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Pac-12 Notes
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April 9th
… Foe Pause …
Way-Too-Early Top 25 basketball predictions for 2019-20 (at least one mentions CU)
From the San Jose Mercury News … What we saw Monday night — Virginia raising the trophy — we could see again a year from now. As of this moment, the Cavaliers are the team to beat in 2020.
The following rankings will be updated in late May, after the deadline to withdraw from the NBA Draft.
Also considered (in no particular order): Mississippi State, Louisville, Arizona, Purdue, Syracuse, UC Irvine, Baylor, Memphis, Davidson, Colorado, Wisconsin, Kansas State, Virginia Tech, Florida, Arizona State, Buffalo and Iowa State.
22. Washington: Sure, the Huskies were hammered by the expiration of eligibility clocks, but there is hope: If Jaylen Nowell returns — and his NBA projections aren’t ideal — then the Huskies just might maintain their momentum. Nowell and 5-star big man Isaiah Stewart would be a dynamite duo.
12. Oregon: If everything breaks right, Kenny Wooten, Payton Pritchard and Louis King return and the Ducks are a top-10 team. If they all leave, the Ducks aren’t a top-25 team. We split the difference and await the decisions.
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CBS Sports “Never-too-early Top 25”
From CBS Sports … With Virginia’s 85-77 victory over Texas Tech in the NCAA Tournament championship game, the 2018-19 college basketball season was completed. So now it’s time to look ahead to the 2019-20 season. And, if these projections prove correct, next season will be all sorts of fun for fans in the state of Michigan because, I think, Michigan State and Michigan should both be great.
They are No. 1 and No. 2 in the preseason Top 25 And 1.
And before you scream “but it’s too early to rank teams for next season because we aren’t even sure who’s coming and going,” understand that I did this exact exercise on the night of the 2018 title game, and 14 of the 16 schools that ultimately made the Sweet 16 of the 2019 NCAA Tournament were in my initial Top 25 And 1. So, at least last year, these rankings were a nice preview of the season to come.
From the Pac-12 …
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ESPN: “Loaded Michigan State leads Way-Too-Early Top 25 for 2019-20”
From ESPN … The 2018-19 college basketball season officially ended Monday, with Virginia beating Texas Tech 85-77 in overtime. That means it’s already time to look ahead to next season.
Things will change, of course. There are NBA draft decisions to be made, players waiting to enter the transfer portal, high school players still unsigned. There is also the second federal trial on college basketball corruption beginning later this month, and that could bring college coaches or players into the headlines.
From the Pac-12 …
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Sports Illustrated: “Way-Too-Early Top 25”
From Sports Illustrated … Way-too-early is an understatement—there might as well still be confetti on the court in Minneapolis—but with another college basketball season all wrapped up, it’s a good time to look ahead to the fall, if ever-so-briefly. These rankings are going to look way different come October, noting the impending flurry of movement (between NBA draft decisions, coaching changes, grad transfers and uncommitted recruits, there’s a lot left to happen). Think of this less as a personal affront to your school, and more of a cursory look at the field.
From the Pac-12 …
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April 8th
… Foe Pause …
Pac-12 Networks President Mark Shuken: “The ultimate objective is to elevate the value of our media rights between now and 2024 (when the current deals expire)”
From the San Jose Mercury News … Pac-12 Networks president Mark Shuken chatted with the Hotline last month in Las Vegas about a range of topics directly and indirectly related to the networks’ future.
The majority of our 45-minute discussion focused on Shuken’s plans to increase engagement, but we touched on the larger media landscape, as well.
The following Q&A has been re-ordered from the original conversation so the topics flow in a manner that will be easy for readers to follow, without impacting the context.
The Hotline’s deep dive into Shuken’s engagement plans — using football as the primary vehicle — can be found here.
For other Hotline content on the Pac-12 Networks, consider this landing page.
*** How do you know the increased emphasis on football is working?
“We’re excited about specific data around all the engagement on the other platforms (beyond linear TV). The question is, how do you monetize? How do you quantify the value of anybody who clicks, or anybody who watches?
“The industry isn’t there yet. But it has to get there — not just with sports necessarily but the whole thing.
“You look at Katelyn Ohashi” — the UCLA gymnast whose routine went viral — “there has got to be some way to make that matter from a business perspective.”
… Continue reading story here …
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April 7th
… Foe Pause …
Deep Dive Part II: “Did The Pac-12 Need A Strategic Partner In 2012?”
From AthleticDirectorU.com …
If you read Part I of this series, you know that I’m building a model to judge the net present value of the 2012 decision for Larry Scott and the Pac-12 to not bring on a strategic partner for the Pac-12 Networks. Crucially, I’m judging this decision based on the time value of money, specifically an 8% cost of capital.
Bottom Line, Up Front
The Pac-12 Networks likely will miss out on somewhere between $276 to $869 million over the 12-year period from 2012 to 2024 by not joining with a strategic partner. That means that to justify this decision, the media rights deals signed in 2025 and beyond need to be worth something like $9 to $12 billion dollars, or three to four times the value of the current deal.
Top Down Calculation
Let’s take a step back and explain how I got there.
