The Pac-12 is moving forward with its new multimedia rights model.
The conference decided at its annual spring meetings earlier this month to form a new company that will support schools that decide to take back their multimedia rights. Eleven of the league’s 12 schools currently outsource their rights to rights holders such as Fox Sports, IMG College, Learfield Sports and Outfront Media Sports. Arizona State is the only one that doesn’t outsource.
The new company will be formed in the coming months as a wholly owned subsidiary of the Pac-12. It will provide accounting, human resources, finance and research-and-development support for the schools that join this new conference model. The new company has not yet been named.
Schools will have the choice of opting in to the conference model or continuing to outsource. Arizona State most likely will be the first school to commit to the conference’s new company. The rest most likely will wait until their current multimedia rights contracts expire before making any moves. Those individual deals have anywhere from two to 10 years remaining.
In addition, the conference lifted the moratorium on any new multimedia rights deals, which was established in March as it began exploring a new model for those rights.
The Pac-12 would be the first of the power conferences to employ this type of conference model. Of the 65 schools in the five major conferences, 63 outsource their rights to a third party, so the Pac-12’s new approach is radically different from the way schools have outsourced their rights over the last few decades.
Multimedia rights typically include corporate sponsorships, in-venue signage, game-day hospitality, digital rights, publishing and coaches’ endorsements. Schools in the Pac-12 make anywhere from the low seven figures annually up to the high seven figures from their multimedia rights contracts.
But the conference has tried to convince its schools that they’ll make more money by cutting out the rights holder and keeping more of the revenue. Officials from the rights holders have argued that they have the expertise to make the most money for the schools, not the conference.
“We’re delighted our presidents approved this model and the creation of a new company to help our schools control their rights and assets,” said Pac-12 Commissioner Larry Scott. “This is a natural progression for us to help our schools operate with best practices. We’re doing the same thing in ticketing, mobile, fan engagement and other areas, and multimedia rights represent the natural next step.”
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SCOTT
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It’s uncertain how many of the Pac-12 schools will opt in to the conference model. Their current multimedia rights deals require the school to negotiate with the current rights holder first, before exploring other options.
Scott wouldn’t speculate on how many schools might opt in, but there had to be some level of enthusiasm for the new model if the conference approved the expenses of establishing a new company. The Pac-12 did not reveal startup costs.
Other than the Pac-12 Networks, this marks the second subsidiary the conference has created. A separate business, Pac-12 Sales, was created last year to help schools with ticket sales. Oregon State, Washington State and Washington have signed up for that program.
The new Pac-12 multimedia rights business will attempt to replicate the current sales model already in place. Schools will have a general manager and a sales team embedded with the athletic department, which is similar to how IMG College, Learfield and the others operate. Those executives will be employees of the new company.
The GM will report to both the school and the new company. Scott said it’s important for the school to have an active voice in how the property is managed.
The conference will take just enough of the revenue to support the new company and on-campus sales teams, which is estimated at 15 percent. That means the schools will keep roughly 85 percent of the gross revenue. Rights holders dispute those projections. It’s likely, however, that contracts between the new company and the schools will vary, meaning revenue will not be the same for each school.
The conference company will have the flexibility to negotiate up-front bonuses and other contractural terms with the schools.
For the Pac-12, the multimedia rights business represents a way for the conference to help schools generate more revenue and share best practices. Scott said the conference has studied the NBA’s team marketing and business operations program, as well as the NFL, to determine how the Pac-12 can help schools operate more efficiently.
