How much did member Pac-12 schools get from the Pac-12 Networks? Were the amounts equal? — @AZHawk4
A: Yes, the payouts are divided equally among the 12 schools after expenses, which are considerable.
According to financial data collected over the years by The Hotline, the Pac-12 Networks will have distributed an average of approximately $2.5 million annually to each school by the time the 12-year contract cycle ends in the summer of 2024.
That’s a vital piece in assessing the valuation of the Pac-12 during the media rights negotiations that are unfolding now and will make or break the conference.
Apologies, but here comes the math …
The Pac-12’s current 12-year agreement with Fox and ESPN carries an average annual value of $250 million. The vast majority — about 85% — is tied to the football inventory. That’s $212.5 million per year.
According to the term sheet, the two networks have the rights to 45 football games per year, including the conference championship. We don’t know how much the title game is worth, so for the sake of simplicity, let’s just split the $212.5 million evenly over 45 games.
That works out to an average of $4.72 million per football game on ESPN and Fox over the life of the 12-year contract.
However, another 36 football games — or 44.4% of the total owned by the conference — are broadcast by the Pac-12 Networks each season.
For those, the net revenue to the schools is … a pittance.
Again, the average annual payout to each campus from the Pac-12 Networks is about $2.5 million. With 12 schools, that works out to a nice round $30 million per year in the total amount distributed.
So the wholly-owned, Larry Scott-created media company generates about $30 million annually in profit and broadcasts 36 football games.
That’s $833,333 in real dollars for the schools per game.
So we’re left with the campuses receiving $4.72 million for each football game on ESPN and Fox and $833,333 for each game on the Pac-12 Networks.
(Note: We aren’t including the value of 68 basketball games on the Pac-12 Networks or the share of the Fox and ESPN revenue taken by the conference office to fund its annual operations. That skews the number, but not significantly.)
Granted, the weekly pick structure allows Fox and ESPN to broadcast the most valuable football games; USC-Notre Dame and Washington-Oregon are never on the Pac-12 Networks.
But you can see where we’re headed. By placing 400-something football games on the Pac-12 Networks over 12 years, instead of on ESPN and Fox, the conference has lost more than half a billion dollars over the contract cycle.
In other words: As the Pac-12 negotiates its new media contracts, it will include a huge package of undervalued football inventory. The $250 million in average annual value from the ESPN and Fox contract isn’t an entirely accurate baseline from which to project the Pac-12’s next media rights contract because of all the games stashed on the Pac-12 Networks that generated very little in real dollars for the schools.
Those games won’t be on the Pac-12 Networks in the next media agreement. They are part of the inventory available for purchase by whichever network(s) signs with the conference.
If you add the 36 football games on the Pac-12 Networks to the inventory pile and remove the cost to produce those games — that cost was carried by the schools — the real dollars returned to the campuses seemingly would increase at a substantially higher rate than the jump in total value of the contract.
In the past, the Pac-12 was trying to stop doing so many late games. Is it safe to assume that that won’t even be a talking point in these negotiations? — @UtesNRoses
A: The night games are perhaps the most valuable piece of the Pac-12’s media rights package.
In theory, it could offer weekly kickoffs at 7:30 p.m. Pacific on Friday and Saturday night for 13 weeks. That’s 26 games, with little or no competition, in primetime windows for the West Coast and Mountain Time Zone audiences.
We don’t know details, but it’s safe to assume the night broadcast slots are a central piece of the bidding process.
And yes, the Pac-12 approached its network partners years ago about reducing the load of night games. The response was, essentially: Fine, but then we will pay you less.
That was the end of the discussion.
Will the Big Ten give the remaining Pac-12 schools time to develop a plan forward? Or will it disrupt the conference by using the new media deal to poach a school or two before the ink is dry? — @EngelKRichard
A: From here, it appears the Big Ten is finished expanding … for now.
The Pac-12 schools must decide in the next few months whether or not to sign a grant-of-rights agreement. In that regard, Oregon, Washington and Stanford don’t appear to have much choice.
None of them want to join the Big 12; they would only make the move if enough Four Corners schools depart that the conference dissolves.
