The Pac-12 financials for the 2017 fiscal year, made available Tuesday but only now assessed on the Hotline (for reasons explained below), can be split into three general buckets:

Revenue generated by the conference; money sent to the campuses; and expenses.

The conference revealed the total revenue and distribution numbers last week, and both were addressed on the Hotline in an attempt to lend context.

Some figures noted below will be familiar to readers, but there is plenty of new material here.

Please note: The Pac-12 reports on a 10-month delay; this information covers the 2016-17 fiscal year.

*** Revenue

The total revenue of $509.4 million is a conference record and represents a 4.3 percent increase over FY16.

The vast majority came, per usual, from three streams.

TV rights: $326.1 million

Football postseason: $113.4 million

March Madness: $35.1 million

No major changes here, as compared to FY16.

*** Campus payouts

This topic was covered extensively in previous Hotline posts but did not have the school breakdowns.

Here you go:

Arizona: $30,993,245

ASU: $30,958,733

Cal: $30,973,919

Colorado: $30,866,273

Oregon: $31,014,443

OSU: $30,958,350

Stanford $30,893,520

UCLA: $30,980,037

USC: $30,959,287

Utah: $30,953,860

Washington: $30,895,861

WSU: $30,921,849

The differences are minor — just $148,170 separating highest (Oregon) and lowest (Colorado) — and can be attributed to accounting and expense matters. It’s not related to performance.

Critical point that was addressed previously but is worth repeating: The payouts are gross figures.

The conference withholds varying amounts — for some schools, it’s more than $1 million — as a result of buying back local media rights years ago. (Explained here.)

The average gross payout of $30.9 million is an 8 percent increase over FY16 (good!) but lower the the Big 12’s average payout and far behind distributions by the SEC and Big Ten (not so good!).

*** Pac-12 Networks

The conference-owned linear TV network reported $127.9 million in income in FY17, which is $300,000 less than the FY16 figure, breaking a years-long stretch of growth.

Unfortunately, the conference is anything but transparent when it comes to reporting Pac-12 Networks expenses, so we’re left to make educated guesses.

We know the total income, and we know, based on sources and documents obtained from the schools, that the networks distributed approximately $2.5 million to each campus in FY17.

(That amount is included in the gross payout figures cited above.)

If a total of $30 million in distributions by the networks is backed out of the $127.9 million in income, we’re left with $98 million.

Do the Pac12Nets have $98 million in expenses? They’re expensive to operate … damn expensive … but $98 million seems a bit much.

The networks broadcast 850 live events per year, and the vast majority are Olympic sports competitions that cost $25,000 (approximately) to produce.

The math … 650 events at $25,000 each is less than $20 million … leaves us a long way from $98 million, even with the production costs of football and men’s basketball.

If expenses are less than $98 million, where is the cash not sent to the schools?

Again, the conference refuses to provide any clarity on the networks’ financial operations.

*** Expenses

The headline number here is $4.8 million, which was commissioner Larry Scott’s compensation in 2016 (salaries are reported on calendar, not fiscal years).

That’s an outrageous amount, but don’t blame Scott. Blame the oversight, or lack thereof, by the presidents and chancellors. They ultimately run the show.

I’ll quote from the 990s, from the notes to Part VI, Section B, Line 15A:

“The board of directors established the compensation for the chief executive officer. The process included review and approval by independent persons, comparability data and contemporaneous substantiation of the decision and was performed at the initiation of the contract.”

Additionally, as USA Today first reported, nine Pac-12 executives other than Scott earned at least $450,000.

Now, the conference would respond to questions about the salary scale by explaining that 1) it uses compensation consultants to follow best practices 2) the Bay Area is unlike any other housing market and 3) many executives oversee departments on both the conference and the network sides, effectively doubling their responsibilities.

Whether you agree or disagree with the salary structure, the only voices that matter are those of the 12 CEOs.

Let’s address another, critical topic, one that applies to both revenues and expenses.

The Pac-12 distributed 72.9 percent of its revenue to the campuses ($371 million out of $509 million). That’s a slight uptick over FY16 but far below the distribution percentages of other conferences.

Of course, no other Power Five is structured like the Pac-12.

In fact, no two are the same.

The Pac-12 wholly owns and operates a linear network.

