The Pac-12, a nominal power conference that has higher expenses, lower revenue, and worse football than other power conferences, is considering an unprecedented strategy in college sports. The Oregonian reported Saturday that the conference is considering taking on private-equity dollars to get a financial shot in the arm. The newspaper has a copy of an internal presentation that makes clear the conference is serious about the idea.
It’s a weird thought: a supposedly non-profit college football conference that facilitates supposedly amateur sporting events taking on venture-capital money.
The specific plan involves the Pac-12 valuing itself at $5 billion, at least.
The plan is that the Pac-12 would form a new company that owns its media rights, then sell 10 percent of that company to private investors at a cost of $500 million. Armed with that $5 billion valuation and the money that came from it, the Pac-12 would then distribute the $500 million to its 12 schools, at about $41 million per school.
Concerns aside, that’d be a nice cash infusion for the immediate future. It’d be especially nice given that the Pac-12’s current annual payout to its schools is about $31 million — a lot, but well behind the Big Ten (over $50 million) and the SEC ($41 million last year). Conference TV money is the biggest revenue source for an athletic department, and this could effectively double it one time.
I’m not a venture capitalist, but if I were, I’m not sure how much I’d feel like buying a piece of a struggling sports conference with financial problems.
I’m not saying I wouldn’t. I get that people who work in VC sometimes like to take struggling companies and make them profitable, sometimes by firing lots of people and other times by making draconian cutbacks that cause significant stress to the workforce still in place.
But I can think of one institution that has a vested interest in the Pac-12’s success and has the money in its couch cushions to afford this.
Stanford had a $26.5 billion endowment at the end of August 2018. It appears to have had the No. 3 endowment among individual schools in 2017, per this unofficial list, and the number has grown in the year since.
Stanford could easily afford the 10 percent piece and could even make this into an episode of Shark Tank and bargain for more. Hell, buying the whole Pac-12 rights package would apparently only cost $5 billion, which would be 19 percent of the school’s endowment. Imagine the Cardinal doubling, tripling, quadrupling, or quintupling their voting power at Pac-12 meetings.
They could make sure a bunch of USC games get stuck on the Pac-12 Network, where nobody could see them. They could demand the conference move its championship game from Levi’s Stadium, where nobody goes, to a campus site. Hell, they could demand it be held in Palo Alto every year, whether Stanford qualified for the game or not.
Of maybe one of these entities could buy up the Pac-12 instead.
- Michigan could buy it and finally make sure it gets to the Rose Bowl every year.
- The Ivy League schools could band together and buy it and force every team in the Pac-12 to play a home-and-home with their teams. Arizona State-Harvard in Cambridge!
- The University of Texas System could buy it and merge the Pac-12 Network with the Longhorn Network, perhaps compelling people to watch the Pac-12 Network.
- Facebook could buy it, because Facebook has all the money in the world and has already demonstrated it doesn’t care about a) exploiting people (college athletics would be a boom market for them) and b) bad PR.
Haha. This is all a joke among friends. The other Pac-12 schools wouldn’t allow it, and Stanford has far better things to invest in than the Pac-12.
In reality, the Pac-12 will link up with a benevolent group of venture capitalists who care only about enhancing the student-athlete experience and making the conference more accessible to fans, regardless of whether they ever get their money back. This is also a joke among friends.