http://www.mercurynews.com/2017/02/07/college-hotline-the-pac-12s-expanding-revenue-deficit-relative-to-sec-big-ten/
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Fiscal year 2015 school distributions (all figures confirmed):
SEC: $32.7 million
Big Ten: $32.4 million
Pac-12: $25.1 million
Fiscal year 2016 school distributions
SEC: $40 million (confirmed)
Big Ten: $35 million (approximate)
Pac-12: $27 million (approximate)
That looks bad … that is bad … but it’s about to get much worse for the Pac-12.
Remember: The Big Ten’s new Tier 1 deal begins in 2017-18, and it’s also a whopper, averaging $440 million per year.
Which brings us to …
Fiscal year 2017-18 school distributions …
Big Ten: $45 million (estimate)
SEC: $43 million (estimate)
Pac-12: $31 million (estimate)
What does it mean?
As a general rule among the Power Five, distributions from the conference office account for varying percentages of the athletic budgets of its memberships — for some, it’s 20-25 percent, for others, 35-40 percent.
That revenue stream helps pay coaches and pay debt service and pay cost of attendance and pay recruiting expenses … and much more.
A single-year deficit of $10M per school for the Pac-12 won’t have a measurable impact on its on-field/on-court performance over the long haul.
But this isn’t a single-year deficit, and the deficit could very well be larger than $10M per school.
The Pac-12’s Tier 1 deal runs through 2023-24. Until then … until it can renegotiate … it’s essentially locked in place. There is no expectation of a major new revenue stream.
In other words, each Pac-12 school could be $12M – $15M behind its SEC/Big Ten peers every year for the next seven years.
THAT’S serious money — more than enough to create a competitive disadvantage. (The ACC and Big 12 will be in similar predicaments.)"
http://www.sfchronicle.com/news/article/Some-ADs-grumble-about-Pac-12-Networks-10910339.php
"But some athletic directors, many of whom were banking on much bigger payoffs to help balance their budgets, are becoming increasingly critical.
Utah athletic director Chris Hill said he hasn’t been satisfied with the network either in its payouts or distribution. “From the ADs’ standpoint, we expected more,” he said.
Pac-12 Commissioner Larry Scott said recently that the network has met the financial expectations “from our original business plan. (But) expectations change. … I’m not going to tell you right now people are satisfied.”
The main concerns center on a few basic issues. Critics say other conference networks — specifically those run by the Southeastern Conference and the Big Ten — have struck much more lucrative deals with broadcast partners such as ESPN. There is also concern that the Pac-12 Networks have failed to reach a distribution agreement with DirecTV, the nation’s largest satellite provider with 22 million subscribers. The perception grows that the Pac-12 is falling behind in both viewership and profitability.
SNL Kagan, a research firm that keeps tabs on the media and communications business, reports that programming from the Pac-12 Networks is available in close to 15 million homes. But that’s only about a quarter of the households that have access to the SEC Network or the Big Ten Network.
The money is quite a bit less, too. Published reports peg the payouts to each member school at $1.5 million a year for the Pac-12 Networks, versus $7.5 million per school for those involved with the SEC Network. The Big Ten Network pays out even more, according to industry sources.
Murphy-Stephans insists comparisons with other conference networks are misleading. “We’re seven networks,” she said. “We’re managing athletic (web)sites for the schools. We’re producing content for each of the universities. We’re owned by the universities. We’re an extension of the conference and the universities. We’re providing a lot of media support that the other schools aren’t getting from their media companies. We’re the only conference to partner with Twitter for our broadband service live stream.”
But those advances haven’t stemmed the criticism. The inability to land DirecTV, in particular, “is making the gap bigger and bigger” in comparison with the other conference networks, said Utah’s Hill.
Those late games are hurting football season ticket sales at some schools. At Cal, The Chronicle recently reported, more-frequent kickoffs at 7 and 7:30 p.m., as well as starting times to accommodate TV that often aren’t announced until days before the game, have soured some Old Blues, costing the school in terms of ticket renewals.
The reports of a $1.5 million payout to member schools are “in the ballpark,” Washington State athletic director Bill Moos said. He said the payout has increased each year but still falls short of expectations. “We were hoping for $5 million to $6 million when we were launching,” he said. “There was never a guarantee, but we were optimistic because we owned it outright.”
That independence has come under scrutiny.
