Pac-12 rebuild: Estimating the media valuation of a reconstructed conference
Apple offered $25 million per school per year for the Pac-12’s media rights last week, with the potential for more if the conference met certain subscription goals.
But how much is a reconstructed conference worth?
The mass exodus on Pitch-Black Friday left behind a quartet of schools and one colossal question: Will Stanford and Cal band together with Washington State and Oregon State to reform the Pac-12 through possible raids on the Mountain West and American conferences?
What kind of revenue could a Pac-8 or Pac-10 command? Because that market did not yet exist, we created it.
The Hotline collaborated with a sports media valuation expert to estimate the market value of a rebuilt conference. (Because of industry relationships, the expert requested anonymity.)
Because of the project’s unusual nature, which relied on established audience data and media contracts while combining teams from three leagues, we made a number of assumptions:
— The contract cycle was set to begin next fall, when the Pac-12 relaunched its next media deal, and last six years. An annual escalation of 3% was included.
— To determine the inventory for broadcast on linear networks, we averaged the Mountain West and American current share. According to the final estimate, linear will be used for 37% of football games and 49% of men’s basketball games. The remaining games would be distributed digitally (ESPN+, Paramount, Apple TV, and so on). Media companies typically pay more for linear broadcast rights.
— For football inventory levels, we assumed an eight-game conference schedule, two non-conference home games, and a championship game. We predicted an 18-game conference season and five non-conference home games for men’s basketball.
— We did not include revenue from the College Football Playoff or the NCAA Tournament. The figures below are only for regular-season game broadcasts.
Scenario I
Expansion move: The four remaining schools form a super-conference with the Mountain West. While an outright merger is unlikely, we wanted to provide a wide range of outcomes.
Total members: 16 in football, 15 in basketball (excluding Hawaii)
Estimated average valuation: $8.4 million per school
Scenario II
Expansion move: San Diego State, Fresno State, and Colorado State from the Mountain West join SMU, Rice, and Tulane from the American.
Total members: 10
Estimated average valuation: $10.5 million per school
Scenario III
Expansion move: San Diego State, Fresno State, Colorado State, and Boise State from the Mountain West join SMU and Tulane from the American.
Total members: 10
Estimated average valuation: $10.9 million per school
Of course, there are other options. The rebuilt league could have as few as eight members or as many as twelve. Except for football, it could add Memphis or even Gonzaga. UNLV could possibly be included. Our goal was to provide a reasonable range of outcomes rather than to cover every possible scenario.
How does that compare to the current Mountain West and American contracts?
The American has a long-term agreement with ESPN that will last into the 2030s, with each campus receiving an average of $7.5 million per year (approximately). Under the highest valuation estimate, any school that switches to the rebuilt Pac-12 would see an annual increase of about 50%.
The Mountain West’s contract with Fox and CBS, which expires in the summer of 2026, pays out an estimated $4.75 million. Under the most optimistic valuation, schools switching to the Pac-12 would more than double their media revenue.
The key point is that our methodology assumes equal revenue sharing, which may not be the case in practice.
Stanford, in particular, may be able to command a larger share. The Cardinal has the highest brand value and is regarded as the Pac-12’s linchpin.
Any scenario in which new members agree to lower revenue shares over the course of the contract raises the amount going to Stanford (and possibly other quartet members).
Furthermore, we did not account for any money that might become available to the ‘Pac-4’ once the eight departing schools leave for the Big Ten and Big 12 conferences next summer. (The conference’s net assets were approximately $43 million at the end of the fiscal year 2022.)
Furthermore, the eight departing schools will forego March Madness revenue in 2025. According to Hotline estimates based on the number of NCAA units generated by the conference, this could add $3 million to the coffers of the four remaining members.
When all revenue streams are considered, including future postseason payouts and NCAA Tournament cash forfeited, the ‘Pac-4’ could earn $20 million per year on average over the six-year contract term.
At that level, campus distributions would lag behind schools in the Power Four but far exceed payouts typically received by Group of Five members.