If back of the envelope math is the quick way to run numbers—which I did last time—I’d call “top down” the easy way, though it can still take a lot of time. Essentially, you take your opinion on what certain things are worth, and use them to calculate revenue, then flow that on down to your profits. The key improvement with this method is I’m going to account for the time value of money.
(Technically, the cost of capital applies to the free cash flow of a business. But since the Pac-12 isn’t actually a business—it’s a non-profit owned by other non-profits—it doesn’t have profit or free cash flow. But it does distribute the money it makes to its “owners,” and that’s good enough as a stand in for free cash flow for me.)
So the starting point is how much money has the Pac-12 Network made since it launched? Well, not much. As Jon Wilner detailed here, the numbers are pretty small:
I say these numbers are small, because of the expectations set by the Pac-12 at launch. As Jon Wilner reports, the Pac-12 expected to make much, much more:
When I first stumbled on these projections, I was stoked frankly. (Can you tell I’m from California?) These numbers are basically the perfect fill-ins for a “top down” analysis.
Assuming the Pac-12 did a 70-30% split (which is a little lower than the Big Ten’s 51-49% split but I’m okay with it), then in the middle case, the schools would have taken home $7 million each year after the partner cut. In the low case, they’d take home about $5 million, which is close to our $4 million back of the envelope number. That said, even that may be too low. The SEC Network launched and it added about $20 million to each school’s distribution. Even if you think the SEC Network (and B1G, which launched much longer back) aren’t comparable because of their bigger geographic regions, the ACC feels pretty comparable. When its network launches next year, it expects distributions to increase by $12 million per school. Looking at those comps, using $10 million as high case seems reasonable too.
We can take these numbers, multiple them by 12 to get to conference numbers and see the difference. I have the increased numbers start in year 2 (2015). I picked such a fast launch because ESPN basically turbo-charged the SEC launch and the ACC may see a similar bump. Then I picked a growth rate of 8% in the high and middle cases and 5% in the low case. As for the actual revenues, since the growth from 2017 to 2018 is about 6% ($30 million in 2017 to a projected $32 million this year) I’ll use that. (Though with AT&T U-verse dropping the Pac-12, this number could even decline next year.)
… Continue reading story here …
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April 6th
… Foe Pause …
Deep Dive into the numbers: Questions about the Pac-12 business model
From AthleticDirectorU.com … Explaining Net Present Value and the Time Value of Money
According to many in the media, Larry Scott has had a rough year or so. On the field, for the second year, his conference was shut out of the College Football Playoffs, and the Pac-12 has had a similarly dismal performance in the NCAA Men’s Basketball tournament. Off the field, there have been problems from questionable officiating to questionable salaries to questionable leasing decisions.
Those controversies are dwarfed by a much larger one: does the Pac-12 have a questionable business model?
The question hinges, it seems, on a key strategic point: The Pac-12 in 2012 prioritized owning 100% of the conference’s media rights. The defenders of Larry Scott—including himself, AJ Maestas, Joe Ravitch and even other athletic directors—summarize the defense along the lines of what Tom Stultz told AthleticDirectorU a while back:
“The true value of the conference’s strategy won’t be fully known until the next round of rights negotiations. The Pac-12 will have more options available to it than any other conference because of the rights it has retained. Whether or not that pays off will be clear once those negotiations occur.”
I’ve been frustrated by this debate, though, because I haven’t seen any good numbers on it. Do we really have to wait until 2025 to judge this strategy? The defenders of the Pac-12 hardly ever quantify the strategic decisions above. I have a saying on my website, one of my core beliefs, that, “Strategy is Numbers”. If you don’t run the numbers, you don’t actually have a strategy.
(I happen to be a diehard UCLA fan, so the success or failure of the Pac-12 is also pretty important to me. I was one of the few people watching UCLA gymnastics and volleyball on the Pac-12 Networks, until AT&T U-verse dropped them.)
As the Pac-12 considers selling 10% of its media rights to a strategic partner, it seems like some numbers can help us understand if Larry Scott and company made the right decision in 2012, if they’re making the right decision now, and what they should do in 2025. Since Larry Scott doesn’t share detailed numbers with his own Athletic Directors, it seems all the more relevant that someone should sketch out the stakes.
Since this is AthleticDirectorU, I’m going to lay out my process so that hopefully other ADs and leaders in college athletics could learn from my approach. Moreover, I’ll teach a few points about business strategy, that apply as much to college sports as consumer packaged goods. As for the numbers, I’m relying on the fantastic reporting of a few people, including Jon Wilner at San Jose Mercury News, John Canzano at The Oregonian and others.
To be clear, I can’t actually answer the question definitively. I don’t have access to the financials of the Pac 12 beyond the broad strokes in the Form 990s filed to the IRS—and released 10 months late—so I have to make a lot of assumptions. But I can sketch out the terms of the debate in hopefully a more concrete way. This article will have two parts. Part I will explain some terms, and Part II will explain my estimates with final conclusions.
… Continue reading story here …
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April 4th
… Foe Pause …
NCAA President Mark Emmert declares victory in Alston case (despite actual ruling)
From ESPN … NCAA president Mark Emmert says a judge’s recent ruling in a federal antitrust lawsuit reinforced that college athletes should be treated as students, not employees.
