• WSJ PAC-12 Autopsy

    From xyzzy@21:1/5 to All on Wed Aug 9 01:43:54 2023

    Two sum­mers ago, George Kli­avkoff took on one of the least de­sir­able and most dif­fi­cult ex­ec­u­tive jobs in col­lege sports: re­sus­ci­tat­ing the rapidly fad­ing Pac-12 Con­fer­ence. 

    Rev­enue in the so-called “Con­fer­ence of Cham­pi­ons” lagged well be­hind
    the two gi­ants that now dom­i­nate col­lege sports, the Big Ten and South­east­ern Con­fer­ences. The Pac-12 hadn’t pro­duced a foot­ball or
    men’s bas­ket­ball cham­pion since 2004. It was bur­dened by its once-in­no­v­a­tive tele­vi­sion net­work, which never reached its po­ten­tial.
    But al­most im­me­di­ately af­ter Kli­avkoff took over, he re­al­ized that
    he was tak­ing over “not just a dump­ster fire, but mul­ti­ple dump­ster fires,” ac­cord­ing to a per­son fa­mil­iar with his think­ing. 

    Kli­avkoff was stymied by the Pac-12’s own mem­ber schools, who shut down pos­si­ble ex­pan­sion in the sum­mer of 2021. He was stiff-armed by tele­vi­sion net­works that dragged their feet in ne­go­ti­a­tions. He mis­cal­cu­lated the mar­ket for a new broad­cast deal, al­low­ing ri­vals
    at other con­fer­ences to out­flank the Pac-12 in col­lege sports’ ruth­less race for dom­i­na­tion. 

    The Pac-12 was al­ready loaded with prob­lems when Kli­avkoff took over
    from for­mer com­mis­sioner Larry Scott in 2021. Many of them were re­lated to the Pac-12 Net­work, the brain­child of Scott and source of plen­ti­ful headaches since its launch in 2012. Lack­ing lu­cra­tive op­tions with net­works, the Pac-12 opted to re­tain full own­er­ship—un­like other con­fer­ence TV chan­nels that part­nered with es­tab­lished net­works with
    na­tional dis­tri­b­u­tion—keep­ing every­thing in-house from a gleam­ing
    new pro­duc­tion stu­dio in down­town San Fran­cisco.

    The Pac-12 Net­work never took off, in part be­cause of its in­abil­ity to reach an agree­ment with Di­recTV that lim­ited dis­tri­b­u­tion. Poor dis­tri­b­u­tion meant lag­ging rev­enue from tele­vi­sion rights, putting
    the Pac-12 in last place among the five ma­jor con­fer­ences. Tax records show that in the 2021-22 fis­cal year, Pac-12 schools re­ceived an av­er­age dis­burse­ment of $37 mil­lion; the Big Ten schools re­ceived $58


    Then, three weeks af­ter of­fi­cially tak­ing over on July 1, 2021, the col­lege sports land­scape be­gan to change when Texas and Ok­la­homa an­nounced they would leave the Big 12 for the SEC. Ac­cord­ing to peo­ple fa­mil­iar with the mat­ter, for­mer Big 12 com­mis­sioner Bob Bowlsby ap­proached Kli­avkoff about com­bin­ing his eight re­main­ing schools with
    the Pac-12 to form a 20-team su­per con­fer­ence. 

    Kli­avkoff was on board, ac­cord­ing to a per­son fa­mil­iar with his think­ing, but the merger failed to clear a sub­com­mit­tee where South­ern
    Cal­i­for­nia pres­i­dent Carol Folt op­posed it, ac­cord­ing to peo­ple
    fa­mil­iar with the mat­ter.

    A year later, Kli­avkoff and the rest of the Pac-12 were blind­sided when
    USC and UCLA an­nounced a shock­ing de­par­ture for the Big Ten. It was the one sce­nario that was im­pos­si­ble to de­fend against, or so an ex­pan­sion study com­mis­sioned by the Pac-12 in the sum­mer of 2021 con­cluded, ac­cord­ing to a per­son fa­mil­iar with the mat­ter.

