Kliavkoff eventually settled on office space in the East Bay city of San Ramon. The conference declined to disclose contract terms but said the move would save millions of dollars per year in rent.

For some, the timing was curious. Kliavkoff committed to a multi-year lease on 42,000 square feet that began this summer — before he had secured a media rights deal that would keep the conference together.

All these months later, the Pac-12 has imploded, 10 schools are leaving, two have been left behind and everyone is seeking clarity on the Pac-12’s assets and liabilities.

Is the San Ramon production facility the former or latter? At the very least, it stands as one of the most confounding aspects of this tumultuous stretch.

Many details are not publicly known, including the endgame. But the Hotline has a few answers.

Why move in the first place?

Few issues have frustrated the campuses over the years like the lavish spending at the conference office, and that spending starts with the office itself.

The Pac-12 paid millions of dollars annually for two floors of office space in downtown San Francisco: One floor for conference operations; one for the Pac-12 Networks studios.

The optics were terrible, the rent was worse — the total outlay over 12 years exceeded $90 million — and the pressure on Kliavkoff to solve the problem was immense.

He made reducing conference expenses in general, and relocating the headquarters specifically, a centerpiece of his agenda upon being named commissioner in the spring of 2021.

“He was so eager to get out of San Francisco,” a source said, “that he pushed for a move fast.”

Why move in 2023?

In one crucial regard, Kliavkoff had no choice. While examining the Pac-12’s contract with Kilroy Realty during his early months in office, Kliavkoff was stunned to discover the deal expired in the summer of 2023 — one year before the end of the Pac-12 Networks’ distribution contracts with Comcast, DISH, etc.

He wasn’t alone. Campus officials and conference staffers alike were baffled when they learned that former commissioner Larry Scott had agreed to the one-year contractual offset.

Why not align the lease with the media deals?

“It’s insanity,” one source said.

“We were gobsmacked,” another said. “Nobody knew it. And nobody could figure out why Larry would agree to an 11-year building lease for a 12-year TV deal.”

One industry source speculated it could have been a leverage play.

“Typically, you don’t have big contracts expire at the same time because it can provide leverage to the other side,” the source said. “So you might do a renewal of the lease but make it contingent on the (media) rights deals.”

There was no contingency clause in the Pac-12 deal, according to a source.

Scott did not immediately respond to a request for comment.

Why not extend the deal in San Francisco?

Whatever the reason for the contractual offset, the reality was bearing down on Kliavkoff in early 2022: The Pac-12 had to either renew in San Francisco or commit to finding an alternate location for the networks’ production studio.

According to multiple sources, the lease included an option to renew for one or more years at market rates. After a series of negotiations, it became clear that any extension would have doubled the $7.3 million annual occupancy cost the conference paid in 2022.

Given the price tag, Kliavkoff committed in March 2022 — with approval from the university presidents — to move out of San Francisco and find office space for the Pac-12 Networks production studio.

“George said, ‘There’s no decision to be made,’’’ a source said.

The cost of San Ramon

Three months later, USC and UCLA announced they were leaving for the Big Ten, and the Pac-12’s future turned murky.

Ever the optimist, Kliavkof plowed forward with plans to relocate. In January, the conference selected Bishop Ranch, a 600-acre, mixed-use community in the city of San Ramon.

The conference has declined to provide contract terms, but multiple sources believe Kliavkoff signed a four- or five-year lease in the range of $1.5 million to $2 million annually.

Then the expenses began piling up.

The San Francisco lease required the conference to return the two-story office space to its original form as two single-floor offices, a “significant” cost, according to a source.

Inflation and supply-chain issues pressured the transition budget. So did the cost of delivering a fully-functional  production studio on an expedited timeline.

Multiple sources said the project went over budget. To offset the costs, the presidents approved tapping the emergency reserve funds that were available at the time, sources said.

The facility opened in July to positive reviews. But weeks later, the conference collapsed and the Pac-12 was left with at least three more years in San Ramon at $1.5 million (or more) annually.

Options for San Ramon

That said, it’s too soon to place the San Ramon office in the liabilities column.

In fact, one source described the facility, which has state-of-the-art technology and is located in the Bishop Ranch business park, as a valuable asset starting next summer.

If Washington State and Oregon State opt to rebuild the conference, the production studio could be used to broadcast their events.

Perhaps a media company (hello, Apple) would be interested in subleasing the space and equipment. Or buying it outright.

Maybe the infrastructure could be used by the Mountain West conference in its next media contract cycle (2026)  following a merger with Washington State and Oregon State.

Perhaps the schools headed to the ACC (Stanford and Cal) and the Big 12 (Arizona, ASU, Colorado and Utah) could use the facility to produce events for their new leagues, which have digital media elements within their contracts.

As with so much else about the Pac-12, the future of the San Ramon production facility is complicated, and undetermined.

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One of those liabilities has come into focus.

The conference is taking a $72 million budget hit as a result of the Comcast overpayment scandal, according to commissioner George Kliavkoff’s court declaration in a lawsuit filed against the conference by two former executives.

It’s the first on-the-record confirmation of the financial damage resulting from Pac-12 mismanagement and far exceeds initial presumptions.