Emmert spoke to The Associated Press on Wednesday at U.S. Bank Stadium, the site of the men’s basketball Final Four, and made his first public comments since last month’s decision in the so-called Alston case.
Judge Claudia Wilken ruled that the NCAA did violate antitrust laws and cannot prohibit schools from providing more benefits to athletes as long as they are tethered to education.
“There were also components of that ruling that reinforced what a number of judges and administrative court proceedings have reinforced, and that is that college sports is about student-athletes playing student-athletes, not employees playing employees,” Emmert said. “And the fact that, once again, another federal decision has come down reinforcing the fundamentals of what college sport is about, we’re very pleased with that. And the way that she wrote what could and could not be prohibited by the NCAA is not in any way fundamentally inconsistent with what we’ve been doing for about a decade now.”
… Even though Wilken’s ruling fell well short of that, plaintiffs’ attorneys have celebrated it. They called it another step toward unraveling the NCAA’s definition of amateurism, which they consider unjust and arbitrary. In 2014, Wilken ruled against the NCAA in an antitrust lawsuit brought by former UCLA basketball star Ed O’Bannon. He claimed the NCAA and conferences inappropriately used the names, images and likenesses of college athletes without compensation.
… Continue reading story here …
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USA Today: Pac-12 spring storylines
From USA Today … The Pac-12 ended last season with two ranked teams: Washington and rival Washington State. That’s fewer ranked teams than the Mountain West, which had three. Likewise with the SEC West — and the SEC East. The Big Ten finished with five ranked teams, three in the East.
While the ACC matched the Pac-12 with just two teams ranked in the final polls, there’s one significant difference: Clemson. The Tigers tore through league play, the national semifinals and then Alabama. The Pac-12 was essentially removed from the College Football Playoff discussion after Washington’s loss to Oregon in October, even if the Cougars remained on the very periphery of the race heading into the final weekend of the regular season.
It’s springtime in the Pac-12. One question stands above the rest: Can this league put a team into the semifinals, or will it once again be left out of the conversation before even the debut rankings? The Huskies are the offseason favorite with several others in tow as the Pac-12 heads into April.
Colorado: The new offense
New coach Mel Tucker brings a solid defensive reputation to his new job, making that side of the ball the primary topic of offseason conversation. Yet it’s the offense that’s intriguing, especially given the question of how well senior quarterback Steven Montez fits into a scheme that seemingly asks its starter to threaten defenses with his legs.
… Read full story here …
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April 3rd
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Bad optics: USC AD Lynn Swann at autograph show while program is in disarray
… Related … “USC AD Lynn Swann defends his decision to sign autographs for money at a memorabilia show” … from CBS Sports
From YardBarker … The USC athletic program is in a state of disarray, and many fans are calling for athletic director Lynn Swann to either be fired or step down because of it. If the way he spent his time over the weekend is any indication, Swann is not bothered by that talk.
As Patrick Hruby of the Los Angeles Times noted, Swann was one of more than a dozen sports personalities and celebrities who attended a memorabilia show in Washington, D.C., over the weekend. He signed autographs for fans and collectors who paid $220 and up for his signature.
Meanwhile, USC trustees and senior leaders were meeting in Santa Barbara to discuss some of the many issues surrounding the school, which include the Trojans’ involvement in a recent FBI investigation into college basketball as well as the admissions scandal that has rocked the school. A university spokesperson told Hruby that Swann was invited to the event but was not required to attend, as there was nothing on the agenda that directly related to him.
That doesn’t make the optics any better. USC is facing some of the most significant issues in school history, and the athletic director is out profiting from an autograph signing. Former USC linebacker Ricki Ellison, who won a co-national championship with the Trojans in 1978, was in disbelief.
“Lynn’s a good guy, but isn’t his salary in the millions?” Ellison asked. “Why does he need to do this? It’s just embarrassing.
“With all of the issues going on right now, why would anybody support this brand or donate money to this school or send their child to this school? If you’re Lynn Swann, how does [going to an autograph show] gain additional credibility for USC?”
USC’s football team has taken some major hits in recent months, and Swann should at least be giving off the impression that he is doing everything in his power to fix it. It’s hard for him to make that case when he’s smiling and collecting money from fans while signing photos of himself.
… Continue reading story here …
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April 2nd
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United Airlines offers to back out of naming rights deal to USC’s Memorial Coliseum
From ESPN … United Airlines offered Friday to withdraw from a $69 million deal to change Los Angeles Memorial Coliseum to United Airlines Memorial Coliseum following criticism that adding a corporate name is disrespectful to the facility’s history of honoring troops who fought and died in World War I.
The airline made the offer to the University of Southern California, which announced the agreement for the naming rights last year as part of its extensive $270 million renovation of the nearly century-old landmark.
United Airlines California president Janet Lamkin said in a letter to USC official Todd Dickey that the company made “a significant commitment to financing this project” in exchange for the naming rights and was careful to keep the words “Memorial Coliseum” to honor the memory of veterans.
