for the Mustangs from 1969 to 1971 (though according to Parker, other boosters were almost certainly involved). The players had received a total of $47,000 during the 1985-86 school year. Eight of those players were paid an additional $14,000 from September to December 1986. The slush fund was due to be discontinued when the 13 players had all left the school. These payments were made with the full knowledge and approval of athletic department staff. According to the Morning News, Hitch knew about the existence of a slush fund as early as 1981 and was involved in the decision to continue the payments even after SMU was placed on probation in 1985. The Morning News also said Collins knew certain players were being paid, but did not know who they were.
Two months after being sworn in as governor, Clements admitted that he had learned about the slush fund in 1984. An investigation by the board of governors revealed players had been paid to play since the mid-1970s. According to Clements, the board secretly agreed to phase out the fund at the end of the 1986 season, since the members felt duty-bound to honor previous commitments to players who had already been promised payments. A 1987 investigation by the College of Bishops of the United Methodist Church revealed that Clements had met with Hitch in 1985, and the two agreed that despite the probation, the payments had to continue because the football program had "a payroll to meet." 
At least two NFL players were identified as receiving payments—New England Patriots running back Reggie Dupard and Tampa Bay Buccaneers cornerback Rod Jones. A third player, wide receiver Ron Morris, was drafted by the Chicago Bears. By the end of the 1986 season, according to the Times Herald, only three of the 13 players still had eligibility remaining.
Soon afterward, school president L. Donald Shields resigned; Hitch and Collins followed suit a few days later. According to the United Methodist Church investigation, Hitch, Collins and Parker were each paid $850,000 to maintain their silence on the matter.
The nature of the violations led to speculation about the possibility of SMU receiving the "death penalty." The revelations came at a time of great concern over the integrity of college sports.
On February 6, 1987, SMU's faculty athletics representative, religious studies professor Lonnie Kliever, delivered a report to the NCAA which recommended an extension of the school's probation an additional four years, until 1990. During this period, the school would be allowed to hire only six assistant coaches, and only four of them would be allowed to participate in off-campus recruiting. It also recommended that the school's ban from bowl games and live TV be extended until 1989. During those two seasons, SMU proposed dropping two non-conference games from its schedule. SMU's cooperation so impressed the enforcement staff that it recommended that the Infractions Committee accept SMU's proposed penalties, with the exception of a ban on non-conference play for two years.
The committee, however, decided to take a different track. On February 25, the committee voted unanimously to cancel SMU's entire 1987 football season and all four of SMU's scheduled home games in 1988. The committee praised SMU for cooperating with the investigation, saying that Kliever's efforts "went far beyond what could fairly be expected of a single faculty athletics representative." It also praised SMU's stated intent to operate within the rules when it returned to the field. This cooperation saved SMU from the full "death penalty"; had this happened, SMU would have had its football program shut down until 1989 and would have also lost its right to vote at NCAA conventions until 1990. However, it said that it felt compelled to impose the "death penalty" in order to "eliminate a program that was built on a legacy of wrongdoing, deceit and rule violations." SMU's record, the committee said, was "nothing short of abysmal," and the school had made no effort to reform itself over the past decade. The committee also found that SMU had gained a "great competitive advantage" over its opponents as a result of its cheating, and the "death penalty" was one way of rectifying this advantage.
David Berst, the chairman of the Infractions Committee, said years later that the Mustang football program was so riddled with corruption that "there simply didn't seem to be any options left." Several members of the committee that imposed the sanctions later said that when the NCAA first enacted the "repeat violator" rules, it never anticipated that there would ever be a situation meriting a "death penalty." However, they said their investigation of SMU revealed a program completely out of control. The director of enforcement for the NCAA at the time was Dan Beebe.
The penalties handed down, in detail:
As a result of the "death penalty," a full release was granted to every player on the team, allowing them to transfer to another school without losing any eligibility; most immediately announced they were considering going elsewhere. As soon as the NCAA announced its decision, hundreds of recruiters from 80 universities—including such powerhouses as Penn State, Oklahoma, and Alabama—traveled to SMU in hopes of persuading players to transfer to their schools.
