PAC 12 Revenue Dispersal

[Johnny Juzang]

http://www.cbssports.com/collegefoo...-68-percent-of-its-record-revenues-to-schools


Dennis Dodd
CBSSports.com


The Pac-12 distributed only 68 percent of its revenue to members in fiscal 2013, by far the smallest percentage among the Big Five conferences according to documents obtained by CBSSports.com.

Each of the other power conferences -- ACC, Big Ten, Big 12, SEC -- returned at least 90 percent of revenues back to members.

That Pac-12 figure shows another side to the annual crowing by conferences over their revenue distribution. The conference last month announced it had a record $334 million in revenue for fiscal 2013 but a closer look shows is distributed only $228 million to members -- a $106 million disparity.

The next-highest disparity among Big Five conferences is the ACC at $23.5 million.

The Pac-12's chief financial officer said the nine-figure difference is due mostly to the league owning and operating its own network. The Big Ten (Fox), SEC (ESPN) and Texas (ESPN) have media partners for their networks. The Pac-12 is the only such entity that runs its own network.

“When Texas reports their numbers … they're just showing the check they received from ESPN," said that CFO, Ron McQuate. "They're not showing the revenues and expense they're incurred from operating the Longhorn Network."

The question, then, becomes if that 68 percent return rate will improve for Pac-12 schools?

One Pac-12 source said the rate of return will improve but will always be substantially different than other leagues. The ACC has the next lowest return rate to members at 90.8 percent. (See below.)

"What our members are focused on, rightly, is how much money we give back to them,” said Pac-12 commissioner Larry Scott, “and are we growing the network?"

McQuate added “Being in the start-up phase, that implies we're going to grow. That's inherent in the start up, thus far we are on plan and delighted with performance with the network. It's certainly a long-term investment for us."

The Pac-12 Network had been on the air for a total of only 10 ½ months when the fiscal year ended on June 30, 2013, McQuate said.

The documents obtained by CBSSports.com are a compilation of IRS 990 tax return forms. A more detailed Pac-12 look from the San Jose Mercury News can be seen here. CBSSports.com's Jeremy Fowler further broke down conference expenses across the nation.

The documents show that while the Pac-12 led the Big Five in revenue, it was third in average distribution to schools -- $19 million. (Eleven schools made $19.8 million. Utah collected only $10.2 million, bringing the average down. The school doesn't get a full share until 2015.)

The real figure is more like $18.5 million per school according to Mercury News.

That's an apples to apples comparison even with the number of conference schools ranging from 10 (Big 12) to 12 (ACC, Big Ten, SEC) during that period.

Both the SEC and Big Ten returned more to their schools despite having generated less revenue than the Pac-12. The Pac-12 per-school increase from fiscal 2012 ranged from $4 million to $8 million, McQuate confirmed.

The breakdown*

Big Ten -- 93.6 percent back to members (24.8 million average per school)

SEC -- 92.8 percent ($20.7 million per school)

Big 12 -- 92.2 percent ($18.5 million)

ACC -- 90.8 percent ($16.9 million)

Pac-12 -- 68.3 percent ($19 million)

*Averages were used because some schools that have switched conferences in realignment are not receiving full shares as yet. Among those schools are Nebraska, Utah, TCU and West Virginia.

 

[dio]

Thats no good

 

[GoBeers]

What a silly article, or maybe just a silly first sentence. The Pac 12 owns the P12 network and is responsible for all expenses and collects all revenues. It's somewhat different from the BTN that gets a check based on revenue that is split with Fox or the new SEC Net which will just get a check from ESPN who owns the whole thing.

As linked in the cbssports article, wilner explains the breakdown:
http://blogs.mercurynews.com/colleg...pac12nets-expenses-plus-true-revenue-figures/

He then backs out a number of $26 million for conference overhead, which is comparable (slightly larger) than the SEC. Well guess what, CA and San Francisco are more expensive than the south. Maybe they could streamline, but who knows? And of course Wilner might be dead on is his guess, but probably not.

As for the 68% returned, revenue for the P12 must include P12 network startup costs and operating costs. That is not the case for other conferences. Sure, the Pac 12 should be more transparent on where money is going, but the FY 2013-14 numbers are going to be way more representative of how the money flows. The big question is whether the P12 network revenue for the year reported included some one time up front 'signing bonuses' from the cable companies to help build the station. I'd guess so, but if not, that means the p12 network will have very very good distributions to each school in the next reporting period.