In January, when the conference terminated CFO Brent Willman and Pac-12 Networks president Mark Shuken for failing to properly report the mistake, it described the amount of overpayments claimed by Comcast as being “more than” $50 million.

Kliavkoff’s declaration, viewed by the Hotline, is one of dozens of filings in the wrongful termination lawsuit, which began in April in San Francisco Superior Court and is ongoing.

Under penalty of perjury, Kliavkoff stated “the Pac-12 will (have) distributed more than $72 million less than previously budgeted … to our member institutions.”

The decrease comes in two forms, according to a source:

— Distributions withheld by Comcast to offset 10 years of overpayments (2013-22) based on the company’s flawed tracking of Pac-12 Networks subscribers. That total is $58 million.

— Reductions in distributions in the 2023-24 fiscal years to account for a correction in the subscriber figures. That total is $14 million.

“It typifies 12 years of neglect,” a source said.

The withholding and reduction of $72 million (or $6 million per school) is already underway and expected to be finalized before the end of the current fiscal year.

In other words, the liability should be off the books if Washington State and Oregon State attempt to rebuild the conference next summer, after the other 10 schools depart for their new conferences.

In order to offset the reduction in revenue, the Pac-12 trimmed its expenses and tapped its emergency reserve fund.

Multiple sources said the emergency reserves — a potential asset for the Cougars and Beavers if they attempt to rebuild — are fully exhausted.

“There’s nothing left,” one source said.

Sworn statements from Shuken, Willman and Kliavkoff illuminate the nuts and bolts of the fiasco that had previously been kept from public view because of litigation and non-disclosure agreements with Comcast.

What caused the $72 million mistake?

In his declaration, Kliavkoff said the company was “employing a calculation for license fees owed to the Pac-12 that double-counted certain subscribers.”

“Given the systemic nature of the error,” Kliavkoff added, “it was reasonably certain that Comcast had been making this error prior to 2016, and would continue to make this error after 2016 and through the life of the Comcast distribution agreement unless alerted to it or until Comcast discovered the error.”

The Pac-12 was made aware of the error in late 2017, following an audit, but never alerted Comcast. The media giant discovered the overpayments years later, in the summer of 2022, following an internal audit.

Shuken’s declaration to the court indicated the Pac-12’s audit was conducted by Media Audits International, which “did not finalize or even publish its audit findings. The audit was left with Pac-12 to further investigate, or to devote resources to complete.”

The audit showed Comcast was overpaying the Pac-12 Networks by $5 million annually, but the conference had no way to confirm the findings because it lacked access to Comcast’s proprietary subscriber data.

“Due to Comcast’s own ability to determine proper payment and its own sophisticated infrastructure and internal controls,” Willman, the former CFO, said in his court declaration, “this raised extreme skepticism within Pac-12 about the audit findings.”

Willman said the audit results were shared with Shuken, commissioner Larry Scott, three executives (John Oliverius, Kim Sullivan and Alden Budill) and possibly other members of the finance team.

“I had several discussions with each of these individuals in 2017 about the existence of the audit, and the purported audit results, and I believe they had conversations amongst each other,” Willman stated.

Shuken became president of the Pac-12 Networks in August of 2017, nine months after the conference commissioned the audit.

His declaration stated that Budill, the head of distribution, “summarized its findings, and expressed her view that the overpayment seemed surprising to say the least.”

Why the skepticism?

Because Comcast had “complete control over the payments to cable programmers like Pac-12 Networks as well as teams of legal and finance individuals to review and determine contract terms and proper payments,” Willman said in his declaration.

He added:

“In fact, one of the reasons the Pac-12 overpayment allegedly occurred in the first place was because Comcast maintains its subscriber data strictly confidential, even from programmers like Pac-12. The contracts between Pac-12 and Comcast generally provide a rate per subscriber and distribution tiers based on the geographic location of each subscriber but only Comcast has information on subscriber counts and location.

“Because Comcast has complete insight into its subscriber obligations, Larry Scott and other individuals at Pac-12 assumed that Comcast regularly monitors the payments it is making.”

Shuken said he shared the findings with Scott “immediately following that summary from Budill” but Scott responded “that the audit findings were ‘preposterous’ and that we ‘should ignore them’ and not move forward with any further investigation or review. Therefore, at his direction, there was no further conversation on this topic, as Mr. Scott chose to close the matter.”

Once Comcast alerted the Pac-12 to the overpayments in the fall of 2022 — more than one year after Kliavkoff was hired — the conference retained Cooley LLP, a Palo Alto-based firm, to investigate.

On the matter of whether Scott knew about the overpayments and hid them from Comcast, Kliavkoff stated: “While Plaintiffs alleged they verbally reported the Comcast overpayment issue to Scott, Cooley did not find that claim to be credible.”

The Pac-12 declined to comment on the revelations in the court documents.

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“That makes everybody equal,” Superior Court Judge Gary Libey said in issuing his ruling a few minutes after 12 p.m.

A preliminary injunction hearing to determine which schools have voting rights — all 12, or only the Beavers and Cougars — is expected to be scheduled in the next few weeks.

“I am pleased with today’s decision,” Oregon State president Jayathi Murthy said on social media. “As the two remaining Pac-12 members, Oregon State and Washington State must be able to chart a path forward for the Pac-12 — not the members that have chosen to leave it.”

