Seven hundred and fifty million is a big number, a bold number, particularly for a commissioner who likes big and bold.
It’s so big and bold, in fact, that the number itself obscures what should be the focus of our attention: The soundness of the underlying strategy.
The Hotline has pondered the Pac-12’s attempt to sell ownership in a media-rights holding company in exchange for a $750 million investment ever since the Sports Business Journal broke the story two weeks ago.
And it’s easy … so, so easy … to get wide-eyed over that number.
But big and bold doesn’t always equal smart and sound, and that’s where the Pac-12 had best be careful — impossibly, ridiculously careful.
Free advice to the 12 presidents and chancellors, the 12 athletic directors and the 24 chief financial officers (12 in athletics, 12 on central campus):
Do not get seduced by the prospect of a jaw-dropping windfall that would make Larry Scott’s much-criticized business model look like a stroke of genius and instantly solve athletic department budget crunches across the conference.
Instead of the bold move, make the smart move … the move that allows the conference to grow and thrive and compete for decades to come.
There’s no way to see clearly until the Pac-12’s investment advisor finishes canvassing the marketplace for formal bids.
It could be that those options are one in the same — that the bold move is the smart move — and this is ultimately an easy choice.
But what if the choice is muddled, what if there’s nuance to the issue?
We know Scott likes bold. He went bold trying to form the Pac-16. He went bold with the $3 billion Tier 1 deal with ESPN and Fox. He went bold with 100 percent ownership in the Pac-12 Networks.
Bold works when it’s the right bold, not when it’s the wrong bold.
The conference made a wrong turn with its business model for the networks: 100 percent ownership, 850 live events and six regional networks created supply that exceeded demand — and not nearly enough viewership or revenue.
Which is why the conference is seeking a cash infusion in the first place.
A Hotline source told me recently that athletic department officials are concerned campus executives will view the cash provided by an equity partner — perhaps as much as $60 million per school — as a chance to eliminate debt.
That those responsible for balancing the books will hijack the process, leaving the athletic departments with nothing left for long-haul resource investment.
They would be right back where they are now, except with an outside entity sharing in their media revenue.
(Over the course of decades, the money lost by splitting the pie 13 ways instead of 12 would quickly erase the initial windfall.)
“It can’t be about helping our budgets,’’ the source said. “It has to be about helping us compete.”
If debt elimination is the end game … if that’s the other end of this wormhole … the conference will be much worse off than it is now.
And for a much longer time frame.
Be smart, not bold — unless those things are indisputably one in the same.
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