November 4, 2022
[00:00:00] Gary Bisbee, Ph.D.: Good morning, Jim, and welcome.
[00:00:02] Jim Staten: Oh, morning Gary. Good to see you again.
[00:00:04] Gary Bisbee, Ph.D.: We’re pleased to have you at this microphone. Let’s dig right into the next chapter in USC’s fabled athletic program. And the big news is that USC and UCLA will be leaving the PAC 12 and joining the Big 10. Jim, what were the factors that led to that decision?
[00:00:25] Jim Staten: Oh, Gary there were many and it was such an exciting time for USC Athletic. We had just recruited our new football coach, head football coach, Lincoln Riley from Oklahoma, and he’s been on the scene for a couple months and we have been watching and trying to decide. Evaluate whether, we should remain in the Pack 12 conference or look for another conference. So we went through an evaluation and came out the other side with the Big 10 conference being the conference of choice. Academically, that conference was more like us. It played on the big stage. It was in the midst of negotiating its own media rights contract at the time. And we just thought that like many universities with big athletic programs, ours has run into deficits over the last number of years because of all of a number of factors that have affected all athletic programs with the type of facilities and recruitment and investments you need to make. It we’re looking for a way to, to eliminate a deficit and create an opportunity for our athlete, our student athletes, to play in a bigger. So all those factors and the timing of, we were coming to a point in our Pac 12 agreement that we were either needed to commit to them to stay in for the next round of media rights negotiations in that conference or look elsewhere. So I think that the time the stars lined up and we in the way these things work, they had to be very, extremely confidential type of conversations. We set out to do it a few months back and we’re excited that it came out good for us.
[00:01:54] Gary Bisbee, Ph.D.: did the board go through a lot of deliberation on this, Jim, or did it seem pretty obvious as you laid the case out to them?
[00:02:02] Jim Staten: Yeah, it’s an interesting question, Gary. At the end of the day our president made the decision and the board, there were not a lot of board deliberations whatsoever. When the leadership team led by the president, our athletic director, and a few our legal counsel and I, and a few others arrived at what we thought was the right decision. We made a round of calls to some of the key committee members of the board. Got their input as we were, finishing off what we thought was the right direction. Got support from them and then actually had a special board meeting where we presented after we had been. Invited into the Big 10 conference what it was gonna mean. So we informed the board as opposed to sought for a board approval to have this transaction. But if you back it up a couple of years, probably in the time I’ve been here, almost seven years now at usc, there has been a number of conversations along the way increasingly with Carol Foltz in the last three. From trustees who are in the business, the media rights business and close to athletics that it might be a good time to, to look to to move to a different arena to play in our athletic programs. We liked the what attracted us to the Big 10 conference was not just the fact that our football program was gonna be invited in, but all sports, all women’s sports, all men’s. So it it gave us an entire athletic program shift. And so being a West Coast facility, we had to evaluate, what the impact was gonna be on student athlete, on travel, on the type of travel that we do and how often, at a team level. So we went through all those various analysis in addition to, looking at the possibilities of what the finances might bring because they get the headlines. More than the headlines. There were, lots of other considerations behind the scenes that led us in that direction.
[00:03:41] Gary Bisbee, Ph.D.: You made reference to this. But how will this affect uscs athletic program and the student athlete?
[00:03:49] Jim Staten: Yeah. So for us the practical benefits of moving conferences is we think about putting our students first. Like we normally do that the increased media coverage from this deal was gonna be good for our student athletes. That they will benefit, they would benefit from more national e exposure and prime time, more than late nineties coast time. Better time slots and opportunities for cross promotion. It ensures that we have, joining this conference, the resources we were gonna need to support our student athletes. I. Title nine Title nine commitments and sports that we were trying to booster to. And academically, this conference is a better academic conference. If you look at the types of schools that are in there.