Washington State president Kirk Schulz called the decision “a step in the right direction.”

The Pac-12, which declined to comment on the ruling, argued that a board meeting scheduled for Wednesday was necessary in order to approve an employee retention-and-severance plan that would help the conference meet its media obligations through the 2023-24 sports season and  produce approximately 1,000 events.

WSU and OSU, which initiated the legal action against the conference last week, feared the meeting could result in the 10 outgoing members voting as a bloc on a plan that would harm the two schools left behind in the realignment game.

Libey later crafted what amounts to a carve-out in his order, allowing the conference to approve the retention plan but preventing further board action.

(According to Eric MacMichael, attorney for the plaintiffs from the firm Keker, Van Nest and Peters, one of the discussion items for the board meeting involved using Pac-12 funds to help offset transition costs for the departing schools. The defense attorney, Mark Lambert, called that a “mischaracterization.”)

The Cougars and Beavers are considering several options, including a rebuild of the conference, but are waiting on the Pac-12 to provide a full report on the assets and liabilities, a slow-moving process that has left both schools frustrated.

They believe the 10 departing members have vacated their board seats — and control of the conference’s assets — by joining other leagues starting next summer.

The Pac-12 bylaws state that if a school gives notice of withdrawal prior to Aug. 1, 2024, then its “representative to the Pac-12 Board of Directors shall automatically cease to be a member of the Pac-12 Board of Directors and shall cease to have the right to vote on any matter.”

What defines a notice of withdrawal?

The bylaws don’t specify. None of the outgoing schools have delivered written notice, according to a source. But WSU and OSU believe the public statements by executives from the 10 schools — and the “welcome” announcements blasted on social media by their new leagues — constitute notice, thereby rendering their presidents ineligible for the board.

Major strategic and financial issues require super-majority approval (75 percent). If the court determines the 10 outgoing schools retain board-of-directors status, they could do as they please. One option: Vote to dissolve the conference as of next summer, which would result in all assets being split among the 12 schools.

But if the Cougars and Beavers are deemed the sole board members, they would control the assets and potentially use tens of millions of dollars in Pac-12 funds to rebuild the conference and offset the loss of revenue resulting from the collapse.

The two remaining schools believe the departing 10 are conflicted as soon-to-be members of rival conferences and based their case on what WSU’s Schulz described as “the action the Pac-12 … took when the first two schools announced their departure from the conference more than a year ago.”

After USC and UCLA agreed in June 2022 to eventually join the Big Ten, they were removed from the Pac-12 board. The conference took the same approach with Colorado this summer after the Buffaloes announced they were leaving for the Big 12.

But late last month, commissioner George Kliavkoff attempted to call a meeting of all 12 presidents and chancellors, alarming the Cougars and Beavers and prompting the legal action.

“The meaning of the bylaws hasn’t changed just because more members have decided to leave,” MacMichael, the attorney for WSU and OSU, told the court.

The judge didn’t rule on that aspect of the case. But he agreed with the Cougars and Beavers that the makeup of the board should be determined before it convenes again.

“We are pleased that the court has taken this important first step to ensure that Washington State and Oregon State’s rights are protected,” said Arianna Scavetti, attorney for the plaintiffs from the firm Weil, Gotshal & Manges LLP.

“We look forward to further proceedings that will ensure clarity and fairness in Pac-12 governance.”

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Washington State’s Kirk Schulz, chair of the Pac-12 board of directors, suggested late last week that Fox might have lured Washington and Oregon into the Big Ten in order to prevent the Pac-12 from signing an agreement with Apple.

“We’ve got just a couple networks that are making the real decisions about who goes where based on the dollars they want to put into it,” Schulz said during a conversation published on the university’s YouTube channel.

“I do think if I was Fox and ESPN, I’m not sure I want Apple in the marketplace, frankly. I don’t want somebody with pockets that are that deep as a rival if I can afford it.”

Pac-12 presidents were expected to sign a grant-of-rights contract with Apple that would have kept the conference together. But a few minutes before their crucial meeting on Aug. 4, Washington and Oregon announced they were joining the Big Ten.

The tectonic development prompted Utah, Arizona and Arizona State to seek shelter in the Big 12, leading to the collapse of the conference.

Fox owns the Big Ten’s media rights and was responsible for the $375 million (approximately) that Washington and Oregon will receive over six years (2025-2030) of the conference’s media contract.

Fox has not made a deep push into the streaming market, preferring to focus on delivering sports content over its linear networks. Meanwhile, Apple has distribution deals with Major League Baseball and Major League Soccer and was attempting to break into the college football space through an agreement with the Pac-12.

“Was it a strategic move on their part to say, ‘If we kill the Apple deal, that gives us five or six years without them in college football?’” Schulz said.

“People can say, ‘Kirk, put on a tin-foil hat; that’s kind of (a) conspiracy theory.’ But on the other hand, I can see making a business decision — I’m not talking about the value of the schools or any of that — that might be seen as more strategic to have a corner on the marketplace.”

The theory that Fox wanted to block Apple has traction across the Pac-12 footprint and support in the broader sports media space. But Schulz is the first Pac-12 executive to address it publicly.

