The endangered Pac-12 Conference, a master class in miscalculations and missteps

George Kliavkoff, the Pac-12 Conference commissioner, stood at a dais in Las Vegas on the morning of July 21 and explicitly said he was not concerned with another league poaching his schools.

Less than a week later, Colorado was returning home to the Big 12 Conference, other schools were seriously assessing options and Kliavkoff’s Conference of Champions was facing an existential threat to survival. The absence of concern had suddenly morphed into a five-alarm fire.

And with the Big Ten Conference now exploring the possibility of adding Oregon and Washington, and an Arizona Board of Regents meeting scheduled Thursday evening to discuss university athletics, there may be too many fires for Kliavkoff to extinguish. As the league’s future hangs in the balance, here’s an important reminder: A century-old conference does not dissolve overnight.

Pac-12 leadership has long conducted a master class in miscalculations and missteps. As a result, the endangered conference is now teetering on the brink of extinction.

“I have never understood the Pac-12,” a prominent longtime college administrator told On3 on Wednesday. “I saw an article from 1996 that said the Pac-12 was last among Power 5 leagues in revenue. Twenty-seven years ago. And [it’s] still last now. Why?”

TV vet to former Pac-12 leader: ‘You are walking into failure’

Trace issues back to Larry Scott‘s ill-fated, 11-year tenure as conference commissioner, whose errors have been long dissected and cursed among stakeholders in Pac-12 circles. His strategic missteps extend far beyond deciding against adding brand behemoths Texas and Oklahoma in 2011, as he then told ESPN, “There’s a very high bar. It’s hard to imagine very many scenarios for our conference to expand because the bar is too high.”

Circle the following year when the Pac-12 Network launched. By the league having full ownership of the network, Scott envisioned, ultimately, a windfall for conference schools because the network wasn’t tethered to a traditional linear TV network, like ESPN. That, in fact, was precisely the problem.

Leading stakeholders told him bluntly that his do-it-alone strategy would be a costly mistake. That is an understatement. The network’s distribution, in a word: Awful.

“You are walking into failure,” a veteran TV source told On3 about Scott’s strategy. “They did not have a partner that could leverage distribution for them. It’s like the SEC Network, it’s like the Big Ten Network, it’s like the ACC Network – you have to have a partner with the ability to leverage distribution.”

Pac-12 bet big on Big Tech for rights deal

Over the past decade, as the escalating cord-cutting trend took hold and the media world began to transform with the advent of streaming platforms, Scott was bullish on Big Tech making a big splash in the college rights space. But the reach of the then-new platforms – especially among older, more traditional fans – posed a large question, and still does today.

“Larry was always talking about how the FAANGs [Facebook, Apple, Amazon, Netflix and Google] are going to be their savior,” another TV source said. “And my response to that was, ‘Ok, right, Larry. The FAANGs first big check, they are going to write it to the Pac-12? No way.'”

Fast-forward to last summer. Kliavkoff, heralded as a ray of sunshine for the league because of his business savvy and non-traditional background, was looking to infuse the league with forward-thinking innovation, as well as clean up any messes left by Scott. 

One problem: During his listening tour across Pac-12 campuses, Kliavkoff failed to correctly read the room. In a choose-your-own-adventure college world, one can wonder if Kliavkoff had moved swiftly to create an unequal revenue-sharing model what would have been the outcome for disgruntled USC and UCLA. How many more dollars would have placated both schools?

As it turned out, Kliavkoff was caught flat-footed by the abrupt departures of league flagships UCLA and USC to the Big Ten. The Pac-12 did not immediately move to expand.

“They just never saw it coming,” one longtime college administrator said.

Big’12 Yormark ‘outflanked’ Pac-12’s Kliavkoff

The Pac-12 then embarked on trying to secure a media rights deal that would clearly be compromised by the absence of a recognizable Southern California presence when both land in the Big Ten in 2024. But the Pac-12 did not move fast enough on the rights deal.

Instead, it watched as Brett Yormark, a New York-area sports business veteran, swooped in and stole their thunder – and dollars. The Big 12, working with Endeavor, leapfrogged the Pac-12 even though the West Coast’s rights deal was to expire July 1, 2024, before that of the Big 12. As a result, the Big 12 secured a six-year, $2.28 billion extension with ESPN and FOX Sports.

More than that, the once-reeling Big 12 secured what the Pac-12 still covets: Stability.

Since then, headwinds in the media rights space have become fierce. ESPN is laying off thousands of employees and is signaling that it will be more selective in rights decisions. Disney CEO Bob Iger is looking for a strategic partner – perhaps from Big Tech or the sports betting world – to buy a stake in ESPN. The network also plans to move to a subscription-based streaming model in the coming years.

Yormark is grateful for striking quickly to land the Big 12 deal.

“I’m a firm believer that you grab a good bird in the hand when you get it,” Yormark told On3 last month. “And I felt that we had a good bird in the hand. It was a fair deal. It was the right deal. Everyone said we wouldn’t get an increase. We did and we got more promotion. We got more marketing. So, I felt it was a great deal and one we had to do. Looking back now, I think that deal looks better every day.” 

