The Pac-12?s financial future: Comparing TV revenue to the SEC and Big Ten

[SBG]

At say 10MM less a year is it going to matter? What are the potential arms races? Stadium upgrades? "Football" dorms? The amount given per stipend.

I don't see it as much now that we aren't the poors. No amount of cash would change Espns tone and have them slobbing on the p12s nob.

 

[Buffnik]

At say 10MM less a year is it going to matter? What are the potential arms races? Stadium upgrades? "Football" dorms? The amount given per stipend.

I don't see it as much now that we aren't the poors. No amount of cash would change Espns tone and have them slobbing on the p12s nob.

Definitely can max out on what you can spend on football. But wouldn't it be nice to be able to add some sports?

 

[CVBuff]

BYU is not, by any measure, a research institution, is not pliable about Sunday play, has a history of TV deals like UT, has questions of struggles regarding academic freedom, and culturally is a poor fit with other PAC 12 schools. It also does not provide additional television markets. However, BYU may still gain P5 status with the Big 12.

 

[SBG]

Definitely can max out on what you can spend on football. But wouldn't it be nice to be able to add some sports?

Yeah, but how badly do we wish to join the pac12 on baseball and wrestling and men's tennis and lacrosse? Enough to sell our souls so that UT can be in the league. No thanks.

 

[Deleted member 807]

First in with Rice.
AAU member
Central Houston location
Not high maintenance like UT
Would reduce some of UT's lock on the Houston market.

 

[sackman]

First and only in with Rice.
AAU member
Central Houston location
Not high maintenance like UT
Would reduce some of UT's lock on the Houston market.

fify

I freaking hate discussions like this. Adding any members is a mistake. It's a band-aid and doesn't address the real issue, which is brand identity. In fact, it mucks up any brand identity we may have had.

We need to work on elevating the Pac to the level of the SEC. While that may not be attainable, we can do a lot better job than we have been.

 

[MtnBuff]

fify

I freaking hate discussions like this. Adding any members is a mistake. It's a band-aid and doesn't address the real issue, which is brand identity. In fact, it mucks up any brand identity we may have had.

We need to work on elevating the Pac to the level of the SEC. While that may not be attainable, we can do a lot better job than we have been.

PAC12 is never going to be the SEC. The people living in the SEC footprint grow up with a dedication to their teams, it is a part of the culture. It is the only part of the country where you can see an NFL team struggles while a .500 college team sells out a huge stadium. When those people move away they retain their alligiences no matter where they move to. About the only thing comparable is Nebraska fans. You also see this mentality with Texas and Oklahoma fans and some B1G fans but not as intensely.

The PAC12 is located in a part of the country where most people are immigrants from other states, college football, especially local college football isn't a strong part of the culture. PAC schools don't have that environment where they are automatically the lead story in their market, they aren't the bond that ties together the population of their regions.

That all said history shows that PAC12 schools can be fully competitive in the world of college football at the highest level. Oregon was a win away from the national title this year, USC has multiple national championships, a number of PAC schools have finished in the top 10 rankings in recent years.

The league and it's schools can do a better job of building brand loyalty and support, the money can be increased. It may never reach SEC levels but as the $$$$ figures rise the marginal impacts diminish, the PAC can solidly complete.

Adding schools just to add schools isn't going to change any of this. The only schools that would truly add financial value to the PAC12 are Texas and Oklahoma and each comes with significant problems that make their financial value questionable.

The simple fact is that the PAC12 is not the MWC or even the ACC. It swings a big hammer. People can talk about conferences being forced to go to 16 teams but no plan is going to advance without PAC12 approval and the PAC has the power to veto that idea if it is not in the interest of the conference. Right now it isn't so the best course of action is to stay at 12 and build on the strengths that exist in the footprint.

 

[SD Buff]

If you're looking for brand, money and perception. The PAC 16 is the solution. I would hate it with 8x2 (east/west) but would actually favor it as a 4x4 with a 3+2+2+2 schedule. I would actually really like it as the conference would have a ton of national stroke.

That being said, Texas isn't lifting it's skirt anytime soon and are perfetly happy ruling their little fiefdom. Not to mention the grant of rights.

So Wilner's latest solution is to sell and equity stake in the PAC 12 Networks. I still don't think he's arriving at the right numbers, but never the less..... LINK

Starting to wonder if Scott is behind this series??

 

[Shldr2Shldr]

If you're looking for brand, money and perception. The PAC 16 is the solution. I would hate it with 8x2 (east/west) but would actually favor it as a 4x4 with a 3+2+2+2 schedule. I would actually really like it as the conference would have a ton of national stroke.

That being said, Texas isn't lifting it's skirt anytime soon and are perfetly happy ruling their little fiefdom. Not to mention the grant of rights.

So Wilner's latest solution is to sell and equity stake in the PAC 12 Networks. I still don't think he's arriving at the right numbers, but never the less..... LINK

Starting to wonder if Scott is behind this series??

The 4x4 system is how we arrive at a larger playoff system. Think it makes the most sense anyway. Would get every team into Cali and TX every year. Do not want UT though. At all.