Combined with the year-plus ban on off-campus recruiting, this led to speculation that SMU's football team would stay shuttered in 1988 as well. Indeed, as early as February 27—two days after the sanctions were announced—school officials expressed doubt that SMU would have enough players to field a viable team in 1988. That day, acting athletic director Dudley Parker said that the football team would not return in 1988 "unless we can really have a team" rather than merely "a bunch of youngsters (who) aren't capable of competing."
On April 11, 1987, SMU formally canceled the 1988 season. Acting president William Stallcup said that under the circumstances, SMU could not possibly field a competitive team in 1988. The only way SMU could have returned that year, Stallcup said, was with "walk-ons and only a handful of scholarship athletes and continuing players." Under these circumstances, Stallcup and other officials felt the players would have faced "an undue risk of serious injury." By this time, more than half of the Mustangs' scholarship players had transferred to other schools. Also, according to Southwest Conference commissioner Fred Jacoby, there would not have been nearly enough time to find a coach, and the school still did not have a permanent replacement for Hitch.
SMU returned to football in 1989 under coach Forrest Gregg, a former Hall of Fame lineman with the NFL's Green Bay Packers who had been a star at SMU in the early 1950s. He was hired in the spring of 1988 and inherited a team made up mostly of freshmen and walk-ons. Gregg's new charges were mostly undersized and underweight; he was taller and heavier than all but a few of the players on the 70-man squad. The new squad was particularly short on offensive linemen; Gregg had to make several prospective wide receivers bulk up and move to the line. By nearly all accounts, it would have been unthinkable for SMU to have allowed such a roster to play a competitive schedule in 1988.
Games were moved to Ownby Stadium, a 23,000-seat on-campus facility. It had to be heavily renovated to meet Division I-A standards; SMU had not played there regularly since 1947 and had not played any games on campus at all since 1948. The Mustangs played there until 1994, when they moved to the Cotton Bowl, the scene of SMU's first glory era in the 1940s and 1950s. Since 2000, the Mustangs have played at Gerald J. Ford Stadium, which was built at the location of the razed Ownby Stadium.
The scandal devastated what had consistently been a top 20-ranked team that had recently contended for the national championship. SMU's players were younger, smaller, and less experienced than their opponents; one team captain later stated that he questioned whether some of his teammates had played high school football. The new team was, as the Associated Press later reported, "scared, almost terrified" to leave the locker room to play number one-ranked Notre Dame on November 11, 1989. They lost that game 59-6, although Notre Dame coach Lou Holtz reportedly went easy on them. As bad as that loss was, it was better than the Mustangs' 95-21 thumping at the hands of Houston several weeks earlier--the second-worst loss in school history. Eventual Heisman Trophy winner Andre Ware threw six touchdown passes against SMU in the first half, and David Klingler added four more in the second half even with the game long out of reach. Gregg was so disgusted that he refused to shake Houston coach Jack Pardee's hand after the game. Thirteen players needed knee surgery after the 1989 season compared to the normal three or four. Gregg, who left coaching to become SMU's athletic director in 1991, said years later, "I never coached a group of kids that had more courage. They thought that they could play with anyone. They were quality people. It was one of the most pleasurable experiences in my football life. Period."
Next to the cancellation of two seasons, the most severe sanction in the long term was the loss of 55 scholarships over four years. As a result, the Mustangs did not have a full complement of scholarships until 1992, and it was another year before they fielded a team entirely made up of players unaffected by the scandal. Additionally, in the wake of the scandal, school officials opted to significantly increase the admissions standards for prospective athletes, effectively removing them from contention for the kinds of players they attracted in the 1980s. Since 1989, SMU has had an overall record of 91-193-3 (.329), a regular season record of 2-68-0 (.029) on the road against teams that went on to finish their seasons with winning records, and a regular season record of 2-35-1 (.056) against top-25 ranked opponents.
Clements apologized for his role in continuing the payments in March 1987. He said that the board had "reluctantly and uncomfortably" decided to continue the payments, feeling it had to honor previous commitments. However, he said, in hindsight "we should have stopped (the payments) immediately" rather than merely phase the fund out. He faced calls for his impeachment as a result of admitting his role in the payments; two state legislators argued that he would have never been elected had he honestly addressed his role in the scandal. While none of these efforts materialized, the scandal effectively ended Clements' political career; he did not run for re-election in 1990.