 

[Buffnik]

What a silly article, or maybe just a silly first sentence. The Pac 12 owns the P12 network and is responsible for all expenses and collects all revenues. It's somewhat different from the BTN that gets a check based on revenue that is split with Fox or the new SEC Net which will just get a check from ESPN who owns the whole thing.

As linked in the cbssports article, wilner explains the breakdown:
http://blogs.mercurynews.com/colleg...pac12nets-expenses-plus-true-revenue-figures/

He then backs out a number of $26 million for conference overhead, which is comparable (slightly larger) than the SEC. Well guess what, CA and San Francisco are more expensive than the south. Maybe they could streamline, but who knows? And of course Wilner might be dead on is his guess, but probably not.

As for the 68% returned, revenue for the P12 must include P12 network startup costs and operating costs. That is not the case for other conferences. Sure, the Pac 12 should be more transparent on where money is going, but the FY 2013-14 numbers are going to be way more representative of how the money flows. The big question is whether the P12 network revenue for the year reported included some one time up front 'signing bonuses' from the cable companies to help build the station. I'd guess so, but if not, that means the p12 network will have very very good distributions to each school in the next reporting period.

Thank you. Saved me the trouble of researching and crafting a response in regard to the start-up costs of creating a conference network and how that was able to be funded from revenues. And as the PACN grows, so do the margins since the overhead is not a fixed variable as a direct cost of good.

 

[hokiehead]

interesting. thanks.

in 2013, the Pac brought in more revenue than any other conference, including the SEC. thinking on that.... the Pac-12 generated more income than the SEC-14. From what income source? TV revenue, it must be (does the Pac have a front loaded TV contract, maybe?). Certainly the Pac isn't beating the SEC in ticket, concession, parking or merchandise sales. I don't think it's bowl revenue. The Pac probably brought in more NCAA tourney money than the SEC, but that's not a needle mover in this equation. Maybe the Pac lost less money on non-revenue sports (sorry, can't bring myself to use "olympic sports", since that term is supposed to include golf and exclude basketball). It must be TV money, right?

besides that, it seems like a big investment in a TV network. i hope the long plan of owning/controlling the whole thing works out for the Pac. I know nothing about the logistics, costs and contractual pieces involved in starting a network.

could be firewall at work, but that link sucked for me -- couldn't get past big brother ad page.

On further thought, since CU charges for volleyball, is it really accurate to refer to that as a non-revenue sport (actually, many D1 schools also charge for baseball)? Sh*t, 'olympic' doesn't work, 'non-revenue' doesn't work and 'sports that people don't care enough about to watch on TV' is too long.

 

[Buffnik]

hokie,

Just call everything except football and basketball an "olympic sport" and be done with it. Is it technically accurate? Nope. But it's common parlance and politically correct.

It's not worth fighting it the same way you don't argue at the DMV about how "white is a color, not a race" when filling out your paperwork.

 

[hokiehead]

hokie,

Just call everything except football and basketball an "olympic sport" and be done with it. Is it technically accurate? Nope. But it's common parlance and politically correct.

It's not worth fighting it the same way you don't argue at the DMV about how "white is a color, not a race" when filling out your paperwork.

I would never argue that point with the DMV -- they taught me in school that white is the absence of color, but OK, I'll hold my nose and refer to golf as an olympic sport.

 

[Buffnik]

I would never argue that point with the DMV -- they taught me in school that white is the absence of color, but OK, I'll hold my nose and refer to golf as an olympic sport.

You were taught wrong. Black is the absence of color. White is every color in the spectrum.

 

[Quattro]

Thats no good

Pretty sure it's low because of the network startup costs


Sent from my iPhone using Tapatalk

 

[Asad950]

I think, its distribution is not good.

 

[BuffClass90]

Pretty sure it's low because of the network startup costs


Sent from my iPhone using Tapatalk

I'm guessing they amortize the expense. Just wondering how much and how long the network books the expense. Once done, our checks should be getting bigger!

 

[Shldr2Shldr]

As the network continues to add premium content so that it doesn't have to keep playing game replays to fill air time, sponsorship money should really start to take off. I know the projections at the onset of the TV deal were close to $30mil/team once they got done paying off the startup of the network

 

[skibum]

I'm guessing they amortize the expense. Just wondering how much and how long the network books the expense. Once done, our checks should be getting bigger!

Amortization doesn't matter to the cash flow (unless the startup costs were financed). Look for a serious bump next year if the one time start up costs were actually significant and "one time."

 

[hokiehead]

yeah, brain fart there -- occurred to me on my drive into work yesterday.

You were taught wrong. Black is the absence of color. White is every color in the spectrum.