When the Pac-12 first started loan talks this summer, it was looking at securing close to $1 billion to support its schools, which were projected to lose up to $80 million each amid the pandemic and without fall football. But with an abbreviated season back on the schedule, the conference will now need less to get by while arriving at the loan office with a much stronger hand.
The seven-game schedule for football and a normal November start for basketball will be enough to secure most of the nearly $300 million payout the conference was set to earn this year from its long-term deals with ESPN and FOX.
Sources within the conference told Sportico that the abbreviated plans announced Thursday night won’t fully satisfy the commitments—of which football and basketball make up a significant portion—but will still be enough to meet “most of” its obligations to the two networks and bring the Pac-12 “very close” to complete fulfillment.
“The difference between not playing football and basketball versus playing football and basketball, just with ESPN and Fox, is really significant,” said the source, who was granted anonymity because of the ongoing nature of discussions with both partners. “But we’ll still be without fans, which is a huge source of revenues for our schools, so there’s still going to be significant financial need.”
The more than $310 million the Pac-12 received in total media payments in 2018-19 included revenues from its 12-year deal with Fox and ESPN, the Pac-12 Networks, as well as March Madness payouts and other media revenue, according to data that the public schools submit annually to the NCAA. The conference in turn distributed $32.2 million to each school for the 2019 fiscal year, up slightly from $31.3 million in 2018. The Pac-12 expected to lose a large portion of that when it initially postponed all sports until at least 2021, in addition to ticket sale revenue.
Thursday’s announcement did not include fans in the stands, which won’t be entertained until at least 2021, which means the conference will still lose the more than $120 million in football tickets sold in 2018. The 10 public school programs made $197.5 million in total donations, some directly tied to football tickets, which is also likely to take a hit.
Schools will also face a year without many supplemental revenue streams tied directly to sport competition (concessions, merchandise, parking, etc.). However, the return of football and basketball puts Pac-12 schools in a better financial situation than expected even a month ago with the security of its media rights revenue. With an average athletics-department deficit of $3.4 million in the conference, mitigating any additional losses was a priority for all.
The Pac-12 can now recalculate how much money each institution expects to need and finalize loan terms with an undisclosed lender in the next few weeks. What once was a proposal that would allow schools’ athletic departments to borrow up to $83 million each in exchange for contracted future media rights revenue at a rate of 3.75% over 10 years, will now likely be a much smaller deal.