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Midway through their seventh year, the Pac-12 Networks aren’t merely stagnating. They’re shrinking in reach and drastically underperforming revenue expectations, according to information obtained by the Hotline that sheds unprecedented light on the financial realities of the conference’s wholly-owned media company.
Some schools, for example, are receiving annual payouts from the networks that are a fraction of what they’d hoped for — and a fraction of what has been reported in the media — when the real cost of the content is included in the calculation.
The figure provided on the website is a lump-sum amount. Two Hotline sources with access have copied down that amount over the years, then dived by 12 to determine the payouts to each school.
Those payout numbers are as follows:
2013: None listed
2014: $862,000 per school
2015 $1,677,500 per school
2016 $1,980,250 per school
2017: $2,522,167 per school
2018: $2,666,667 per school
Over the six completed fiscal years of the networks’ existence, the total payout per school, as tallied by campus officials, is $9,708,584 per school — not even at the top end of the single-year range referenced by the source who attended Scott’s presentation.
“They told us, ‘This is what we think it’s going to be,’’’ said John Perrin, the longtime CFO of the Arizona athletic department who retired two years after the networks were launched.
“And it hasn’t panned out anywhere near where they thought.”
But that’s not the end of the financial story, at least from the schools’ perspective.
Not only are the annual payouts below the expectations of many athletic department officials. They are, in the eyes of some, merely a gross number.
The Pac-12 Networks would not exist without an inventory of content, without the games themselves.
But in order to acquire that inventory, the conference needed each athletic department to buy back the TV rights to local football and basketball broadcasts — the games not shown nationally on ABC or ESPN — from its sponsorship and marketing partner.
Once all the local rights had been repurchased from the likes of IMG and Learfield, they were pooled together to form the content backbone of the Pac-12 Networks.
(The SEC went through the same process a few years ago when forming its network.)
The amount and duration of the buy-back process varied by school and was based on individual contracts.
Some, like Washington and Washington State, have completed the repurchasing process; others have not.
In most cases, the cost of repurchasing the local rights was substantial.
Over a four-year period, for example, UCLA had $5.6 million “carved out” of a larger sponsorship deal with IMG as compensation for the loss of its TV rights, according to a school official.
Back that figure out of the $9.7 million distributed to each campus by the Pac-12 Networks, and the Bruins have received $4.1 million in net revenue. That’s an average of $683,333 per year over six years of the networks.
Cal reported a bigger hit over a longer buy-back process, reimbursing IMG to the tune of $7.1 million over five years.
Remove that from the Pac-12 Networks’ payout, and the Bears have received an average of $433,333 in net annual revenue — or 1/20th of the amount in the high range of the scenario presented to athletic directors.
Right click and open in incognito window....
Midway through their seventh year, the Pac-12 Networks aren’t merely stagnating. They’re shrinking in reach and drastically underperforming revenue expectations, according to information obtained by the Hotline that sheds unprecedented light on the financial realities of the conference’s wholly-owned media company.
Some schools, for example, are receiving annual payouts from the networks that are a fraction of what they’d hoped for — and a fraction of what has been reported in the media — when the real cost of the content is included in the calculation.
The figure provided on the website is a lump-sum amount. Two Hotline sources with access have copied down that amount over the years, then dived by 12 to determine the payouts to each school.
Those payout numbers are as follows:
2013: None listed
2014: $862,000 per school
2015 $1,677,500 per school
2016 $1,980,250 per school
2017: $2,522,167 per school
2018: $2,666,667 per school
Over the six completed fiscal years of the networks’ existence, the total payout per school, as tallied by campus officials, is $9,708,584 per school — not even at the top end of the single-year range referenced by the source who attended Scott’s presentation.
“They told us, ‘This is what we think it’s going to be,’’’ said John Perrin, the longtime CFO of the Arizona athletic department who retired two years after the networks were launched.
“And it hasn’t panned out anywhere near where they thought.”
But that’s not the end of the financial story, at least from the schools’ perspective.
Not only are the annual payouts below the expectations of many athletic department officials. They are, in the eyes of some, merely a gross number.
The Pac-12 Networks would not exist without an inventory of content, without the games themselves.
But in order to acquire that inventory, the conference needed each athletic department to buy back the TV rights to local football and basketball broadcasts — the games not shown nationally on ABC or ESPN — from its sponsorship and marketing partner.
Once all the local rights had been repurchased from the likes of IMG and Learfield, they were pooled together to form the content backbone of the Pac-12 Networks.
(The SEC went through the same process a few years ago when forming its network.)
The amount and duration of the buy-back process varied by school and was based on individual contracts.
Some, like Washington and Washington State, have completed the repurchasing process; others have not.
In most cases, the cost of repurchasing the local rights was substantial.
Over a four-year period, for example, UCLA had $5.6 million “carved out” of a larger sponsorship deal with IMG as compensation for the loss of its TV rights, according to a school official.
Back that figure out of the $9.7 million distributed to each campus by the Pac-12 Networks, and the Bruins have received $4.1 million in net revenue. That’s an average of $683,333 per year over six years of the networks.
Cal reported a bigger hit over a longer buy-back process, reimbursing IMG to the tune of $7.1 million over five years.
Remove that from the Pac-12 Networks’ payout, and the Bears have received an average of $433,333 in net annual revenue — or 1/20th of the amount in the high range of the scenario presented to athletic directors.
