Mailbag: Grading the Pac-12’s media rights deals

The Hotline mailbag publishes weekly. Send questions to wilnerhotline@bayareanewsgroup.com and include ‘mailbag’ in the subject line. Or hit me on the social media platform X: @WilnerHotline

Some questions have been edited for clarity and brevity.

The financial terms of the Pac-12’s media rights agreement with CBS, The CW and USA Network were not disclosed, which I have never heard of with a media deal announcement. Is it way lower than projected? Or are they possibly waiting until the Mountain West announces the financials of its deal first? – @NateJones2009

I seriously doubt the Mountain West’s media rights negotiations impacted the Pac-12 decision to keep mum. Could the ongoing litigation over the poaching penalties and exit fees have played a role? Perhaps.

But when there’s a shred of doubt, the Hotline typically leans into Occam’s razor: The simplest explanation is correct.

And in this case, the simplest explanation is the financial terms of the three agreements aren’t what the rebuilt conference aimed for when this process began.

Because if the revenue figure was worth celebrating, the Pac-12 would have found a way to leak the terms, just like every other conference in the history of college sports media deals.

Having said that, there is a load of context to include in our discussion, starting with the original projections and reasonable range of valuation.

Based on conversations with sources throughout the process, our understanding is the nine schools were given a wide range of media rights valuations by both the advisor on expansion (Navigate) and the advisor on media rights (Octagon). And those figures depended, to a large extent, on the makeup of the conference.

The projected valuation was not the same with Memphis, Tulane and South Florida (and perhaps UTSA) forming an eastern arm – and spreading the footprint across four time zones – as it was without those schools, for example.

What’s more, there was ongoing confusion in both public comments and leaked information over the projected distributions for the media rights component as opposed to the total annual payouts, which include College Football Playoff and NCAA Tournament revenue.

Once it became evident Memphis and Co. would not be involved, the Hotline set $7 million to $10 million (per school per year) as our projected range for the media rights piece.

Now that the process is complete, our hunch, per industry sources – to be clear: they have not seen the final contracts – is the valuation landed on the lower end of that range.

But even there, more context is required, for two reasons:

1. We don’t know the specific terms of Texas State’s agreement. The Bobcats are a partial-share member, but for how much and for how long? Whatever revenue they don’t collect increases the shares of the other schools.

2. Pac-12 Enterprises, the conference’s production unit, will handle dozens of football and basketball games for The CW and USA Network. The cost of those productions – it’s presumably several million dollars per year, at least – will impact the Pac-12’s bottom line and create a net revenue figure.

And in the interest of transparency: Our projected range of $7 million-to-$10 million per school was based on a net revenue figure.

(Over and above those components, keep this in mind: The Pac-12 is creating a performance fund in which postseason participants keep an outsized percentage of the revenue earned. That money is part of the annual total distributions from the conference, not the media rights revenue stream).

Until there’s fact-based reason to believe otherwise, the Hotline views the entire pursuit with a dose of nuance.

The Pac-12 didn’t reach the media rights valuation level it sought, but every home football game will be on linear television. (Dollars matter, but so, too, does exposure). Not being on ESPN or Fox is a miss for media attention, but the ability to set every kickoff time prior to the season is a hit for fans.

If we’re handing out grades, the Pac-12 clearly doesn’t deserve an ‘A’ or ‘D’. Whether it gets a ‘B’ or ‘C’ depends on the details that are not yet known.

With 16 football teams being the smallest Power Four conference, what number of teams do you think the Pac-12 needs in order to be taken seriously? – @brycetacoma

We’ll start by saying there is no football membership total that will elevate the new Pac-12 to the level of the ACC, Big 12, Big Ten and SEC.

The conference was relegated to the second tier the moment eight schools announced their departures on Aug. 4, 2023.

So let’s address the relevant question: Is there a membership total that would optimize the Pac-12’s ability to become the best of the non-power conferences?

The answer is, unequivocally, no.

It’s not about quantity; it’s about quality. The rebuilt Pac-12 is better off remaining lean and mean than adding schools for heft. Why? Because schedule strength and quality wins are vital to the College Football Playoff selection process.

In order for the Pac-12 champion to grab an automatic bid, it must be ranked higher than the winners of the American, MAC, Mountain West, Conference USA and Sun Belt.

That’s best achieved by avoiding low-level competition that deflates vital metrics.

If the conference cannot find a ninth (or 10th) school that maintains or elevates the quality of play, it should stand on eight.