The Pac-12 is getting a new Commissioner
February 4, 2021
In a move that many people felt was long overdue, the Pac-12 Conference announced on January 20th that they had decided to part ways with Commissioner Larry Scott. On the same day that a new U.S. President was being inaugurated, the Pac-12 decided that it also needed new leadership. They will officially part ways on June 30th, 2021. The search for a new commissioner is already underway.
Scott's tenure began on July 1, 2009, so he will have lasted exactly 12 years in his current position. Scott had some early success on the job, including a then record-setting $3 billion, 12-year television deal with Fox and ESPN. It was the most lucrative college TV deal in history at the time, and nearly tripled the annual television revenues of the conference.
Scott also led the conference through expansion with the addition of Colorado and Utah, which in turn generated the need or desire to implement a conference championship game in football. The conference had passed the SEC and the Big Ten in conference revenue and then decided to develop their own TV Network, the Pac-12 television network.
The Pac-12 Network was launched on August 15, 2012, just in time for the 2012 football season. The network consists of seven channels, six regional and one national channel. The regional networks were grouped in the following regions: Washington, Oregon, Northern California, Southern California, Arizona, and Mountain. The Pac-12 Network featured a network for each of the Pac-12 regions that have two universities, along with the national network.
For the financial year of 2018-2019, the Pac-12 Conference reported revenues of $407 million and net operating expenses of $42 million. For 2018-2019, the Pac-12 Networks reported revenues of $123 million and net operating expenses of $90 million. Total revenue for 2018-2019 was $530 million and distributions were at $387 million, representing an average of $32.2 million per member university.
The revenue of $530 million is good, but the expense of $132 million was much too high. The expense of running a seven-channel network available in only 17 million homes was a financial disaster. The SEC Network and the ACC Networks are owned and operated by ESPN. The Big Ten Network is operated by Fox Sports Media Group with an ownership share of 51%. The Big Ten has a 49% ownership share.
The Pac-12 Network turned out to be the single biggest mistake made under Larry Scott. The conference struggled to get on cable outlets and could never land an agreement with DirecTV. In Pac-12 cities, it was and still is difficult to find an outlet that carries the Pac-12 Network. A sports bar in Southern California with DirecTV will carry the SEC or the Big Ten Network, but not the Pac-12 Network.
The Pac-12 decision to go forward without a network partner turned out to be a huge mistake. The SEC has an estimated 70 million subscribers and the Big Ten an estimated 60 million subscribers. More subscribers mean more revenue for these conferences. Partnering with a network has been better for profit and exposure for these two conferences.
Other issues with Scott have involved expenses and communication. Scott's decision to relocate from Walnut Creek to San Francisco was ridiculously expensive. The annual lease payment in San Francisco is $6.9 million. This from John Canzano of the Oregonian: "The building the Pac-12 Conference is headquartered in was sold to Kilroy Realty Corp in Nov. 2011 for $92 million. A month later, the Pac-12 signed an 11-year lease on 70,000 square feet of space. By the end of the deal, the conference will have paid ~$90 million in rent." The lease worked well for Kilroy Realty Corporation.
Scott is paid $5.4 million annually, more than the SEC Commissioner and Big Ten Commissioner combined. Scott's response to questions about his salary is, "We're unique as a conference in that we're a conference on the one hand, but when it comes to head counts, financial results, we're actually a media company as well." Scott likes to fly first class or by charter. Scott seems to live by the Patrick Ewing credo, who once said about NBA players, "Sure NBA players make a lot of money, but we spend a lot too."
Besides the need to reduce expenses, the Pac-12 needs to improve communication. Scott's management style and communication did not sit well with the Athletic Directors. One Athletic Director was once told by Scott, "You're lucky for what you get." The next Commissioner needs to be able to address the concerns of the schools besides finding a solution to the Network issue.
With the shortened season due to the Covid-19 pandemic, the Pac-12 decided to play their games on the ESPN Family of Networks (ABC, ESPN, ESPN2, ESPNU) and the Fox Family of Networks (FOX, FS1). The conference generates millions of dollars more per broadcast from Fox and ESPN than it does from the Pac-12 Networks. The Pac-12 Network did not televise any football games this season.
The result was that all the games were more widely seen this season, which seems to be helping with recruiting. Oregon is currently ranked 6th and USC 8th in 2021 football recruiting, according to 247sports. That is the first time since the 2012 season that the Pac-12 has had two top ten schools in football recruiting. In 2019, UCLA had four of their six home games televised on the Pac-12 Network. In 2020, they had their four home games on FS1, FOX, ABC and ESPN, a significant improvement in exposure.
The next commissioner needs to improve TV exposure and built a fence around the Pac-12. With the stumbles of the Pac-12 under Scott, it has become easier for schools like Alabama, LSU, Ohio State and Georgia to recruit west coast football players. But the situation is far from hopeless for the next commissioner.
The Pac-12 gets quality non-conference opponents at home and almost every school in the SEC has a home-and home series with a Pac-12 school in the future. For example, LSU will open their 2021 season at the Rose Bowl vs. UCLA. Georgia will be at the Rose Bowl in 2025 and Auburn in 2027. LSU has future games at Utah and Arizona State. Florida is at Cal, Colorado, and Arizona State. Texas A&M is traveling to Colorado in 2021 and has a future game at Arizona State. Alabama has a future game at Arizona. An attractive non-conference schedule is appealing to networks like ESPN and FOX.
Despite losing talent to schools back east, the Pac-12 continues to be among the best in the pro drafts. In the 2020 NFL draft, the Pac-12 was third in most players drafted behind the SEC and Big Ten. In the recent 2020 NBA draft, the Pac-12 tied the SEC with the most first round picks at six and finished second to the SEC with ten picks. In the 2019 Major League Baseball draft, the Pac-12 was second to the SEC with most players drafted.
The networks can see that the Pac-12 has good markets, good weather and a strong non-conference schedule. There is still plenty of talent, as the NFL Rookie of the Year, Justin Herbert of Oregon, showed this past season. Once Scott is gone, communication should get better, expenses will fall and hopefully they can find a quick solution to the Pac-12 Network.