Arizona’s apparent Pac-12 exit puts future of conference in jeopardy

The fractures in the Pac-12 Conference appear to be turning into an irreversible breakage that the league – as we know it – won’t be able to climb out of.

According to Yahoo! Sports’ Ross Dellenger, the Big 12 has approved the application of Arizona, nearly making the Wildcats the conference’s 14th member. Now, the next and final step is the Wildcats getting approval from Arizona’s Board of Regents, which oversees both Arizona and Arizona State. The board is meeting Thursday night to discuss university athletics and perhaps approve the move.

The news of Arizona’s exit further reinforces that the endangered Pac-12 Conference is facing an existential crisis for survival.

If Arizona leaves for the Big 12 in 2024, it would give Brett Yormark‘s league his preferred number of 14 schools after Colorado joined last week. A Big 12 source with direct knowledge of the league’s strategy told On3 that a 14-member league was identified as the “right” number. But the source added that 14 is not necessarily a “hard stop” if the right opportunities emerged to expand to 16.

And they could emerge quickly.

Arizona’s departure, if it occurs, could also spur other dominoes to fall, specifically Arizona State and perhaps Utah following the Wildcats in lockstep to the Big 12. The Big Ten Conference is also actively considering adding Oregon and Washington from the distressed league.

In play is a potential dramatic makeover of some of the nation’s marquee conferences and perhaps the collapse of a century-old Conference of Champions, the Pac-12. If more schools depart, it’s an open question whether the league will survive, and, if so, in what form.

Concern reaches a fever pitch for Pac-12

Like Colorado, Arizona would be expected to receive a full revenue share of $31.7 million annually. 

The Big 12 in October secured a six-year, $2.28 billion extension with ESPN and FOX Sports. ESPN’s contractual portion of the deal – which amounts to roughly two-thirds ($20 million) – includes a pro rata clause, which stipulates that the financial value of the deal increases accordingly if the league adds a Power 5 school.

The FOX contractual portion of the deal – roughly $11 million of the $31.7 million – does not include such a clause, Action Network‘s Brett McMurphy reported, but the network has verbally agreed to follow suit with ESPN if the Big 12 adds up to two Power 5 schools. If the Big 12 adds more than two Power 5 schools, conversations would need to occur to determine whether they would also initially receive a full revenue share.

Concern reached a fever pitch in Pac-12 circles because, even after commissioner George Kliavkoff presented university presidents this week with the most attractive rights deal proposal, it is unclear how much rights revenue members would yield annually. The proposed deal is a heavy streaming-centric partnership with Apple TV+, which includes a baseline revenue figure that would increase based on subscription-based financial incentives.

There is no guarantee that Pac-12 members would receive anything close to the $31.7 million Big 12 members will receive. Pac-12 sources have privately remained confident throughout the nearly year-long negotiation that they would reach that financial threshold. But TV sources said that with media rights headwinds now fierce, that figure is a reach for the Pac-12.

“Networks spent their money somewhere else [for the $2.28 billion Big 12 deal last October],” tweeted Bob Thompson, the retired president of FOX Sports Networks. “Then the spigot got turned off. A lot has changed in the last year.”

Subscription-based incentives ‘definitely risky’

It is unknown whether the Apple deal would include a smaller deal with a linear TV network, which offers a broader reach. Without one, the concern is that the league would not merely fall behind in dollars but also in brand visibility. Neal Pilson, the former longtime CBS Sports president, told On3 that he estimates the league would lose 50% of its audience by putting almost all of its inventory on a streaming platform.

William Mao, SVP Global Media Rights at Octagon, told On3 on Thursday that very few streaming platforms have a U.S. subscriber base that approaches the current TV household reach of the major cable sports channels. Case in point: Even the NFL experienced a larger-than-expected decline in viewership when Thursday Night Football transitioned exclusively to Amazon Video, which has one of the largest subscriber bases in the streaming space.

“Decreased reach means less brand/media presence relative to other conferences and institutions, and also less exposure for brand partners – think stadium signage, product and apparel deals, etc.,” Mao said. “Athletics is often called the ‘front porch’ of a university, serving as the most visible ‘room’ of the institution. So, if the porch gets smaller, or is in a different neighborhood, and may require additional cost to access, it could have a knock-on effect on athlete recruitment, admissions, alumni contributions and on any other university initiatives that leverage the athletic program.”

Tatu Tiililae, manager of client strategy at Navigate, told On3 on Thursday that, as we’ve seen with the NFL, streaming will decrease overall viewership but will keep core fans engaged in the product. The concern lies with casual fans – will they purchase yet another subscription when they are accustomed to easily flipping channels for games?

“It is hard to envision that Pac-12 games will garner as much national attention as they’ve been able to in the past,” Tiililae said, adding that subscription-based incentives are definitely risky. 

“Looking at consumption and cord-cutting trends, streaming is part of the future fabric of media deals in college football,” Tiililae said. “However, the Pac-12 faces the same question as [Apple partner] MLS: Were these deals signed by premature visionaries, or will we look back on these in five to seven years and realize that they made the right decision at the right time?”