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Volume 21 No. 1
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Pac-12 Conference would build familiar structure

The Pac-12 is spending the next six months developing a financial structure to bring multimedia rights in-house in what would be a new and untested conferencewide model, but many of its elements will be designed so that they’re familiar to the schools.

For example, the conference would install local sales teams at each campus, just as the current rights holders do. Financially, the conference likely would pay the schools a guaranteed amount, plus bonuses if sales hit certain thresholds.

{podcast}

SBJ Podcast:
College writer Michael Smith and editor Tom Stinson talk about the Pac-12's study and how it could alter the college rights model.


But unlike traditional media, the revenue would not be shared equally among the 12 schools because each school takes a different approach to multimedia rights. Some are more conservative, while others are more commercial.

Currently, IMG College works with Arizona, California, Oregon, UCLA, Washington and Washington State. Learfield Sports represents Colorado, Oregon State and Stanford. Utah works with CBS Collegiate Sports Properties, Southern Cal is with Fox Sports and Arizona State operates independently after splitting with IMG College last fall.

Any schools that were in talks about an extension with their rights holder must cease those negotiations as part of the six-month moratorium initiated by the Pac-12 presidents last month.

If the Pac-12 adopts a conference-controlled model, each school would take back its rights as the third-party deals expire. Currently, multimedia rights deals range from two to nine years in length. Washington, Washington State and Arizona have the most time left on their deals (see chart in main story).

The staggered expiration dates on these deals is one of the primary challenges to implementing a new model. The conference would have to pick off schools as their deals come to an end, and establish the local sales force at that time. Until then, each school’s rights would remain with the rights holders.

Among the questions the conference will attempt to answer during this six-month moratorium:

How much in overhead would it cost for the conference to manage multimedia rights? Office space for local sales teams would be supplied by the schools, as they currently do for the third parties. But what about salaries and commissions? Sales executives most likely would be employees of the conference, not the school. Would noncompete clauses prevent the conference from hiring executives away from the current rights holders?

What kind of value might be realized by establishing a one-stop shop, where the Pac-12 could sell across the schools, the conference and the Pac-12 Networks? By packaging school assets with conference, TV and digital assets, would revenue grow beyond what is currently available for the schools?

How much would the schools save by not sharing revenue with the rights holders? IMG, Learfield and others typically pay the school a guarantee and keep a portion of what they sell above the guarantee. Schools have gravitated to this model in the past because of its simplicity. They cash the check and let the rights holder worry about sales, commissions and fulfillment.

AJ Maestas, president of Chicago-based Navigate Marketing, works with colleges, including some in the Pac-12, to determine their media value. He’s not surprised to see the Pac-12 schools looking at taking their rights back from the rights holders. But he remains skeptical of a model that would put the conference in charge of monetizing the schools’ rights.

“There is a real groundswell around alternative models to outsourcing multimedia rights,” Maestas said. “But I think schools will look to move rights back in-house before tying them to their conference. And that’s even if a conference can find a model to successfully aggregate its schools.”