Dennis Dodd: Big Ten expansion not done...stay tuned | Page 10 | The Boneyard

Dennis Dodd: Big Ten expansion not done...stay tuned

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CL82

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Might not use the word scare, but it never hurts to show that an issue was negotiated and part of an agreement.
 
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Sales contracts don't have termination provisions. Once media rights are sold, they are sold. That is the end of it. To beat the GOR, the league that is losing the team would have to simply release that school out of the goodness of their heart. Why would a conference do that?

Wrong. Sales contracts do in fact have termination provisions. I am not an expert on media rights, but I do work with large sales contracts (many of which have third party buyers involved) on a daily basis and have never seen a single contract that does not include termination clauses for all parties involved.
 

nelsonmuntz

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Sales contracts do not have termination provisions for stuff that has already been sold. This is like selling a house for $500k, realizing that it was worth $700k, and trying to get the house back. This buyer may give it back, but they are under no obligation and there is nothing the seller can do if the buyer says "no". There is no way to force the buyer to give the house back.

That is the same situation as a GOR.
 

pj

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And I bet even someone like you that was "modestly" paid at $400 an hour would not be so stupid as to have your client sign a GOR that someone could just get up and walk out on.

Edit: The core assumption anyone has to make to assume that a GOR can be beat is that everyone involved in drafting the GOR's are total freaking idiots, because without that assumption, there is no reason to believe GOR's can be beat.

Again, you are missing the point of the GOR. Walking out on the conference is not walking out on the GoR. Walking out on the TV network would be, but schools cannot do that. Why did ESPN add $2 mn per school per year to the ACC take when they signed the GoR? Because ESPN, not the ACC, was the beneficiary of the GoR. Leaving a conference is not "beating" a GoR. Leaving the conference's network would be beating the GoR. That is what the GoR stops.

Why did smart lawyers have their clients sign a GoR if some other school could still get up and walk out of the conference? Because ESPN was paying them an extra $2-3 million per year to sign. And they will still be getting that extra $2-3 mn if a school leaves.
 
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Sales contracts do not have termination provisions for stuff that has already been sold. This is like selling a house for $500k, realizing that it was worth $700k, and trying to get the house back. This buyer may give it back, but they are under no obligation and there is nothing the seller can do if the buyer says "no". There is no way to force the buyer to give the house back.

That is the same situation as a GOR.

The example you give would be the equivalent of selling your media rights forever. A better example of GOR would be renting a house (renting your media rights for a given time). ESPN is renting the house (media rights) from the school (or conference) for 13 years. During this 13 years, ESPN has the right to use the house (media rights) or sublet the house (media rights) to FOX or NBC. At the end of 13 years, ESPN can move on, ESPN can negotiate to renew, or the School (or conference) can look to move on. Under this example, the renter and landlord always have termination clauses within the lease.

What if a school was suspended or ESPN faced a steep decline and one of the sides could no longer keep its promise per the contract? There would have to be a termination clause to cover these scenarios, just as there likely are termination clauses for departing members. I am not saying the fights in court would be easy or financially viable, but I am saying that a school can likely leave and face nothing more than a monetary penalty (although it may be too expensive to afford).

I can agree to disagree for the time being, and hopefully we will have the opportunity to see the Big 12 GOR play out in court.
 

nelsonmuntz

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PJ,

Your argument holds up right to the point where you assume someone can leave. ESPN is the beneficiary of the GOR since they purchased the media rights. Why would ESPN let someone walk away? The ACC could make a credible threat that schools were going to leave, which forced ESPN to increase rights fees. In return, ESPN made the contract directly with the individual schools (kinda). There is no threat to leave now, because ESPN, through the ACC, already owns each schools rights for the next 15 years. Show is over.
 

WestHartHusk

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PJ,

Your argument holds up right to the point where you assume someone can leave. ESPN is the beneficiary of the GOR since they purchased the media rights. Why would ESPN let someone walk away? The ACC could make a credible threat that schools were going to leave, which forced ESPN to increase rights fees. In return, ESPN made the contract directly with the individual schools (kinda). There is no threat to leave now, because ESPN, through the ACC, already owns each schools rights for the next 15 years. Show is over.

Nelson - first, none of us have seen the contract so we should all keep that in mind.

But I think the answer to your question is simple - ESPN is worried about their ability to televise games and in their competitive position re: Fox. They are not necessarily worred about the ACC, the ACC is a means to an end for them. So by owning the media rights to UNC (UVA, GT, pick a school) they prevent conference movement from affecting their inventory. So for $2M /yr / school that is what they got and I think you can make a compelling case that that is a bargain to prevent FSU, GT, CU, UNC, UVA from moving to Fox properties. It is the exit fees that are the "penalty" part of the contract, and it is the lack thereof in the Big12 that I think makes them particularly vulnerable.
 

WestHartHusk

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So Kansas leaves the big 12 with no monetary penalty?
Not sure it's that easy...

Can't see the GOR having any teeth if a school can leave, still get paid by the old conference and get some checks from the new.

I'm guessing once a school leaves, those conference checks get cut to zero.

Without some legal loophole, either Kansas or the big would need to take a hit. Not sure why Kansas would sign up for that...

Marty - I am curious why you think the GOR has to have "teeth" regarding the conference. From my view the GOR is a bargaining chip, a means by which universities together negotiate a better TV deal by providing a network with a firm commitment to inventory over a given period of time. To me it is the exit fees that are the "teeth" and which are supposed to capture the damages caused by departing a conference.
 
