Pac-12 survival: Are Oregon, UW, Stanford and Cal worth the investment? Breaking down the Big Ten expansion math

The Pac-12’s existence appears to be in jeopardy as the Big Ten considers whether to admit Oregon, Washington, and possibly Stanford and Cal as well.

Is the conference planning to establish a West Coast division? Will it remain silent and give the Pac-12 a chance to survive?

This extremely complicated issue could be resolved quickly, perhaps within the next 48 hours.

After all, the Big Ten pulled off a West Coast raid last summer, capturing USC and UCLA. The groundwork appears to be in place for a second round of plundering, but only if proper motivation exists on two fronts:

— Obtaining funding from a media company.

— Getting enough university presidents to sign off on it.

Neither entity has been interested in the past year. The networks lacked the funds, and the presidents were uninterested in driving a stake into the Pac-12.

However, at least one of the two entities changed their minds this week.

Because the Pac-12’s existential crisis provides the necessary cover, the Big Ten presidents have indicated a willingness to consider adding Washington, Oregon, and Bay Area schools. Presidents are not predators; rather, they are saviors. They’re offering a life raft instead of a stake.

However, magnanimity is one thing. Another issue is money, and the Big Ten schools will not expand if it means foregoing a dime of the money promised to them under the media rights agreement, which begins this year.

The agreement with Fox, NBC, and CBS is expected to pay each school an average of $65 million over the course of the seven-year contract.

Whatever money is given to new members must come from a separate revenue stream.

In other words, the Big Ten would need one of its current media partners to increase its payments to cover the costs of expansion, or a fourth network would have to join the fray and shoulder the burden.

How much is it?

To begin, Fox owns the Big Ten media rights through its majority stake in the Big Ten Network, which controls the league’s grant-of-rights agreement.

Any media partner and expansion decisions are made by Fox, which is essentially sub-licensing game packages to CBS and NBC for the seven-year contract.

Second, Oregon, Washington, Stanford, and California would receive far less than the $65 million allotted to the Big Ten’s 16 members (including USC and UCLA).

Even discounted shares, however, would incur enormous costs.

The Ducks and Huskies have stronger brands and higher viewership than Cal and Stanford, making them more valuable to Big Ten media partners.

Assume the Northwest powers agreed to a revenue ladder similar to this over the Big Ten’s contract:

Years 1 and 2: a quarter share

Years 3 and 4: 50%

Years 5 and 6: three-quarters

Year 7: complete share

That’s $260.5 million divided by two years at $16.5 million, two years at $32.5 million, two years at $48.75 million, and one year at $65 million.

Multiply that by two schools, and a media company would have to pay $521 million to make the math work for the Huskies and Ducks to enter the Big Ten at lower revenue shares for the entire seven-year contract cycle.

(Please keep in mind that our figures are estimates. The Big Ten’s contract includes an escalation clause, which means that payments begin far below the estimated average of $65 million and end far above.)

If Stanford and Cal are included, the total becomes significantly higher. How much is it? It’s unlikely to be double the price of UW and Oregon because Bay Area schools don’t command the same market value as the Huskies and Ducks.

Let’s say Stanford and Cal get revenue shares equal to 75% of what UW and Oregon get. This equates to $195.4 million per school.

Over a seven-year period, the bill for two schools exceeds $500 million.

The total cost for the four schools approaches $1 billion.

However, due to the Big Ten’s game-selection process, there may be an additional complication.

The fourth media partner would not always have first picks.

According to an industry source familiar with the Big Ten’s selection process, ESPN would not be guaranteed weekly high-level matchups involving Washington and Oregon simply because it paid for Washington and Oregon.

It would most likely follow the primary rights holders (Fox, NBC, and CBS).

In most weeks, instead of Washington vs. Penn State, Oregon vs. USC, or Stanford vs. Michigan, the network would get Purdue, Minnesota, Rutgers, Maryland, and Illinois.

That is a lot of money for mediocre games.

And the fourth media partner could have the fifth pick for several weeks, trailing Fox, NBC, CBS, and the Big Ten Network, which is owned by Fox, the controlling entity in all of this.

So additional West Coast expansion appears to be contingent on…

— Membership invitations are being approved by the Big Ten presidents.

— Fox agreeing to sell the additional inventory’s broadcast rights.

— A buyer willing to pay the cost and accept the Big Ten’s selection model’s limitations.

Furthermore, the Big Ten schools would almost certainly have to offer the new members a full revenue share of the next media rights contract. Adding schools now could have a financial impact on current members in the 2030s.

And if that isn’t complicated enough, the Big Ten must also consider the potential breakup of the ACC, where a handful of schools, led by Florida State, are dissatisfied with media revenue and are attempting to violate the conference’s grant-of-rights agreement.

The situation isn’t quite as dire as what’s going on in the Pac-12, but it’s close.

“I’m not optimistic that we’ll be able to stay,” Florida State president Richard McCullough told trustees on Wednesday, according to ESPN. “I just don’t know.” It is possible, but something drastically different will have to occur. “Everything is still on the table.”

And we believe Fox, which does not have broadcast rights to the ACC or the SEC, would be eager to gain access to schools in Florida and North Carolina, in particular.

Would Fox agree to add Oregon and Washington, as well as Stanford and Cal, before knowing whether Florida State and North Carolina are available?

Would the Big Ten presidents agree to an 18- or 20-team conference if they knew 22 or 24 members were an option?

Westward expansion is an extremely complicated situation that has lain like permafrost across the Big Ten landscape for the past year.

However, it appears that a thaw is underway.