During a wide-ranging discussion with retired journalist Enrique Cerna, a member of WSU’s board of regents, Schulz acknowledged that the Cougars were “standing in line like everybody else to collect that check” from media companies. But he expressed concern over the role Fox and ESPN play in conference realignment.

(The full interview can be found here.)

“The more you pull competition out of the marketplace, the easier it becomes for some of those funders to really, really call the shots,’’ he said.

“We’re sort of down to really two dominant players that are really determining what happens with expansion. I don’t mean necessarily that any one of them is calling a commissioner and saying, ‘Go get these two schools.’ Maybe that’s happening; I don’t know that.

“But what is happening is the commissioner calls them and says, ‘We’d like to add X and Y,’ and (the networks) get to make the decision, ‘Do I give a pro-rata amount for that?’ Or do I say, ‘Sorry, we’re not going to give you any money.’ I would argue that’s the golden rule: Whoever has the gold makes the rules. And that’s where we are right now.”

(Fox executives were not available for comment.)

Washington and Oregon needed more than cash to make the jump into the Big Ten, however. They also needed approval from the conference’s Council of Presidents and Chancellors.

That same group approved invitations for USC and UCLA in June 2022, thereby creating an existential crisis for the Pac-12. For most of the intervening 13 months, the Big Ten presidents seemed unwilling to take the final step — membership offers for the Pacific Northwest powerhouses — that would lead to the Pac-12’s destruction.

What changed in early August, other than Fox’s willingness to fund the expansion?

Arizona’s application for membership in the Big 12 played a key role in the process, according to a source.

The Wildcats weren’t the only school to seek a lifeboat; Utah and ASU would follow them into the arms of the Big 12 (and Colorado, of course, had already jumped). But in an attempt to secure a home in case the Pac-12 collapsed, Arizona formally applied for membership in the Big 12 in the middle of the week — before Oregon and Washington rejected the Pac-12 grant-of-rights agreement on that fateful Friday morning.

The Big Ten became aware of Arizona’s application to the Big 12, according to the source.

“So (Big Ten commissioner) Tony Petitti tells his presidents, ‘We aren’t the ones,’” the source said. “They felt like they weren’t the ones to fire the kill shot.”

That triggered the Big Ten presidents to approve membership for Washington and Oregon without guilt — and with Fox’s cash as their carrot, the source said.

Arizona’s application was approved by the Big 12 on Thursday evening, according to a Yahoo report, even though president Robert Robbins awoke Friday morning prepared to join ASU and Utah in signing the Pac-12’s grant-of-rights deal.

But by then, the Big Ten’s hammer had fallen.

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Shuken, the former president of the Pac-12 Networks, and Willman, the Pac-12’s former CFO, were terminated on Jan. 20 for failing to properly report millions of dollars in overpayments made by Comcast to the Pac-12 Networks.

But the complaint alleges they did, in fact, properly report the issue — they repeatedly told then-commissioner Larry Scott about the situation after it was discovered in December 2017, and Scott told them “not to say or do anything.”

The overpayments continued for years and are believed to have totaled $5 million annually over the course of a decade, before Comcast discovered them in 2022. They have left the Pac-12 schools at significant financial risk, with Comcast expected to withhold approximately $50 million in revenue distributions to the networks — or $4.2 million per school — until the expiration of its contract in the summer of 2024.

Filed in San Francisco Superior Court this week and obtained by the Hotline, the document calls the twin terminations of Shuken and Willman an “egregious case of scapegoating and the cover-up of retaliation.”

It seeks injunctive relief, claiming the statement published on the Pac-12 website that announced the terminations of unnamed executives has caused “irreparable harm” to their reputations. Damages are “in amounts to be established at trial and believed to be in excess of $2 million,” according to the complaint.

Asked to comment, the Pac-12 issued the following statement to the Hotline:

“The claims being alleged are wholly without merit and the Pac-12 intends to vigorously defend against such false claims.”

At the center of the complaint is an argument for wrongful termination. The executives were dismissed for “a failure … to disclose material information to the Pac-12 Board of Directors and external Pac-12 auditors in connection with overpayments by a Pac-12 Networks distribution partner,” according to a statement by the conference on Jan. 20.

However, the complaint states that Shuken and Willman repeatedly told Scott, who served as both commissioner and chief executive of the Pac-12 Networks:

“From late 2017 and well into 2018, Plaintiffs Shuken and Willman repeatedly and separately told Commissioner Scott about the audit, appropriately deferring to him about how to proceed. Commissioner Scott told them that the Comcast audit findings were ‘preposterous’ and they each were specifically instructed by Commissioner Scott not to say or do anything about the Comcast audit. When Willman disclosed the audit, Commissioner Scott responded: ‘no way.’ Commissioner Scott told Shuken in response to the audit results: ‘it’s crazy, ignore it.’

Scott did not respond to a request for comment.

The complaint also attempts to undermine the credibility of the investigation conducted last fall on behalf of the Pac-12 by the Palo Alto-based firm Cooley LLP. It states that the lead attorney, Michael Sheetz, has been Scott’s personal attorney. (The Pac-12 has retained Cooley LLP for legal work for years.)

The complaint does not mention the existence of any documentation (no emails, no text messages, no memos or notes) that prove Shuken and Willman told Scott of the overpayments, suggesting all exchanges about the issue were verbal.