And in that case, they would probably beg the Big Ten for immediate membership.
Now that it looks like the Pac-12 is going to survive, don’t you think it makes sense for the conference to add two more members in the near future. Right now, I’d add San Diego State and go for Houston before they arrive in the Big 12 and get locked into an exit penalty. — Doug Ware
A: First, I wouldn’t assume the Pac-12 is going to survive. That’s the most likely short-term outcome, in our opinion, but it’s not a lock.
We view survival as a 4.5-point favorite over extinction. That’s anything but an overwhelming favorite.
If the conference holds together, there’s a reasonable chance it expands to 12 teams. Why? Because of inventory demands.
As noted above, one of the Pac-12’s chief selling points is the ability to provide inventory for the late TV broadcast windows on both Friday and Saturday.
To meet the inventory demands, it very well could need the additional games that the 11th and 12th teams would provide.
And if expansion is the decision, San Diego State stands as the obvious call.
Houston would be a first-rate addition, depending on availability. We aren’t privy to the documents signed by the university — and whether it would be subject to Big 12 exit fees.
Would per-team allocations increase without Oregon State or Washington State? Should the Pac-12 therefore consider negotiating its next media rights deal as an eight-team conference, or as a 10-team conference with San Diego State and another replacement? — @YoniCohen
A: We’re skeptical about a merger between the Pac-12 and Big 12 (even though it makes sense for both), but that’s the only way consolidation enters the realignment fray this year.
The Pac-12 isn’t booting Washington State and Oregon State if the other schools stick together. It wouldn’t make sense on multiple levels, starting with the need for inventory referenced above.
We’ve heard all about market size. Has anyone brought up market wealth? Seems like one clear difference between the Pac-12 and Big 12 schools is just sheer amount of money in many of the Pac-12 markets. —@blykmyk44
A: I’m not aware of the traditional TV networks having a valuation component for “market wealth,” but it could exist.
Surely, it would matter to a company like Amazon or Apple that’s trying to move its own merchandise during the game broadcast.
More broadly, market demographics absolutely matter to conferences. The Big Ten, for example, might be interested in Stanford or Cal because of the Bay Area media market, the access to Big Tech money and the number of Big Ten alumni in the region.
Wealth often tracks size: Bigger markets have larger business communities, which corresponds to cash.
I truly believe the North is going to be super competitive this year. It’s a pick ’em between Oregon State, Oregon, and Washington. Is the eventual Pac-12 championship game going to be a blowout? Is the South going to have the top-three teams? — @OhItsPM
A: Don’t forget: The North and South divisions are no more.
Starting this season, the Pac-12 standings will reflect a single 12-team league, with the top two teams (by winning percentage) advancing to the championship game.
But yes, it’s entirely possible that three teams formerly in the South (Utah, USC and UCLA) will be the best in the league.
How do you think the new Big 12 and new Pac-12 compare in hoops interest and performance? — @vakaviti
A: No comparison. The Big 12 is a vastly better basketball conference — arguably the best in the land these days with the past two national champions (Baylor and Kansas).
Aside from three phenomenal weeks in March ’21, the Pac-12 has struggled on the court relative to the other Power Six leagues.
And in two years, it’s losing the one true blue blood.
If Subway offered Washington a billion-dollar promotional deal but Kalen DeBoer had to coach each game in a sandwich outfit and the team had to become the Washington Meatball Marinaras, should they do it? — @Matt_Hartley23
A: No. The money would be nice, but the damage to the UW brand would be irreparable.
Forget realignment and think back to a simpler time, when a Pac-12/Big Ten alliance referred only to the Rose Bowl. What is the single best Pac-12 team that didn’t play in the Granddaddy of Them All? — @OllieVonDoof
A: If this is meant as a trick question, the answer is obvious: USC ’04.
The best team of the Pete Carroll era won the national championship with a blowout victory over Oklahoma … in the Orange Bowl. (The BCS system didn’t allow USC to play in Pasadena.)
If you’re asking about the best team from the pre-BCS/playoff era that didn’t qualify for the Rose Bowl, we’d have to give that some serious thought.
