DM to @tequilla regarding Pac 2 settlement

EwaDawg

Or anyone else who can cut through the bullshit.

Please tell us about the agreement between the Pac 2 and it's departing members.

Conzano (sic) is trying to say the beavs and cuog will out earn UW/U0/Stanford/Cal due to a $250 million windfall.

Can you break down the specifics? Please tell me future liabilities come out of this number.

I know we? give you shit from time to time, but you are probably one of a few who might care to take the time to understand this shit.

TIA or not.

Purple_Pills

Canzono is a clown. There is no way they settled with WSU and OSU getting anything close to $250,000,000. I hear they get some money to cover conference costs and all schools will cover conference debts and liabilities.

The settlement will eventually be pubic due to a state of Oregon law.

UW_Doog_Bot

You probably want to actually @Tequilla if you want him to take the gloves off.

GrundleStiltzkin

Purple_Pills said:

Canzono is a clown. There is no way they settled with WSU and OSU getting anything close to $250,000,000. I hear they get some money to cover conference costs and all schools will cover conference debts and liabilities.

The settlement will eventually be pubic due to a state of Oregon law.

They’ll take it in the shorthairs eh?

UW_Doog_Bot

Purple_Pills said:

Canzono is a clown. There is no way they settled with WSU and OSU getting anything close to $250,000,000. I hear they get some money to cover conference costs and all schools will cover conference debts and liabilities.

The settlement will eventually be pubic due to a state of Oregon law.

Yeah, this is a giant nothingburger.

OSU/Wazzu basically ensured liabilities were guaranteed for the conferences historical obligations and agreed to pay out members minus some of that money.

Maximum windfall looks between $50-100 million which ain't shit once you subtract out the additional liabilities moving forward then divide by 2.

Good luck the rest of the way guysm!

UWhuskytskeet

$250M is $125M each which is the equivalent of four years of old P12 revenue. Those two schools won’t have any media revenue for the next couple years and are paying the MW for the right to scrimmage, so they will be net negative in probably three years. Everyone sans the Bay schools are making $30M+ in new conferences and will pass the “treasure chest” quickly.

Basically buys them three years of praying they make it into a P4 conference, otherwise they are back to G5 revenue instantly.

haie

Canzano is still butthurt.

There is no choice between going to B1G and staying and he knows it but still insists on acting like a douchebag about it.

The 2 schools are just getting enough to float by yet:

They are playing a Mountain West schedule with no real conference championship to even play for.

Their non football sports have been relegated to the WCC (except OSU baseball which will try to go independent).

They have no TV contract. And they will never get one that will keep them at a power 5 level.

The CFP will completely ignore them (they're currently lying to recruits about this).

After 2 years when they have to drop the conference label no one besides the Mountain West will take them. This is another lie they're telling recruits. If Power 4 didn't want them now they won't even be considered in 2026.

Any money they're getting now is offset by the crippling facilities debt they both willingly and foolishly took on.

Tequilla

Others have touched around some high points but I'll try to summarize and obviously until the agreement is completely public there's still some unknowns

Breaking down the revenue and liability streams:

There's a segment that is tied to the entire backload of conference assets that is estimated at around $200M in total. To my understanding the biggest contributors to this amount are the Rose Bowl Settlement and anticipated future NCAA Tournament units (the payout is fairly long-term and delayed; there's historical precedent out there that these units typically stay with the conference versus the teams that accrued them).

While on the surface this looks like a sizable chunk of money, the reality is that the NCAA units are what they are and barring the conference dissolving (which it really should have but whatever) ... the size of the legal fight to claw back anything in this area not only was going to be long and lengthy but also have a high chance of failure. The departing 10 members have been fairly public for the time being in being prepared to walk away from this so this isn't anything anybody should be really too worked up on.

The bigger area where on the surface it feels like it's worth questioning is the roughly $6M discount on current year revenue streams. The key here will be in understanding how that retention of money follows the KNOWN liabilities (think Holiday Bowl, Comcast, P12 Network wind down and severance pay, etc.). The good news with the balance of those liabilities is that the amount should be relatively fixed at this point. I'd expect that the 10 agreed to those discounts with the understanding that it was the responsibility of the 2 to pay those liabilities. I'd also expect that some of the clawed back revenue is an acknowledgement of enticing the 2 to settle.

