The Pac 12: Cash Is A Four Letter Word

The Pac 12
SEATTLE, WA - APRIL 27: A view of the PAC12 logo before the University of Washington Spring Game at Husky Stadium on Saturday, April 27, 2019 in Seattle, WA. (Photo by Joseph Weiser/Icon Sportswire via Getty Images)

Mel Tucker left his coaching job at Colorado this last week to take an offer at Michigan State. He takes over for Mark Dantonio who “retired” abruptly the day before National Signing Day.

On the surface, leaving a struggling Colorado program for a Michigan State team that is expected to compete at the higher end of the Big 10 seems like an obvious. But what is eye stopping when you read the news is that Tucker went from $2.4 million per year in Boulder to $5.1 million per year in East Lansing. There was no way Colorado was going to try to counter to keep Tucker. First of all, he was 5-7 in his one year running the Buffaloes football fortunes. But beyond that, no Pac 12 school is going to double what they are already paying a coach, and they certainly are not going to be able match the pay levels of other conferences.

The Pac 12: Cash Is A Four Letter Word

In the two months since the end of the 2019 season, the conference has lost coaches Chris Petersen (retirement), Mike Leach, (bolting for another job), and Tucker (more money elsewhere).

In early December, the enigmatic Leach signed a contract extension at Washington State that would have kept him there through the 2024 season at $4 million per year. A month later he was gone to Mississippi State for a $1 million dollar per year increase. He will get $5 million per year for 4 years in Starkville. The median household income in Pullman is $30,548 according to Data USA. Leach had plenty of financial room to spare at Washington State. It is slightly higher in Starkville at $36,700. So Leach is “keeping up,” with his extra $1 million per year for the Bulldogs’ job.

The Pac 12
Former Washington State coach Mike Leach left the Pac 12 school for greater resources in the SEC at Mississippi State. (Photo by Jennifer Stewart/Getty Images)

So, what is the difference maker? Leach is getting a pool of $4.7 million to pay his 10 assistant coaches. That is an increase of $1.5 more than what he had to work with at Washington State according to school sources in Pullman.

Whether it is doubling the pay of a coach who has yet to prove his value at that level like Tucker, or providing significant resources that Pac 12 schools are not going to match, as is the case with Leach, the Pac 12 cannot keep up with other conferences.

It was this time last year that the conference actually went out on a fishing expedition looking for cash. Yes, the Pac 12 was, and likely still is, in need of angel investors. There was a road show put together for the investment community that touted the “Conference of Champions.” They talked about the coverage in the major media markets like Los Angeles, the Bay Area, Seattle, and others. They talked about the top three schools in the country in terms of NCAA championships being from the Pac 12. Indeed, Stanford, UCLA, and USC have more NCAA championships combined than any other conference in its entirety. But most are in non-revenue sports.

But this conference is led by commissioner Larry Scott. There has been nothing conventional about his 10+ years at the helm of the conference. Heck, if you look at his Wikipedia page, it spends nearly as much space talking about his very short tenure on the professional tennis tour, his time as an executive with the ATP and then his tenure running the Women’s Tennis Association. Nothing ever announced that Scott was ready to bring the Pac to new levels to compete with the other major conferences during a period of major change in college sports. If anything, the conference has fallen farther and farther behind during his term at the helm.

The Pac 12
HOLLYWOOD, CA – JULY 26: PAC12 Commissioner Larry Scott speaks to the media during PAC12 Media Days on July 26, 2017 in Hollywood, California. (Photo by Leon Bennett/Getty Images)

Let’s start with touring the country with your hand out at investment firms and private equity companies The typical transaction for this community is, we give you money in exchange for ownership equity, seats on the board of directors, and voting interests in the company, at a bare minimum. How does an “amateur sports” athletic conference give up such things in exchange for needed cash? There is only one real decision maker in the conference, and it is Scott. Think he was going to discharge some of his authority in order for the conference to have an influx of cash?

No, the only thing Scott could bring to the table was formatting the Pac 12 like any privately held portfolio company and offer preferred shares of stock in that company. That was it. Buy stock in the Pac 12. That was the offer. He got next to nothing of the more than half-a-billion in investment money he was seeking.

Part of the reason the schools cap what they are willing to invest is exactly because the Pac 12 is not a healthy portfolio-style company, and the financial support for the universities is not there.  Scott’s baby, the Pac 12 Television Network is an unmitigated disaster.

Promises Not Kept

Nearly 10 years ago, the Pac-12 announced it had reached a 12-year deal with Fox and ESPN for $3 billion dollars. That was by far the most money ever signed by a college athletics conference for its media rights. The agreement splits up 44 regular season football games between ESPN and Fox. It also rotates the conference’s football championship game annually between the two networks. At the same time, Scott announced the creation of the Pac 12 Network. It would be, and sadly remains, the only network that is entirely owned by the conference and its member schools.

Scott promised an ad revenue/sponsorship boom that would lead to economic heydays for the schools. Nearly 10 years later, they are all still waiting. Scott, having never negotiated a major TV creation on his own failed at step one. You never launch anything new on-air until you have guaranteed the clearance for it. To this day, the Pac 12 Network has never cleared Directv, and it has since lost AT&T U-Verse, among other provider outlets.

As of the 2018-2019 academic year, the Pac 12 Network reached a grand total of 18 million homes. There are nearly 10 million homes just in LA County alone, (per the 2010 Census).  And that is a fraction of the total Los Angeles media market. Add in the Bay Area, Seattle, Salt Lake City, Phoenix/Tempe, and so on and the Pac 12 Network is carried in about one-third the homes that exist in its conference’s geography. Directv alone reaches 17.9 subscribers. None of them see the Pac 12 Network.

Four years ago, Scott was offered a bailout of sorts. A new partnership offer with ESPN. They wanted part ownership of the Pac 12 Network, much as they have with the SEC Network. ESPN would take over all production costs, reliving the conference of massive overhead. They would handle the broadcast scheduling and programming. And the conference and its schools would reap the financial benefits. Scott said thanks but no thanks. He thought it better for the Pac 12 Network to remain independent. That’s worked well.

Post Season Money Is Real

The 2019 college football playoffs had schools from the Big XII, the Big 10, the ACC, and the SEC. All of those invest more in their teams, and conferences overall, than does the Pac 12. All of their affiliate schools are enjoying a nice profit-sharing of sorts, as they get a cut of that massive post-season pie. The Pac 12 school’s meanwhile are getting their shares of Oregon’s $40 million payout from the Rose Bowl. It sounds like a lot until you start dividing it 12 ways. With all of the post-season payoff, including all bowl games, the Pac 12 came in last of the Power 5 conferences in terms of total revenue garnered.

Scott, for years now at Pac 12 Media Days, has said there is no concern with the lack of eyes on the Pac 12 Network for advertisers to pay for. The conference, he said was preparing for the cord-cutters of the future. He made good on the promise….in his mind, last month. The Pac 12 signed a content streaming agreement with a company called Vidgo. The outlet has agreements with other sports networks like ESPN and Fox Sports. The difference is those networks are not relying on Vidgo to deliver any significant audience. It’s just an addition format for them. The Pac 12 actually needs Vidgo, and it needs it to prosper and expand quickly.

The challenge with that? Vidgo itself is a start-up in this incarnation. It’s outreach is to the cash-and-carry crowd, like a burner phone company. And oh, by the way, Vidgo is already making the national tour looking for cash, going to many of the same investors that already said no to the Pac 12. Sounds like the two are made for each other.

 

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