Why would an investor want to put 500 mil into a conference that is staying static otherwise? Just to slowly watch their investment dwindle away? Did I miss the part about making structural changes (add teams) in order to increase the value?
#GoCoogs!
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Potential partners will ask tough questions and cut costs. That’s what companies do when they’re looking to turn a profit and maximize value. Also, they’ll want to be more than a silent (10 percent) partner. They’ll want control. And that’s how a proposal of $500 million for 10 percent dwindles into a counter-offer of significantly less in cash in exchange for 51 percent control.
Private-equity money isn’t cheap.
A sophisticated firm won’t let public-records laws get in the way of a dig into the financials. It will want a favorable valuation. It will ask for an industry-standard 11-15 percent return on a $500 million investment. The conference athletic directors, who were promised a windfall when the network was formed, will hear that and fall over laughing, kicking their feet at the ceiling.
On the surface, this offer from ESPN looked like a great lifeline to bail out the Pac-12 and their struggling networks, but the Pac-12 is (again) betting on itself when the next round of rights negotiations comes up. With their current TV rights deal with Fox and ESPN ending in 2024, the Pac-12 is hopeful that within the next five years, digital outlets will join traditional TV networks and create a bidding war for their next rights deal. The Pac-12 is getting $3 billion over 12 years from ESPN and Fox, so this rights deal is one of their biggest revenue generators. Extending with ESPN now would remove much of the uncertainty around the Pac-12 Networks and their distribution, but would also deprive the conference of a potentially larger payday in the future.
The pac sounds like many posters here before the new deal with ESPN thinking that new media players are going to swoop in and pay big money.
Amazon, and the other new media, are spending big bucks on sure things like premier league soccer and formula 1, not minor leagues.
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Agreed. The new media players don’t really need live content as much as the traditional channels do as they aren’t as reliant on advertising dollars since most require subscriptions. They can be much more selective. Even if they do decide to go after college content, I can’t see them giving the payouts that the traditional channels are giving.
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I just don’t see this magic bullet of digital media riding in. Everyone seems to believe it’s going to happen. I personally don’t. The value to streaming isn’t going to be in conferences, it’ll be in individual teams. It’s the natural progression of things. As more and more inequality comes into play.
The P5 separates from the rest, then eventually the top tier programs both on and off the field are going to want more to separate themselves from the rest. Driving up the value of certain schools while decimating the overall value of a conference.
Best example is the Big 12. Value wise Texas and OU football and KU basketball are by far the biggest value drivers. The rest are with a lot closer both a little above and below AAC value. That’s where streaming would jump in, pay a whole lot to those three and tiddlywinks to the other programs.
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I won’t invest in it…but I’ll short it.
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Probably a smart idea:
The Pac-12 has decided against selling ownership in its media rights to a private equity firm, commissioner Larry Scott told the Hotline, but it still could take on a strategic partner.
Scott said the presidents and chancellors have ruled out an arrangement with a “pure financial institution” that would receive minority ownership in a media rights holding company and, in return, provide each campus with tens of millions in up-front cash.
However, the Pac-12 continues to examine partnerships with media or tech companies that could involve selling ownership for cash but would better position the conference for media rights negotiations in 2023-24.
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That’s a slight bummer.
It def wouldn’t have hurt to have that happen for our chances.
We need to improve our on field product (as well as a couple other teams) over the next 2-3 years
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Nah…not a bummer at all. Everything we have read talks about bridge loans, media partners, etc…none of this blather (thanks for nothing Mr. Commish…) solves the underlying problem of creating more buzz, a better product, and more markets for the Pac12…
Which is what every single bought and paid for study and survey has shown…
Go East…
Come knocking, we will answer !!!
Go Coogs !!!
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Us and SMU (I know they are religious)
Great article. Hiring The Raine Group as a consultant is quite revealing for me,
Morgan Stanley and Goldman Sachs ties
Gaming ties
Major networks ties at the highest level
Does this mean the PAC12 network is going to be “rebranded”? That sure points that way.
Now do not be surprised if UNLV is part of an expansion plan. Remember that the NFL is now in the city of lost wages. This is not a coincidence. With gaming you need more participants. Gaming companies will want more geographical coverage thus expansion to Texas and Houston. Just imagine the potential revenues and ROI for the PAC12?
PAC12 sponsored by the Golden Nugget? Everything is possible friends.
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Cal losing last night gives every Pac 12 team a loss and makes getting a Pac 12 team in the playoffs tough again.
Every year it happens leads closer to them shaking things up and gives UH a better shot.
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I like the way you think, Chris! “Rebranding” probably gives us the best opportunity I’ve seen discussed. Especially if it includes the city of lost wages! Too bad we have to wait for so long!!!
Thank you Al. Let’s hope it case it does happen that it does not include a deal with the devil.
Where exactly do you want to go “east” to?
Ya SMU is never going to be in the PAC.
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I think there is a “chance” we are already “addable” to the PAC. The problem is there aren’t anywhere close to 3 other teams needed to make it work.
A Pac 14 doesn’t work. Show me a divisional breakdown of a PAC 14 and I will point out who all will vote against it. Keep in mind they didn’t even want to expand to 12 and several stipulations had to be added in order for it to happen.
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