Where there are likely unknowns going forward is how future unknown liabilities will be treated with the elephant in the room being the current case before the House. The potential magnitude in a settlement is vast and I can understand the 2 wanting some form of guarantee in the protections (although to be fair I don't think that there's any way the 10 could act like they walk away from it but whatever on that). What's probably a little messier is how any liabilities that arise from this point forward are handled ... I'd be very hesitant if I was the 10 to agree to anything that arose from the control/management of the 2 and the 2 alone. We'll see on that ...

In the end, my read on the matter is that the departing 10 schools basically decided that the cost and energy required to call BS on the 2 was far greater than any potential reward. I do think there was an opportunity to challenge whether the PAC was a going concern conference but it was far from a slam dunk and that's where measuring risk vs reward comes into play. Finding an agreeable number from which to walk away from any future relationships with these 2 schools frankly was in the best interest of everybody.

Tequilla

As for how the departing 10 schools and their revenue profiles will compare to the 2 going forward, you have to look at the relative groups separately.

UW/Oregon

Everybody should be relatively familiar with the media terms that are in the $30-35M range for the duration of the current B10 deal. The problem is that that's where everybody fixates without understanding all of the different revenue streams available.

First, there is a pull forward provision over the next handful of years of $10M/yr against future revenue streams to help normalize the transition. I haven't looked into detail on if there are any interest provisions on the payback amount but assuming there isn't or that it's nominal ... it's an easy YES to taking the pull forward (I believe UW has already said yes to it) ... so that bumps up the short-term amounts to $40-45M

Second, there's the revenue that comes from the CFP and NCAA Tournament. The CFP is up for renewal and its distributions are going to be subject to significant negotiations and you know that there's going to be a push for a model that is more of a mirror to that of the NCAA Tournament ... notably that units are provided per game played such that the more teams you have in the field and the deeper those teams go the greater the slice of the pie that you get. This is a SIGNIFICANT piece of joining the Big10. The NCAA Tournament is locked in through 2032 but the Big10 traditionally is getting 9-10 teams into the Tournament and when you normalize for the joining of the PAC schools and the % of teams in vs total and compare to the PAC ... not only is that % going to be higher but the typical depth of Big10 teams vs PAC teams is likely going to earn a greater unit share. That's a net positive with the move.

Lastly, what's not included in the media deal numbers is what the impact of the Big10 Network is ... I haven't researched the particulars here but obviously that's better positioned than what was in place prior.

And of course, none of the above touches on visibility, position within the college sports power structure, impact on recruiting, etc.

USC/UCLA

All of the above said about UW/Oregon holds true with the exception of UCLA having to effectively subsidize Cal for at least some period (I believe I saw that number at $10M/yr but I'm too lazy to go look it up right now).

Obviously a no brainer for them to move versus what staying in the PAC would have looked like.

Corner Schools

They were able to come into the Big12 with full shares (low $30M range per year) and likely better align geographically going forward. Moreover, each of the Corner Schools has the ability or path to say that they are joining the Big12 and immediately jumping in in the upper half of the conference (if not higher). I'd argue that once the ACC breaks up and whatever happens there happens ... the Corner Schools immediately become the top of the food chain in terms of attractiveness in the 7-10 year range.

One of the big benefits for them heading to the Big12 is having an inventive commissioner that is actively trying to grow the pie and to do so in ways that are not traditional. While not the primary reason for these consolidations, the Big12 can definitely be argued to be the premier conference for college basketball and there is an opportunity to package its brands as such with a marquee TV deal (particularly depending on how the upcoming NBA deal plays out). Additionally, as noted for the Big10, the Big12 is going to be well positioned to take a disproportionate share of the NCAA Tournament units.

My general conclusion with these schools is that they are at minimum no worse off than they would have been staying in the PAC and depending on your views with the Apple deal and distribution/visibility likely a better spot overall and in particular in terms of stability.