The complaint states Shuken and Willman were contractually prohibited from going over Scott’s head and reporting the overpayments to the Pac-12 board of directors (i.e., the university presidents).

Current commissioner George Kliavkoff is mentioned a few times in the 32-page document, with each reference citing an exchange with Willman in mid-January.

Willman, as CFO, had prepared a financial forecast for the Pac-12 presidents in advance of a board meeting on Jan. 30. The slide deck included details of the 2017 audit that initially exposed the overpayments.

According to the complaint, Kliavkoff “expressly directed Mr. Willman to remove all mentions of the 2017 audit from the Board deck, to shield any mention of it from the Board.”

By then, the board had known about the situation for months and Willman was three days from being terminated.

The complaint doesn’t indicate Shuken or Willman mentioned the overpayments to Kliavkoff between the time he became commissioner in the summer of 2021 and the discovery of the overpayments by Comcast in the fall of 2022.

Shuken and Willman are represented by Cotchett, Pitre and McCarthy LLP, a San Francisco firm.

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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.

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We know the distribution partner in question is Comcast.

We know Comcast filed a claim in October stating it overpaid the networks by a total of more than $50 million over a number of years.

We know two executives, CFO Brent Willman and Pac-12 Networks president Mark Shuken, have been fired for failing to “disclose material information … in connection with overpayments,” according to the Pac-12.

And we know former commissioner Larry Scott has been interviewed.

Many key details are missing, known only to the conference and those involved.

But thanks to information provided by Hotline sources with knowledge of the situation — none of them are employed by the conference office or the schools — we can offer a rough framework of events and answer several outstanding questions.

What prompted the 2017 audit, performed on the Pac-12’s behalf, that revealed the overpayments?

Why didn’t the Pac-12 stop the overpayments given the ongoing financial risk they created?

Why did Comcast continue paying more than it should have?

Were the executives involved attempting to inflate Pac-12 Networks revenue, either to make the business appear more successful than it was or to trigger performance bonuses?

The full story might never become public, but multiple sources offered the same assessment of the terminated executives, Willman and Shuken: There was no malice involved in their handling of the situation.

“They were not willfully hiding money,” one source said.

From the Hotline’s perspective, this is a clear case of mismanagement. By whom? That’s where it gets murky.

In the spring of 2017, the Pac-12 Networks asked an outside auditing firm — a firm described by the Pac-12 as an industry leader — to examine the payments Comcast was making to the Pac-12 Networks.

This is not an unusual step in the media distribution business. Companies regularly seek audits to make sure monthly or annual payments are accurate.

And Pac-12 Networks executives did not think Comcast’s payments were accurate, according to sources. They thought Comcast was underpaying.

They were surprised by the audit’s conclusion that Comcast was, in fact, paying too much.

“Nobody thought it was credible,” one source said.

“There was disbelief,’” the other source said.

How much was too much? About $5 million annually, according to sources.

The results of the audit were made known to Shuken and Willman in December 2017.

At that point, the logical step would have been to cross-check the audit results with the Pac-12’s internal data and examine invoices sent to Comcast for the year in question (2016).

Except the Pac-12 had none of that, because Comcast didn’t share its subscriber data. The situation wasn’t unusual in the media distribution business.

“You have to take the distributor at their word,” one source said. “You don’t know what their (subscriber) data is. And if the payments seem light, you ask for an audit.”

“The situation wasn’t built on something the Pac-12 could check,” the second source said, “because the payments were being made based on Comcast’s internal data. They couldn’t correct it, because it was all on Comcast.”

The only way to gain visibility into the accuracy of payments is to request an audit. It’s standard practice in the media distribution game.

Sources believe Comcast was double-paying the Pac-12 for a portion of its subscriber base — likely for the customers who received both the Pac-12 Networks’ national feed and one of the regional feeds.

What did Shuken and Willman do next?

Did they tell Scott, who was not only the conference commissioner but also the chief executive of the Pac-12 Networks?

Did they tell Woodie Dixon, the Pac-12’s chief legal officer and senior vice president for business affairs?

It’s logical to conclude that Shuken, who reported directly to Scott, would have told the commissioner — and perhaps Dixon, as well.

Or, as multiple sources wondered: What motivation did Shuken and Willman have to keep the issue from Scott?

Neither executive benefited personally from the overpayments. The amount ($5 million) likely wasn’t enough to boost Pac-12 Networks revenue into a threshold that would trigger performance bonuses for either of them.

Also, Shuken had been on the job for just three months. The overpayments weren’t his responsibility — they were from the year before he was hired. He had nothing to hide.

Scott declined an interview request, and the Pac-12 hasn’t offered comment on the involvement of any specific individuals. (It did not even identify Shuken and Willman in the public statement issued last week.)

Exactly what happened next is unclear. But the Pac-12’s Board of Directors (the university presidents) was never told — not by Scott, who reported directly to them, or by Shuken or Willman, who were fired for failing to “disclose material information to the Pac-12 Board of Directors and external Pac-12 auditors in connection with overpayments.”

(This much we know: Had information about the overpayments leaked, it would have added to the public perception of the Pac-12 Networks as an underperforming business.)

