Huskies looking forward to additional revenue

Nearly two years ago to the day, Washington had to let go of their men's and women's swimming programs. That meant 77 years of history down the drain. But Wednesday's announcement by the newly formed Pac-12 and their multimedia agreement with ESPN and Fox Sports - which begins in August of 2012 - should flush any thoughts about more Olympic programs having to be cut from athletic departments.

In fact, Pac-12 Commissioner Larry Scott said that it's his hope that this new infusion of revenue will not only save some sports, but bring them back.

In 2009, it would have cost Washington $1.2 million to keep their swimming program, but facing a $2.8 million deficit, they had no choice. Starting in 2012, Pac-12 programs facing similar circumstances should be able to weather those financial storms.

"It was awful," Washington Associate Athletic Director O.D. Vincent told Dawgman.com Wednesday. "We never, ever, as a department, want to go through that and want to be put in a situation where those kinds of decisions have to be made. "What it does for us is puts us on a level playing field with some of the other BCS conferences out there that have had a number of years of television deals comparable to the one we're going to start next year. Scott's vision - and our vision - is to compete nationally, not just across our conference."

Since that fateful day in May two years ago, it's not as if things have markedly improved. "We've had to be extraordinarily lean and efficient in our decisions to get through this ultra difficult time," Vincent said. "Our staff hasn't received any pay raises - it's been flat for three or four years now. And we don't plan on changing that any time soon.

"I wouldn't say we are in financial trouble, but we've had to be ultra, ultra careful as to the decisions we've made to get us to this point."

So here comes Larry Scott to the rescue. The Pac-12 will not release the dollar amount, but a number of different, reputable sources have the 12-year agreement netting the conference upward of three billion dollars. That means more than $21 million per team, per year. Schools that are just coming into the conference, like Utah, are on a tiered system, where they receive their full share by year three, but the overall impact of this contract will reverberate out west for years and years to come.

"It's a blockbuster deal," said A.J. Maestas, President of Navigate, a company that specializes in conducting research, measurement and analysis of sponsorships in the fields of sports and entertainment. "Depending on what happens with the Pac-12 Network, they are going to get as much, if not more, than all the other conferences get out of TV money. And when you look at fan affinity, passion, demographics, the population base, the Pac-10 is not the worse, but it's nowhere near the best either. So if you did it just based on the numbers - how many people are going to be watching, what can we sell this advertising for - there's no way the Pac-10 should have gotten the deal they just got."

In Maestas' opinion, the deal was made possible because of a number of factors. To start, the Pac-12 just happened to be in the right place at the right time. "TV media - sports media in particular - just had an incredible sales year, while other media just didn't do as well," he said. And with 88 million cable subscribers, networks are now merging with cable companies so they can create multiple revenue streams. ABC/ESPN and NBC/MSNBC/CNBC are prime examples of networks extending their reach to cable.

To add to that, the fact that multiple networks were bidding on the Pac-12 media rights created an atmosphere conductive for maximum value. With the rights to sports markets become more and more costly, the access to those rights have diminished - simply because the rights for most markets have already been gobbled up. Lastly, Scott's team used their business savvy to squeeze every possible dollar out of this arrangement. Eighty football games will be televised by both ESPN and Fox Sports, but the rest will be broadcast by the Pac-12 Network, an entity that belongs to the conference, and is open to a bidding war on its own. And on top of that, the Pac-12 is now in charge of things like their men's basketball tournament, so instead of the game always being in Los Angeles, they may want to rotate venues starting in 2012. ESPN and Fox Sports have split the championships down the middle, with each network getting the rights to the football, men's and women's basketball championship games every other year. The football championship, starting this fall, will be played on a Friday night on Fox Sports.

So while the deal is reported to be in the 10-digit range, there's even more out there to be explored - including Pac-12 network rights, mobile rights, internet rights and the rest. Maestas believes a company like Comcast could certainly rise from the ashes of a tough battle for television rights and snag the Pac-12 rights - or create a distribution agreement. They have a wide reach in 10 of the 12 Pac-12 markets - including Seattle.

"There's some strong rumors out there that they are looking at some non-traditional technology solutions," Maestas said. "It's a pretty awesome idea. The world isn't ready for it; it wouldn't be a profitable endeavor in the short term. But it's not long-term either. Fifteen years from now, media won't be distributed through a wire line to your house."

Scott hinted Wednesday that there would be more information coming about the Pac-12 Network and another possible distribution deal in the next two weeks. On top of that, the new commissioner has plans to monetize certain Olympic sports, like softball - something considered inconceivable in the past. Needless to say, there's still plenty more revenue to be generated from Scott's plan, and the Huskies will benefit - both in the short-term and for the long haul.

"They still did all the right stuff to take advantage of it," said Maestas. "You can say right place at the right time, but they did a lot of things to maximize their efforts. They brought fairly liberal, commercial-friendly policies to the negotiation process. They opened up scheduling. They deserve credit."

To read the Pac-10's official release on the deal, click HERE. To read ESPN's take on the deal, click HERE.

