Business of Sports – Departures of Pac-12 executives give Kliavkoff the chance to cut salary costs

Six senior execs have left the conference in recent years; a few won’t be replaced

Deputy commissioner Jaime Zaninovich became the third executive to depart the Pac-12 this year — but the first to leave voluntarily — when his move to the private sector was revealed last week.

In January, the conference terminated the employment of chief financial officer Brent Willman and Pac-12 Networks president Mark Shuken for their roles in the Comcast overpayment scandal.

All told, four high-compensated executives have left the conference since George Kliavkoff became commissioner in the summer of 2021, while two others departed in the final stage of Larry Scott’s tenure.

Put another way: Kliavkoff has a chance to significantly cut salary costs at the conference office precisely when the schools need it most because of gross mismanagement … at the conference office.

The overpayments made by Comcast, which were known to Shuken, Willman and possibly Scott — his role in the scandal remains unclear — are expected to result in the media company withholding approximately $50 million in payments to the Pac-12 Networks before its contract expires in the summer of 2024.

As a result, each school is likely to have its revenue distribution from the conference reduced by at least $4 million.

Any savings on personnel would help offset that wallop. And based on his staff moves thus far, Kliavkoff intends to create a leaner operation than the version Scott employed for so many years.

In total, we count six major moves at the executive level in the final year of Scott’s reign and the first 22 months of Kliavkoff’s tenure:

Nov. ’19: Alden Budill, head of distribution for the Pac-12 Networks, departs after just three years. (“It’s time for me to tackle a new decade and new challenges,” she told the Hotline at the time.) She has not been replaced.

July ’20: Woodie Dixon, the controversial general counsel and football supervisor, leaves the conference. Dixon’s duties are split between Merton Hanks, who joined the conference to run football operations, and Maggy Carlyle, who was promoted to chief legal officer. (She has since left the Pac-12 for a job in the NFL and was replaced through an internal promotion.)

Feb. ’22: Danette Leighton, the chief marketing officer and one of Scott’s original hires, exits the Pac-12 to become CEO of the Women’s Sports Foundation. She has not been replaced.

Jan. ’23: Shuken and Willman are dismissed for what the conference described as failing to properly report years of overpayments made by a Pac-12 Networks distribution partner (Comcast). Shuken won’t be replaced, while the conference is conducting an active search for a new CFO.

April ’23: Zaninovich, who was both deputy commissioner and chief operating officer, departs to take a senior-level position with TrailRunner International, a global strategic communications firm. The conference has no immediate plans to replace Zaninovich, largely because his first project with TrailRunner is to advise the Pac-12 on its media rights negotiations and basketball strategy.

Assigning a specific dollar amount to potential savings from the staff turnover is difficult. Some of the executives have been replaced (or will be); others have not. Roles have been divided; duties have changed.

But we can take our best guess, and that process begins in 2019.

Why the pre-COVID timeframe? Because executive compensation is reported in the Pac-12’s annual financial results, which are made public 10 months after the fiscal year in question.

The 2022 results aren’t available until next month, and the compensation figures for 2020 and 2021 were impacted by salary cuts due to the COVID-related budget tightening.

Additionally, executive compensation figures are reported for the calendar year that ends within the reported fiscal year (per Schedule J on the Pac-12’s tax filings).

So our sharpest look at the salary structure during the Scott era comes from the 2019 calendar year compensation figures, which were revealed in the 2020 fiscal year results and thus not impacted by cost reductions under COVID.

In 2019, the three executives who have not and will not be replaced (Budill, Leighton and Shuken) combined to earn $2.33 million, with Shuken taking home $1.25 million himself.

Meanwhile, Willman, the terminated CFO, earned $648,000 in total compensation — a figure that we suspect won’t be matched by his replacement.

Why? Because the job posting by Turnkey ZRG, the executive placement firm assisting the Pac-12 in its search for a new CFO, lists the “anticipated salary range” as $250,000 to $350,000. (We’ll assume there’s some wiggle room for bonuses.)

What’s more, the conference is undoubtedly saving money at the very top of the org chart. Scott averaged approximately $4.75 million annually in total compensation in the final half of his tenure (and took home about $45 million in total over his dozen years in charge).

Details of Kliavkoff contract were not disclosed at the time of his appointment in the spring of 2021, but the financial results released next month for the 2022 fiscal year will report a compensation figure for the first six month of his tenure. And there’s a good chance his salary will be markedly lower than Scott’s.

(The Pac-12 presidents, who determine the commissioner’s contract terms, were punished publicly for Scott’s exorbitant salary and likely did not repeat the mistake with Kliavkoff.)

On top of any reduction in staff compensation, the Pac-12’s decision to shutter the San Francisco office and rent a production studio in the East Bay for its media-content arm should result in significant savings.

Currently, the conference pays about $7 million annually in occupancy for 114,000-square feet on Third Street. We don’t know details of the rental agreement on 42,000 square feet in San Ramon — the move is scheduled for this summer — but the savings could be $5 million annually, based on commercial property prices listed on the website PropertyShark.com.

Combine the reduced rent with the salary savings from departed executives who haven’t been replaced and (presumably) a scaling back of compensation for the commissioner, and the total cut to expenses should approach $10 million annually.

That won’t fully offset the expected hit from the Comcast overpayment scandal — at least $2 million per school per year — but it could reduce the bottom-line damage to the campuses by 30 percent or more.

Which is far better than a zero-percent offset.