The Joel Klatt Show: A College Football Podcast - Klatt on next wave of conference expansion: Big changes coming for Pac-12, Big Ten, and Big 12?

Episode Date: August 3, 2023

FOX Sports’ lead college football analyst Joel Klatt shares his thoughts on the next wave of conference expansion, which will likely impact the Pac-12, Big Ten, and Big 12 significantly. Oregon and Washington could leave the Pac-12 for the Big Ten on the heels of Arizona, Arizona State, and Utah potentially leaving the Pac-12 to join the Big 12. Florida State is also considering a move, but Joel explains the reasons why they’ll have a hard time leaving the ACC. Finally, Joel explains why these moves are on the table and how they could affect the rest of college football. Learn more about your ad choices. Visit podcastchoices.com/adchoices

All right, emergency pod time, Joel Klatt show. This is Joel Klatt. Hope you're all having a great summer, and it is wild out there. Emergency pod time because of the conference realignment discussion. So we had to come to you so that you can hear some of the details about what's going on out there. Hopefully shed some light on what is happening with the PAC 12, namely, and whether the PAC 12 is even going to be around here in the next couple of days. So as you know, things are heating up.

At the time that we are doing this show, there is conversations about Arizona having a meeting in the Four Corner Schools, potentially going to the Big 12. There are conversations and news and sources out there saying that Washington and Oregon are potentially headed to the Big Ten. So let's just kind of talk about all of those things. And why are we at this position? Okay, let's try to answer that question.

Well, we're at this point right now and not last year because there has been a deal presented to the existing PAC 12 teams now, minus Colorado, who already made the move to the Big 12, but they had been presented that deal, the Apple deal, which I talked about in the last podcast, emergency podcast that I did. And it's basically a subscription model that they candidly should decline, talking about the members. It's not a deal that's going to be sustainable for them, for them from a revenue perspective or from an exposure perspective.

So this deal that's been presented to the members of the PAC 12 is not going to work. And because it's going to be and is being declined by this conference and its members, those members are now immediately looking around thinking to themselves, what in the world are we going to do? So this is the, you know, finding the life raft off of the Titanic moment. And because of that, you've got multiple schools trying to find a lifeboat. Where is it? Where can we go?

What situation can we create? What conference will take us, I mean, to put it bluntly. And so because they can't take that deal, they're seeking landing spots. And because of that, these moves are not just possible, but I believe imminent at the time that we're recording this. In fact, you may be listening to this and these moves already have taken place, but these are imminent moves. I believe that they will happen.

And here's the reason why. Let's actually go through this. This was not the doing of USC or UCLA or even Colorado. from last week. This was not their fault. This started years ago in the PAC 12. And I talked about this a little bit in that emergency pod with Colorado's move to the Big 12.

But it goes back even further. These dominoes begun to fall over a decade ago. In fact, it wasn't even this last television deal, but the deal before that that the PAC 12 did. and really the first whisper of this and the PAC 12's instability was when the revenue distribution within that conference went from tiered to equal. You see, it used to be that USC and UCLA got a little bit more of the revenue distribution than the other institutions. That's how it had been built.

And in not this last television deal, but the last one before that, it went to equal. Well, they weren't all that thrilled with that. Okay, so that is like the first little, you know, hammer in the ice, chip in the ice, that begins the crack that turns into, you know, a monumental crater. So USC and UCLA, they have equal share. And then in this last television deal, there was epic failures by the Pakistan. 12, namely in their creation of the PAC 12 network. Not that the network was a failure, but the way that they built it from a business perspective

was. So the model that they tried to create was that they wanted to do a PAC 12 network that had a national network and then 12 different feeds, basically, that would feed each of the regions and or schools. So they wanted this tier where they had a national network for a cable service. subscriber and a regional network for a cable subscriber. And they felt like they could generate more revenue because of that per subscriber based on who they got to distribute that model. But the problem was is that they did not partner with an existing network. Okay. So they didn't have NBC Universal help

them out or Fox helped them out or ESPN help them out. They weren't partners with anybody in that space. So they built this channel from scratch, owned 100% of it, and had no leverage when they were trying to get it distributed across the country. So it wasn't distributed

because cable entities across the country, including people like, you know, Comcast and direct TV and, you know, Spectrum, if you're in California or whatever, is Cox Cable. What they saw was a channel that had no leverage.