Meanwhile, executives remained miffed at the results of the audit and convinced that Comcast was, in fact, underpaying the Pac-12, according to sources.

Because the Pac-12 commissioned the audit and Comcast was solely responsible for the payment amount based on its proprietary subscriber data, a source said, the Pac-12 was not obligated to act on the results.

“They thought, ‘That can’t be right,’” a source said. “The results were so different than what they expected that they didn’t close the audit. So Comcast was never informed.”

And the overpayments continued — by about $5 million annually, according to one of the sources.

That amount makes sense in this respect: There have been 10 fiscal years since the launch of the Pac-12 Networks.

If Comcast, a founding partner, overpaid the Pac-12 by about $5 million annually for 10 years, that’s $50 million — the amount cited in the claim filed by Comcast in October.

(That claim prompted the Pac-12 to investigate the matter with the use of an outside firm, Cooley LLP.)

Had the Pac-12 not commissioned the audit in the spring of 2017, then Comcast would have continued making the overpayments and the conference would have been dumbstruck when Comcast came forward with the claim.

At what point did Comcast discover the overpayments? How did it make the determination?

Both details remain unclear.

The amount in annual overpayments constituted about four percent of the Pac-12 Networks’ annual revenue at the time of the audit and approximately one percent of the conference’s total revenue.

Sources believe the company will simply withhold payments totaling $50 million (approximately) over the remaining two years of the carriage contract — about $2 million per school per year.

And more details will undoubtedly surface.

But for now, we know the combination of Comcast’s error (based on proprietary data), an audit ordered by the Pac-12 (to ensure proper payment) and the passage of time resulted in two terminations and a bill that’s just coming due.

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One aspect of the negotiations hasn’t changed: The potential for a distribution agreement with Big Tech — the first of its kind within the Power Five.

If anything, a deal with Amazon seems more likely today than it did in late July, when commissioner George Kliavkoff said the conference had received “significant interest from potential partners, including both incumbents and new traditional television and most importantly, digital media partners.”

Whether or not the Pac-12 partners with Amazon, the concept itself is fascinating. The Hotline previously examined how the NFL’s ‘Thursday Night Football’ on the streaming giant could impact Pac-12 strategy and the merits of an all-in partnership with Amazon across the remaining 10 universities.

But three developments have added layers to the calculation:

1. Marie Donoghue, Amazon’s vice president for global sports video, indicated the company could add college football to its distribution portfolio.

“Actually, we’re very interested in that,” Donaghue told the “Marchand and Ourand” podcast.

“Obviously, we don’t talk about specific negotiations, but we’re going to keep knocking. The thing about sports is there’s a lot of marquee properties out there. We’re very interested in big-time college sports. Anybody would be.”

Amazon tried to secure rights this summer to the Big Ten’s football inventory, but the conference signed with Fox, NBC and CBS instead.

With the SEC and ACC media rights locked up for years and the Big 12 expected to extend its contracts with ESPN and Fox, the Pac-12 stands as Amazon’s easiest entry point.

2. The ‘Thursday Night Football’ broadcasts are a hit with advertisers and attracting younger audiences, according to Amazon’s data.

The company just announced it will show an NFL game next season on Black Friday, the biggest shopping day of the year.

“You’re bringing the average age of your audiences down. The consumer’s ability as a spender also goes up,” Jeremy Carey, chief investment officer at marketing agency Optimum Sports, said last week during an Advertising Week event in New York.

“The ability to talk to and extend reach across (Amazon’s) distribution is tremendous.”

3. The concept of a partnership with Amazon has become more palatable to Pac-12 conference and campus officials as the ‘Thursday Night Football’ experiment rolls on.

There have been no technical problems. The production value is excellent. And the ratings, while dropping since the season opener, have been impressive enough to suggest Amazon could be a viable platform for Pac-12 football.

That said, the conference must be smart. It cannot use Amazon as the only delivery vehicle for its football inventory. Broadcasts on the traditional college football networks — both over-the-air and cable — is vital.

The Hotline has contended since June 30, when USC and UCLA announced their departures to the Big Ten in 2024, that it was more likely the remaining 10 schools would stick together than break apart.

In much the same fashion, the most likely outcome of the media rights negotiations is a partnership with Amazon or Apple for a package of football and basketball games.

Amazon seemingly is a better fit because its NFL agreement creates a synergy with college football. Additionally, the scope of Amazon’s businesses presents the Pac-12 with a wider range of revenue opportunities.

As a result, we envision three scenarios:

— Amazon decides the Pac-12 doesn’t have enough compelling content to warrant a serious bid.

— Amazon makes a serious bid, but the Pac-12 opts for deals with traditional partners only. (This feels highly unlikely.)

— Amazon partners with the Pac-12 on a shared distribution agreement with ESPN and possibly Fox.

Exactly how the content is sliced and diced, we can only speculate. But weekly games on Friday night make sense, perhaps alternating between Amazon and ESPN.

(One option: Use the Apple Cup, which is played on Friday of Thanksgiving weekend and always draws impressive ratings, as the second half of a doubleheader with the NFL’s Black Friday game. The move surely would play well in Washington, Amazon’s home state.)

