PAC-12 Conference Revenue Sharing

The newly expanded PAC-12 Conference has yet to play a game, but they are already planning to change the league revenue sharing policy.  According to an article in the Seattle Times, the league is considering a move to an unequal revenue sharing plan under which USC and UCLA get $2 million more than other teams in the conference “until the year that combined broadcast revenues reach a certain threshold.”  The threshold has yet to be determined, but the number being tossed around is in the vicinity of $150 million.

In the U.S., major college conferences earn media rights revenues by collectively selling the rights to broadcast regular season football and basketball games to media providers.  The current PAC-10 is not a revenue generating machine, despite having teams in large media markets like Los Angeles, San Francisco, and Seattle.  While the SEC and BIG 10 have football/basketball rights fee contracts that bring in about $200 million each year, the current PAC-10 conference only gets $52 million a year.  In addition to a small broadcast rights fee contract, the PAC-10 already shares revenues unequally.  Under the current system, TV rights fees are distributed based on the number of TV appearances.  The two teams playing in a televised game split 64% of the revenues from the game, while the remaining 8 teams in the conference split the other 34%.  This led to an unequal distribution of TV rights fees in 2007-08 and 2008-09 under which Stanford and WSU got only $14 million while USC got $22 million.

Unequal revenue sharing was a contributing factor to the recent breakup of the Big XII conference.  It looks like the PAC-12 is starting off on the wrong foot.

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One Response to PAC-12 Conference Revenue Sharing

  1. Dan says:

    Brad,

    It is typical for associations or especially cartels (I’m not saying the Pac-12 is a cartel) to divide the spoils up in a way that keeps the association intact. That is how the power of one works. Remember the Board of Regents case. Georgia and Oklahoma wanted more of the revenue that they were generating. They didn’t want it to be split equally. If the NCAA hadn’t given them more, the whole thing would have broken up.

    A distribution based on appearances is “equal” in the sense that each school that appears gets an equal amount of revenue. As you note, there is a balance that is needed — keep the revenue-generators happy, but don’t alienate the low-revenue teams.

    The NFL does equal revenue sharing, but a result is that there are many teams that free ride because they know they will get the big TV bucks anyway. The NFL deals with this by having team salary minimums. In many ways, the NCAA does the same thing with minimum number of scholarships.

    Somewhat unequal, but not too unequal revenue sharing, is likely just about right.

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