They had no other channels to leverage. they had no other channels to leverage against. You see, when ESPN goes to one of those cable subscribers, cable providers, I guess I should say, and they say, hey, we want you to take ESPN, and by the way, you're going to have to pay us eight bucks a month for ESPN and the family of ESPN channels. Well, one, they have a family of ESPN channels. But then they also have all sorts of other content that falls under the Disney umbrella. that that cable provider would say,

we don't want to lose all of that. So sure, we're going to agree upon that. Well, same thing happened with FS1. When FS1 became a new channel a little over 10 years ago, guess what happens? Well, hey, you've got to take FS1. If you don't take FS1, then you don't give Fox News and Fox Business.

They had other entities under their umbrella in order to leverage that channel against. BTN was a partner with Fox. So that leveraging is important. It's very important. That's why Longhorn Network got distribution. It's why the SEC Network got distribution. It's why ACC network got distribution. The PAC 12 tried to do it on their own and got no distribution. When you don't get any distribution, you don't get any revenue. So the revenue projections fell well short of what they were supposed to be. So they owned 100% of $1 rather than $50. We all know which is the greater value at that point. Okay. So these are the things that start to happen over the of the last five and ten years that begin to fracture the conference. They had the network failure. I believe that scheduling was a huge issue with them.

One, in terms of network windows, when they were playing games and when they had to play games, I think they all played too late. They lost some national awards because of that. Exposure was an issue because of the distribution that I was just talking about. And then they also didn't help their best teams in terms of the way that they schedule just from a competitive balance standpoint. You see, if other leagues are out there, they're scheduling for championships, I would argue that the PAC 12 was not.

They were scheduling for parity. And because of that, some of the best teams of the course of the last decade in the PAC 12 have had ridiculously difficult schedules within the conference where they've got back-to-back road games in November against high-quality opponents. Things like that don't happen in other conferences and they happened in the PAC 12. Because of that, they did not have the top-in, top-line success that I think that they needed in order to get a great television deal this time around. So because of those cracks start to happen with USC and UCLA,

and then the network fails, guess what? USC and UCLA, they see greener pastures. And they say the revenue distribution in the Big Ten is going to be so far above what we can even project out here in the PAC 12, we almost have to go to the Big Ten. And so they did. That was last summer. At that point last summer,

there was still an avenue, there was still a path, for the PAC 12 to be a conference with 10 members, with Colorado and Oregon and Washington and all the four-corner schools, all of them, right? Oregon State, Washington State, Cal, Stanford. All of them had a path. That path was narrow but open.

And that path was getting the one deal that was left out there. And this is exactly what I've talked about in my previous episodes. Please go and check it out my emergency pod about Colorado. there was basically one deal left in live sports to be negotiated and two entities that wanted that deal. The Big 12 needed a deal. The PAC 12 needed a deal because the Big 10's revenue had gone up so much and the SEC's revenue had gone up so much. The ACC was locked in until mid-2030s and the NFL's revenue and cost had gone up so much. There was only room money. There's a finite amount of it. There's only enough money for one deal. Well, the Big 12 beat them to market.

Brett Yormark did a sensational job. He beat the PAC 12 to market and he got the deal that was necessary to create stability around his conference. When that happened, now the PAC 12 has got to go cobble something together. And this is when you get to today. Because what we're seeing this week is what they've been able to cobble together, which was a subscription-based deal from Apple, which is going to fall short. We've already seen, and I've already told you that the subscription-based model, didn't pan out in a roundabout way for their network.

They know there's not the demand that they hoped for 10 years ago when they launched their network. Why would the demand be there now? In particular, without their biggest football fan base, without their biggest basketball fan base, without Coach Prime, who drives a lot of interest, it just wasn't going to be feasible. This is why they couldn't take this subscription-based deal from Apple this week. That's why they're all seeking a lifeline. Okay.