On so many levels, the Pac-12 isn’t the NFL. The success of ‘Thursday Night Football’ wouldn’t translate to Pac-12 broadcasts on Amazon in any direct fashion, either for ratings or advertising.

But in this case, the future is the key to the present.

The Pac-12 isn’t evaluating a partnership with Amazon based on how it would be received today; it’s evaluating Amazon for 2024 and 2026 and beyond.

Given the astounding rate of changes in technology and the way fans consume sports media — not to mention Big Tech’s roots along the West Coast — a partnership with Amazon could feel as normal in the second half of the decade as it feels unnatural today.

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The Pac-12 is seeking damages and injunctive relief in order “to both recoup the license fees Dish has already improperly withheld and to prevent any continued withholding of fees due under the parties’ agreement,” according to the lawsuit, which was filed Oct. 6 in U.S. District Court in Colorado. (Dish is located in Englewood, outside of Denver.)

The Hotline obtained a copy of the lawsuit, which features significant redactions covering the financial terms of the distribution contract, the licensing fees Dish is withholding and the damages sought.

Dish declined to comment per its policy on “ongoing litigation matters.”

The Pac-12 also declined to comment.

Two sources with backgrounds in sports media contracts were asked to review the lawsuit. One described the case as appearing  “straightforward” in that Dish “tried to renege on a payment deal.” But both acknowledged the redactions make definitive conclusions difficult.

The dispute stems from the 2020 football season heavily impacted by COVID.

According to the lawsuit, Dish pays a monthly fee based on the number of subscribers to the Pac-12 Network. Dish is entitled to a rebate if the network doesn’t broadcast a minimum number of games each season.

Typically, that’s about 36 games. But in 2020, the Pac-12 Network showed only one game: San Diego State at Colorado, the lone non-conference matchup of the COVID season. (The rest were broadcast by ESPN and Fox and thus governed by separate contracts.)

In February ’22, the Pac-12 offered Dish a rebate for the 2020 season that was “calculated pursuant to the parties’ agreed-upon rebate provision,” according to the lawsuit. The offer was accepted a month later.

But Dish “also inexplicably demanded from the Pac-12 additional rebates for the two contract years before 2020-21,” per the lawsuit. The explanation for Dish demanding additional rebates is redacted.

The Pac-12 contends that Dish’s position is “improper and unreasonable” because Dish “could not possibly have suffered losses during the 2018-19 and 2019-20 contract years from COVID-19-related football shortfalls occurring one to two years thereafter.”

But the dispute isn’t limited to the COVID season.

According to the lawsuit, Dish “began to unilaterally withhold license fees from Pac-12 amounting to (redacted). To date, it has already withheld license fees amounting to (redacted). This exceeds (redacted) by the allowable rebate of (redacted).”

Because of the redactions, the Hotline’s sources were left wondering how Dish concluded that the shortfall in 2020 impacted the prior years and, therefore, prompted the decision to withhold present-day payments.

“What’s the justification?” one source said.

In the last fiscal year prior to the pandemic, the Pac-12 Network generated approximately $120 million in revenue, much of it through distribution agreements with an array of providers, including Comcast, Charter and Dish.

As a result of Dish withholding the payments, the lawsuit states:

“DISH’s demands and self-help actions have severe and immediate consequences for (the) Pac-12 and the Conference, and punish the academic institutions they represent for a pandemic over which they had no control. Dish seeks multiple recoveries for the same missed games, an unduly punitive position that has no basis in the parties’ contract.”

The complaint includes a demand for a jury trial.

Dish’s stock price has dropped approximately 70 percent in the past year. The company was recently embroiled in a carriage dispute with Disney.

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Combine the initial success of the company’s ‘Thursday Night Football’ broadcasts with the Pac-12’s need for competition at the negotiating table, and a courtship makes perfect sense.

But the Hotline isn’t convinced the Pac-12 should limit itself to a media rights deal.

It should consider going all in with Amazon.

Yep, the whole shebang.

Why not partner with Amazon on all business opportunities across the 10 campuses, from food services to cloud storage to merchandise sales to event sponsorships to executive travel to driverless cars.

Don’t gaze at the future. Walk down the aisle with it.

Yes, it’s a radical plan. But the Hotline is comfortable outside the box; in fact, that’s our preferred location.

In the past, we have proposed playing football games at 9 a.m. and scheduling doubleheaders on the Sunday of Labor Day weekend. We suggested using Bill Walton as a second commentator on football broadcasts. Three years ago, we made the case for an alliance with the Big 12.

Our Amazon Partnership Plan originated in an exchange with a trusted source, was relayed to two highly-valued sounding boards and polished for your consumption and consideration.

The whole process took five-to-seven business days.

Effectively, the Amazon Partnership Plan would bind the Pac-12 to one of the world’s most innovative and sprawling companies — one that’s located in a Pac-12 city and filled with Pac-12 graduates and, like Apple, depends so heavily on the same tech-savvy, educated, affluent West Coast population that fuels enrollment across the Pac-12 footprint.

Let’s start with the media rights component.

From our vantage point, the Pac-12 has a competition problem. It’s clear ESPN wants to maintain a relationship with the conference. (Fox might, as well.) But are other media companies interested enough to drive up the price? That remains to be seen — it’s the $500 million question.

