Beginning next year, the cash flows of Pacific-12 Conference athletic departments will be significantly enhanced, and we can all point to the events of last Wednesday as to why.
Big 12 Conference commissioner Dan Beebe signed a 13-year agreement to renew Fox Sports’ possession of the conference’s second-tier media rights, which includes 40 college football games and their digital, mobile and exclusivity rights. Under exclusivity rights, ESPN cannot broadcast one of those 40 games unless it pays a syndication fee to Fox Sports.
ABC/ESPN currently owns the Big 12’s first-tier media rights, which essentially amounts to the pick of the litter of all content owned by schools in a conference. The most valuable of those properties are college football games, and they are the primary revenue drivers for conferences and television networks. There are second and third tiers of media rights based on what’s left over.
Last Wednesday, Fox Sports agreed to pay the Big 12 $90 million per year for those second-tier rights, up from $20 million per year in the previous deal. That is $30 million per year more than the conference’s first-tier rights deal, and amounts to just under $1.2 billion in total revenue. That’s billion with a B, as in beaucoup bucks.
That also adds roughly $7 million per year to the 10 athletic departments in the conference, a major shot in the arm as budgets become increasingly scrutinized.
Presumably, Pac-12 commissioner Larry Scott drove over to his office in Walnut Creek, Calif., fired up his laptop, discovered the news and promptly spit his coffee onto the screen. Then, Scott began jumping for joy.
The Pac-10 media rights agreement expires next year, and schools are saying good riddance. Then-commissioner Tom Hansen signed away virtually all of the conference’s rights for $53 million a year in deals with ABC/ESPN and Fox Sports.
By comparison, the Big Ten Conference ­— the only college conference with its own television network — receives $220 million in annual revenue. The Southeastern Conference, $205 million. The Atlantic Coast Conference, $155 million. Hansen’s inadequacy as commissioner shines through in many ways, but perhaps no more so than here.
Scott, previously the commissioner of the Women’s Tennis Association, aggressively pushed for a greater conference profile and expansion to 16 schools, eventually receiving pledges from Colorado and Utah to join in. He has transformed the Pac-10’s image, but at the negotiating table, favorable circumstances — such as the Big 12 second-tier rights contract — are making his life easier.
According to a Friday article in The Wall Street Journal, “The Pac-12 conference is seeking a 10-year deal worth $220 million a year, plus a commitment to launch a regional sports network, people with knowledge of the talks say. Start-up costs for such a venture would likely run in the neighborhood of $100 million, most of which would come from the media partner. Negotiations are likely to conclude in the next few weeks.
“It is a closely watched deal for the industry. After the Pac-12, the Big East is the only major conference with media rights available before 2016. Meanwhile, sports programming, long a cash-cow that drives up carriage fees for cable but now largely a loss-leader on broadcast, is getting more important as they try to bulk up on live programming that customers are less likely to watch on-demand or online.”
The scarcity of available major-conference rights is driving up the value of what the Pac-12 has to offer. Historically strong football, basketball and Olympic sport programs add to that demand.
Scott had a target of $170 million a year in rights’ fees set because, below that threshold, USC and UCLA would receive bonus payments of $2 million a year before equal sharing of revenue. As it stands, he figures to quadruple and perhaps quintuple the available money for member institutions.
With annual payments of $220 million to the Pac-12, Oregon’s share of equity would jump from $5.3 million per year to $18.3 million. Not bad for a school with some bills — er, facilities — to pay off.
From there, the challenge becomes one of how to make money make more money. Athletic director Rob Mullens has options on the table — an expansion of Autzen Stadium’s north side chief among them — to drive more ticket and sponsorship revenue.
Some options may come more naturally. Popularity of basketball and baseball has increased over the past year, and track and field remains a high-level program. A new soccer and lacrosse complex could add incrementally to Oregon’s revenue pie.
The biggest concern, naturally, remains that the books balance at the end of the day, with the possibility of expanding opportunities for fans and stakeholders. Thus, the Big 12’s brand-new contract makes life for the Pac-12 all the more fortunate.
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