Can’t be easy to be the Pac-12 Conference right now.
The COVID-19 pandemic sure provided some cover, though, didn’t it?
The narrative over the past three months stopped being about how far the “Conference of Champions” is behind its peers when it comes to raising revenue and playing football. The focus also shifted temporarily from whether flailing conference commissioner Larry Scott would be retained when his contract expires in 2022.
Suddenly, Scott was sitting at the table with the other Power Five Conference commissioners talking about masks, tests and getting athletes back to campus. And now all eyes are on the upcoming football season and how football must find a way to be played.
Still, the conference outlook is shaky.
The Pac-12 lost nearly $16 million in revenue in the past three months. There were no March Madness payouts, no postseason play, no spring sports season, and the conference was forced to dip into conference reserves to help its members survive.
The Pac-12 Network laid off eight percent of its staff in April. It froze other positions and implemented 10 percent pay cuts for conference staffers. And Scott, who makes $5.3 million annually, announced he was taking a 20 percent pay cut, although that was an exercise in semantics that was noted by some of the conference’s athletic directors.
Scott’s voluntary cut was for only three months. It ends next week, at the end of June. He makes $441,667 per month. His pay cut amounted to $88,333 per month, times three.
Total reduction: $265,000.
That’s only five percent of Scott’s annual salary. And if he’s not basing the cut off his gross pay, it will be a lower percentage. Which is only to say that if I’m one of the 12 university presidents and athletic directors, I’m looking at Scott today and wondering if he’s willing to start leading in a way he hasn’t before. Because what he has here is an opportunity to emerge from all of this with some momentum.
A to-do list for Scott:
• Extend his 20 percent pay cut through the end of the year.
• Declare the downtown San Francisco headquarters is an expense that no longer makes sense and seek cost-effective alternatives.
• Announce the Pac-12 will play football. Whether that happens in fall/spring and whether it includes other opponents or features that previously floated conference-exclusive schedule with no fans in stadiums — be the first to announce it will absolutely play.
• Give a hopeful update on the conference’s media rights deal that expires in 2024.
Not picking on Scott here. He’s one of the five major conference commissioners. But he’s the one I cover and he has bigger problems than the others. I was struck in the early stages of the pandemic that he didn’t lead as much as he waited for direction from his conference presidents and rubber-necked at the Big Ten and SEC. And frankly, if the Pac-12 is going to emerge from this with a chance, it needs to stop being a follower and start leading.
That starts with the big boss in the big office at the big conference headquarters that sit mostly empty these days in downtown San Francisco. The annual rent at headquarters is $8.1 million, with another $10.3 million in “deferred rent” that exists as a future liability.
Basically, the place is a money pit. Probably a good time to explore whether headquarters should be moved at the expiration of the lease. Also, the perfect time for Scott to go public and announce that he’s extending his 20 percent pay cut and will get by on $353,334 a month through December.
The media rights part of this is the most critical part. The current deal with Fox and ESPN expires in 2024. The negotiation timeline for that is complicated by Scott’s own contract, which ends (2022) just as the real talks would be ramping up. But the conference needs to be plotting now.
It should be working to advance the media rights possibilities with Amazon, Facebook and Apple. Yes, even as it is currently under contract with Fox and ESPN. Yes, just like the SEC, which leapfrogged its current partner to get to a far more lucrative deal down the road with CBS.
Plain and simple. A growing Pac-12 partnership or even the illusion of one with a tech company is a wise move right now. In April, Pac-12 Networks president Mark Shuken floated just that in an interview with the Sports Business Journal. I saw that as a promising bit of strategy by Shuken, no doubt planted with intention. But that can’t be all there is to that.
Amazon already has the NFL. It’s signed on for an expanded and exclusive partnership with the league. It doesn’t need the Pac-12 to matter in households. But the conference desperately needs it. Not just as a potential partner, but to use as leverage in the event that Fox/ESPN/CBS don’t come to the table in a meaningful way in the coming months.
There’s no telling what this pandemic is going to do to television advertising revenue. If there’s a football season, the Pac-12 Network will save money on production costs because it won’t have on-site pre-game remote shows. If there are games, it will still collect cable fees and the conference will fulfill its existing television obligations that generate revenue. So the short-term appears sustainable as long as football happens, but I’m more into the long play here.
So are a lot of Pac-12 fans, apparently.
I’ve received a growing number of inquiries from fans across the conference who expressed a desire to pay for the Pac-12 content on a pay-per-view basis. It’s not the worst idea floated. But the conference tells me it’s prohibited by its current distribution agreement from distributing the Pac-12 channels individually outside a bundle.
Said Andrew Walker, a spokesperson: “Near-term options for enjoying Pac-12 Networks live TV coverage have not changed. Fans continue to have multiple options via cable and over-the-top distributors to enjoy all seven Pac-12 Networks channels. In terms of long-term possibilities, thanks to the optionality of controlling all of its media rights when they become available in 2024, the Pac-12 will have a number of distribution models to explore for all of its content.”
As I sift through that, pay-per-view very much feels like an option. Not the first option. Maybe not the best option. But one that exists and at a very basic level might provide a small bit of additional leverage to a conference desperately in search of it.
There are far more important things than the sports world.
Coronavirus has exposed athletic departments that operated on thin margins with no safety net. It’s created all sorts of health and economic challenges. But also, it’s provided the Pac-12 with some cover and an opportunity to gain market share and improve its footing.
I’d like to see the conference emerge from the pandemic economically healthy, focused, and energized. I’m weary from watching it act more lamb than lion. And in the end, that’s leadership.