Mailbag: Cash available for the ‘Pac-4,’ the rules of withdrawal, options for WSU and OSU, Kliavkoff’s strategy and more
The Hotline mailbag is usually published on Fridays. Given the extraordinary events that led to the Pac-12’s demise, we are planning a series of mailbags (beginning today) in the hopes of addressing all of our readers’ concerns.
Send questions to pac12hotline@bayareanewsgroup.com with the subject line’mailbag’. Alternatively, you can reach me on Twitter: @WilnerHotline.
Please keep in mind that some questions have been edited for clarity and brevity.
How much money does the Pac-12 have in its accounts? And are the four remaining schools obligated to share that, as well as the revenue from 2023-24, with the departing schools? @grasslandJerry
The remaining schools’ financial situation is critical, and there are many unknowns at this early stage. However, multiple sources have told us that the quartet controls the conference as the only voting members of the Pac-12 Board of Directors.
To the extent that there is cash to be controlled, they control it.
According to our interpretation of the bylaws, the eight departing schools may be entitled to their standard revenue shares for the 2023-24 sports season, significantly reducing the available funds for the remaining members.
Here is the relevant section on withdrawal rules:
“No member shall deliver a notice of withdrawal to the Conference between July 24, 2011 and August 1, 2024; provided, however, that if any member does deliver a notice of withdrawal prior to August 1, 2024, in violation of this chapter, the Conference shall be entitled to an injunction and other equitable relief to prevent such breach.”
“and if a court of competent jurisdiction denies the Conference such injunctive relief, the Conference shall be entitled to retain all of the member purporting to withdraw’s media and sponsorship rights in the multi-player video distribution (MPVD) and telecommunications/wireless categories through August 1, 2024, even if the member is then a member of another conference or an independent school for some or all intercollegiate sports competitions.”
“In addition, if a member delivers notice of withdrawal in violation of this chapter, the member’s representative to the CEO Group will automatically cease to be a member of the CEO Group and will lose the right to vote on any matter before the CEO Group.”
Is it possible to withhold the revenue? According to a source, the final judgment will undoubtedly be rendered by the lawyers, who must determine “the real damages” inflicted on the four remaining schools.
However, the Pac-12 finished the fiscal year 2022 with $42.7 million in net assets, which includes the emergency reserve funds controlled by the presidents — the presidents of the four remaining schools.
What about the responsibilities?
We assume that the Comcast payments will be deducted from campus distributions to all 12 schools in the spring, removing them from the books after June 30, 2024.
However, the technological infrastructure supporting the Pac-12 Networks must be considered, as must the lease on the new San Ramon property.
Morane Kerek, the Pac-12’s chief financial officer, who was hired in June, has a busy few weeks ahead.
Another thing to consider:
If desired, the four schools could play hardball and declare the eight outgoing Pac-12 members ineligible for Pac-12 titles in 2023-24, as well as any automatic bids to NCAA championships.
Such action is not without precedent. VCU, George State, and Old Dominion were declared ineligible for championships by the Colonial Athletic Association in 2012.
We doubt Stanford, Cal, WSU, or OSU would go that far.
But, like everything else, it’s on the list of possibilities during this turbulent period.
Assuming Cal and Stanford leave, why wouldn’t WSU and OSU split $200 million in assets and try to get into a conference when the next domino falls, or buy time until they can reform a version of the Pac-12? @yofster
First and foremost, I do not anticipate that financial outcome. There will be no $400 million, or anything close to it, to divide next summer.
If the Bay Area duo departs, WSU and OSU will be unable to rebuild the conference on their own. They would most likely flee to the Mountain West and join Stanford and Cal in dissolving the Pac-12 at the same time.
In that case, it’s unclear whether any remaining assets would be divided equally among the four schools or equally among all 12.
What happens to the College Football Playoff and NCAA Tournament payouts if the Pac-12 folds at the end of the season? Is there a distinction between Oregon State and Washington State in terms of the name? — @UACatManDo
According to our understanding, the CFP distributes revenue throughout the fiscal year, which includes the competition season. As a result, the Pac-12’s cash haul from the 2023-24 playoff will be distributed to the schools during the first six months of next year.
(Whether that is divided 12 ways or four ways remains to be seen.)
Revenue from March Madness is distributed in installments. Any proceeds from the 2024 event would be distributed in 2025. The departing schools would not be entitled to anything.
That could change if the conference is dissolved. Only the four remaining schools, however, have the authority to shut everything down and turn off the lights.
