"Greed" Didn't Kill the Pac-12. Entrepreneurial Failure Did
For college football fans, it’s already been a wild August week before the first kickoff.
Reminiscent of the Europe of old, and, hopefully, the America of the future, the collegiate athletic landscape in the last several years has witnessed a massive redrawing conference kingdom borders. The most powerful empires are the SEC and the Big Ten, with the former adding the Universities of Texas and Oklahoma and the latter pursuing manifest destiny in the West with the addition of Southern California and UCLA in 2022, and Oregon and Washington this past week.
This shift in borders coincided with a negotiation of television rights. Disney (which owns ESPN and ABC) secured a monopoly on the SEC by adding full broadcast rights to their games to a preexisting arrangement with ESPN that included streaming rights for $3 billion over ten years. The Big Ten was able to package both broadcast and streaming rights with Fox, CBS, and NBC for $7 billion over seven years. Factoring in other revenue sources, industry analysts expect Big Ten and SEC schools to pull in $70 million per school starting in 2024.
The Big 12 responded with its own additions after losing two of its founding members, adding Colorado, Arizona, Arizona State, and Utah this past week. These acquisitions were the result of a successful television deal of their own with ESPN and Fox that is expected to net the Big 12’s programs over $30 million a year.
The loser of this zero-sum game for territory is the Pac-12, the self-named “Conference of Champions,” which now finds itself with four remaining members. It now seems inevitable that the Pac-12 will go the way of the once-proud Southwest Conference, and the less proud Western Athletic Conference, into the dustbin of pigskin history.
Understandably, these major disruptions to a sport fueled by the dynamics of hate-filled rivalries and proud tradition have resulted in a cascade of digital denunciations about the damaging costs of blind greed, the reliable boogeyman for anyone unhappy with particular economic outcomes.
But what does an alternative universe where greed does not exist in the future of sports look like? The boom in sports television-programming rights is a market response to a radical transformation in entertainment consumption. The rise of streaming services has turned sports programming into premium real estate for advertisement as one of the few entertainment options that is watched live. Sports leagues have leverage while Hollywood actors and writers are on strike. While sports channels are laying off analyst-driven content in an age of podcasts and other independent digital content, networks like Fox are investing in the creation of new sports leagues to help fill their time slots.
In The Anti-Capitalistic Mentality, Ludwig von Mises wrote at length about the extent to which capitalism and the pursuit of profit rile the prejudices of various interest groups upset at the ways changing consumer tastes create new challenges. As Mises explains, conservative anticapitalists lament that legacy powers can be ruined if they fail to meet the changing demands of consumers, while progressives condemn the riches that are awarded to those that triumph.
The Pac-12 is a perfect illustration of this dynamic at work.
While it is easy to portray Big Ten and SEC officials as the villains of conference realignment, a look at history paints a picture in which the death of the Conference of Champions resulted from its own entrepreneurial failure.
As Stewart Mandel documented for The Athletic, the seeds for the now Pac-4 were planted over a decade ago. Tasked with filling the large shoes of Commissioner Tom Hansen, Larry Scott sought to inject new energy into West Coast athletics through what was at the time the largest TV deal in history, worth $3 billion over twelve years. In 2011, Commissioner Scott launched a doomed venture called the Pac-12 Network. He followed that up with a standalone channel, which lacked the built-in support of a national network like ESPN.
This independent venture had the potential to maximize the conference’s profit. Instead, as Mandell notes, “the bizarre seven-channel model struggled to gain distribution and never came close to delivering its projected revenue figures. It became an albatross from which league members could never escape.” The consumer behavior of West Coast fans proved to be different than that of fans of the SEC and Big Ten, whose successful standalone networks helped fuel the current TV arms race.
Scott’s tenure became bogged down with controversy and mounting bills. In one instance, he infamously interfered with an officiating decision in a basketball game, undermining the league’s credibility in the eyes of some. A deal made with Comcast to elevate the Pac-12 Network resulted in the conference’s owing the cable giant $50 million in fees.
Scott isn’t entirely to blame for the Pac-12’s woes. The competitive culture of other leagues has resulted in a demand for excellence from their programs. The University of Georgia replaced a beloved and winning coach, Mark Richt, with Kirby Smart because a .738 record wasn’t elite. TCU pressured its all-time most successful coach, Gary Patterson, out of fear of stagnation. The two teams met to play for the national title this past January.
While the willingness of money-prominent programs like Texas A&M, Auburn, and Florida to spend to hire and fire head coaches has been seen as a perversion given the illusion of “amateurism” in college sports (made thinner by Name, Image and Likeness money now available to student athletes), college sports programs are ultimately economic firms engaging in highly competitive environments. Success on the field means money and prestige for both the athletics programs and the universities that they represent.
In recent years, the Pac-12’s competitive edge has been wanting. Ever since Pete Carroll left USC for a return to the NFL, the windows of opportunity to achieve national significance have been brief for Pac-12 members. Oregon’s run with Chip Kelly, a true sports science entrepreneur, lasted three years before he moved on to the pros. The respected Chris Petersen made Washington nationally relevant before stepping away from the game in 2019. Lincoln Riley revived a USC program that has never returned to its Carroll-led glory. Most conference members seemed content with mediocrity, which was on full display with the constant poor performances during bowl season.
The willingness to rest upon past success also seemed to cloud the judgment of Commissioner Scott’s replacement, George Kliavkoff. Saddled with Scott’s lingering financial issues and the loss of the profitable Los Angeles television market, Kliavkoff opened up bidding for a new television contract with a deal reportedly worth around $50 million a school. No one was interested. Kliavkoff ended up with a streaming agreement with Apple that would have offered teams around $20 million a year plus incentives for subscription sign-ups for Apple TV+ had it been approved. The legacy of the Pac-12 Network did not help the deal’s image among university leaders.
In contrast, Big 12 commissioner Brett Yormark, himself reeling from the pillaging of his two biggest brands, which even had pundits asking whether the conference’s death was inevitable, managed to do what Kliavkoff couldn’t: get a deal done, and take four of the Pac-12’s members.
Often in discussions of the sports business, emotion triumphs over economic reality. WNBA salaries are the result of misogyny. Running backs are exploited. Players’ labor is what drives the value of college football. None of this is true.
Sports, even collegiate sports, is a business. A business with history, pageantry, and tradition, but a business nonetheless. Institutions capable of winning on and off the field will inspire new generations of tradition and rivalries. Those that can’t will end up like Sewanee, which once had the most powerful football program in the South. This isn’t new to the modern era, it’s a reality inherent to competition.
The fall of the Pac-12 is an unfortunate end to a proud collegiate institution. But its death isn’t the fault of uncurable greed but of the conference’s own inability to be competitive in the game.