Pac-12 legal saga: OSU, WSU block mid-year revenue payments to 12 campuses as massive liabilities loom

The legal fight over control of the Pac-12 took another turn last week when Oregon State and Washington State blocked a traditional multi-million-dollar revenue distribution from the conference office to the campuses, the Hotline has learned.

OSU and WSU called their decision “responsible” and suggested any other action would not be in the best interest of the future of the conference.

In response, the 10 outgoing members accused OSU and WSU of “abusing their position” — as allowed by a court order — and therefore causing harm to athletes at the outbound schools. The move “has nothing to do with the future of the Conference,” the 10 said in a joint statement.

On Dec. 5, commissioner George Kliavkoff notified the 12 campuses that, in accordance with past practice, the conference was prepared to distribute 15 percent of its annual revenue to the schools.

For the 2023-24 fiscal year, that split is approximately $61 million, or just over $5 million per campus, according to a memo obtained by the Hotline.

Kliavkoff explained that the 15 percent distribution is “not expressly required under our bylaws” but “traditionally” has been sent to the schools in December.

There is nothing normal about the current state of affairs as a massive antitrust lawsuit looms over the NCAA and the so-called ‘Pac-2’ schools seek control of the conference.

A ruling last month by a Whitman County (Washington) judge determined the Cougars and Beavers were the sole members of the governing board, giving them control over the distribution of revenues and assets.

Two weeks later, the Washington Supreme Court stayed the ruling but left in place a temporary restraining order, issued in September, that prevents the Pac-12 board from making decisions without the consent of all 12 schools.

The unanimity requirement has placed the conference in a state of near-paralysis.

Kliavkoff’s memo continues:

“Because of the ongoing litigation between our members, our view is that we can only make the December distribution with the unanimous approval of our members and are therefore not planning to make this distribution in the absence of such a vote. The Pac-12 would of course call for such a vote if requested by any member.”

The 12 schools agreed recently to allow Washington State and Oregon State to enter a scheduling agreement with the Mountain West starting next fall. And although the Cougars and Beavers are paying the MW a fee for the series, the cash needed will come from future Pac-12 assets, not the 2023-24 revenue.

On the use of current revenue, there is no agreement.

In response to a query from the Hotline about their decision to block the mid-year distribution, OSU and WSU issued a joint statement:

“As the only two remaining members, OSU and WSU are the only schools committed to the best interest of the Pac-12. That means taking responsible steps to protect the assets of the Conference and plan for the future.

“No member acting in the Pac-12’s best interest would allow departing schools to drain the Conference’s assets on their way out the door, while they refuse to pay their fair share of the liabilities.”

There are numerous liabilities, but one cast a larger shadow than all the others: an antitrust lawsuit against the NCAA and the Power Five conference filed by former Arizona State swimmer Grant House on behalf of thousands of former athletes.

The lawsuit seeks 1) backpay for name, image and likeness opportunities and 2) a 10 percent share of the massive media rights deals between TV networks and the conferences.

The case was recently elevated to class status, meaning the damages could climb into the billions.

A trial is set for January 2025 — after the Pac-12’s departing schools have left the conference.

“The departing schools have not committed to a plan for addressing the liabilities,” a source said. “If there’s a judgment (in the House case), the named entities would be responsible. And the Pac-12 is a named defendant.”

But the 10 outbound members took exception to WSU and OSU blocking the December revenue payments, issuing the following joint statement:

“A decision to distribute 15 percent of the more than $400 million in net revenues to the members now to support student athletes, as the Conference has always done in December, has nothing to do with the future of the Conference. Instead, OSU and WSU’s refusal to agree to it shows that the two schools are abusing their position to injure our programs and athletes in violation of all prior precedents.

“The unanimous support that all of our schools gave for the Mountain West agreement demonstrates that OSU and WSU can successfully plan for their future while all members continue to have a say in Pac-12 decisions impacting the current athletics year.

“The hundreds of millions of dollars that the Conference will receive from existing contracts during the two years after the other schools depart will support plans with the Mountain West and any future plans of the Conference.”

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