The leadership of the Pac-12 Conference has proposed what could be a game changer in college football: opening up partial ownership of the conference to private investors.
The six-page proposal was first reported by Oregon Live, which published the document this week. The private investment plan, called the "Pac-12 NewCo" plan, was presented by conference commissioner Larry Scott to university presidents and chancellors in a mid-November meeting and discussed again in a December conference call, the outlet reports.
The plan would give private investors 10% of the new entity for a $500 million investment. That money would immediately be distributed to each of the 12 teams (Arizona Wildcats, Arizona State Sun Devils, California Golden Bears, Colorado Buffaloes, Oregon Ducks, Oregon State Beavers, Stanford Cardinal, USC Trojans, UCLA Bruins, Utah Utes, Washington Huskies, and the Washington State Cougars). The conference would maintain 90% of the equity under the deal.
"The conference’s broadcast rights, sponsorship rights, merchandising and all other commercial assets would be consolidated under the umbrella of 'Pac-12 NewCo,'" Oregon Live notes.
The purpose of "Pac-12 NewCo" is to level the playing field for the conference, which is currently more costly than its Power Five Conference rivals and trailing them in media rights revenues. The conference is locked into its sub-par media rights deal until 2024. The most lucrative conferences, the Big Ten and the SEC, are set to distribute over $10 million more to each of their members this year than the Pac-12, putting the conference's teams at a massive financial disadvantage.
That disadvantage is playing out on the field. Once again, the Pac-12 has failed to make the College Football Playoffs, which pits the top-four teams in the country against each other. In the five years that the playoff has existed, the Pac-12 has only managed to get two teams in: the Oregon Ducks in 2014-2015 and Washington in 2016-2017. Washington was eliminated easily in the first round by Alabama, while Oregon made it to the final only to be routed by Ohio State. A Pac-12 team hasn't won the national championship since USC won it in 2004-2005, a championship that has since been vacated by the BCS for NCAA rules violations. This year, no Pac-12 team finished with fewer than 2 losses.
The "Pac-12 NewCo" proposal predicts that the new company could be valued at $5 billion to $8.5 billion. Oregon Live sees some problems with those projections, however, noting that they include "$36 million in annual revenue from DirecTV beginning in 2020 and a one-time payment in 2024 from ESPN in the amount of $347 million," neither of which is certain. Another potential problem is the plan includes FOX's current contract with the Pac-12, which is likewise not yet locked in.