The Big Ten partially owns a network (with Fox).

The SEC doesn’t own its network but has a revenue-sharing arrangement (with ESPN).

The Big 12 has no network.

The ACC is getting a network.

As a result, comparing the percentages of revenue distributed by the Power Fives is an inherently flawed process. The Pac-12 has $50+ million in network operational expenses that aren’t on the books in other conferences.

But here’s the problem:

The Pac-12’s lack of transparency with regard to expenses means we don’t know exactly how much the networks cost to operate …

Which makes it impossible to know exactly what the conference office is doing with the money …

Which makes it impossible to know if there is wasteful spending or if every available dime is being sent to the schools.

From this vantage point, it appears that the Pac-12 spends money like no other conference, anywhere, ever, whether it’s on amenities in the office or travel or salaries or whatever.

For example, let’s again turn to the 990s themselves — specifically, to the supplemental information to Schedule J:

“First class travel: In instances when flights are lengthy or work duties are expected to be performed during the flight, the organization will sometimes purchase first class tickets to help facilitate the conduct of business.”

“Sometime” is not defined.

(At least one chancellor believes the conference spends too much money: Late last year, Cal’s Carol Christ took aim at what she called the “elaborate” nature of Scott’s operation.)

*** Unanswered questions

After obtaining a copy of the 990s Tuesday morning, I spent several hours examining both the FY17s and copies of previous tax filings to identify changes or trends.

I was confused on a few matters, sent a series of questions to the conference and gave it 48 hours to respond.

That’s more time than I would typically allow, but there has been significant turnover in the CFO role — Laura Hazlett, hired last summer, was gone by March (to pursue other opportunities) — and providing additional time for responses seemed fair.

The questions:

1) What is the explanation for the $3 million (approx) drop in conference advertising revenue?

2) What accounts for the $300,000 downturn in Pac-12 Networks income after several years of $10+ million annual increases? Additionally, how does that downturn square with the whopping increase in assets for Pac-12 Enterprises?

Enterprises, the broader entity that houses Pac-12 Networks and Pac-12 Properties, saw its assets grow from $72.5 million in FY16 to $102.8 million in FY17.

That’s a 40+ percent increase in assets during a fiscal year in which income for the largest revenue generator, the Pac-12 Networks, dipped.

(Income and assets are different, obviously, but I was hoping for some context.)

3) In the compensation section of the 990s, the conference lists five independent contractors — one of which, Proskauer Rose LLP, was paid $3.9 million in legal services.

Yet in the statement of functional expenses (line 11B), the conference lists just $302,512 for legal.

Where are the Proskauer payments?

There is no other $3.9 million expense listed in the “fees for services” section.

I suppose it could be wrapped into the $4.4 million listed in “other” expenses, but why would legal be considered “other”?

(There were additional payments to independent contractors — more than $9 million, in fact — that were not readily identifiable in the statement of functional expenses. I asked about those, as well.) Related Articles Pac-12 apparel deals: From the top (UCLA) to the bottom (Washington State), the disparity is immense

Salaries for Pac-12 athletic directors: No surprise at the top; change needed at the bottom

Pac-12 Networks: Media industry report shows steep drop in subscriber fees (but don’t hit the panic button just yet)

Pac-12 Networks president Mark Shuken: On equity options, the secure “fortress,” AT&T negotiations and looming Tier One deals

4) Finally, the TV revenue doesn’t add up:

The Pac-12 Networks are credited with $127.9 million in income, and the conference received $226.1 million from Fox and ESPN for the Tier I media rights deal, according to the FY17 payment listed on the term sheet (I have a copy).

That’s $354 million from the two streams of TV rights.

Yet in the statement of revenues, the conference lists $326.1 million in “Television Rights Fees.”

Where is the other $28 million if it’s not in the buckets that make up the conference’s overall revenue total ($509 million).

I am no accountant, but those seemed like reasonable questions that most likely have perfectly reasonable answers.

But the conference wouldn’t answer, a departure from its previous years, when it was willing to walk me through points of confusion.

The only explanation I received, from a spokesperson, was this:

“What I can tell you is that the consolidated tax return line items often combine results from the Conference and Networks and sometimes use different rules than traditional accounting methods and internal metrics.”

*** For more on missing TV revenue, go here.

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