"Death Penalty" and decades of rebuilding (1987–2007)
Main article: Southern Methodist University football scandal
In 1987, SMU football became the first, and only, football program in collegiate athletic history to receive the "death penalty" for repeat violation of NCAA rules; that is, having a sports program fully terminated for a determined amount of time. SMU's football program was terminated for the 1987 season because the university was making approximately $61,000 in booster payments from 1985 to 1986. It later emerged that a slush fund had been used to pay players as early as the mid-1970s, and athletic officials had known about it as early as 1981.
SMU was eligible for the "death penalty" because it had been placed on probation in 1985 for recruiting violations. Since many potential student-athletes were poor, boosters would induce them to sign with SMU by offering them payments and expense coverage. Several key boosters and administration officials determined that it would not only be unethical to cut off those payments, but also potentially problematic as some boosters were contractually obligated to pay the athletes for the duration of their time at SMU. There was also the real potential of disgruntled football players "blowing the whistle" on SMU should the payments not continue. When the sanctions were handed down, SMU had three players – all seniors about to graduate – receiving payments. Not long afterward, SMU announced that its football team would stay shuttered for the 1988 season as well after school officials received indications that they wouldn't have enough experienced players to field a viable team,[10] as most of the team had left the university and transferred to other institutions. Forrest Gregg, an SMU alum who was the head coach of the Green Bay Packers, was hired in 1988 to help rebuild the team. The decimation of the program meant that Gregg was left with an undersized and underweight lineup.
The Mustangs struggled for 20 years to recover from the effects of the scandal. Coach Gregg compiled a 3–19 record in his two seasons. He moved on to be the SMU Athletic Director from 1990 through 1994. The program's chances of ever recovering were likely ruined by the collapse of the Southwest Conference after the 1995 season; SMU wound up in the WAC and later in Conference USA.
The Mustangs had three more head coaches and only one winning season through the completion of the 2007 season.