Pac-12 finances: Record revenue, modest uptick in campus payouts, Scott’s compensation, networks expenses and more

The Pac-12’s tax filings for any given fiscal year are released the following summer, making them something of a lagging indicator of the conference’s financial wherewithal.

With a pandemic raging, the figures from FY19 feel like they’re from a different era.

Nonetheless, tracking the dollars acquired, spent and distributed are important for the public record.

We report on the conference finances every year, and the approach isn’t changing because coronavirus has pushed athletic departments to the brink of financial calamity this fall.

So based on documents obtained by the Hotline, here we go …

For the second year in a row, the Pac-12 provided enhanced transparency into the complicated inner workings of its two divisions, with revenues and expenses reported in detail for both the conference office and the Pac-12 Networks.

From the campus distributions to the networks’ revenue to commissioner Larry Scott’s compensation, the numbers all align with expectations given the reports from prior years.

But as we’ll explain, there is a layer of complication to the year-over-year comparisons on the revenue side.

(One slice of the financial picture is not included, and never has been: The full equity value of the Pac-12 Networks.)

As for the top-line numbers:

The Pac-12 reported a record $530.4 million in revenue for FY19 and distributed an average of $32.2 million to each campus.

The revenue came from three primary buckets:

1. Media rights: $351.3
(includes ESPN, Fox and Pac-12 Networks)

2. Football postseason: $114.4
(includes College Football Playoff)

3. NCAA funds/conference events: $38.1
(includes March Madness, conference basketball tournaments and the football title game)

The $530.4 in total revenue in FY19 represents a year-over-year increase of 6.7 percent, but be mindful:

The figure for FY18 was low because of the Rose Bowl’s position as a College Football Playoff semifinal host.

In years the Rose Bowl hosts a semifinal, the Pac-12 is unable to collect its $40 million paycheck from participating in the Granddaddy, causing both overall revenue and campus payouts to drop.

To offset that ebb, the Pac-12 withholds a portion of the Rose Bowl revenue from its membership in two out of every three years.

It then uses those reserves to offset the dip in the third year, when the Rose Bowl hosts a semifinal.

(This approach has been approved by the schools.)

In that regard, the best comparisons for the revenue/payouts for FY19 would actually be FY17, when the numbers were not impacted by the Rose Bowl hosting the semifinals.

*** Pac-12 total revenue, past three years:

2017: $509.4 million
2018: $497 million
2019: $530.4 million (4.1 percent increase over FY17)

*** Pac-12 campus distributions, last three years:

2017: $30.9 million
2018: $31.3 million
2019: $32.2 million

*** Pac-12 campus distributions in FY19 vs. Power Fives:

Big Ten: $56 million per school (estimated)
SEC: $45.3 million per school (actual)
Big 12: $38.8 million per school (actual/excludes Tier 3 rights)
Pac-12: $32.2 million per school (actual)
ACC: $31.5 million per school (estimate)

(The Pac-12 figure is slightly lower than our published estimate.)

*** Other items of note:

— Scott earned $5.4 million in total compensation, slightly above his pay the previous year ($5.3 million).

He remains credited with the use of a $1.9 million “relocation” loan, with the full balance due.

— Conference operating expenses increased to $41.7 million from $39.9 million the previous year — an uptick of 4.5 percent that could be attributed to two factors, according to the conference:

Higher costs related to staging the football championship at Levi’s Stadium; and the timing expenses from the Student-Athlete Health and Well Being Initiative.

(The Pac-12 typically spends several million dollars each year funding research grants, but the timing of each grant can vary.)

— The Pac-12 paid $7.8 million in occupancy for the conference and networks office space, down slightly from $8.1 million the previous year.

It has $8.6 million in deferred rent.

— The Pac-12 Networks generated $123 million in revenue in FY19, compared to $127 million the year prior.

— However, networks expenses dropped by $10 million year-over-year, from $100 million to $90 million, reflecting attempts to create more cash to distribute to the schools.

The decrease in expenses could be attributable to several factors:

Depreciation costs dropped by $2.5 million

Legal fees declined by $2 million

Programming costs dropped by $1 million

Advertising dropped by $800,000

Also of note:

The Pac-12 paid $885,000 in severance (over two reporting years) to former networks president Lydia Murphy-Stephans, who stepped down in June ’17.

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