One veteran TV source questioned, given the state of the rights ecosystem now, if the Big 12 would have been able to land that deal this summer had it waited. The source added: “Brett outflanked George by going early. He moved quickly. Had the Pac-12 done that, would they have gotten a deal first? I don’t know. Now they’ve had instability that the Big 12 did not have.”

‘Can you get blood out of a stone?’

Silent messaging is another miscue that industry leaders attribute to the Pac-12 over the last year. The league issued the now infamous unity statement Feb. 13, saying that members would secure a rights deal in the very near future.

When that never materialized and the calendar kept turning, Klaivkoff purposely remained silent, at least publicly. League leagues continued to espouse confidence that the Pac-12 would wind up with an attractive rights deal, keep everyone together and deliver in the ballpark of $31.7 million annually to members (matching the Big 12 figure). One source even told Pac-12 insider John Canzano that it was a “layup.”

The league was a victim of its own messaging. By taking the silent approach, it ceded the opportunity to shape the narrative to others. Conversely, the Big 12 has been quite public about its desire to expand and why and how it would benefit its conference.

At media day, Kliavkoff said he could have spent all last year “getting into a he said, he said on every single rumor,” but “we decide to take the high road, we decide to focus on the future of the conference. That is why we haven’t engaged.” 

“What I will tell you is, when you think about the effect that might have on our schools, of not being in the public every day talking and defending ourselves, for me the concern – the real concern – was is it going to affect our recruiting,” Kliavkoff added. “Are we going to lose potential student-athletes because of some uncertainty? I will tell you, our recruiting has never been stronger. That kind of reinforced the decision to not engage.”

By most accounts, the Pac-12 overvalued its inventory. Media rights sources expected it to be a reach for the league to reach the Big 12 figure in annual distribution. And if it did, it would have to sacrifice brand visibility by getting into bed largely streaming partners. Especially in this media rights climate, squeezing more money out of the likes of ESPN was bound to be difficult.

“It’s the money,” one TV source said recently about the reasons for the protected rights negotiations. “Can you get blood out of a stone? I don’t know. You have a distressed product. Who is going to overpay?”

And who is going to pay top dollar for inventory that has been diminished. Without USC and UCLA in the picture, there’s a scarcity of national brand recognition across the league with the exception of Oregon and perhaps Washington.

In college football, there remains an almost insatiable appetite to watch the biggest brands match up. To that point, one prominent college athletics official who has been involved in numerous media rights deals told On3, “The networks will pay you whatever you need them to pay you for the top inventory. What they don’t want to do anymore is pay $9 million a game for Michigan–Ohio State and also pay $9 million a game for Rutgers–Maryland. Every conference is top-heavy.”

In a post-UCLA and USC world, Kliavkoff was never holding a great hand. On top of that, he misplayed the limited hand he held. 

“The most puzzling rights negotiations I’ve seen in a long, long time,” one conference commissioner told On3.

No guarntees creates problems for school leaders

Having grown so frustrated by the process – largely shrouded in secrecy – Colorado didn’t even wait to hear financial figures from Kliavkoff. Industry leaders say he underestimated Colorado’s impatience and willingness to bolt to more stable ground back home in the Big 12.

Concern has now reached a fever pitch in Pac-12 circles because, even after Kliavkoff presented university presidents this week with the most attractive rights deal proposal, it is not remotely clear 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.

No guarantee that enough subscribers would sign up to yield anywhere near $31.7 million annually for league members. And a heavy streaming deal means consequential questions about brand visibility for fans and recruits.

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.”

One TV source added: “Nobody had any idea when they peeled back the curtain who was going to be there. I don’t know what they are doing. ESPN has all it needs and has plenty of products in the windows that matter. Late night? Yeah, some Saturday windows here and there, but that is not a tier-one plan. And what are they going to pay for it? And are streamers willing to spend a fortune on college product with all the instability?”

‘Rearranging deck chairs on the Titanic’

Are fans going to pay for content behind a paywall? Neal Pilson, the former longtime CBS Sports president, told On3, “You’re not talking about college kids; you’re talking about alumni and fans of the Pac-12 who are used to watching it on linear television. And they don’t know how to connect their large TVs to the Internet. They will be forced to watch on their laptops or their phones. And you’re going to see a significant decline in their total audience if they move their package principally to Apple.” 

Pilson said a move to largely streaming would see the Pac-12 lose an estimated 50% of its audience. He likened the Pac-12’s moves now to control damage to “rearranging deck chairs on the Titanic,” adding that “half the remaining Pac-12 schools will probably move to the Big Ten and the Big 12 which means the end of the Pac-12.”

Less than two weeks after he said he had no concerns about league unity, no concerns about conferences poaching his schools, fires blaze across the Pac-12, perhaps too many to extinguish. 

Kliavkoff may be eyeing checkmate.