*** The first in a hotline series examining the financial condition of the Pac-12 and its media strategy…
The release of federal tax filings by four major conventions late last week added clarity to one aspect of the Pac-12’s near-term fate. The poor seem to be getting poorer in comparison to the competition.
We knew the Pac-12 Presidents’ decision to play a shorter football season in 2020 would reduce the cash the campuses would receive in fiscal 2021. And, in fact, the Pac-12 reported distributions that fell 41 percent year-over-year, from an average of $33.6 million per school before the pandemic to an average of $19.8 million in the year affected by COVID.
But because the PAC-12’s revenue base is smaller than that of its two counterparts (the Big Ten and the SEC). And With fewer football games played than the two leagues with comparable revenue streams (ACC and Big 12), it was momentarily reduced to match the campus distribution anywhere in the Power Five.
Tally for FY21:
SEC: $54.6 million per school
Big Ten: $46.1 million per school
ACC: $36.6 million per school
Big 12: $35.6 million per school
Pac-12: $19.8 million per school
(Figures for all leagues except the Pac-12 were published by USA Today last week. When a range of payouts within a specific conference were published, we have averaged them for clarity.)
The Pac-12 expects to return to normalcy in the current fiscal year and will report its FY22 financials next spring.
“We are encouraged by the substantial return to pre-pandemic levels of revenue and distribution, which will show our 2021-22 financial results,” Commissioner George Klewkopf said on Friday. The Pac-12 released its tax filings.
But the 41 percent year-on-year decline could extend beyond the affected fiscal, especially as it contrasts with cash flows in the Power Five scenario.
And a second development, which came to the fore in ACC’s financials, highlighted the Pac-12’s ever-increasing revenue challenge.
Conventions manage their distribution differently, making apples-to-apples comparisons a bit daunting. But just two years ago, the Pac-12 was sending (on average) $2 million to $3 million more to its schools than the ACC.
The expansion carriage of the ESPN-owned ACC network changed that dynamic.
The ACC would have passed the Pac-12 in revenue distribution, with distributions climbing 80 percent for the entirety of the 2020-21 sports calendar, according to USA Today. Even though the Pac-12 played a normal football season in the fall of 2020,
In other words, the Pac-12 is now ranked last among the Power Five in annual media rights payouts – and is likely to remain in fifth place until its new contract cycle begins with the 2024 football season. (Commissioner George Klewkopf is expected to begin formal talks with media partners later this year.)
The hotline has back-of-the-envelope math to support our conclusion.
Notes on the following estimates:
– Because campus distribution includes two components that are impossible to predict (college football playoff attendance and NCAA tournament bids/wins), we assumed those revenue streams were fixed and focused on income from Tier 1 media deals and conference networks She was
— For conferences that report a range of payments, such as ACC, we averaged the highest and lowest.
Four percent of escalators were used year-on-year.
– figures are hotline estimate unless otherwise noted.
**** FY21
SEC: $54.6 million per school (official)
Big Ten: $46.1 million per school (official)
ACC: $36.6 million per school (official)
Big 12: $35.6 million per school (official)
Pac-12: $19.8 million per school (official)
*** FY22
Big Ten: $58.7 million
SEC: $58.7 million
Big 12: $40.8 million
ACC: $38.1 million
Pac-12: $36.3 million
note: Figures based on pre-pandemic distribution and adjusted for changes disclosed by the league.
*** FY23
Big Ten: $61.1 million
SEC: $61 million
Big 12: $42.4 million
ACC: $42.1 million
Pac-12: $37.8 million
note: ACC Networks is expected to have full distribution for the entirety of FY23. We’ve bounced $4 million on the Comcast customers added within the footprint, in large part, based on the distribution of each school. Typically, each in-market cable home costs about $1 per month for a conference network; Xfinity has a wide presence in Pennsylvania, Georgia, and Florida.
*** FY24
Big Ten: $86.9 million
SEC: $63.4 million
Big 12: $44.1 million
ACC: $43.8 million
Pac-12: $39.3 million
note: The Big Ten’s current media rights deal expires at the end of fiscal 2013, so the 2023 football season will be the first under a new agreement. To get an idea of how much growth there should be, we first assigned 70% of annual convention distribution to direct media rights; The remaining 30% consists of CFP and fixed payments (for our purposes) from March Madness. Then we increased the valuation of direct media rights for new contracts by 60%. This figure divides the difference between the increase in NFL media rights from its new agreements (80%) and the increase in MLB rights from its new deals (40%).
***FY21-24 Total Pay Per School
Big Ten: $252.8 million
SEC: $237.7 million
Big 12: $162.9 million
ACC: $160.6 million
Pac-12: $133.2 million
that leads us…
Pac-12 Four Years revenue loss relative to:
Big Ten: $119.6 million per school
SEC: $104.5 million per school
Big 12: $29.7 million per school
ACC: $27.4 million per school
From a comparative cash flow standpoint, that could be a long four years on the West Coast.
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