Meanwhile, Amazon has entered the live sports space. It reportedly paid $1 billion annually to the NFL for exclusive rights to broadcast ‘Thursday Night Football’ and made a serious bid for part of the Big Ten’s football package.

But does the Pac-12, stripped of its biggest market (Los Angeles) and biggest brand (USC), possess enough quality content to bring Amazon to the table with its checkbook in hand?

That’s where the Amazon Partnership Plan comes into play.

Unlike ESPN and Fox, Amazon isn’t a media company. So why should the Pac-12 limit itself to a media deal?

Amazon is a technology company and an online retailer and a business-to-consumer service and a media company — it’s all that and more. The Pac-12’s partnership should reflect that product diversity.

Start by selling the broadcast rights to all sporting events to Amazon, which would then sell packages of games to traditional broadcasters like ESPN and Fox.

Amazon would retain a chunk of the Pac-12 inventory for streaming on Prime and use the Pac-12 Networks’ cutting-edge equipment to produce the events, just as NBC actually handles the production for Amazon for ‘Thursday Night Football.’

Why would Amazon want to own the rights to every Pac-12 football game?

Because it wants to use football as a freeway to your wallet. It wants to show you football and sell you toilet paper. And there are no wallets it enjoys more than those along the West Coast, from Seattle to Portland to the Bay Area. The heart of the reconfigured Pac-12 is Amazon’s e-commerce wheelhouse.

Amazon could become the lead sponsor for every Pac-12 event (“The Pac-12 Football Championship Game presented by Amazon”) with its logo on every venue.

It could serve as the primary ticket broker for all Pac-12 sporting events and any concert held on a conference campus.

It could provide aircraft for every team.

Also, Amazon undoubtedly sees the enormous potential of sports wagering.

The next iteration of the gaming marketplace, which is coming not in a few decades but a few years, will feature an interface that allows fans to watch football in real time with betting opportunities appearing on the screen.

With their credit card already entered into the system, viewers will be one click away from making a proposition bet on the outcome of the very next play. Run or pass, touchdown or turnover. There will be no latency and no limit, except what your credit card allows.

If Amazon owns the Pac-12’s data rights, the potential revenue from sports wagering on every big screen throughout the conference footprint would be enormous.

Also enormous: Amazon’s increased entrenchment in every home, every wallet and every bank account, with its AI technology leading the way.

With the Amazon Partnership Plan, the dollar figure attached to any Pac-12 media rights deal becomes secondary.

Give Amazon equity in the conference, and it would be motivated to ensure the Pac-12 thrives. What it didn’t own, it would buy. What it couldn’t buy, it would create — perhaps with the help of R&D consortiums across the Pac-12 engineering schools.

You sign media deals with media companies.

You sign all-in deals with everything companies.

And therein lies the true value of the Amazon Partnership Plan (APP): The limitless business opportunities across the 10 campuses.

Put an Alexa in every dorm room and provide IT services for every student. Between drone deliveries and Amazon blue-and-grey trucks, every service imaginable would be available for students and staff across the campus.

Every mobile phone on campus would have an app for the APP.

Now, this proposal is sure to confuse many, offend some and raise myriad questions. The first is whether our plan is even possible. Every school has existing contracts for food services, for example. So the Pac-12 and Amazon would either need to buy out the existing deals or wait for them to expire in two years, four years, whatever.

And we should acknowledge the potential for political pushback at the state level. In some cases, deals might not be practical or could be delayed indefinitely.

But the possibilities are enormous:

— Amazon could handle food services for the campuses and sporting events, perhaps through a subsidiary of Whole Foods.

— Amazon Web Services could provide cloud computing support for every academic department.

— Amazon’s e-commerce arm could sell all university merchandise (backpacks, hoodies, jerseys) both online and through traditional bookstores on campus.

— Amazon’s Ring home security could protect every door.

— Amazon’s driverless car subsidiary, Zook, could provide transportation for every drunk student in need of a ride home from the bars and parties.

— Amazon’s video service, Twitch, could stream live campus events — both sporting and otherwise — and perhaps partner with the Pac-12 on e-sports opportunities.

Essentially, Amazon would have the credit card for every student, professor and staff member on every campus in the conference — a conference that, oh-by-the-way, draws from all over the world.

And the company would retain that connection, one based on its AI technology, long after every student has graduated.

It’s a radical idea, sure. And there would be a risk for the Pac-12. Heck, going all-in with Amazon simply for football media rights constitutes a significant risk. But the Amazon Partnership Plan carries gargantuan upside for both sides.

(For one thing, Washington, which just partnered with Amazon to launch a ‘Science Hub,’ wouldn’t leave for the Big Ten.)

It’s a marriage proposal that would propel every campus into the future with the company set to own the future.

And for just the right price, perhaps the Pac-12 could become the Amazon-12.

Support the Hotline: Receive three months of unlimited access for just 99 cents. Yep, that’s 99 cents for 90 days, with the option to cancel anytime. Details are here, and thanks for your support.

*** Send suggestions, comments and tips (confidentiality guaranteed) to pac12hotline@bayareanewsgroup.com or call 408-920-5716

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*** Pac-12 Hotline is not endorsed or sponsored by the Pac-12 Conference, and the views expressed herein do not necessarily reflect the views of the Conference.