The Pac-12’s two remaining members have signed a formal exit agreement with their 10 departing league-mates, a settlement that will see those schools forfeit more than $65 million on their way out the door.
Under the 20-page agreement, a redacted version of which was shared with Sportico, the 10 schools leaving the Pac-12 will each have $5 million withheld from their 2023-24 revenue distributions. They will also each pay an additional $1.5 million to the conference under the agreement, which ends months of legal back-and-forth and appears structured deliberately to avoid any future litigation.
On paper, that’s a $65 million concession to Oregon State and Washington State, which were left behind when the rest of the conference chose to depart for other leagues in the middle of a nationwide realignment. In reality, the two schools will see a lot more than that, because they’ll also keep the bulk of future Pac-12 revenue. The agreement states that outside of future income that was supposed to be paid prior to the 10 teams leaving this summer, all future Pac-12 revenue will stay with the conference.
That includes the tens of millions that the Pac-12 will be paid in the next six years for success in previous men’s March Madness tournaments. The NCAA rewards teams for their tournament success in a complex way, called units, which pay out for six subsequent years. As a very rough proxy, each game played by a Pac-12 team in the tournament is eventually worth about $2 million over the course of those six years, and the Pac-12 is still yet to be fully paid for dozens of those units.
That means Arizona’s run to the Sweet 16 (three units so far) and units earned by fellow departing members Colorado (three) and Oregon (two) will all stay with the conference.
There are nearly four pages of redacted details regarding the full nature of the conference’s future revenue. A representative for the Pac-12 declined to comment on the specifics.
Legally speaking, the settlement is structured to avert potential conflicts that could re-trigger litigation. By calling for the 10 departing schools to preserve their votes on conference matters impacting the remainder of the 2023-24 academic year while clarifying that Oregon State and Washington State—and not the exiting schools—will decide conference matters that concern future revenue and decisions, the settlement ensures the departing schools still have a voice on the present but not on the future.
The settlement also calls for the departing schools to not attempt to dissolve the conference. Failure to adhere to that provision could trigger potential consequences of injunctive relief issued against the departing schools and liquidated damages pegged to (among other things) unrealized future revenues for the conference. The emphasis of such a clause is to deter the departing members from trying to undermine the conference’s future on their way out the door.
Neither side wants a scenario where the case is reopened, or one side sues the other for breach of contract (settlement). In that scenario, legal fees and unwanted press attention would surface. Ongoing litigation could also make it more challenging for what remains of the Pac-12 to reconstitute itself and attract new member schools.
The settlement also contemplates distribution of conference assets in the event the conference ceases to exist. The agreement indicates that if the conference shuts down before the end of fiscal year 2026, any remaining assets are shared pro rata by the departing and remaining schools. However, if the dissolution occurs after the last day of fiscal year 2026, the departing schools are not entitled to any distribution. Although there are many factors in a conference dissolution and the value of conference assets two years from now are unknowable, this provision would incentivize the remaining schools to keep the conference going for at least a couple of years. (The Pac-12 has agreements with the Mountain West and WAC for scheduling purposes in the near term).
The details of the settlement remain to be seen, but last December OSU president Jayathi Murthy and WSU president Kirk Schulz indicated the 10 departing schools would forfeit some distributions made during the 2023-24 year. The two presidents also claimed the departing schools gave “specific” albeit unrevealed “guarantees against potential future liabilities,” a statement that could refer to the waiving of potential legal claims against the conference or indemnity provisions should other litigation—such as with conference business partners and employees—arise.
