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Canzano: Coronavirus makes now-empty Pac-12 Conference headquarters an expensive problem
Updated Mar 28, 12:16 AM; Posted Mar 27, 11:36 AM
The Pac-12 Conference paid $6.9 million in rent for its headquarters last year and another $11.7 million in deferred rent.
By John Canzano | The Oregonian/OregonLive
When freshly minted Pac-12 Conference commissioner Larry Scott dispatched a chief lieutenant years ago to help locate office space that would become the new conference headquarters, he asked for two Bay Area options.
One, in Oakland.
The other in the heart of downtown San Francisco in one of the most expensive real estate footprints on the planet.
“Larry wasn’t going to Oakland," an executive-team source said.
Scott directed Gary Stevenson to negotiate an 11-year lease with Kilroy Realty Corporation to secure two floors and 113,000 square feet of prime office space in downtown San Francisco. The deal cost the conference $6.9 million in rent last year and another $11.7 million in deferred rent.
Those offices sit mostly empty this week, amid a social-distancing mandate.
I couldn’t help but think about that glaring expense amid the COVID-19 outbreak. The NCAA announced some bad news on Thursday. It revealed the payment it would make to members would only be $225 million, down from $600 million that was budgeted before the cancellation of the men’s and women’s basketball tournaments.
Blame the pandemic. Its created a mess for a lot of businesses. But the financial shortfall created by the latest loss of revenue underscores what was already glaring issue for the conference even in the best of financial times.
Big Ten headquarters in Chicago will cost that conference less than $1.5 million this year. The SEC, which secured a sweetheart deal in Birmingham, Ala., pays only $1 annually in rent.
If I’m a member of the Pac-12′s CEO Group -- the presidents and chancellors of the 12 universities -- I have one question: Why are we still there?
None of the Pac-12 Conference member institutions are located in downtown San Francisco. Staff at the Pac-12 offices have to be paid more because of the high cost of living. And the theoretical advantages of being located within blocks of some high-profile tech companies hasn’t manifested itself in a single lucrative partnership.
That downtown San Francisco location is a vanity play for a conference that can’t afford one. Which is why I’ve long wondered why the Pac-12 doesn’t just relocate to Salt Lake City, Phoenix or perhaps move to a less expensive Bay Area suburb. You know, like Morgan Hill, Calif. or something?
Even Las Vegas as a Pac-12 headquarters location would make more sense given the enormous cost savings and number of conference championship events that feel destined to take place there. But the point is, when you’ve lost control of your revenue streams you’d better get in touch with your expenses.
Canzano: Coronavirus makes now-empty Pac-12 Conference headquarters an expensive problem
Updated Mar 28, 12:16 AM; Posted Mar 27, 11:36 AM
The Pac-12 Conference paid $6.9 million in rent for its headquarters last year and another $11.7 million in deferred rent.
By John Canzano | The Oregonian/OregonLive
When freshly minted Pac-12 Conference commissioner Larry Scott dispatched a chief lieutenant years ago to help locate office space that would become the new conference headquarters, he asked for two Bay Area options.
One, in Oakland.
The other in the heart of downtown San Francisco in one of the most expensive real estate footprints on the planet.
“Larry wasn’t going to Oakland," an executive-team source said.
Scott directed Gary Stevenson to negotiate an 11-year lease with Kilroy Realty Corporation to secure two floors and 113,000 square feet of prime office space in downtown San Francisco. The deal cost the conference $6.9 million in rent last year and another $11.7 million in deferred rent.
Those offices sit mostly empty this week, amid a social-distancing mandate.
I couldn’t help but think about that glaring expense amid the COVID-19 outbreak. The NCAA announced some bad news on Thursday. It revealed the payment it would make to members would only be $225 million, down from $600 million that was budgeted before the cancellation of the men’s and women’s basketball tournaments.
Blame the pandemic. Its created a mess for a lot of businesses. But the financial shortfall created by the latest loss of revenue underscores what was already glaring issue for the conference even in the best of financial times.
Big Ten headquarters in Chicago will cost that conference less than $1.5 million this year. The SEC, which secured a sweetheart deal in Birmingham, Ala., pays only $1 annually in rent.
If I’m a member of the Pac-12′s CEO Group -- the presidents and chancellors of the 12 universities -- I have one question: Why are we still there?
None of the Pac-12 Conference member institutions are located in downtown San Francisco. Staff at the Pac-12 offices have to be paid more because of the high cost of living. And the theoretical advantages of being located within blocks of some high-profile tech companies hasn’t manifested itself in a single lucrative partnership.
That downtown San Francisco location is a vanity play for a conference that can’t afford one. Which is why I’ve long wondered why the Pac-12 doesn’t just relocate to Salt Lake City, Phoenix or perhaps move to a less expensive Bay Area suburb. You know, like Morgan Hill, Calif. or something?
Even Las Vegas as a Pac-12 headquarters location would make more sense given the enormous cost savings and number of conference championship events that feel destined to take place there. But the point is, when you’ve lost control of your revenue streams you’d better get in touch with your expenses.
