Washington president Ana Mari Cauce took issue with the notion that the Pac-12’s media rights negotiations with ESPN collapsed because the university presidents believed the conference was worth $50 million per school, or a whopping $500 million annually.
Instead, Cauce said the $50 million figure was discussed last year as a target for the total revenue distributions to the campuses — meaning it would have included payouts from the College Football Playoff, the NCAA Tournament and the media rights deal.
“In some models, it was possible for some schools to get $50 million,” Cauce told the Hotline in an interview earlier this month. “But at no time did anyone think we could all get $50 million in media rights. That would have been stupid.”
Cauce explained that after the announced departures of USC and UCLA (in June 2022), commissioner George Kliavkoff told the 10 remaining presidents that 30 percent of the conference’s media valuation “just walked out the door.”
“There was no scenario in which everybody thought the schools could bring in $50 million,” Cauce added. “The estimates from George were in the $30 millions to low $40 millions. Potentially, some (schools) could make $50 million with the (playoff) and media rights.”
ESPN had offered $30 million per school per year, according to sources. Asked if Kliavkoff took a $50 million counterproposal to the network, Cauce said:
“I cannot tell you for sure that (Kliavkoff) asked for $50 million per school, but I would be very surprised if that was a serious counteroffer. I have notes, and $50 million is never something we were told. I don’t believe that ever happened.”
Cauce was chair of the Pac-12’s board of directors at the time.
The $50 million offer, first reported by JohnCanzano.com, is viewed as one of many strategic miscalculations during the failed 13-month pursuit of an agreement that would have saved the conference from dissolution.
Instead of renewing its partnership with ESPN and Fox during the exclusive negotiating window last summer, the Pac-12 took its media rights to the market just as the economy began deteriorating. A long period of stagnation followed until Kliavkoff finalized an offer from Apple this summer worth $25 million guaranteed per year, with additional revenue available if subscription targets were met.
Washington and Oregon rejected the Apple deal and fled to the Big Ten on Aug. 4, leading to the departures of five more schools and leaving Washington State and Oregon State behind.
“We had reason to believe we didn’t have to be in a hurry and we could bring other people to the table,” Cauce said of the prolonged process. “The timing didn’t work.”
Several sources took issue with Cauce’s interpretation of the negotiations with ESPN last fall and said the presidents supported asking for $50 million per school per year.
The strategy came during a crucial window in the Pac-12’s fight for survival — after the Big Ten agreed to a deal with Fox, CBS and NBC for approximately $65 million per school (in the middle of August) but before the Big 12 renewed its agreement with ESPN and Fox for $31.7 million per year (in late October).
Sources said Kliavkoff provided the presidents with a valuation range of about $35 million to $43 million for the entirety of the Pac-12’s media rights.
A series of models were considered and meetings held, some with the full board and some with sub-groups of presidents. Their positions could be placed into one of three buckets, according to multiple sources:
— One president served as the prime driver of the $50 million asking price using an analysis performed by an on-campus advisor.
(The Hotline has not identified the president in question to a level that meets our standards for publication. However, we were able to confirm that it wasn’t Cauce.)
— A small group of presidents believed the $50 million analysis was valid and supported presenting ESPN with the proposal.
— The remaining presidents offered no strong opinion.
However, during a critical meeting in the late summer, “two presidents said to ask for $50 million,” a source recalled. “Nobody said, ‘That’s a bad idea.’ They were pushing George to negotiate hard.”
Said another source: “People with expertise were telling them there was a path to a deal in the $30 millions. One president said, ‘We should be in the 50s.’ That caused delays.
“Sometimes, delays don’t matter. Here, two things happened: The Big 12 did a deal, and that made (the networks) need us a little less. And No. 2, the economy tanked.”
Kliavkoff declined to comment for this article.
According to multiple sources, the presidents were made aware of the risks involved in negotiating for $50 million per school — mainly, that it could prompt ESPN to walk away and, in the words of one source, “drive them into the arms of the Big 12.”
So why did the Pac-12 move forward with the unreasonable proposal?
Multiple sources indicated Kliavkoff failed in his role as steward of the negotiations: Knowing that ESPN would consider the $50 million price exorbitant, he should have pushed back against the presidents.
“You need a commissioner who can talk about the reality of where everybody’s at,’’ a source said. “George needed to manage that.”
Ultimately, the counteroffer — and Kliavkoff’s inability to gain board consensus on a reasonable valuation — was one of several mistakes on the Pac-12’s long road to collapse. But it didn’t singularly doom the conference.
“It’s like a blown play with 10 minutes left in the fourth quarter,” a source said. “It doesn’t mean that’s why you lost. But if it works out better, you have a chance to win.”
Cauce pointed to macro-economic factors that emerged in the late fall as one of the challenges.
“There were some things that were not predictable by history,” she said. “Who would have predicted, given how well the technology companies did during the pandemic, that there would be layoffs? In retrospect, maybe there should have been more urgency.”
On the totality of the 13-month process, she added: “I’m not sure I fully understood how destabilizing it would be.”
*** Send suggestions, comments and tips (confidentiality guaranteed) to pac12hotline@bayareanewsgroup.com or call 408-920-5716
*** Follow me on Twitter: @WilnerHotline
*** Pac-12 Hotline is not endorsed or sponsored by the Pac-12 Conference, and the views expressed herein do not necessarily reflect the views of the Conference.
