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College Hotline - Pac-12 affairs: Conference losing ground (rapidly) in the revenue game

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    It wasn’t long ago that the Pac-12 went from last to first among major conferences in the revenue game.

    Those days are now long gone.

    We suspected it was headed in this direction last summer, but the situation is coming into focus with recent news reports (by USA Today and CBSSports.com) detailing the FY2015 tax filings by the Big 12 and especially the SEC, which generated $527 million in annual revenue.

    FIVE HUNDRED AND TWENTY SEVEN MILLION.

    Not much surprises me. That surprised me.

    The reports also spurred me to take an updated look at annual revenue for the Pac-12 and its peers. The topic was addressed here in June, and the numbers haven’t changed much … except for the FIVE HUNDRED AND TWENTY SEVEN MILLION.

    Yes, we track the money here on the Hotline, devoting a few posts each year to the topic.

    Why? Because it’s all about the money …

    Pac-12 expansion: All about the money.
    College Football Playoff: All about the money.
    Pac-12 Tier 1 deal with ESPN/Fox: The money.
    Pac-12 push into Asia: Money.
    Expansion of March Madness to 68 teams: Money.
    Pac-12 football championship game: Money.
    Pac-12 Networks business model (i.e., full ownership): Money.

    So yes, we track the money.




    Because the major conferences work on different timetables, and report their taxes on different schedules, great effort is made here to keep the comparisons at an apples-to-apples level.

    The Pac-12, for instance, won’t report its FY15 data until May, and the Ten has yet to sign its a new Tier 1 TV agreement — its version of the deal the Pac-12 signed years ago.

    So my numbers for the Pac-12 are approximate; the numbers for the Big Ten aren’t what they will be in two years; and the numbers for the SEC and Big 12 are real.

    (Note: The revenue figures listed below don’t include income from multimedia rights, like sponsorships, ads, radio deals, etc., which are generated at the campus level and differ widely.)

    Here we go for 2015:

    SEC (per tax filings, via USA Today)
    Total revenue:
    $527.4 million
    Per school:
    $31.2 million

    Big Ten (per projections)
    Total revenue:
    Per school:
    $30.9 million

    Big 12 (per tax filings, via CBSSports.com)
    Total revenue: $268 million
    Per school:
    $27.3 million (includes $4 million in Tier 3 income; see note below)

    Pac-12 (my projections)
    Total revenue: $430 million
    Per school:
    25.1 million

    (*** Big 12 note: The Pac-12 and SEC pool TV rights and include all the income in their distributions. The Big 12 does not pool Tier 3 rights like the Longhorn Network — that windfall is not included in the league’s distributions.

    (The average payout for the Big 12’s continuing members was $23.3 million without the Tier 3 income. Kansas State’s Tier 3 deal was $4 million, per CBSSports. To make the income consistent with the other leagues, I have added Tier 3 money to the total above.

    (KSU’s figure was selected because it seemed like a reasonable midpoint. It’s not nothing, but it’s not Texas or Oklahoma money, either.)

    Which brings us to …

    The SEC and Big Ten have a substantial lead, and it’s only going to expand — for the Big Ten when its new Tier 1 deal kicks in, for the SEC when the SEC Network fully matures.

    Why does it matter?

    Because a decided edge in revenue translates to a competitive advantage in all sports in regard to hiring coaches and funding recruiting budgets and building facilities and managing cost-of-attendance and handling any other expenses that surface from the legal challenges facing college sports.

    The Pac-12’s biggest problem is no secret: The conference’s TV network is lagging its SEC and B1G counterparts in subscriber base and annual revenue, generating a mere $1 million (approx) per school per year.

    To my knowledge, there is no game changer on the horizon for the Pac-12 outside of a breakthrough with P12Nets carriage.

    Maybe the league has something planned, something big. That’s a distinct possibility.

    But as the months roll on and the data comes in, it becomes easier to envision a situation several years from now in which the Pac-12 is right back where it was a decade ago, with its annual revenue and distributions far behind those of the SEC and Big Ten.

    xxxxxxx

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