The SEC Network, by contrast, has a long-term license deal with ESPN. (Disney owns 80 percent of ESPN; the other 20 percent is held by the Hearst Corp., which also owns The Chronicle.) The Big Ten Network is majority-owned by Fox. According to Moos, BTN, launched in 2007, was already paying schools $10 million annually when the Pac-12 Networks were born.
Besides its independence, the Pac-12 operation is different from the other two conference networks in another major respect: It offers six regional networks and one overall channel, which allows it to show 850 live sporting events a year in high definition. Many of them are in so-called Olympic sports like women’s soccer and volleyball and men’s swimming and wrestling. Those sports have never had it so good, and recruiting has benefited enormously.
“Personally, there’s just as much value in the exposure of the less visible sports” as there is in revenue, Moos said. “Getting our product out was extremely important.”
According to Moos, fewer than half the current ADs were in their positions when the Pac-12 Networks were launched in 2011, at about the same time as Scott’s deals with ESPN and Fox, which delivered the schools a financial windfall. “The frustration is mainly from the ADs who came later,” Moos said.
One of them is Colorado’s Rick George. “Everybody would like to have more money,” he said. Rather than partner with a media giant like ESPN, he said, “the strategy is to have 100 percent of our own network. Time will tell whether that’s the right strategy.”
Two other relatively new athletic directors, Stanford’s Bernard Muir and Cal’s Mike Williams, stress the networks’ benefits rather than their financial shortcomings.
“We love the exposure we derive from it, especially for the Olympic sports programs,” Muir said. “It’s a great tool and a great asset for us.”
“For many of our schools in the conference, it’s an important way for them to connect to their alumni bases and their recruiting bases,” Williams said.
The schools are counting heavily on the broadcast revenue. Washington State, for example, invested extensively in its athletic facilities over the past five years and is paying $7.5 million in debt service with money from the broadcast deals, Moos said. “Without that, we would have been left in the dust.”
Another player will enter the competition in a couple of years. The Atlantic Coast Conference, in conjunction with ESPN, will launch its network in 2019. One industry insider thinks that deal “will blow the Pac-12 away.”
The Pac-12 could pursue selling an equity stake in its networks for a large but short-term infusion of cash. Scott isn’t flatly ruling that out. But he said, “When you have a partner, you’re less in control of making decisions.”
What Scott calls “a level of nimbleness” helped the Pac-12 reach a deal with Sling TV in September to show content from the regional networks to some subscribers of the Internet TV service. Sling TV also has deals with the SEC and Big Ten networks.
Why that is remains a mystery. Neither side will divulge the specific roadblocks to a deal. AT&T spokesman Leland Kim said his company “has the same passion for college sports as each of the Pac-12 schools’ most loyal fans” and remains open to further negotiations.
What complicates the picture further for the Pac-12 Networks is that their existing distribution contracts, according to Murphy-Stephans, contain “most favored nation” clauses. That is, those deals would have to be sweetened if the Pac-12 Networks cut a better deal with DirecTV.
Of the three major conference networks, the Pac-12 Networks claim to show the most live events. Among its 850 annual broadcasts are roughly 35 football games, 100 men’s basketball games and 40 women’s basketball games. The rest are in less visible sports. About 350 events are on the national network and 500 on the regional networks.
The Big Ten says its network shows 504 events on its linear network and streams another 1,000 online. ESPN says 486 events were shown in 2015-16 on the SEC Network and more than 1,100 on SEC Network Plus, its digital platform.
It doesn’t help the Pac-12 Networks that college football on the West Coast has nowhere near the hot-blooded appeal that it has in the South and Midwest, where the SEC and Big Ten networks capitalize on that fervor.
At one point last year, the Pac-12 considered eliminating the regional networks in favor of one feed. That idea was rejected because one network couldn’t handle all 850 events, a number stipulated by the contracts with service providers.
So, while the Pac-12 Networks continue to give exposure to less visible sports, they apparently risk continuing to lose ground to the other conference networks, at least until the next round of negotiations in 2024.
Staying independent will be important, Scott insists. “Tough to place a value on that sitting here right now ... but I can tell you that will be incredibly valuable,” he said.
By all accounts, Scott — who earns $4 million a year — has retained the support of the conference presidents. As he’s well aware, however, a lot of grumbling is going on behind the scenes."
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