“If USC is not in a position to honor the terms of the agreement, including in particular the name change, United would be amenable to abiding by the wishes of the community, stepping away from this partnership with USC, and mutually terminating the agreement,” Lamkin wrote in the letter obtained by the Associated Press.
… Continue reading story here …
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Mike Leach’s “Insurgent Warfare and Football Strategy” class underway
From The Athletic … At the end of the first meeting of Washington State’s Insurgent Warfare and Football Strategy class a Q&A session opened up. There were a few general questions, and then one student near the front of the class raised his hand and directed one toward co-teacher — and, also, head football coach — Mike Leach about the future of football, specifically regarding artificial intelligence.
Most in the classroom were general students, not well-acquainted with Leach beyond what they see in the video clips aired after games or on Twitter. They did not know well the regularity with which Leach might take hold of such a question and speak nonstop for upward of an hour, ending up at a place that has absolutely nothing to do with artificial intelligence or football.
To the casual observer, it might seem unconventional at best and chaotic at worst. At times, that can be Leach.
He strings together thoughts, jumping from one topic to the next with a thread that few might follow and many might chalk up to eccentricity, but in his head, it all makes sense.
And so, with the class — slotted to last an hour and a half — looking to end right on time, it’s understandable that those in attendance who knew Leach well sighed when the question about artificial intelligence and football came up.
… Continue reading story here …
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April 1st
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Pac-12 men’s basketball closes forgettable decade with only one Final Four appearance
From the San Jose Mercury News … The decade is over for Pac-12 men’s basketball (as defined by the NCAA records book), and it was a forgettable one, indeed.
Over the course of 10 NCAA Tournaments, the conference produced one Final Four team: Oregon ’17.
How does that compare? As you probably guessed …
Final Four appearances for the Pac-12, by decade:
1980s: 2 (UCLA ’80, Arizona ’88)
1990s: 4 (Arizona ’94, UCLA ’95, Arizona ’97 and Stanford ’98)
2000s: 4 (Arizona ’01, UCLA ’06, ’07 and ’08)
2010s: 1 (Oregon ’17)
Final Four appearances per conference 2010-19 (based on affiliation of the school at the time of its appearance in the semifinals):
Big Ten: 8
SEC: 7
Big East: 7
ACC: 6
Big 12: 4
Horizon: 2
Missouri Valley: 2
American: 1
Pac-12: 1
WCC: 1
Not sure there’s much to add.
… Continue reading story here …
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“Best Coast” Mailbag with Chantel Jennings from the Athletic
From The Athletic … Three related questions, the answers to which are not necessarily the same:
1. What constitutes a good season for the Pac-12?
2. What will it take for the Pac-12 to regain national respect?
3. What will it take for Pac-12 fans to stop declaring that the sky is falling?
Garrett P.
Starting and ending the season on high notes while avoiding PR drama in the middle.
The Pac-12 needs to show up in its marquee non-conference games this year: Early on, Stanford has Northwestern and UCF, Washington State has Houston, Oregon has Auburn, Colorado faces Nebraska, Arizona State has Michigan State, and Arizona has Texas Tech. The Pac-12 needs to win a majority of those games and, ideally, in convincing fashion. Then, the season needs to be defined by the football, not by off-field or HQ drama. Come bowl season, another playoff absence would just add to the narrative that the Pac-12 is falling further and further. So, a playoff appearance plus some convincing bowl wins would go a long way.
Is that too much to ask? At this point, I honestly don’t know.
With regard to national respect, consistently making the playoff and convincing West Coast talent to stay in the West is crucial. Produce a playoff team most years and the conference will be fine on the national stage. Plus, being a part of that conversation on TV networks and in major publications is great for recruiting and would figure to help attract more talent.
And finally, the sky-is-falling crowd is always going to be there. We are all Chicken Littles just trying to get through the season. Everyone is always going to think that the worst thing is just around the corner. But hey, it’s kind of fun to live on that edge, right?
How patient are Buff fans going to be with Mel Tucker? Are they in a kind of a “Year Zero” situation?
Tyler D.
Every coaching transition takes time. The energy and enthusiasm in Boulder are genuine, and I do believe there’s an intensity the team is playing with that maybe hasn’t been there consistently. But, Colorado has serious gaps to fill at linebacker, safety and running back, and though the passing game returns talent in Steven Montez, Laviska Shenault and K.D. Nixon, they’re also all adjusting to a new system.
I say this every time there’s a coaching change, because fans want to put a bar down at the beginning of the season and say that one side is success and one side is failure. It just doesn’t work like that. I think Colorado fans need to see how the offensive execution improves from week 1 to week 4. I think they should look at how the team is playing in the fourth quarter when the score is unbalanced (with the Buffs being up a lot or down a lot). I think they should see what the morale of the team looks like if the group loses a few games in a row and how maybe that’s different than it was in seasons past. I know that’s not what fans want to hear because how can you measure any of that? And, sorry, you can’t. But success in year 1 looks so different at every single program. Every new beginning is hard. So, look for growth and change.
… Read full story here …
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Stuart
Continue reading...
