What’s next for the ‘Pac-2’: Could Washington State, Oregon State attempt a reverse merger with the Mountain West?

The next move depends on the amount of Pac-12 assets the Cougars and Beavers could control

According to a source close to the process, the Pac-12 was on the verge of disbanding on Friday when two of the remaining schools, Stanford and Cal, received invitations from the ACC.

For the time being, only Washington State and Oregon State remain members for the 2024-25 sports season.

The Cougars and Beavers are looking into a variety of options, including traditional conference realignment moves into the Mountain West or American Athletic Conference.

The most intriguing play is also the most difficult to understand: Rebuild the Pac-12 by raiding other leagues or merging with the Mountain West.

Everything had been put on hold while the schools awaited Stanford and Cal’s decisions.

“The rebuild with four (schools) was the best option, but it also had challenges,” according to a source. “It’s now time to see what it looks like with two.”

The Pac-12’s unprecedented demise, with ten schools set to leave next summer, has complicated matters for Washington State and Oregon State.

Before making a decision, the schools must first determine what assets and liabilities exist within the Pac-12’s legal and financial structures, as well as whether remaining as the conference’s sole owners would be the most profitable move.

“They have to look at the bylaws, just like they would if there were only four schools left,” an industry source explained. “It’s more difficult, and they don’t have the academic clout of Stanford and Cal.”

“However, they are committed to obtaining clarity on the financial and legal issues.” This is not a problem for athletic directors or presidents. It’s a problem for the financial officers and the lawyers.”

According to Pac-12 bylaws, if the legal entity remains intact, Oregon State and Washington State would control the conference’s assets, but if the Beavers and Cougars leave and the conference is dissolved, the assets would be split 12 ways.

“It might not make sense for Washington State and Oregon State to participate in another conference,” said an industry source. “You’d divide by 12 if you dissolved the Pac-12.”

The NCAA Tournament units earned by the conference during the six-year cycle that ends in March 2024 are expected to be worth more than $60 million by the end of the decade. Depending on how the attorneys interpret the bylaws, the Beavers and Cougars may be entitled to the entire amount.

The emergency reserve fund, the Pac-12 Networks infrastructure, and various sponsorships are among the other conference assets.

There are liabilities, however, such as a recently signed lease on office space in the Bay Area to house the Pac-12 Networks production facility.

(The financial impact of the Comcast overpayment scandal is expected to be shared by all 12 schools in the current fiscal year through revenue reductions.)

“Once clarity comes, and if access to the (NCAA) units is available, there may be a clear path,” the source said.

However, two schools do not constitute a functioning conference. To meet NCAA requirements, the Pac-12 would need at least eight members by the summer of 2026.

If they decide to rebuild, the Cougars and Beavers may try to recruit the top Mountain West football programs. Or they could try the risky reverse merger, with the Mountain West disbanding and all 12 schools joining the Pac-12 as a group.

“No other brand in the Group of Five has the value of the Pac-12 brand,” according to an industry source. “If you have the brand, you own history.”

The other critical component of any salvage operation is securing a media rights agreement that will begin next summer. Without knowing the membership composition, no linear networks (ESPN, Fox, CBS) or streaming services (Apple, Amazon) would partner with the rebuilt Pac-12.

Gloria Nevarez, the Mountain West commissioner and a former Pac-12 executive, is expected to be named commissioner of the reformed league.

“The good news is that Gloria is willing to be creative, and she’s astute enough to recognize what’s at stake,” a source said. “You could argue that she knows the Pac-12 better than anyone else (currently working there).”

However, the possibility of a reverse merger and the pursuit of a media rights contract are on hold until the Cougars and Beavers decide whether to attempt a reclamation project or simply flee the scene of destruction.

And they won’t make that decision until they have clarity on the assets and liabilities, which could take several weeks.

“Washington State and Oregon State are pragmatic schools,” according to a source. “They have no egos.” They are aware of who they are and have some time.

“No one considered this when the bylaws were written.” It’s outside of all possibilities.”