Pac-12 legal affairs: Court filings indicate the 10 departing schools fear punitive action by WSU, OSU

The Cougars and Beavers could block revenue distributions in the current school year

According to court filings obtained by the Hotline, Washington is concerned about financial repercussions if a lawsuit results in Washington State and Oregon State gaining control of the Pac-12’s governing board for the duration of the current competition year.

“If OSU and WSU gain control of the Board, I am concerned that they would claim control over the entirety of UW’s media rights interests,” Ana Mari Cauce, president of the University of Washington, said in a statement. She went on to say: “I am also concerned that, in general, a Board controlled by OSU and WSU would decide not to distribute net revenues earned by UW and the other nine departing institutions for competing during the 2023-24 year.”

WSU and OSU have asked Whitman County (Wash.) Superior Court Judge Gary Libey for a preliminary injunction, which would give the two remaining schools sole control of the Pac-12 board before the other ten schools leave for their new conferences next summer.

(A hearing is set for November 14.)

The Cougars and Beavers, as the conference’s only voting members, would control the distribution of more than $400 million in revenue, which is expected to be divided equally among the 12 member universities.

Washington and the other nine departing schools are fighting the preliminary injunction to keep their board seats and access to $35 million (approximately) per campus in the fiscal year 2024.

Conference distributions account for roughly 33% of each athletic department’s annual revenue. (Ticket sales and donations are the other main sources.)

Because the lawsuit was filed within its state, Washington is the only remaining school that has submitted documents to the court and filed a motion to intervene — a critical step in having the lawsuit dismissed.

“UW depends on revenue distributions from the Conference to fund our Intercollegiate Athletics budget, which includes millions of dollars for critically important services such as student-athlete mental and physical health, academic support, and nutrition and meals,” Cauce said in a statement.

“Losing this revenue would be devastating for the University of Washington and our student-athletes. I know that the other departing institutions would face similar problems if they did not receive Pac-12 distributions this year.”

The conference’s primary revenue sources are as follows:

— ESPN and Fox have signed Tier I media rights deals.

— Pac-12 Networks distribution agreements (with Comcast, Dish, and others).

— College Football Playoff, Rose Bowl, and NCAA Tournament postseason payouts.

According to the term sheet obtained by the Hotline, the two networks are expected to pay the conference $321 million in 2023-24, the final year of the agreement with ESPN and Fox.

Meanwhile, the Pac-12 Networks typically generate more than $100 million in revenue, with postseason events worth more than $150 million, according to revenue reported by the conference in tax filings for the fiscal year 2022.

How would WSU and OSU spend the hundreds of millions of dollars currently set aside for the ten departing schools? A separate filing last week by attorneys for the Pac-12, which is named as a defendant in the WSU and OSU lawsuit, provided some insight:

“Plaintiffs seek exclusive control over the Conference from the Departing Members to use, in their words, the same Conference ‘coffers’ to ‘recruit new members,’ for ‘rebuilding the conference and planning for future seasons,’ and ‘to explore media and scheduling opportunities’ all of which would be effective after August 1, 2024.”

Both WSU and OSU have two choices:

— In a traditional realignment move, join the Mountain West.

— Make an attempt to rebuild the Pac-12 with all or some Mountain West schools.

Any reconstruction would necessitate massive resources and could take years. As a result, the Cougars and Beavers are debating whether to compete as a two-team conference next season, an unusual but legal option under NCAA rules.

It’s unclear whether WSU and OSU would be able to prevent the ten departing schools from receiving their entire revenue share or just the portion related to Tier 1 media rights (from ESPN and Fox).

According to Cauce’s assertion:

“The Pac-12 Board of Directors has the authority to ‘grant back, license, or assign back any portion or all of the rights to the participating members.’ I am concerned that if OSU and WSU gain control of the Board, they will assert control over all of UW’s media rights interests.

“I am concerned that OSU and WSU will refuse to grant or license back UW’s media rights in their own athletic competitions, and may charge exorbitant fees to do so.”

“I am concerned that they would be able to take similar steps against the other nine departing institutions.”

The plaintiffs and defendants have entered mediation in addition to the preliminary injunction hearing scheduled for next week.

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