What was Commissioner George Kliavkoff’s reasoning for securing rights before expansion? Would the Pac-12 have been saved if San Diego State and SMU had joined prior to the Apple deal? @JonBernal19
The schools didn’t want to expand unless it made financial sense — they wanted new members to increase payouts, not decrease them — and the only way to find out was to secure a media rights deal first.
That strategy was always a mystery to us. After all, the strength-in-numbers strategy is critical to surviving realignment. (The Big 12 set an example by adding Brigham Young, Houston, UCF, and Cincinnati in the fall of 2021.)
The decision to prioritize media rights over expansion, as well as the lack of urgency in completing the entire process, were both huge miscalculations. (We discussed the urgency issue in January.)
I can’t say whether SDSU and SMU would have changed their minds if they had agreed to join the conference in the spring — before the Mountain West doubled SDSU’s exit fee — and the same scenario had played out last week.
However, one possible outcome would have resulted in six schools remaining, rather than four, providing more clarity for the path forward.
No one mentions Apple. Shouldn’t they bear some of the blame? What were they thinking if rumors are true and their last offer to the Pac-12 for streaming was $25 million per team? Apple is now barred from streaming college football for the next six or seven years. — Wayne Niebroski’s
Simply put, Apple made the most logical offer for Apple — a risk the Pac-12 took in pursuing a partnership.
Could the company be “shut out” of college football until the next media contract cycle in the 2030s? Perhaps. Alternatively, it could acquire a stake in ESPN and secure a deal for the network’s distribution on Apple TV.
It could also buy ESPN outright.
Or it could buy both ESPN and Fox.
Of course, we’re joking about Fox. However, Apple may decide to dominate the world of sports media.
Is it possible that Stanford will drop Cal? What if the Big Ten or ACC decides that SMU or anyone else is a better fit than Cal? @tgbegreen
Cal’s administrative indifference and institutional obstacles, as well as the deterioration of its football and basketball programs, have put the Bears in jeopardy. They may be permanently left behind in the realignment game.
However, at this point, an intertwined future for the Bay Area teams appears to be the most likely outcome. If membership options in the ACC or Big Ten become available, they would be natural travel partners.
If those doors close, the Cardinal and Bears, along with Washington State and Oregon State, could provide the foundation for rebuilding the Pac-12.
The key point is that we do not see Stanford ever joining the Mountain West.
If the schools do not remain in the Pac-12 and Stanford competes as an Independent, the Bears will have a choice: do the same or join WSU and OSU in the Mountain West.
The only way they could split up is if they reach that endgame, which seems unlikely.
How likely are Washington State and Oregon State to be accepted into a major conference? Is Mountain West the clear favorite? —@phillipmaz
The Cougars and Beavers have only two options moving forward: stay in the Pac-12 if Stanford and Cal do the same, or join the Mountain West.
The Big 12, Big Ten, ACC, and SEC are all out. Realignment is harsh and is primarily determined by media valuation and, to a lesser extent, geography.
Given their limited resources, the Cougars and Beavers perform admirably. However, Fox and ESPN are only concerned with brand value, TV ratings, and market size.
How come Washington and Oregon received Big Ten invitations while Notre Dame remains in the ACC? —@brianbikefit
There is only one reason Notre Dame isn’t a Big Ten member: it doesn’t want to be a Big Ten member.
The Irish prefer their football team to be independent, and we don’t see that changing anytime soon.
After all, they will have excellent access to the expanded playoff through the at-large route — athletic director Jack Swarbrick was a member of the four-person committee that devised the format — and will almost certainly receive top dollars from NBC when the broadcast contract expires after next season.
I’m not sure if this has been asked, but after the Pac-12 disbands, what happens to the Rose Bowl on New Year’s Day? Is it going to be strictly playoffs from now on? —@BSTEVENS_1984
It was easy to overlook, but Penn State’s victory over Utah on Jan. 2, 2023, was the final traditional Rose Bowl.
Why? Because the Rose Bowl will be a playoff semifinal in January 2024, and all subsequent Rose Bowls will be part of the expanded playoff — as a quarterfinal two out of every three years, and as a semifinal the third.
What do you intend to do with the Pac-12 Hotline after the 2023-24 season? Will you change it to “Former Teams of the Pac-12 Hotline” or something similar? What about a “Big Ten and Pac-12 Scraps Hotline”? — KuhlBen1250
Since the conference’s demise, I haven’t had much time to sort things out or carry out basic life functions. If necessary, we simply change the name to WilnerHotline.com — also my Twitter handle — and continue.
Long before “Pac-12” was added to our name, the Hotline was covering western schools and the issues that mattered to them.
This will not change as a result of new conference affiliations.
As always, we are grateful to the legions of readers for their support and loyalty.