Pac-12 Notes
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April 9th
… Foe Pause …
Way-Too-Early Top 25 basketball predictions for 2019-20 (at least one mentions CU)
From the San Jose Mercury News … What we saw Monday night — Virginia raising the trophy — we could see again a year from now. As of this moment, the Cavaliers are the team to beat in 2020.
The following rankings will be updated in late May, after the deadline to withdraw from the NBA Draft.
Also considered (in no particular order): Mississippi State, Louisville, Arizona, Purdue, Syracuse, UC Irvine, Baylor, Memphis, Davidson, Colorado, Wisconsin, Kansas State, Virginia Tech, Florida, Arizona State, Buffalo and Iowa State.
22. Washington: Sure, the Huskies were hammered by the expiration of eligibility clocks, but there is hope: If Jaylen Nowell returns — and his NBA projections aren’t ideal — then the Huskies just might maintain their momentum. Nowell and 5-star big man Isaiah Stewart would be a dynamite duo.
12. Oregon: If everything breaks right, Kenny Wooten, Payton Pritchard and Louis King return and the Ducks are a top-10 team. If they all leave, the Ducks aren’t a top-25 team. We split the difference and await the decisions.
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CBS Sports “Never-too-early Top 25”
From CBS Sports … With Virginia’s 85-77 victory over Texas Tech in the NCAA Tournament championship game, the 2018-19 college basketball season was completed. So now it’s time to look ahead to the 2019-20 season. And, if these projections prove correct, next season will be all sorts of fun for fans in the state of Michigan because, I think, Michigan State and Michigan should both be great.
They are No. 1 and No. 2 in the preseason Top 25 And 1.
And before you scream “but it’s too early to rank teams for next season because we aren’t even sure who’s coming and going,” understand that I did this exact exercise on the night of the 2018 title game, and 14 of the 16 schools that ultimately made the Sweet 16 of the 2019 NCAA Tournament were in my initial Top 25 And 1. So, at least last year, these rankings were a nice preview of the season to come.
From the Pac-12 …
- 16. Oregon
- 17. Arizona
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ESPN: “Loaded Michigan State leads Way-Too-Early Top 25 for 2019-20”
From ESPN … The 2018-19 college basketball season officially ended Monday, with Virginia beating Texas Tech 85-77 in overtime. That means it’s already time to look ahead to next season.
Things will change, of course. There are NBA draft decisions to be made, players waiting to enter the transfer portal, high school players still unsigned. There is also the second federal trial on college basketball corruption beginning later this month, and that could bring college coaches or players into the headlines.
From the Pac-12 …
- No. 11 – Oregon
- No. 16 – Washington
- No. 17 – Arizona
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Sports Illustrated: “Way-Too-Early Top 25”
From Sports Illustrated … Way-too-early is an understatement—there might as well still be confetti on the court in Minneapolis—but with another college basketball season all wrapped up, it’s a good time to look ahead to the fall, if ever-so-briefly. These rankings are going to look way different come October, noting the impending flurry of movement (between NBA draft decisions, coaching changes, grad transfers and uncommitted recruits, there’s a lot left to happen). Think of this less as a personal affront to your school, and more of a cursory look at the field.
From the Pac-12 …
- No. 10 – Oregon
- No. 14 – Arizona
- No. 17 – Washington
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April 8th
… Foe Pause …
Pac-12 Networks President Mark Shuken: “The ultimate objective is to elevate the value of our media rights between now and 2024 (when the current deals expire)”
From the San Jose Mercury News … Pac-12 Networks president Mark Shuken chatted with the Hotline last month in Las Vegas about a range of topics directly and indirectly related to the networks’ future.
The majority of our 45-minute discussion focused on Shuken’s plans to increase engagement, but we touched on the larger media landscape, as well.
The following Q&A has been re-ordered from the original conversation so the topics flow in a manner that will be easy for readers to follow, without impacting the context.
The Hotline’s deep dive into Shuken’s engagement plans — using football as the primary vehicle — can be found here.
For other Hotline content on the Pac-12 Networks, consider this landing page.
*** How do you know the increased emphasis on football is working?
“We’re excited about specific data around all the engagement on the other platforms (beyond linear TV). The question is, how do you monetize? How do you quantify the value of anybody who clicks, or anybody who watches?
“The industry isn’t there yet. But it has to get there — not just with sports necessarily but the whole thing.
“You look at Katelyn Ohashi” — the UCLA gymnast whose routine went viral — “there has got to be some way to make that matter from a business perspective.”
… Continue reading story here …
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April 7th
… Foe Pause …
Deep Dive Part II: “Did The Pac-12 Need A Strategic Partner In 2012?”
From AthleticDirectorU.com …
If you read Part I of this series, you know that I’m building a model to judge the net present value of the 2012 decision for Larry Scott and the Pac-12 to not bring on a strategic partner for the Pac-12 Networks. Crucially, I’m judging this decision based on the time value of money, specifically an 8% cost of capital.
Bottom Line, Up Front
The Pac-12 Networks likely will miss out on somewhere between $276 to $869 million over the 12-year period from 2012 to 2024 by not joining with a strategic partner. That means that to justify this decision, the media rights deals signed in 2025 and beyond need to be worth something like $9 to $12 billion dollars, or three to four times the value of the current deal.
