“And it hasn’t panned out anywhere near where they thought.”

Let me introduce you to the living embodiment of Gordon Gekko being full of shit.  Ladies and gentlemen, I give you the Pac-12.

The conference has never disclosed the financial guidance given to the campuses in 2011-12, during the run-up to the launch of the networks.

Officially, the schools were advised to avoid budgeting for a specific revenue amount and that in an extreme, worst-case scenario, the networks would still manage to break even.

However, in a pre-launch presentation attended by athletic directors, Scott dazzled the room by providing three ranges of annual payouts (once the networks had exited the start-up phase).

According to a source who attended the presentation, those payout ranges were:

High end: $7 million-to-$10 million per school per year

Middle: $5 million-to-$7 million per school per year

Low end: $3 million-to-$5 million per school per year.

When asked about that guidance, former Washington State athletic director Bill Moos said he didn’t recall the exact figures but remembered vividly the reaction in the room.

“We were all giddy,’’ Moos said. “And we wouldn’t have been a giddy over $2 million (per year).

“We were just coming off the biggest Tier 1 deal in the history off college sports” — the $3 billion agreement with ESPN and Fox — “and everybody was jumping up and down. (Scott) had just walked the walk, so why shouldn’t we believe him?”

The presidents and chancellors were all in with Scott, to the point that his annual compensation of $4.8 million — he’s the highest-paid commissioner in collegiate athletics — is based on his dual roles as conference commissioner and media executive.

(Last fall, during his court testimony in a high-profile lawsuit against the NCAA, Scott explained: “An important component of determining my compensation is based on a unique dual role that I have serving as commissioner of the conference, but also executive chairman of a media company that’s wholly owned by our 12 schools where we’re unique in that regard.”)

But after six payout cycles, the networks have yet to even hit the low end of the expected range, according to financial information obtained by the Hotline.

It’s not just that the revenue stream has come up woefully short.  Schools have also had to spend money to reclaim broadcast rights.

The Pac-12 Networks would not exist without an inventory of content, without the games themselves.

But in order to acquire that inventory, the conference needed each athletic department to buy back the TV rights to local football and basketball broadcasts — the games not shown nationally on ABC or ESPN — from its sponsorship and marketing partner.

Once all the local rights had been repurchased from the likes of IMG and Learfield, they were pooled together to form the content backbone of the Pac-12 Networks…

Oregon State must compensate Learfield $1 million annually through 2022 for the repurchase of its local TV rights.

Carve $6 million out of OSU’s total payout thus far from the Pac-12 Networks, and the Beavers are left with an average of $616,000 per year in net distributions[Emphasis added.]

Now that is one helluva deal, my friends.  And don’t think Larry doesn’t know what a load of swill he sold his presidents.

Details of the networks’ financial performance are closely guarded, with only the total income provided on the federal tax returns. (In the 2017 fiscal year, the listed income was $127,850,701.)

The conference does not separate Pac-12 Networks distributions from the larger annual payouts to the schools, which include revenue from Fox and ESPN, March Madness and the football postseason — it does not cut a separate check, so to speak.

Nor does the conference distribute financial details to the schools, thereby avoiding the potential for those details to be subject to public records requests.

Instead, the annual payout figures are made available for temporary viewing by campus financial officers on a secure website, according to multiple sources.

“It’s very frustrating,’’ one administrator said.

Greed is good.  For Larry Scott, anyway.

7 Comments

Filed under It's Just Bidness, Pac-12 Football

7 responses to ““And it hasn’t panned out anywhere near where they thought.”

  1. ASEF

    Digital broadcasting plants are expensive to build. The opportunity cost of this thing – build out, then buy back inventory, balanced against meager payouts – is laughable. All to put your product in front of fewer eyeballs.

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  2. Chi-town Dawg

    Now that everyone is realizing what a colossal fuck-up the PAC-12 made with this decision, it’s time for Larry Scott to convince the schools to sell off the network. Then he’ll probably get a cut of the sale price and ride off into the sunset laughing all the way to the bank.

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  3. Macallanlover

    Sad commentary of the naivete of the educators who had total control of this fiasco. They not only failed to see this elixir salesman’s con years ago, they are still stewing in it. The fruits and nuts label for the Weird Coast is still appropo. Not sure how many “fans” in the PAC 12 footprint even care about collegiate sports in any way, in the “it just means nada” geography. I would say Scott should be liable for what he has done to so many innocents, but that is where the “deserve what they got” part of me kicks in. If they even have business schools in those universities, this should make a humorous case study.

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  4. Russ

    Maybe they should televise the replay booth and let viewers chime in. I’d watch that.

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  5. Malcolm X

    Wow. Just plain wow. Thanks Senator for your continued coverage of finances. Four million bucks for a Kommisar. Thirty years ago I was aghast at the idea of paying players. Now I say PAY THEM YOU INCOMPETENT FASCIST BASTARDS. I mean just look at Briles at Baylor, Maryland’s murder, Penn State Pedophile U, North Carolina moron easy fake classes…much less all the raping by players at school. Jesus I need a beer.

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  6. I am a major Pac 12 fan and some of their folks in charge are terrible. No other way around it.

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  7. UGA '97

    Good luck with Chip Kelly, UCLA. Oregon has Knight. Stanford and USC have plenty of endowment. Rest of the PAC-12 is f’d. Might as well pack up the conference and shut it down. That’s just fine, more garbage late night games with no defense. Let all the others absorb ’em or heck, the Mountain West should just go ahead and write up the merger offer.

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