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Will The Pac-12’s Long-Term View Pay Off?

Discussion in 'CU Buffs Newsroom' started by RSSBot, May 24, 2015.

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    By Stuart


    [h=3]Will the Pac-12’s Long-Term View for Television Revenue Projections Pay Off?[/h]—
    The Pac-12 is the only conference which wholly owns its own network. The Big Ten, ACC, Big 12 and SEC all have deals with broadcast networks. Those deals*cut down on revenues for those conferences, but also cuts down significantly on expenses.
    The Pac-12 is off to an early lead in the ever-changing world of media revenue generation, but will shortly be falling behind the Big Ten and SEC as those conferences have new deals kick in. The Pac-12 is counting on the Pac-12 Networks continued growth, along with the growth of other media outlets, to help the conference keep pace with other conferences.
    It’s a gamble which may or may not pay off.

    The numbers can be difficult to decipher.
    Want to focus on the good news?
    For Fiscal Year 2013-14, the Pac-12, for the second year in a row, led the nation in gross media revenues.
    By total revenue
    Pac-12: $374 million
    Big 10: $339 million
    SEC: $326 million
    ACC: $292 million
    Big 12: $226 million
    For the Pac-12, the increase in revenue from Fiscal Year 2012-13 was significant, up $40 million from the $334 million taken in the year before. It was with that report two years ago that the Pac-12, for the first time,*overtook the other biggest players in the revenue race. With the Pac-12 bringing in $334 million, the Big Ten*reported $318.4 million in total revenue, while the SEC reported $314.5 million.
    Now, with the latest report (which is still a year old, being fiscal year 2013-14), the Pac-12 has expanded its lead, with a $35 million advantage over the Big Ten.
    All good, right?
    Well, not exactly.
    Owing to the expenses the Pac-12 shelled out for its wholly owned Pac-12 Networks, the payout to schools in the conference was not as high as other schools across the nation.
    According to Jon Wilner at the San Jose Mercury News, the gross revenue lead for the Pac-12 was lost when expenses were factored in:
    By percentage of total revenue distributed to schools
    Big Ten: 93.4%
    SEC: 90.2%
    Big 12: 87%
    Pac-12: 67%
    ACC: unknown
    By per-school income
    Big Ten: $27.5 (for continuing members)
    Big 12: $23 million
    Pac-12: $21 million (does not include Tier 3 withholdings of approx 750k)
    SEC: $21 million
    ACC: $21 million
    While*the Pac-12 held its own in FY*’14, the numbers are just going to*get worse and worse as Big Ten and*SEC contracts improve, while the*distribution from the*Pac-12*to its members from the Pac-12 Networks are projected to remain relatively stagnant.
    According to Wilner, starting with the 2017-18 academic year, when the Big Ten’s new Tier 1 deal kicks in, there could be an $8 million – $10 million disparity in TV-related income per school.
    Wilner’s*estimates:
    SEC:*$35.6 million
    Big Ten:*$33 million
    Pac-12:*$22.95 million
    Again, those are*per-school, per-year*figures.
    Over a five-year span, for instance, that would equate to $500+ million*difference in conference-wide disbursements between the Big Ten and the Pac-12.
    Yikes!
    … And,*it might get even worse …
    The Big Ten has its nationally televised football and basketball deals expiring soon. Currently the conference has deals with ESPN/ABC for football, and CBS for basketball, and as everyone knows there is a content battle between ESPN/ABC, Fox, CBS, and NBC. The asking price to televise these games could be astronomical. TV rights continue to increase, and the Big Ten is in the perfect spot to leverage its position and increase the revenue gap between itself and the Pac-12.
    Pac-12 commissioner Larry Scott, for one, is not concerned by Wilner’s dire predictions.
    Wilner’s projections of continued sluggishness in payouts to Pac-12 schools (roughly $1 million this year, compared to around $5 million per school in the Big Ten and SEC*this year, and up to $10*million for those schools in the next two to three years), sounds*bleak. Wilner’s numbers,*though, “at least from our perspective were not completely accurate”, said*Scott in March. “But, overall, I don’t disagree with the trends. I think the Big Ten is going to get a significant uptick in their rights knowing they’ll get more in 2017 (when present contracts expire). And the SEC Network I believe is going to kick out significant resources. It’s a big, big success”.
    So, how will the Pac-12 and it’s Pac-12 Networks keep up?
    The Pac-12 is banking on advancements in technology and media distribution to help the wholly-owned Pac-12 Networks pay for themselves many times over in the future. “One of the reasons I was attracted to (full ownership of the Pac-12 Network) is I feel we’re in a very fast-changing dynamic world when it comes to the value of college sports rights, and changes in technology and distribution”, Scott told CBS Sports. “It’s happening before our eyes”.
    Scott said the Pac-12 is not interested in selling equity in the Pac-12 Network (though Jon Wilner has suggested that might be the right way to go). Scott sees the value of the Pac-12 Network as being “significantly greater” in the next five years than it is today. “We very much like the position we are in, and, more importantly, feel like we are in a growing market”, said Scott. “So long as the market is still growing and increasing in value, it’s an enviable position to be in”.
    One of the Pac-12’s long-term goals is to be the first conference to gain a significant foothold in Asia and Australia. There have been substantive discussions of the Pac-12 and Mountain West Conferences teaming up to send bowl teams to Australia as early as 2016. Meanwhile, Washington will play Texas in the 2015-16 men’s basketball season opener in China, where there are an estimated 300 million basketball fans (almost the entire population of the United States). Scott announced this spring that the Pac-12 has plans to open its regular season in China for the next two seasons, and hopefully well beyond. The Pac-12 has entered into*a two-year sponsorship deal with Alibaba Group, a major Chinese e-commerce company, though details have not been released.
    Asked what the deal in China might be worth to the Pac-12, Scott declined to comment. “I don’t really think of it in those terms right now”, Scott said. “Long-term, I think it’ll be more obvious in terms of what the value is”.

    So, in Larry we trust?
    Looks like that is what Pac-12 fans will need to bank on, especially in the near term, as the Pac-12’s revenue advantage slides into a significant disadvantage.
    Even*Scott concedes that time will tell as to whether the Pac-12’s model of a wholly owned network will pay off in the long run. “I think the*worry five years from now, ten years from now, is will there be a significant gap?”, Scott said at the Pac-12’s spring meetings in Phoenix. *“We don’t believe there will be. In some respects, we’re in a uniquely good situation in that we own and control our own network and have a lot of opportunity in terms of what we can do down the road. I feel very comfortable with where we are”.
    Time will tell …
    ——



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