Top Down Calculation
Let’s take a step back and explain how I got there.
If back of the envelope math is the quick way to run numbers—which I did last time—I’d call “top down” the easy way, though it can still take a lot of time. Essentially, you take your opinion on what certain things are worth, and use them to calculate revenue, then flow that on down to your profits. The key improvement with this method is I’m going to account for the time value of money.
(Technically, the cost of capital applies to the free cash flow of a business. But since the Pac-12 isn’t actually a business—it’s a non-profit owned by other non-profits—it doesn’t have profit or free cash flow. But it does distribute the money it makes to its “owners,” and that’s good enough as a stand in for free cash flow for me.)
So the starting point is how much money has the Pac-12 Network made since it launched? Well, not much. As Jon Wilner detailed here, the numbers are pretty small:
I say these numbers are small, because of the expectations set by the Pac-12 at launch. As Jon Wilner reports, the Pac-12 expected to make much, much more:
When I first stumbled on these projections, I was stoked frankly. (Can you tell I’m from California?) These numbers are basically the perfect fill-ins for a “top down” analysis.
Assuming the Pac-12 did a 70-30% split (which is a little lower than the Big Ten’s 51-49% split but I’m okay with it), then in the middle case, the schools would have taken home $7 million each year after the partner cut. In the low case, they’d take home about $5 million, which is close to our $4 million back of the envelope number. That said, even that may be too low. The SEC Network launched and it added about $20 million to each school’s distribution. Even if you think the SEC Network (and B1G, which launched much longer back) aren’t comparable because of their bigger geographic regions, the ACC feels pretty comparable. When its network launches next year, it expects distributions to increase by $12 million per school. Looking at those comps, using $10 million as high case seems reasonable too.
We can take these numbers, multiple them by 12 to get to conference numbers and see the difference. I have the increased numbers start in year 2 (2015). I picked such a fast launch because ESPN basically turbo-charged the SEC launch and the ACC may see a similar bump. Then I picked a growth rate of 8% in the high and middle cases and 5% in the low case. As for the actual revenues, since the growth from 2017 to 2018 is about 6% ($30 million in 2017 to a projected $32 million this year) I’ll use that. (Though with AT&T U-verse dropping the Pac-12, this number could even decline next year.)
… Continue reading story here …
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April 6th
… Foe Pause …
Deep Dive into the numbers: Questions about the Pac-12 business model
From AthleticDirectorU.com … Explaining Net Present Value and the Time Value of Money
According to many in the media, Larry Scott has had a rough year or so. On the field, for the second year, his conference was shut out of the College Football Playoffs, and the Pac-12 has had a similarly dismal performance in the NCAA Men’s Basketball tournament. Off the field, there have been problems from questionable officiating to questionable salaries to questionable leasing decisions.
Those controversies are dwarfed by a much larger one: does the Pac-12 have a questionable business model?
The question hinges, it seems, on a key strategic point: The Pac-12 in 2012 prioritized owning 100% of the conference’s media rights. The defenders of Larry Scott—including himself, AJ Maestas, Joe Ravitch and even other athletic directors—summarize the defense along the lines of what Tom Stultz told AthleticDirectorU a while back:
“The true value of the conference’s strategy won’t be fully known until the next round of rights negotiations. The Pac-12 will have more options available to it than any other conference because of the rights it has retained. Whether or not that pays off will be clear once those negotiations occur.”
I’ve been frustrated by this debate, though, because I haven’t seen any good numbers on it. Do we really have to wait until 2025 to judge this strategy? The defenders of the Pac-12 hardly ever quantify the strategic decisions above. I have a saying on my website, one of my core beliefs, that, “Strategy is Numbers”. If you don’t run the numbers, you don’t actually have a strategy.
(I happen to be a diehard UCLA fan, so the success or failure of the Pac-12 is also pretty important to me. I was one of the few people watching UCLA gymnastics and volleyball on the Pac-12 Networks, until AT&T U-verse dropped them.)
As the Pac-12 considers selling 10% of its media rights to a strategic partner, it seems like some numbers can help us understand if Larry Scott and company made the right decision in 2012, if they’re making the right decision now, and what they should do in 2025. Since Larry Scott doesn’t share detailed numbers with his own Athletic Directors, it seems all the more relevant that someone should sketch out the stakes.
Since this is AthleticDirectorU, I’m going to lay out my process so that hopefully other ADs and leaders in college athletics could learn from my approach. Moreover, I’ll teach a few points about business strategy, that apply as much to college sports as consumer packaged goods. As for the numbers, I’m relying on the fantastic reporting of a few people, including Jon Wilner at San Jose Mercury News, John Canzano at The Oregonian and others.
To be clear, I can’t actually answer the question definitively. I don’t have access to the financials of the Pac 12 beyond the broad strokes in the Form 990s filed to the IRS—and released 10 months late—so I have to make a lot of assumptions. But I can sketch out the terms of the debate in hopefully a more concrete way. This article will have two parts. Part I will explain some terms, and Part II will explain my estimates with final conclusions.
