Pac-12 has least revenues and most expenses among Power 5 conferences. Commish asks, how about selling off 10 percent of the conference?
As long as Seattle-area college sports fans keep eyes on the Huskies’ success this season in football and men’s basketball, there’s not much urgency to ask about that smoke rising on the Pac-12 Conference horizon. Then again, the University of Washington is perhaps only a Jaylen Nowell ankle sprain or a torn labrum for Jacob Eason from feeling the heat like everyone else.
By now, the smoldering emergency is well-known: Several seasons of mediocrity in the revenue sports combined with an ill-conceived business model for the Pac-12 Networks has left the alleged Conference of Champions with the least revenues and the most operating expenses among the Power 5 conferences.
A partial result is the prospect next month of a single league entrant in the most important event on the sports calendar of the big-amusement schools: The NCAA men’s basketball tournament. The fact that the lone entrant may be Washington, back in the field for the first time since 2011, is solace only for the crowd one bus ride from Montlake.
While it’s a little difficult to draw a direct line between non-competitive revenues and blown free throws or dropped touchdown passes, there is no arguing some grim data points.
It’s been 15 years since the Pac-12 won a national football championship, longest drought among Power 5 conferences. The league has missed the most College Football Playoffs (three of five) among its peers, and was 3-4 in the bowl season after going 1-8 the year before, both the worst among the Power 5. Football attendance is at its lowest since 1982 (an average of 46,733).
A year ago, the league was out of the men’s hoops tourney after the first round for the first time in 32 years.
And the Pac-12 returns the least amount of media revenues (73 percent) to its members. That’s mostly due to the expensive commitment to televise all non-revenue sports to six regional mini-networks, despite drawing audiences mostly of relatives and pets.
Oh, one other expense: Commissioner Larry Scott’s salary of $4.8 million is way more than any of his peers. He must think he’s an MLB middle reliever, or some such exaltedness.
The data was compiled by CBSSports.com in an extensive story this week about the woes of the west. In an interview, Scott largely dismissed concerns that the Pac-12 was going Venezuela, saying the absence of competitive success was merely cyclical.
“If you’re going through a down cycle like I think we are now in football and basketball, people try to look for reasons,” Scott told CBS Sports. “I’ve been hearing that for 10 years. I’ve seen (down cycles) happen with the Big 12. I’ve seen it happen with the ACC. I’ve seen it happen with the SEC in basketball. I’ve seen it happen with the Big Ten. I think, in a way, it’s our turn.”
Even if that’s true, there’s no dispute that the weak TV revenues will continue, because the TV deal Scott made at the birth of the Pac-12 Networks with ESPN and Fox still has five years to run. Nor is Scott likely to add revenues from subscribers of DirecTV, the region’s largest satellite distributor that refuses to pay the Pac-12 ask.
But Scott believes the Pac-12 will be in good position after 2024 to feast on next-gen media revenues from streaming and other delivery innovations, such implantation of chips in our temples so we can hear 24/7 from Bill Walton, reciting the playlist of the Grateful Dead’s 1968 concert at the Fillmore.
The trick is getting to 2024 before Scott, and the university leaders who support his tenure, get run off the continent’s left edge by annoyed athletic departments, regents and fans.
So Scott has proposed a novel idea to the schools — selling a 10 percent stake in the conference business operations for $500 million.
While you were bringing home pallets of nachos for the Huskies in the Rose Bowl and the Seahawks in the playoffs, the Oregonian’s John Canzano on Dec. 29 broke the story of the ploy.
Called “Pac-12 Newco,” the plan was explained to presidents and chancellors at a mid-November meeting and was subsequently discussed in a conference call in December. Private investors would receive 10 percent equity in the newly formed entity in exchange for a $500 million investment, which could be distributed immediately to the schools.
The figure means that Scott has valued the Pac-12 media property at $5 billion. How he came to that figure when the Pac-12 has been losing cable subscribers, and its two glam schools, USC and UCLA, are having the worst combined time in 75 years, is hard to say. The Pac-12 distributed $31 million in media revenues the last fiscal year, $19 million less than the Big 10.
I keep imagining Scott sounding and acting like that annoying hump-day camel on the Geico TV commercial.
In this case, taking on private equity partners is a little like the casino advancing cash to a drunk sports gambler playing catch-up after a series of bad beats. It is unlikely to end well for the patron. The private-equity guys want to beat the rate of return available in the stock market, or they hold Scott by his ankles out of a hotel room window.
But who knows? Rights fees for all sports continue to go up, and the Pac-12 has a West Coast monopoly on this particular entertainment. So a burgeoning media powerhouse like Amazon might want to deliver free Kindles loaded with Pac-12 content to every person in China.
And unleashing Walton on the unsuspecting Chinese might be the best non-lethal weapon America has devised.