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How Does It Compare?

While at first blush the record-setting numbers from the Pac-12 appear strong, the comparison to its peers is arguably more telling.

The table below summarizes the Power 5 numbers.

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On a per-school basis, the Pac-12 was last in the Power 5 in distributions. However, its total revenue number was higher than the Big 12 and comparable to the ACC.

In fact, the Pac-12 pulled in $100 million more dollars than the Big 12, but the fly-over conference’s payout per school was higher due to the fewer number of teams in the league.

Still, if anything, the 2021-22 financial reports from the Power 5 conferences underline the enormous gap between the Big Ten/SEC and the rest of the leagues.

At the end of the day, the term “Power 5” has become obsolete. In reality, there is a “Power 2” and—to borrow a phrase coined by Action Network’s Brett McMurphy—a “Middle 3.”

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Tidbits and Odd Numbers

The Pac-12’s 2021-22 Financial Report detailed some odd facts about the Conference’s expenses.

The league spends more money on Information Technology ($10.7 million) than it does on officiating ($3.0 million). Even more head-scratching, the Pac-12 spent more on legal fees ($4.5 million) than it does on officiating.

That’s not a comforting set of numbers for a Conference that is routinely criticized for its poor officiating, particularly in basketball.

You would think the league would invest more in paying its officials than it does on say, employee benefits. Yet, the Pac-12 spent $3.4 million on employee benefits to just $3.0 million on officiating.

Honestly, does the IT department need a budget three times that of the officiating budget? Should the employee benefits and legal fees expenses be higher than officiating expenses? What is going on here?

But it gets worse.

The Conference spent more than twice its officiating budget on “Occupancy,” which appears to be their politically correct way of saying “Rent.”

So, while the league spends outrageous amounts of money on its San Francisco office spaces, the officiating budget remains underfunded.

Still, the league ended the 2021-22 year with an $18.5 million dollar profit after distributing a record-setting amount to its 12 member schools.

Perhaps the Conference can dedicate some of that profit to doubling or tripling the officiating budget.

We can only hope.

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Takeaway Moving Forward

From a purely financial point of view, the $162 million in revenue generated from Bowl Games and the NCAA Tournament should be the hand that guides policy.

The TV Rights money is essentially a fixed revenue stream set by contracts signed more than a decade ago.

The variable revenue streams from postseason play, though, must be maximized.

The massive amount of money generated from football bowl games creates a clear policy change proposal: The league needs to play just eight conference games.

Teams need just six wins to reach bowl eligibility to garner a payment to add to the pot and getting to that threshold is more difficult with only three nonconference games.

The SEC employs the eight-game strategy and look at their numbers.

That’s why Alabama plays some cakewalk FCS school in Week 9 while Oregon goes on the road to USC for a game that could eliminate the Pac-12 from the Playoff.

Whether or not the eight-game conference season would be better or worse for the product is a debate for another time. For now, it’s about financially surviving and a reduction in conference games is arguably a must.

At the same time, the $38 million in revenue mostly attributable to the NCAA Tournament must be analyzed.

The league has made wise moves by requiring teams to schedule more difficult opponents during the nonconference season.

But more often than not the Pac-12 doesn’t gain the respect needed to get a large field in the Big Dance.

Increasing the advertising and promotion budget with targeted directives could be a solution. The Pac-12 is one of the few high-major basketball conferences without a head-to-head tournament with another league.

The ACC held a 24-year challenge with the Big Ten, while the SEC had a 10-year challenge with the Big 12.

The Pac-12 should use its profits to get a challenge going with either the Big East, WCC, or Mountain West and promote it nationally.

There’s enough money to help cover the expenses of the event and it could be worth an extra bid or two to the Big Dance if it goes well.

Whatever the league’s higher-ups decide to do, they can’t just sit on the pile of cash and hope its members’ football and basketball teams make the postseason.

Active steps must be taken, even if that means showing scheduling favorability to its top teams.

If that’s what it takes, so be it.

This is a business and the time for being “fair” is over.