… Continue reading story here …
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April 4th
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NCAA President Mark Emmert declares victory in Alston case (despite actual ruling)
From ESPN … NCAA president Mark Emmert says a judge’s recent ruling in a federal antitrust lawsuit reinforced that college athletes should be treated as students, not employees.
Emmert spoke to The Associated Press on Wednesday at U.S. Bank Stadium, the site of the men’s basketball Final Four, and made his first public comments since last month’s decision in the so-called Alston case.
Judge Claudia Wilken ruled that the NCAA did violate antitrust laws and cannot prohibit schools from providing more benefits to athletes as long as they are tethered to education.
“There were also components of that ruling that reinforced what a number of judges and administrative court proceedings have reinforced, and that is that college sports is about student-athletes playing student-athletes, not employees playing employees,” Emmert said. “And the fact that, once again, another federal decision has come down reinforcing the fundamentals of what college sport is about, we’re very pleased with that. And the way that she wrote what could and could not be prohibited by the NCAA is not in any way fundamentally inconsistent with what we’ve been doing for about a decade now.”
… Even though Wilken’s ruling fell well short of that, plaintiffs’ attorneys have celebrated it. They called it another step toward unraveling the NCAA’s definition of amateurism, which they consider unjust and arbitrary. In 2014, Wilken ruled against the NCAA in an antitrust lawsuit brought by former UCLA basketball star Ed O’Bannon. He claimed the NCAA and conferences inappropriately used the names, images and likenesses of college athletes without compensation.
… Continue reading story here …
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USA Today: Pac-12 spring storylines
From USA Today … The Pac-12 ended last season with two ranked teams: Washington and rival Washington State. That’s fewer ranked teams than the Mountain West, which had three. Likewise with the SEC West — and the SEC East. The Big Ten finished with five ranked teams, three in the East.
While the ACC matched the Pac-12 with just two teams ranked in the final polls, there’s one significant difference: Clemson. The Tigers tore through league play, the national semifinals and then Alabama. The Pac-12 was essentially removed from the College Football Playoff discussion after Washington’s loss to Oregon in October, even if the Cougars remained on the very periphery of the race heading into the final weekend of the regular season.
It’s springtime in the Pac-12. One question stands above the rest: Can this league put a team into the semifinals, or will it once again be left out of the conversation before even the debut rankings? The Huskies are the offseason favorite with several others in tow as the Pac-12 heads into April.
Colorado: The new offense
New coach Mel Tucker brings a solid defensive reputation to his new job, making that side of the ball the primary topic of offseason conversation. Yet it’s the offense that’s intriguing, especially given the question of how well senior quarterback Steven Montez fits into a scheme that seemingly asks its starter to threaten defenses with his legs.
… Read full story here …
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April 3rd
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Bad optics: USC AD Lynn Swann at autograph show while program is in disarray
… Related … “USC AD Lynn Swann defends his decision to sign autographs for money at a memorabilia show” … from CBS Sports
From YardBarker … The USC athletic program is in a state of disarray, and many fans are calling for athletic director Lynn Swann to either be fired or step down because of it. If the way he spent his time over the weekend is any indication, Swann is not bothered by that talk.
As Patrick Hruby of the Los Angeles Times noted, Swann was one of more than a dozen sports personalities and celebrities who attended a memorabilia show in Washington, D.C., over the weekend. He signed autographs for fans and collectors who paid $220 and up for his signature.
Meanwhile, USC trustees and senior leaders were meeting in Santa Barbara to discuss some of the many issues surrounding the school, which include the Trojans’ involvement in a recent FBI investigation into college basketball as well as the admissions scandal that has rocked the school. A university spokesperson told Hruby that Swann was invited to the event but was not required to attend, as there was nothing on the agenda that directly related to him.
That doesn’t make the optics any better. USC is facing some of the most significant issues in school history, and the athletic director is out profiting from an autograph signing. Former USC linebacker Ricki Ellison, who won a co-national championship with the Trojans in 1978, was in disbelief.
“Lynn’s a good guy, but isn’t his salary in the millions?” Ellison asked. “Why does he need to do this? It’s just embarrassing.
“With all of the issues going on right now, why would anybody support this brand or donate money to this school or send their child to this school? If you’re Lynn Swann, how does [going to an autograph show] gain additional credibility for USC?”
USC’s football team has taken some major hits in recent months, and Swann should at least be giving off the impression that he is doing everything in his power to fix it. It’s hard for him to make that case when he’s smiling and collecting money from fans while signing photos of himself.
… Continue reading story here …
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April 2nd
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United Airlines offers to back out of naming rights deal to USC’s Memorial Coliseum
From ESPN … United Airlines offered Friday to withdraw from a $69 million deal to change Los Angeles Memorial Coliseum to United Airlines Memorial Coliseum following criticism that adding a corporate name is disrespectful to the facility’s history of honoring troops who fought and died in World War I.
The airline made the offer to the University of Southern California, which announced the agreement for the naming rights last year as part of its extensive $270 million renovation of the nearly century-old landmark.
United Airlines California president Janet Lamkin said in a letter to USC official Todd Dickey that the company made “a significant commitment to financing this project” in exchange for the naming rights and was careful to keep the words “Memorial Coliseum” to honor the memory of veterans.