So what does this mean for the University of Washington? With $37 million raised toward their top capital project - Husky Stadium - an extra $21 million per year could certainly defray a lot of the yearly bond interest payments - expected to be somewhere in the range of $15 million. But according to Vincent, the plan already put in place for the stadium renovation - including new ticket pricing structure, naming rights and other revenue streams - is the one they are sticking with.

"We haven't changed our plan for Husky Stadium at all," he said. "There are going to be a number of tickets in Husky Stadium that are less expensive than what they are today. The seats on the fringes and the value seats to get more people in the stadium will be more affordable.

"The main message that I'd like everyone to understand out of this is: Our number-one priority is Husky Stadium, and the plan we have moving forward hasn't changed because of this at all."

Vincent did concede, however, that if there are cost overruns, or if UW does fall short of their fundraising goals, the revenue stream generated by this new Pac-12 television deal could be used to help offset costs. For example, the cost of moving the track currently located in Husky Stadium has already been built into their full budget, but the price has now nearly doubled because of the cost of pylons that will have to be driven deep into swampy land to make sure the track remains level.

Vincent remains confident that won't be the case, with the recent success of the football program under the guidance of third-year Head Coach Steve Sarkisian.

Husky Stadium still remains the top capital project on the AD's mind, and it's not really close, according to Vincent. But that doesn't mean they won't try and move ahead with other initiatives that have been on their to-do list for years. "If you took each sport we compete in, and you look at the different elements and building blocks of those programs nationally, I think it would be a surprise to most people to see how far behind we are in the investment we've made in a lot of our sports," he said. "We want to be competitive in every single sport, in every single way. And we have a tremendous amount of deferred investment in those areas that we need to prioritize moving forward."

And a simple look around the Husky Sports Complex would confirm Vincent's thoughts. That's why UW is in the middle of a renovation of Husky Ballpark, including updating the team amenities and the stands. And even though the renovation of Alaska Airlines Arena is just over 10 years old, the AD wants to make sure men's and women's basketball have the offices and team amenities they need, but that particular project has not moved past through the conceptual phase at this point. There is also a general agreement appears to have been made with the IMA to use the space just south of the golf driving range to enhance that space with field turf open for all student for use year-round. A track could also be put in place.

"It could also be an amenity for the community, the campus, and our teams," Vincent said of the additional IMA field.

He added that while it would have been nice to day-dream and think of all the improvements possible through an eight-digit yearly infusion of cash, the athletic department is still trying to wrap its head around all the ramifications surrounding Wednesday's agreement. "We have put together a capital needs list, but we haven't linked the two conversations, like 'if the television money is x, we'll be able to do projects a, b, and c'," he said.

Washington is the only self-sustaining athletic department in the Pac-12, but there are still some academic concerns the AD must face going forward. With tuition rising at a rate of 14 percent a year, and summer school aid something they have never been able to fully fund before, it makes sense for the department to take care of all their 650 student-athletes.

"The cost of making sure they have a first-class experience continues to escalate every single year," Vincent said. "It's escalating faster than inflation. It's been tough to keep up with that."

With the Pac-12 working hard at putting money in their pockets, the UW AD is putting in their own legwork to make sure they monetize their own properties and put partnerships in place that make sense. For Washington, that means staying local.

"We think in this community, there are so many great companies headquartered here, there are so many great companies run by and heavily populated by Huskies," said Vincent. "Alaska Airlines is a great example. We turned down more money to go with Alaska Airlines, because we wanted the local company. We want partners that are going to enhance the experience in the venue; we want partners that want to be involved in our student-athletes; we want partners that want to provide internships for our student-athletes; we want companies that want to mentor our student-athletes. For us, it's a real comprehensive look at things, and we think our local community is strong enough that we don't have to go outside of that. Price isn't going to be the barrier."

Vincent added that while this new Pac-12 television agreement will be a boon for all league schools, it will also help sell the idea of Washington as a great marketing and advertising partner to would-be investors. But it has to be the right fit. "What we have to ensure is that sponsors of Husky Athletics are sponsoring Husky Athletics," he said. "We're going to have a national reach, but I want to make sure we keep the unique-ness of Washington. I don't want to throw everything into a conference-wide cookie-cutter. I don't want to be just like everyone else. I think there are uniquenesses here that we've got to protect and enhance."

And part of that charm lies in the fact that Husky Stadium is built alongside Lake Washington. With water on two sides, a bottleneck can take place during peak traffic times - like game days, for instance. That theory was really put to the test last year when the Washington football team hosted UCLA on a Thursday night. Because of advance notice and extraordinary detail to fan concerns, the game and subsequent hassles getting in and out of Montlake were minimized. But don't expect the Huskies to host many of the eight yearly Thursday and Friday night games, even in this new Pac-12 landscape.

"It's not our first choice," said Vincent. "Everything we'll be asked to do, we'll do everything we can. There are going to be cases where that's going to be more difficult. It's something we've made clear; we'll participate, but by no means are we asking for more of those games. We think that Saturdays here, for Husky football - Saturdays make a lot more sense."

But even Vincent concedes that given the circumstances of the newly-formed Pac-12 championship game, Washington will be more than happy to deal with the headaches of hosting a Friday night game in December. After all, you only get to be the first Pac-12 champion once.

"For the championship game, we'll be there," he said, matter-of-factly.


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