With the possibility that college football may not be played this fall, many schools will need financial help to ensure that not only their football programs are unaffected, but that the rest of their sports survive as well. With that in mind, Jon Wilner of the San Jose Mercury News reports the Pac-12 is considering a massive, near $1 billion loan to help schools as needed.
Wilner reports the conference should have no problem obtaining a loan of that size because the remaining value of the TV contract, which runs through 2024, exceeds the value of what they’d need. Each school could take up to $83 million though Wilner reports most schools would either not need the help or would take much less than the maximum allowable amount.
It appears the conference would actually be responsible for repaying the loan, 3.75% interest over a 10-year term, until the new media rights deal kicks in starting in 2024, when the debt would be transferred to the universities who would then, in theory, be benefiting from a much more lucrative contract (which might not end up on traditional networks at all).
As much as we like to pile on Larry Scott and the conference higher ups for their lack of vision and leadership, this makes a whole lot of sense. The Pac-12’s member institutions are going to have to leverage a lot of future debt on academics due to the effects of COVID-19, leaving little money to ensure their athletic programs remain healthy or are around after the pandemic is over at all. For schools like WSU, which are already piled up in athletic department debt, this relief value is especially valuable since they won’t have much, if any, additional borrowing capacity to cover potential losses.
The conference intends to play a league-only schedule this fall, kicking the can down the road a bit to see if it will be possible to field a season at all. If they ultimately have to wipe out football, this loan will do a lot to help bridge the gap of lost ticket and TV revenue.