So did USC or UCLA or Colorado kill the conference? Absolutely not. Did George Klovkov kill the conference? No, this is not George's fault. Now, could he have beat Breit Your Mark to market and get a deal? Yeah, he could have. And that probably would have stabilized this conference and those 10 members would have moved forward together.

But when he didn't, this was almost inevitable. And these lifelines are what's going to happen. So what's going to go on from here? I believe that the four-corner schools are going to go to the Big 12, which means Colorado already one of those. That means the three others, both Arizona's and Utah will likely end up in the Big 12. I believe that Oregon and Washington are likely going to go to the Big Ten because they fit. They're premium brands. Oregon is a premium football brand. Premium is what the Big Ten is all about. Washington is a premium football brand and a premium academic brand.

That's what the Big Ten is all about. It also solves a bit of an issue, which they've been struggling with in terms of scheduling for the non-revenue sports and how they get these two West Coast entities and how do they work out the travel in terms of the Big Ten? There's been a lot of discussions about this over the last eight months. This would help and alleviate some of those pressures within the new Big Ten. So I think it fits from that standpoint as well. Then it becomes about how.

So that's why I think that that fits. But how? How will it fit? Will they get an equal share? Well, no. they likely will not because they don't have any leverage. This is when it becomes a business discussion. They're not going to have any leverage. So they probably won't get equal shares.

Now, will it be equal shares for the four-corner schools in the Big 12? Colorado got an equal share. I'm not sure about the other schools. We'll see how that ends up in the negotiation. But Oregon and Washington will probably end up on the same track that Rutgers in Maryland were on when they entered the Big Ten, which was a partial share ratcheting up over the years. And then we'll see how that kind of comes to fruition when it comes time for the next television deal in about six years.

So this is all what's going on on the West Coast. Also what's going on is a lot of chatter from Florida State. We've heard them be very unhappy with their current deal in the ACC. I don't think Florida State's going anywhere. That is exactly what you. what I said, a bunch of chatter. Florida State has nowhere to go. They are locked in on their media deal.

Unless they get 50% or more of the schools in the ACC to break apart their media deal, then they're not going anywhere because no one's going to take them. The only conference that I think would take Florida State at this point would be the SEC. But the SEC is not going to do that because their partner, ESPN, already. has Florida State games. So why would Florida, why would ESPN negotiate against itself?

That doesn't make any sense. So there's nowhere for Florida State to go. By the way, you can say, well, what if the ACC disbands and 50% of them saying, you know what? No, we're going to break this deal apart.

You really want to do that with what just happened to the PAC 12? There's not another deal to be made. Networks aren't going to clamor to pay the ACC schools more than what they're already getting and locked into for the next 10 years, 12 years until 2036. So this is why I don't think that the SEC is going to expand anytime soon. I don't think the ACC is going to break up anytime soon. And I don't think Florida State's going to do anything anytime soon. And by the way, if they keep barking and if

there's continued chatter, they're going to find themselves in heaps of litigation. Because you can't do that. Like, they're in a contract. So this is where everything sits right now, at least the way that I see it. And we'll see how it plays out. But like I said, the likely scenario for me is that these schools from the PAC 12 end up moving. And we'll see how it all pans out after that. Wild times right now. And by the way, if it doesn't happen, it may not 100% positive. I think it's likely, but I'm, not 100%. There's a scenario

where there's a lifeline thrown in the form of revenue to keep these schools as nine in the PAC 12, but I don't see it right now. At least that handwriting is not on the wall. So there you have it. My thoughts on all the current landscape

as it relates to conference alignment. Make sure to tune in, by the way, next week, Monday, right here from our brand new studios. This is the first, by the way, an emergency pod at the brand new studio. This is quite exciting. Brand new preview content Monday morning. It's my top 25 teams in the country for 2023, and you're not going to want to miss that.

Subscribe to the show on the YouTube channel and make sure that you're following us on all the social media so that you know exactly what's going on. That'll do it for this emergency edition of the Joel Clatt Show. Thank you.