 

[SD Buff]

Yeah - 16x4 with a 4x4 = NFL like structure and a real clean playoff system.

 

[BlackNGold]

Is the climate for conference realignment the same as it was two years ago? I don't think so. It is all driven by TV contracts and the media delivery business model is changing. Many TV people already feel that too much is being spent on Sports programing.

So the question is if you realign will it bring in more revenue in today's market? Certainly TCU or Houston will not get the networks or content providers excited. If you brought in Texas and Oklahoma then Direct TV would most likely sign up for the Pac 12 network but will that off set the money those schools would want to be guaranteed.

I think we should be happy with what we have and like Sackman says improve the Brand of CU and the PAC 12. We are not going to catch up to the SEC - people out here don't have the same passion in the numbers they do in some other footprints. Most of people in LA don't realize (or care) that they don't have an NFL team.

 

[Buffnik]

If you're looking for brand, money and perception. The PAC 16 is the solution. I would hate it with 8x2 (east/west) but would actually favor it as a 4x4 with a 3+2+2+2 schedule. I would actually really like it as the conference would have a ton of national stroke.

That being said, Texas isn't lifting it's skirt anytime soon and are perfetly happy ruling their little fiefdom. Not to mention the grant of rights.

So Wilner's latest solution is to sell and equity stake in the PAC 12 Networks. I still don't think he's arriving at the right numbers, but never the less..... LINK

Starting to wonder if Scott is behind this series??

I don't understand Wilner's logic in the last installment.

Yes, you get a short-term windfall for selling off half the network equity.

However, the valuation of the network is not where you would be making a smart business move since it's still in its early growth phase. Usually, a business doesn't get to a "tipping point" valuation until it's 5-7 years in and, therefore, should only be taking capital and diluting equity if it is going to be used for growth. To take capital only to distribute it to current owners at this stage is bad business.

More importantly, it's very fuzzy math if Wilner believes that a business can give up half the pie and that this will result in annual payouts increasing beyond that one-time equity sale windfall. Profits for the network are not going to more than double simply because Fox or ESPN owns half of it.

Basically, he's calling for a desperate move when there doesn't seem to be any justification for desperation. Are a number of Pac-12 members in a financial bind that make an extra $14.6 million in revenue next year a game changer? What's the point or the goal of bringing in that money? What would they do with it beyond what they're currently doing?

That column made zero business sense.

 

[SD Buff]

I am not buying his math in general. He says its well researched and I am sure he dumbed it down for simplicity sake, but I think he's telling the narrative he wants to tell here. I would be very interested in Scott's take to confirm whether he's in the ball park. Or like I said previously, is Scott behind this in the first place? And as was posted in the comment section, how much of last years operating expenses were start up related? He's just drawing that number forward along with revenue to land at a 1 million distribution 3 years from now?

 

[skibum]

It's very strange that any newspaper person located in the bay area could so misunderstand some of the basic business concepts around growth, equity partners, etc. It's one of three things:

1. He really doesn't understand business capital structures
2. He thinks an equity partner would bring more value than they dilute
3. He thinks the P12 Network is a mature business that is past the growth stage

My money is on #1, because #3 is pretty dumb and while a case could be easily be made for #2, he neither makes it nor acknowledges that it needs to be made.

 

[EddieCrowder]

If this is coming from Scott, and I hope its just throwing sheet against a wall, but supposing it is. I think my insistence that he overplayed his hand from the beginning starts to look like more then just my opinion.

 

[SuperD]

I don't understand Wilner's logic in the last installment.

Yes, you get a short-term windfall for selling off half the network equity.

However, the valuation of the network is not where you would be making a smart business move since it's still in its early growth phase. Usually, a business doesn't get to a "tipping point" valuation until it's 5-7 years in and, therefore, should only be taking capital and diluting equity if it is going to be used for growth. To take capital only to distribute it to current owners at this stage is bad business.

More importantly, it's very fuzzy math if Wilner believes that a business can give up half the pie and that this will result in annual payouts increasing beyond that one-time equity sale windfall. Profits for the network are not going to more than double simply because Fox or ESPN owns half of it.

Basically, he's calling for a desperate move when there doesn't seem to be any justification for desperation. Are a number of Pac-12 members in a financial bind that make an extra $14.6 million in revenue next year a game changer? What's the point or the goal of bringing in that money? What would they do with it beyond what they're currently doing?

That column made zero business sense.

The only way his logic seems to make any sense is if he thinks that the P12 is essentially maxed on subscribers and is not going to see any more growth in out of market subscribers, and won't even make it onto any more sports tiers anywhere on the East Coast without a distribution partner that swings a big stick.

To me the only way an equity sale makes sense is if its essentially some sort of equity swap with ESPN to merge the LHN with the P12 as part of a brokered agreement to bring Texas into the league. That might have been possible if the LHN had continued to flounder, but ESPN seems to have fixed their distribution problems by tying it to the SEC Network negotiations. UT may as well be in the SEC from a TV distribution perspective.

 

[jahbrahakala]

oops