Cal/Stanford

Could actually look at them independently but there are a couple of common themes. First, nobody was actively pursuing them when things went sideways and it makes sense because their indifference is a huge issue and it leads to them being dilutive members. Second, when faced with the prospect of rebuilding the PAC with Oregon St and Washington St or choosing any other alternative, Cal/Stanford couldn't disassociate themselves fast enough ... it didn't matter the deal they wanted and needed out.

I might be off a bit on the numbers but I believe the range from the ACC was in the $15M a year range for the near future (and who knows what that future is). I think they likely knew that the ACC was on unstable footing but they needed any landing spot from which to regroup and take one last run at arguing that they should be future members of the Big10 (and that will be an interesting argument at some point).

Cal's number isn't like anybody else's above but it's better than it sounds because of the clawback by the UC-system on UCLA bringing them into the mid $20M a year range. That's obviously not going to be sustainable for Cal going forward long-term for a number of reasons but it buys them time to evaluate their next move. I still expect that at some point Cal walks back from competing at the high end of college football and re-prioritizes as an academic school ... but let's also be honest that they've got to figure out how to get out from under the remodel of their football stadium.

Stanford is in a different spot given the overall endowment of their athletic programs. I'm not going to say that they don't need money but the calculus for them is and always will be different. Their profile fits with a lot of the ACC schools that will be left behind when it all blows up in being private schools with strong academic reputations ... there is potentially something that they can do with that. Their long-term ties always will allow them the opportunity to put together a compelling football schedule if they are independents (SC and ND are foundations but it wouldn't be hard to see where UW could be talked into scheduling that game on a regular basis for starters). Outside of that, their other non-revenue athletic programs will survive given not only the endowments but the educational opportunities that Stanford offers for non-revenue sports will always be a positive differentiator for them. They'll figure it out

Oregon St/Washington St

The settlement money will stabilize their programs over the next 2-4 years as there is a decent amount of it that is up front and spread out in its payments over the coming years. The problem for them and what they can't effectively answer is "what's next" ...

There's zero chance they will join the Big10 or SEC ... the ACC isn't a fit (if it was you'd think that would have advanced further in this cycle to help with Cal/Stanford vs SMU) ... there will be better options for the Big12 to look at. For them to join you'd have to think it would have to be heavily subsidized up front ... which frankly is money those programs don't have.

Joining with whatever motley collection of non-power programs at this point won't move the needle in any television rights negotiations, etc.

Once outside say the next 5 years, their revenue profile is almost assuredly going to look like that of a non-power program. I just don't see a logical path for them getting into a comparable situation as they have been in and I don't really see any of the departing 10 schools going to bat for them with their potential conference members advocating for the value that they add to a conference. In all situations on that platform they'll be viewed as dilutive.

The logical conclusion for these schools is to use the money that they've been given to right-size their programs over the coming years. In particular, Wazzu's athletic department has been leaking cash for years trying to keep up in a rent district that they no longer have the ability to compete in. It's a bitter pill to swallow but it is the logical path for them to continue to remain viable and rebuild from.

In both cases, geography really hurts both schools. Unlike when the SWC broke up (which is probably the closest comparable to the PAC breaking up in our lifetimes) and some schools got effectively demoted, their geography at least gave them a fighting chance ... TCU is in DFW, Rice is in Houston. Even with some solid geographical advantages, it took TCU the better part of 15+ years to be able to claw themselves back into a peer conference. The path for Oregon St and Wazzu is likely only going to be more difficult.

Perhaps the alumni and supporters of those schools reach into their pockets and find ways to contribute in ways that they historically haven't done. Oregon St I'd say has a cleaner path than the Cougs ... but neither is great. There's opportunity in them being a dominate G5 school and leveraging that for relevance and access ... but they will be doing so in a market that is very clearly consolidating instead of increasing access and expanding. It's a harsh harsh reality.

dirtysouwfdawg

Thanks teq. Could you boil this down to a
Couple sentences for me?

PurpleBaze

Tequilla said:

I'll try to summarize

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