Pac-12 collapse: Is the costly production studio in San Ramon’s Bishop Ranch an asset or liability?
The conference opened the Northern California facility one month before Black Friday
Commissioner George Kliavkoff decided to close the conference office and relocate the Pac-12 Networks’ production studio long before the Pac-12’s legal dispute, before the collapse and the Comcast scandal, and even before the Los Angeles schools fled for greener pasture.
Kliavkoff eventually settled on San Ramon, a city in the East Bay. The conference declined to reveal contract terms, but stated that the move would save millions of dollars in rent each year.
For some, the timing was perplexing. Kliavkoff signed a multi-year lease for 42,000 square feet that began this summer — before securing a media rights deal that would keep the conference running.
After all these months, the Pac-12 has imploded, ten schools have left, two have remained, and everyone is looking for clarity on the Pac-12’s assets and liabilities.
Is the San Ramon manufacturing facility the former or the latter? At the very least, it is one of the most perplexing aspects of this turbulent period.
Many details, including the endgame, are unknown to the public. However, the Hotline has a few answers.
Why did you decide to relocate in the first place?
Few issues have irritated campuses as much as lavish spending at the conference office, and that spending begins with the office itself.
The Pac-12 paid millions of dollars per year for two floors of downtown San Francisco office space: one for conference operations and one for Pac-12 Networks studios.
The optics were bad, the rent was even worse — the total outlay over 12 years exceeded $90 million — and Kliavkoff was under enormous pressure to solve the problem.
When he was appointed commissioner in the spring of 2021, he made reducing conference expenses in general, and relocating the headquarters in particular, a priority.
“He was so eager to get out of San Francisco,” a source told me, “that he pushed for a move fast.”
Why relocate in 2023?
Kliavkoff was forced to make a critical decision. Kliavkoff was taken aback when he discovered the Pac-12’s contract with Kilroy Realty expired in the summer of 2023 — one year before the Pac-12 Networks’ distribution contracts with Comcast, DISH, and others expired.
He wasn’t by himself. When campus officials and conference staff learned that former commissioner Larry Scott had agreed to the one-year contractual offset, they were perplexed.
Why not coordinate the lease with the media agreements?
“It’s insanity,” one source said.
“We were astounded,” said another. “No one knew. Nobody could figure out why Larry would sign an 11-year building lease for a 12-year television contract.”
According to one industry source, it could have been a leverage play.
“Typically, you don’t have big contracts expire at the same time because it can provide leverage to the other side,” a person familiar with the matter said. “So you might do a renewal of the lease but make it contingent on the (media) rights deals.”
According to a source, there was no contingency clause in the Pac-12 agreement.
Scott did not immediately respond to a comment request.
Why not extend the deal in San Francisco?
Whatever the reason for the contractual offset, Kliavkoff faced a reality check in early 2022: the Pac-12 had to either renew in San Francisco or commit to finding a new home for the networks’ production studio.
The lease, according to multiple sources, included the option to renew for one or more years at market rates. Following a series of negotiations, it became clear that any extension would have doubled the conference’s $7.3 million annual occupancy cost in 2022.
Given the cost, Kliavkoff agreed to relocate the Pac-12 Networks production studio to Los Angeles in March 2022, with approval from the university presidents.
“George said, ‘There’s no decision to be made,” according to a source.
San Ramon’s price
Three months later, USC and UCLA announced their departures for the Big Ten, casting doubt on the Pac-12’s future.
Kliavkof, ever the optimist, forged ahead with relocation plans. Bishop Ranch, a 600-acre mixed-use community in San Ramon, was chosen for the conference in January.
The conference has declined to disclose contract terms, but multiple sources believe Kliavkoff signed a four- or five-year lease worth $1.5 million to $2 million per year.
Then the bills started piling up.
According to a source, the San Francisco lease required the conference to return the two-story office space to its original form as two single-floor offices, at a “significant” cost.
The transition budget was put under strain by inflation and supply-chain issues. The cost of delivering a fully functional production studio on a tight deadline also increased.
According to multiple sources, the project went over budget. According to sources, the presidents approved using the emergency reserve funds that were available at the time to offset the costs.
The facility opened to positive reviews in July. However, the conference folded a few weeks later, leaving the Pac-12 with at least three more years in San Ramon at a cost of $1.5 million (or more) per year.
San Ramon Alternatives
However, it is too early to classify the San Ramon office as a liability.
According to one source, the facility, which has cutting-edge technology and is located in the Bishop Ranch business park, will be a valuable asset beginning next summer.
The production studio could be used to broadcast events if Washington State and Oregon State decide to rebuild the conference.
Perhaps a media company (here’s looking at you, Apple) would be interested in subleasing the space and equipment. Alternatively, you could buy it outright.
Following a merger with Washington State and Oregon State, the Mountain West conference may be able to use the infrastructure in its next media contract cycle (2026).
Perhaps the ACC (Stanford and Cal) and Big 12 (Arizona, ASU, Colorado, and Utah) schools could use the facility to produce events for their new leagues, which have digital media elements in their contracts.
The future of the San Ramon production facility, like so much else in the Pac-12, is complicated and uncertain.