Collins was not sanctioned by the NCAA for any role in the events leading up to the "death penalty," though the final report criticized him for not providing a convincing explanation for why players were still being paid after the school assured the NCAA that the payments had stopped. Nonetheless, his reputation was ruined. While he was a finalist for an opening at Mississippi State in 1990 (which eventually went to Jackie Sherrill), he has not returned to the collegiate ranks in any capacity since leaving SMU.
The Southwest Conference suffered greatly as a result of the scandal. It already had a dubious reputation with the number of NCAA violations at its member schools (at one point, only three of its nine members - Arkansas, Baylor and Rice - were not on probation), and the discovery of the scandal was a blow from which the conference never recovered. The SWC dissolved in 1996, and SMU moved initially to the Western Athletic Conference along with former SWC rival TCU. The Mustangs eventually transferred to Conference USA along with Rice in 2005, joining former SWC rival and C-USA charter member Houston, and later moved to the American Athletic Conference with several other C-USA schools including Houston. The team continues to compete in the Division I Football Bowl Subdivision despite having an undergraduate enrollment of about 6,000 students—one of the smallest in the division. 
Prior to joining Conference USA, SMU had only one winning season since returning from the "death penalty," in 1997. In 2009, the Mustangs made their first bowl appearance since 1984, a 45-10 victory over Nevada in the Hawaiʻi Bowl. They succeeded in winning the C-USA West Division in 2010, giving them their first shot at winning a conference since 1984, but they lost in the Conference USA Championship to UCF. They did receive a second consecutive bowl bid, however. SMU was invited to participate in that year's Armed Forces Bowl to face Army in what amounted to another home game for SMU: because of construction at the game's primary site, Amon G. Carter Stadium in Fort Worth, the game was held at SMU's Gerald J. Ford Stadium. They would end losing this game despite playing it on home turf with a score of 16-14. In 2011, the Mustangs were invited to the BBVA Compass Bowl in Birmingham, Alabama—the first time they'd made three consecutive bowl appearances since the glory years of the early 1980s. The game was played on January 7, 2012, the first January bowl game for SMU since their appearance in the Cotton Bowl in 1983. By coincidence, they played Pittsburgh, the team they had defeated in that Cotton Bowl game, in the BBVA Compass Bowl and defeated them 28-6 for their second bowl win in three seasons. They moved to the American Athletic Conference in 2013.
In November 1999, twelve years after the NCAA's death penalty to SMU football, The Dallas Morning News reported on a possible academic fraud scandal involving SMU football. Former SMU football player Corlin Donaldson alleged that defensive line coach Steve Malin paid another person $100 to take Donaldson's ACT exam in 1998 so that Donaldson would be eligible to attend SMU. Malin, who had been suspended since August, was fired on December 8, 1999. On December 13, 2000, the NCAA placed SMU on two years' probation and vacated ten games from SMU's 1998 season in which Donaldson played, which reduced SMU's record to 1-1 for 1998. SMU's 2005 media guide indicates that the NCAA vacated the first ten games of the 1998 season. The NCAA reported that its infractions committee "concluded that the assistant football coach [Malin] initially suggested that the prospective student-athlete [Donaldson] should participate in academic fraud, actively assisted in the initial fraudulent ACT, had actual knowledge of the fraud in the second ACT and finally, had reason to know that the prospect, after enrolling at the university and becoming a student-athlete, was ineligible to compete by reason of the academic fraud." The NCAA also discovered rules violations regarding recruiting and tryouts dating back to 1995. Additionally, the NCAA extended several self-imposed sanctions that SMU made on coaches' recruiting and official campus visits by high school recruits.
The far-reaching effects that resulted from enacting the "death penalty" on SMU has reportedly made the NCAA reluctant to issue another one. Since 1987, 31 schools have committed two major violations within a five-year period, thus making them eligible for the "death penalty." However, the NCAA has seriously considered shutting down a Division I sport only three times since then—against Kentucky men's basketball in 1989, Penn State football in 2012 and Texas Southern University football and men's basketball in 2012. It has actually handed down a "death penalty" only twice, both against smaller schools—Division II Morehouse College men's soccer in 2003 and Division III MacMurray College men's tennis in 2005.
SMU taught the committee that the death penalty is too much like the nuclear bomb. It's like what happened after we dropped the (atom) bomb in World War II. The results were so catastrophic that now we'll do anything to avoid dropping another one.
