Pac-12 Seeking $750M Investment For Schools, TV Networks
The Pac-12 is seeking $750M from investors, considerably more than the $500M it originally discussed four months ago, according to multiple sources. The conference will distribute $700M of that investment to its 12 schools. The other $50M will go into a new entity to manage the conference’s media rights and networks. The breakdown is detailed in official bid books that the conference sent to potential investors in recent days. The bid book, which is more than 70 pages, identifies the Pac-12 media holding company as NewCo, which includes all the conference’s media rights and the Pac-12 Networks. NewCo reported an EBITDA of $286M last year, according to the bid book. The book does not outline a timetable to complete a deal, but sources indicated the process will unfold over the coming weeks. The Pac-12 did not comment.
TOUGH TIMES: The Pac-12’s attempt to attract investors is unprecedented in college athletics and represents a bold step by Commissioner Larry Scott to create more revenue for the schools. The conference is facing considerable headwinds given the underperformance of the networks combined with the lack of on-field success. The conference’s competitive landscape has dropped so far that the Wall Street Journal headlined a March 13 story as “The Worst Pac-12 Season Ever.” Conference officials hope that finding the right strategic partner and getting an infusion of cash will reverse those trends. Scott has said that his primary motivation is to identify a strategic partner that could help with monetization of its media rights and distribution of the Pac-12 Networks. His secondary motivation is an infusion of cash for the schools, who have fallen behind their Power Five brethren, financially and competitively.
Among the details outlined in the bid book, according to sources:
- Investors are required to make a 25-year commitment.
- A minimum investment of $100M is required for individuals in an investment group.
- Investments are expected to be paid up front. The Pac-12’s book did not detail a specific rate of return. The investor would own a share of NewCo to be determined and participate in the profits as an equity investor. The expectation, sources said, is that NewCo eventually would be sold and the investor would benefit, but there are no guarantees.
- Terms of an investment could vary from one investor to another depending on the value the investor brings as a strategic partner.
- The Pac-12’s media-rights deal with ESPN and Fox Sports is worth $3B over 12 years and expires in ‘23-24.
The Raine Group is working with the Pac-12 on the new model.