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Canzano: Latest fiasco clouds Pac-12's path
I'd sure like to talk with Larry Scott... one last time.
I’d rather be writing about basketball, football, and the potential expansion of the Pac-12 Conference today. But our old friend, Larry Scott, just won’t let me.
I’d sure like to talk with the former Pac-12 commissioner.
One last time.
Just a couple of questions.
Turns out the conference’s network may be on the hook for $50 million in overpayments by a television partner. On Tuesday, Jon Wilner of The San Jose Mercury News identified Comcast as the entity making the claim and provided some important framework for the fiasco. But there’s still something not quite right here.
I spoke to a number of current and past employees of the Pac-12 this week.
• Chief Financial Officer Brent Willman and Pac-12 Networks president Mark Shuken were terminated by the conference last Friday. The prevailing thought among my sources is that they are scapegoats.
Willman and Shuken had no reason to keep the news of an overpayment to themselves. Neither would benefit directly from doing so. Everyone I spoke with believed it was more probable that they informed Scott and the Pac-12’s general counsel, Woodie Dixon.
Said one former high-ranking Pac-12 employee: “Brent and Mark were sacrificial lambs.”
• Scott is long gone. His contract expired last summer, but Scott was informed by the Pac-12 CEO Group that he wouldn’t be retained in January of 2021. He’s kept his head down since leaving. Scott was, however, interviewed by the law firm that conducted the conference’s investigation into the looming $50 million question.
• The Pac-12 conducted an audit that was finalized in December 2017. It revealed that the conference may have received an overpayment to the tune of $5 million a year. There was some internal confusion about that.
A former employee with knowledge of the inner-workings told me: “Pac-12 is the one who chose to do the audit. They thought we weren’t getting paid enough so they did an audit. To find out they were getting overpaid, it was probably curious. That should have been met with ‘We need to look into this’ from Larry Scott. For whatever reason nobody looked into it.”
• Also, nobody bothered to tell the presidents and chancellors who make up the Pac-12 CEO Group. They were left in the dark.
• Maybe delivering that news didn’t feel like a high priority. If you’re giving Scott the benefit of the doubt, you’d start the argument there. The last thing the Pac-12 wanted to deal with at that time was having to give back millions in revenue. It’s possible Scott didn’t trust the audit and, therefore, decided he had no duty to share the results with his bosses until he knew for certain. But it certainly should have been revisited.
• It’s also possible he hoped the whole thing would just go away. Comcast wasn’t asking questions at the time. That would happen later. Additionally, in early 2018 Scott was amid growing pressure to increase revenue and enhance the distributions to Pac-12 members. He also wanted another contract extension. There was a lot going on.
• In 2018, Scott hatched an idea to sell a stake in the Pac-12’s media rights to private-equity investors. He tried to find investors, but a deal never came to fruition. During the early college football bowl season, I broke the news that the Pac-12 was seeking $500 million in exchange for a 10 percent investment in its media rights.
• After I learned about the Pac-12’s proposed private-equity Hail Mary, I reached out to Mark Cuban — one of the stars of the television show “Shark Tank.” Cuban told me he was “intrigued” by the thought of owning a slice of the media rights of a college conference.
“What they would value at, I don’t know,” Cuban said. “But Disney selling all the Fox Sports regionals will help determine the value.”
• I wonder how much pressure the conference was under in 2018 and early 2019 to make the Pac-12 Networks look like a thriving, viable, drama-free, profitable entity.
• Current Pac-12 commissioner George Kliavkoff inherited this mess. I can’t think he’s happy with dealing with the firing of employees and lousy optics while trying to negotiate the Pac-12’s new media rights deal. It’s been a hell of ride for Kliavkoff so far, hasn’t it?
• If the Pac-12 Networks is going to be sold during this negotiation cycle, this mini-drama isn’t helpful. It may cause Amazon or whoever is bidding to audit the Pac-12 Networks and make a downward adjustment on its valuation.
• The Pac-12’s media rights negotiations are moving slowly. Industry insiders are leaning into the idea that this accounting fiasco is causing a delay. The whole thing clouds the path of a conference that needs clarity and focus right now.
• Kliavkoff needed a show of strength to his bosses. Also, he had to send a message, internally, about the importance of ethics and protocols. Kliavkoff fired Shuken and Willman for their roles last week. But the bigger questions are for Scott and Dixon.
• It doesn’t seem smart that Scott and Dixon wouldn’t think about the audit someday coming back to be a problem for them both. Did they tell investigators: “I don’t recall”? Or did they just throw Willman and Shuken under the bus? Something else? I don’t know… yet. Given the fallout, whatever they told investigators apparently didn’t help Shuken and Willman.
• Cooley is the Palo Alto-based law firm hired by the Pac-12 last fall to investigate the situation. We’re told the firm interviewed Scott, among others. Cooley has provided counsel to the Pac-12’s governing board for years.
• Michael Sheetz is a partner at Cooley. Said one former high-ranking Pac-12 employee: “Mike Sheetz and Larry are buddies.”
That makes sense to me. Sheetz and Scott worked together in their respective roles over the years. Scott is a Harvard-educated tennis player. The commissioner was often awkward and uncomfortable fraternizing with staffers at headquarters. It wouldn’t be unusual for him to gravitate toward high-profile lawyers.
I spent a few days last week in Tempe, Ariz., and posted a column on the FS1 broadcasters who didn’t show up in person to call the ASU-UCLA basketball game. I have a pile of fun columns and some interesting and deep dives that I want to take in print. But I can’t quite get there.
Larry Scott won’t let me.
I’d sure like to talk with the old commissioner… one last time.
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