Despite the NCAA's apparent wariness about imposing such an extreme sanction, it has indicated that the SMU case is its standard for imposing it. For instance, in its investigation of Baylor basketball, the NCAA deemed Baylor's violations to be as serious as those SMU had engaged in almost 20 years earlier. However, it praised Baylor for taking swift corrective action, including forcing the resignation of coach Dave Bliss. According to the committee, Baylor's actions stood in marked contrast to SMU's behavior; as mentioned above, SMU officials knew serious violations were occurring and did nothing to stop them. Bliss was coach at SMU at the same time as the football scandal. Baylor did receive what amounted to a half-season death penalty - the cancellation of its non-conference games for the 2005-2006 season.
Further supporting this, the NCAA handed down a "death penalty" to Morehouse in 2003 for what it deemed "a complete failure" to comply with NCAA rules and regulations, even though it was Morehouse's first major infractions case.
The NCAA seemed to underline this even further in its 2012 announcement of sanctions against Penn State for school officials' cover-up of former defensive coordinator Jerry Sandusky's rampant abuse of children. In a sweeping consent decree implementing the sanctions, the NCAA stated that the "death penalty" was primarily reserved for repeat violators that had neither cooperated with the NCAA nor taken any corrective measures. Although there had been serious discussion about imposing a death penalty on Penn State without any preliminaries, the NCAA ultimately decided against it because the school took swift corrective action once the scandal broke out in full, including firing head coach Joe Paterno and forcing the resignation of president Graham Spanier.
The 1991 film Necessary Roughness touches on an up-and-coming season at the fictional higher learning institution of Texas State University and its football team nicknamed the Fightin' Armadillos. (At the time the film was made, there was no Texas State University, but in 2003, Southwest Texas State University changed its name to Texas State University, nicknamed the Bobcats, which coincidentally was the "season opener" opponent of the fictional Texas State Armadillos). Texas State's predicament—they are forced to start the season with a host of new coaches and players after the previous staff and players were removed after a scandal—is based on the "death penalty" handed out to the Southern Methodist University football team by the NCAA in 1987 for team violations very similar to the ones that the fictional Texas State is accused of.
As noted above, ESPN's 30 for 30 documentary series profiled the SMU football scandal in one of its productions. Pony Exce$$ (purposely spelled with dollar signs) was the thirtieth and last of the original series, airing on December 11, 2010. Among those who were interviewed for the program were Verne Lundquist, a Texas native who grew up during the Doak Walker era at SMU; Ron Meyer, who was the team's head coach through the first five years of its run, and his assistant coach Steve Endicott; then-KRLD radio reporters Chuck Cooperstein and Brad Sham, who also was the station's sports director; Skip Bayless, who covered SMU during this era for both The Dallas Morning News and Dallas Times Herald; Dallas radio hosts Norm Hitzges and Randy Galloway, the latter of whom was writing for the Morning News at the time; and Dale Hansen, who as noted above broke the story of David Stanley's allegations. The documentary was narrated by Patrick Duffy, who had starred in the television series Dallas during this time. The program also included interviews with several former SMU boosters.
In addition to the media personalities, former players Eric Dickerson, Craig James, David Richards, Bobby Leach, Lance McIlhenny, Harvey Armstrong, and Rod Jones were also interviewed for the program as was David Stanley's mother and Vinita Lee Piper, who was Stanley's fiancee at the time of his death in 2005 from his continued substance abuse issues. The film portrayed Stanley as a loose cannon and showed some instances where he committed personal fouls for late hits. Dickerson in particular was harshly critical of Stanley, due to an incident at an Italian restaurant in 1983; the university had asked Dickerson, who was starting his rookie season with the Los Angeles Rams, to come and meet with several incoming freshmen. After Stanley made a wisecrack about being bigger than him Dickerson responded by angrily confronting him, calling him a "motherfucker" and threatening him with bodily harm. He then strongly advised the coaches and recruiters not to sign Stanley, calling him "bad news".
It was noted in the review of Pony Exce$$ written by The Dallas Morning News reporter Barry Horn that Thaddeus Matula, himself an SMU alum, tried to reach out to both former coach Bobby Collins and booster Sherwood Blount for interviews but both refused to speak to Matula. This did not stop Matula from featuring them in the film.