The pandemic struck, revenues went up, Larry Scott’s bonus went down, and an emergency fund was tapped to make the schools whole.
Those were among the highlights Thursday as the Pac-12 released its federal tax filings for the 2020 fiscal year — the year without March Madness.
The damage from COVID was limited, however.
The conference increased its overall revenue by one percent, to $533.8 million, as growth in other areas offset a 40 percent year-over-year reduction in revenue related to the basketball postseason.
More importantly, the Pac-12 increased campus distributions by four percent, to an average of $33.6 million per school. That increase was in line with prior years.
“It was a challenging year,” said Oregon president Michael Schill, chair of the CEO Group. “Like everything, the Pac-12 Conference was impacted by the pandemic.
“I appreciate all the work of Commissioner Larry Scott and the Pac-12 to reduce costs and maximize distributions despite the challenges.”
The Hotline obtained a copy of the tax filings and will present key findings below separated by topic, in order to make the data more easily digestible for readers.
The conference generated $533.8 million in total revenue, compared to $530.4 million the previous year, with the vast majority related to media rights.
The cancellation of March Madness and abrupt end to the Pac-12 tournament in the spring of 2020 resulted in a year-over-year decline of $15 million in basketball revenue (both media rights and ticket sales).
However, the Pac-12 offset that loss with a combination of expense reductions (see below) and revenue increases in several areas:
— Revenue from media partners (ESPN, Fox and the Pac-12 Networks) jumped by $11 million year-over-year because the conference was able to meet its key contractual obligations — the COVID shutdown occurred after the football and basketball regular seasons.
(The Pac-12 tournament, which was canceled after the first day, accounts for a small percentage of the total income.)
— Revenue from the college football postseason increased by $5 million, per contracts with media partners.
— The Pac-12 also received a $5 million year-over-year bump in what it describes as “other” revenue.
(According to the conference, NCAA payments that typically go directly to the schools were instead sent through the conference office.)
The primary revenue streams were as follows:
TV rights: $361.9 millionPostseason bowl: $119.4 millionNCAA Funds/Conf. events: $22.9 millionAdvertising: $14.3 millionOther revenue: $11.5 millionTotal: $530 million
(The “conference events” category includes the Pac-12 football championship game, which was played as scheduled in Dec. ’19.)
While not listed on the tax filings, the Pac-12 tapped its emergency reserve fund for $5 million.
Per documents obtained by the Hotline previously, the reserve funds are believed to have at least $15 million remaining.
The Pac-12 distributed an average of $33.6 million to each campus in FY20, a four percent year-over-year increase over the FY19 distributions of $32.3 million.
Although the payouts met the campus budget forecasts set before the pandemic, they compare poorly to peer conferences.
Campus payouts for FY20 (data from other leagues from USA Today):
Big Ten: $54.3 million per schoolSEC: $45.5 million per schoolBig 12: $37 million to $40.5 million per schoolPac-12: $33.6 million per schoolACC: $30.9 million to $37million per school
Note: The Big 12 figure excludes millions in local media rights, which are owned by the schools because the conference doesn’t have a dedicated TV network.
Commissioner Larry Scott was credited with $4.6 million in earnings, a year-over-year decrease from the $5.4 million he received in FY19.
Compensation is reported on a calendar year basis, so Scott’s salary figure is from CY19 and does not include any pandemic-related reductions.
In other words, he took a non-COVID pay cut.
Although Scott’s base salary increased by $50,000, his bonus was reduced by more than half: He received an $875,000 bonus in CY19, compared to the $2.2 million he collected the previous year.
The reduction came on the heels of the difficult 2018 calendar year for Scott, highlighted by the instant-replay controversy.
According to the conference, Scott’s bonus payments are tied to increases in media revenue. When certain thresholds are met, his bonuses are higher.
It’s the first time since the 2014 fiscal year that Scott’s bonus has dipped below $1 million.
The conference’s wholly-owned media company distributed an average of $2.95 million per school in FY20, which is included in the payout figures cited above.
Only in recent years has the conference provided revenue and expense data specific to the Pac-12 Networks. But based on Hotline research, the FY20 campus payouts would be the largest since the networks were launched in Aug. ’12.
Annual Pac-12 Network distributions (fiscal year), per documents and research:
2013: None listed2014: $862,000 per school2015: $1,677,500 per school2016: $1,980,250 per school2017: $2,522,167 per school2018: $2,666,667 per school2019: $2,789,583 per school2020: $2,950,000 per school
The Pac-12 Network has just 14.8 million subscribers, according to Dec. ’20 estimates provided to the Hotline by S&P Global Market Intelligence.
The conference office and Pac-12 Networks generated $129.4 million in expenses in FY20, which represents a $2.7 million year-over-year decline (approximately two percent).
The number of full-time employees dropped from 218 to 201, based on headcount totals on June 30 of each year.
The expenses for FY20 included $8 million for what is described as a “special project” — a line item that was not listed on the prior year’s tax filings.
According to the conference, special projects include video productions, media days, brand activation and various promotions.
“The Pac-12 mission is to support our over 7,000 student-athletes both on the field and in the classroom,” Scott said in a statement Thursday accompanying the financial report.
“Our continued financial growth in revenues and member distributions, along with expense management efforts, have and will continue to allow us to support this essential academic and athletic mission.”
Of note: The conference spent $148,000 on lobbying in FY20 and described the effort this way on the Schedule C portion of the tax filings:
“Contact with federal and state officials and the staffs to provide information and educate them regarding issues related to potential legislation regarding student-athletes licensing their name, image and likeness for compensation.”
The conference hasn’t been as fortunate in the 2021 fiscal year, with the shortened football season substantially impacting the media rights revenue.
The Pac-12 does not provide revenue guidance to the public and won’t make FY21 tax filings available until next spring.
But schools have provided clarity.
Washington State officials are projecting $21.3 million in Pac-12 and NCAA distributions this year, according to documents presented recently to the WSU Board of Regents.
In a similar presentation to its regents, Washington’s athletic department is forecasting $23.2 million in payouts for FY21.
The average of the two estimates — or $22.3 million — would represent a 33 percent decline in conference distributions from the current fiscal year.
That figure makes perfect sense:
The football regular season, which generates a substantial portion of Pac-12 revenue, was cut in half.
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