[00:04:30] Gary Bisbee, Ph.D.: The idea of the media rights agreement seemed like that came together pretty quickly. I’ve seen some big numbers there. Is that the sort of thing that you were all actively involved in or trying to pull that all together?
[00:04:44] Jim Staten: Yeah, not really. Gary. We were aware that the media rights deal, the conference was in the process of negotiating, but we were not inside those negotiations at. And I know the publicity, you know that the deal was finalized for over a billion dollars a year among the institutions. A seven year deal is now out in the public. We knew that it was in process. The Big 10 and Fox TV and CBS and NBC starts in 2023. We’re joining the conference in 2024. We’re honoring two years of commitments to the pac. But as we looked at what we receive at USC in media rights from our Pac 12 agreements and then anticipated what that might change to as we move forward and compared it to what the Big 10 media rights contr existing contracts were and what we thought with their New deal might come out the other side, we pretty much, believe that we were gonna have an accelerated level of media, right? Revenue streams by joining this conference. We we made the deal and then the anticipation that we would probably double the amount of media rights revenue that would come to us over time in that conference. And that was part of the business plan that we put together. But it was an important piece, but not the only piece.
[00:05:56] Gary Bisbee, Ph.D.: So Jim, you’ve got a substantial. T in healthcare as well as higher education. And you know about the consolidation in healthcare, of course, and our health systems and insurance companies and so on. And I just wondered whether there was any kind of comparison to what’s going on in healthcare and what might go on in higher education and whether the consolidation of the athletic conferences is any kind of leading edge indicator to what might happen, which. Consolidation of colleges and universities going forward.
[00:06:33] Jim Staten: Huh. It’s a great question, Gary. Playing on a bigger stage and being bigger and more excellent at what you do in athletics and academics and research and in patient care. On our health system side is of at the core as we look at, you our customers, our patients, our students, our faculty, in this case our football coach, Lincoln Riley, had to be part. The conversation to say, Hey, listen, we’re gonna bring you, you to a bigger stage. He had just arrived. So I think as we look at consolidation in the higher education business sector what I see at least from my seat is not the type of consolidation going on the healthcare. Which has been, I think, very active, in, in the last decade or so. But, I think, we have looked at some smaller organizations, smaller, higher education colleges. But I don’t see in this market a consolidation like we’re seeing in the athletic conferences. I think, if you think about these conferences, the more we can come together as a consolidated group, the better leverage we have with with the media people in negotiating, terms that are for us in college football, behind the NFL football, their viewership, After nfl it’s college football and then, and the major league baseball. As the healthcare providers come together to negotiate rates and lobby, with government for fair pay. I think in university world we have the bigger academic medical centers and the. Universities research are one universities and many smaller universities. They’re two different brands. And so as we’ve looked at, see where it makes sense, ge geographically, academically, it’s been a harder path to looking at what makes sense. There’s so many opportunities for a university like us internationally around the. When a local college runs into problems financially or is looking for a partner, we’re looking and we’re asking, how does that make sense to us? What kind of investment, would that need and doesn’t make sense to our academic programs or our research program? I think it, they’ll continue to be I would call I would say more affiliations agreements, business arrange. Between programs, research institutes academic pieces of universities, but, full out acquisition, as we’ve seen in some of the healthcare stuff or changing in conferences, the way we’ve looked at, are we gonna align with the the Big 10 conference players probably in a number of, other business opportunities and discuss. We’re looking at one right now in Washington, dc where we’re deciding whether we’re gonna put a bigger presence at USC in a nice location, in a beautiful building. And, there could be opportunities to align with our new conference allies and colleagues in that space if it were to move forward. Those type of things, short of a full acquisition, but relationships that I think folks are looking for that run these universities to make sense from a business standpoint.
[00:09:23] Gary Bisbee, Ph.D.: Yep. That makes good sense. Thanks for your insight, Jim, and thanks for sitting down with us today. Great conversation as expected, and we really. Your joining us.
[00:09:33] Jim Staten: My pleasure, Gary. It’s always good to see you.