“If USC is not in a position to honor the terms of the agreement, including in particular the name change, United would be amenable to abiding by the wishes of the community, stepping away from this partnership with USC, and mutually terminating the agreement,” Lamkin wrote in the letter obtained by the Associated Press.
… Continue reading story here …
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Mike Leach’s “Insurgent Warfare and Football Strategy” class underway
From The Athletic … At the end of the first meeting of Washington State’s Insurgent Warfare and Football Strategy class a Q&A session opened up. There were a few general questions, and then one student near the front of the class raised his hand and directed one toward co-teacher — and, also, head football coach — Mike Leach about the future of football, specifically regarding artificial intelligence.
Most in the classroom were general students, not well-acquainted with Leach beyond what they see in the video clips aired after games or on Twitter. They did not know well the regularity with which Leach might take hold of such a question and speak nonstop for upward of an hour, ending up at a place that has absolutely nothing to do with artificial intelligence or football.
To the casual observer, it might seem unconventional at best and chaotic at worst. At times, that can be Leach.
He strings together thoughts, jumping from one topic to the next with a thread that few might follow and many might chalk up to eccentricity, but in his head, it all makes sense.
And so, with the class — slotted to last an hour and a half — looking to end right on time, it’s understandable that those in attendance who knew Leach well sighed when the question about artificial intelligence and football came up.
… Continue reading story here …
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April 1st
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Pac-12 men’s basketball closes forgettable decade with only one Final Four appearance
From the San Jose Mercury News … The decade is over for Pac-12 men’s basketball (as defined by the NCAA records book), and it was a forgettable one, indeed.
Over the course of 10 NCAA Tournaments, the conference produced one Final Four team: Oregon ’17.
How does that compare? As you probably guessed …
Final Four appearances for the Pac-12, by decade:
1980s: 2 (UCLA ’80, Arizona ’88)
1990s: 4 (Arizona ’94, UCLA ’95, Arizona ’97 and Stanford ’98)
2000s: 4 (Arizona ’01, UCLA ’06, ’07 and ’08)
2010s: 1 (Oregon ’17)
Final Four appearances per conference 2010-19 (based on affiliation of the school at the time of its appearance in the semifinals):
Big Ten: 8
SEC: 7
Big East: 7
ACC: 6
Big 12: 4
Horizon: 2
Missouri Valley: 2
American: 1
Pac-12: 1
WCC: 1
Not sure there’s much to add.
… Continue reading story here …
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“Best Coast” Mailbag with Chantel Jennings from the Athletic
From The Athletic … Three related questions, the answers to which are not necessarily the same:
1. What constitutes a good season for the Pac-12?
2. What will it take for the Pac-12 to regain national respect?
3. What will it take for Pac-12 fans to stop declaring that the sky is falling?
Garrett P.
Starting and ending the season on high notes while avoiding PR drama in the middle.
The Pac-12 needs to show up in its marquee non-conference games this year: Early on, Stanford has Northwestern and UCF, Washington State has Houston, Oregon has Auburn, Colorado faces Nebraska, Arizona State has Michigan State, and Arizona has Texas Tech. The Pac-12 needs to win a majority of those games and, ideally, in convincing fashion. Then, the season needs to be defined by the football, not by off-field or HQ drama. Come bowl season, another playoff absence would just add to the narrative that the Pac-12 is falling further and further. So, a playoff appearance plus some convincing bowl wins would go a long way.
Is that too much to ask? At this point, I honestly don’t know.
With regard to national respect, consistently making the playoff and convincing West Coast talent to stay in the West is crucial. Produce a playoff team most years and the conference will be fine on the national stage. Plus, being a part of that conversation on TV networks and in major publications is great for recruiting and would figure to help attract more talent.
And finally, the sky-is-falling crowd is always going to be there. We are all Chicken Littles just trying to get through the season. Everyone is always going to think that the worst thing is just around the corner. But hey, it’s kind of fun to live on that edge, right?
How patient are Buff fans going to be with Mel Tucker? Are they in a kind of a “Year Zero” situation?
Tyler D.
Every coaching transition takes time. The energy and enthusiasm in Boulder are genuine, and I do believe there’s an intensity the team is playing with that maybe hasn’t been there consistently. But, Colorado has serious gaps to fill at linebacker, safety and running back, and though the passing game returns talent in Steven Montez, Laviska Shenault and K.D. Nixon, they’re also all adjusting to a new system.
I say this every time there’s a coaching change, because fans want to put a bar down at the beginning of the season and say that one side is success and one side is failure. It just doesn’t work like that. I think Colorado fans need to see how the offensive execution improves from week 1 to week 4. I think they should look at how the team is playing in the fourth quarter when the score is unbalanced (with the Buffs being up a lot or down a lot). I think they should see what the morale of the team looks like if the group loses a few games in a row and how maybe that’s different than it was in seasons past. I know that’s not what fans want to hear because how can you measure any of that? And, sorry, you can’t. But success in year 1 looks so different at every single program. Every new beginning is hard. So, look for growth and change.
… Read full story here …
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Stuart
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