    That left Kli­avkoff with a clear man­date to keep the con­fer­ence’s 10 re­main­ing schools to­gether by sign­ing an at­trac­tive tele­vi­sion deal. He at­tempted to en­ter an ex­clu­sive ne­go­ti­at­ing win­dow to
    ex­tend its ex­ist­ing deals with ESPN and Fox in July 2022. Some Pac-12 board mem­bers wanted as much as $50 mil­lion per school per year, ac­cord­ing to peo­ple fa­mil­iar with the mat­ter, but Kli­avkoff told them that about $43 mil­lion was a more re­al­is­tic tar­get. Even so, this
    was so far above what tele­vi­sion part­ners were will­ing to pay that a deal never ma­te­ri­al­ized.

    Mean­while, new Big 12 com­mis­sioner Brett Yor­mark had ap­proached ESPN and Fox about an early re­newal at a much lower ask­ing price that the net­works found more palat­able, said peo­ple fa­mil­iar with the mat­ter.
    Thus, the Big 12’s new six-year $2.28 bil­lion deal an­nounced in Oc­to­ber
    leapfrogged the con­fer­ence past the Pac-12.

    The Pac-12 had no choice but to take its broad­cast rights to the open mar­ket—where the TV in­dus­try was in­creas­ingly un­der eco­nomic pres­sure. Af­ter months of hop­ing that the fi­nan­cial cli­mate would im­prove, the Pac-12 pres­i­dents and chan­cel­lors on June 30 unan­i­mously voted to give the com­mis­sioner a July 31 dead­line for the me­dia deal, said a per­son fa­mil­iar with the con­fer­ence.

    Kli­avkoff even­tu­ally de­liv­ered two op­tions. One was a tra­di­tional
    five-year deal in­volv­ing tra­di­tional net­works, with three ca­ble part­ners and one digi­tal bid­der split­ting the Pac-12 rights. It would have even­tu­ally given schools a dis­burse­ment of about $30 mil­lion a year—far less than the Big Ten and SEC, but in line with the new Big 12 deal. 

    The sec­ond op­tion–a stream­ing deal with Apple—had more risk and more up­side. Schools would start out mak­ing less—Ari­zona pres­i­dent Robert
    Rob­bins this week put the fig­ure at $23 mil­lion—but could make more de­pend­ing on how many sub­scrip­tions they gen­er­ated. It would be costly for the con­fer­ence in other ways: Apple de­clined to cover pro­duc­tion costs as­so­ci­ated with foot­ball and bas­ket­ball games, which tele­vi­sion ex­ec­u­tives said can run be­tween $600,000 and $900,000 per game.

    But just days be­fore the July 31 dead­line, the ground shifted un­der Kli­avkoff’s feet when Col­orado an­nounced it was leav­ing the Pac-12 for
    the Big 12. The de­fec­tion caused the more tra­di­tional tele­vi­sion deal
    to fall through, said one per­son fa­mil­iar with the mat­ter, but Kli­avkoff was able to keep Apple in­ter­ested by sug­gest­ing the Pac-12 could add a 10th mem­ber. 

    Kli­avkoff pre­sented this re­vised Apple deal to the Pac-12’s re­main­ing
    nine pres­i­dents and chan­cel­lors on Tues­day morn­ing. As late as Thurs­day evening, Kli­avkoff and oth­ers in the con­fer­ence be­lieved that the deal and a new grant of rights—a le­gal doc­u­ment that binds the schools to­gether for the du­ra­tion of the tele­vi­sion con­tract—would be
    fi­nal­ized at a board meet­ing sched­uled for 7 a.m. Pa­cific time on Fri­day morn­ing. Some schools had even sent the Pac-12 of­fice signed copies of the grant of rights, said a per­son fa­mil­iar with the mat­ter.

    “I gen­uinely felt that on Fri­day morn­ing we would sign the needed pa­per­work [and] fi­nal­ize the deal with Apple,” wrote Wash­ing­ton State
    pres­i­dent Kirk Schulz in a let­ter pub­lished Mon­day.

    What Kli­avkoff and other Pac-12 pres­i­dents didn’t know was that the Big Ten had reen­gaged in con­ver­sa­tions with Ore­gon and Wash­ing­ton that
    had been put on ice un­der for­mer com­mis­sioner Kevin War­ren. In a closed ses­sion late Thurs­day night, Wash­ing­ton’s Board of Re­gents de­cided that what the Big Ten had to of­fer—a par­tial share of rev­enue up to $35 mil­lion, and the prom­ise of a full share in the fu­ture—was bet­ter than any­thing the Pac-12 could de­liver.

    “I usually skip over your posts because of your disguistng, contrarian, liberal personality.” — Altie

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