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Marty - I am curious why you think the GOR has to have "teeth" regarding the conference. From my view the GOR is a bargaining chip, a means by which universities together negotiate a better TV deal by providing a network with a firm commitment to inventory over a given period of time. To me it is the exit fees that are the "teeth" and which are supposed to capture the damages caused by departing a conference.
you might be right... just doesn't seem right that a school can leave the conference and still collect revenues for tv rights it no longer owns. especially if they are no longer in that conference.
 

The Funster

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PJ,

Your argument holds up right to the point where you assume someone can leave. ESPN is the beneficiary of the GOR since they purchased the media rights. Why would ESPN let someone walk away? The ACC could make a credible threat that schools were going to leave, which forced ESPN to increase rights fees. In return, ESPN made the contract directly with the individual schools (kinda). There is no threat to leave now, because ESPN, through the ACC, already owns each schools rights for the next 15 years. Show is over.

What if a school changing conferences would benefit ESPN? Let's say UNC wanted to join the SEC. Would ESPN think that UNC as a member of the SEC is worth more to ESPN than it would as a member of the ACC?
 
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Okay, maybe I am getting a better understanding of Grants of Rights. Given some of the recent commentary:
1) GoR's are particularly important for Conference Networks: B1G has GoR, B1G has BTN (with Fox); Pac-12 signed GoR at the creation of the Pac12 Network; SEC now launching SEC network (ESPN) which *may* incite a GoR; ACC launches "planning" of network (with ESPN) and signs GoR; Big 12 has no conference network, but has GoR, schools retain Tier 3 rights.

2) Television contracts: B1G(through 2015-16): ESPN, BTN(Fox); Pac-12: ESPN, Fox, Pac12N, SEC: CBS, ESPN, SECN(ESPN), ACC: ESPN; Big 12: Fox, ESPN.

So the Big12 is the only conference firmly committed to "no network", yet it has a "GoR". Given that Big 12 Tier 1 is Fox (and Tier 3 is with the schools, most of whom have allied with Fox), that BTN is Fox and likely Fox will make major effort for B1G Tier 1 for this next contract... hmmm....

If I subscribe to the pj, westharthusk train of thought that the GoR is with the television network, well then, I'd say the odds of Kansas and Oklahoma going to the Big Ten are getting better. (There is still the issue with K-State and OkState, however.)
 

SubbaBub

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I'll add that to the B12 only UT and OU's rights really matter so long as there are still a certain number of members.

They would absolutely let a team like KU go for a price if they thought they'd get a better replacement team(s), say FSU.

Sent from my MB860 using Tapatalk 2
 

The Funster

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Okay, maybe I am getting a better understanding of Grants of Rights. Given some of the recent commentary:
1) GoR's are particularly important for Conference Networks: B1G has GoR, B1G has BTN (with Fox); Pac-12 signed GoR at the creation of the Pac12 Network; SEC now launching SEC network (ESPN) which *may* incite a GoR; ACC launches "planning" of network (with ESPN) and signs GoR; Big 12 has no conference network, but has GoR, schools retain Tier 3 rights.

2) Television contracts: B1G(through 2015-16): ESPN, BTN(Fox); Pac-12: ESPN, Fox, Pac12N, SEC: CBS, ESPN, SECN(ESPN), ACC: ESPN; Big 12: Fox, ESPN.

So the Big12 is the only conference firmly committed to "no network", yet it has a "GoR". Given that Big 12 Tier 1 is Fox (and Tier 3 is with the schools, most of whom have allied with Fox), that BTN is Fox and likely Fox will make major effort for B1G Tier 1 for this next contract... hmmm....

If I subscribe to the pj, westharthusk train of thought that the GoR is with the television network, well then, I'd say the odds of Kansas and Oklahoma going to the Big Ten are getting better. (There is still the issue with K-State and OkState, however.)

IIRC, the Big 12 GOR is actually an amendment to the TV contract.
 
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PJ,

Your argument holds up right to the point where you assume someone can leave. ESPN is the beneficiary of the GOR since they purchased the media rights. Why would ESPN let someone walk away? The ACC could make a credible threat that schools were going to leave, which forced ESPN to increase rights fees. In return, ESPN made the contract directly with the individual schools (kinda). There is no threat to leave now, because ESPN, through the ACC, already owns each schools rights for the next 15 years. Show is over.


It's not so much that a school can't leave, but that they have little value to another conference without their TV rights attached. The GOR is a deterrent to poaching, not to departure. But that's semantics.
 
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IIRC, the Big 12 GOR is actually an amendment to the TV contract.
I am just conjecturing -- along the lines of pj, woomba, westharthusk -- that if the GoR IS tied to the TV networks, then KU and OU going to BTN would likely be from one Fox commodity (Big12) to another Fox commodity (B1G), hence no violation of the GoR (*except* that ESPN does have Big12 Tier 2 rights now...)
 

pj

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Okay, maybe I am getting a better understanding of Grants of Rights. Given some of the recent commentary:
1) GoR's are particularly important for Conference Networks: B1G has GoR, B1G has BTN (with Fox); Pac-12 signed GoR at the creation of the Pac12 Network; SEC now launching SEC network (ESPN) which *may* incite a GoR; ACC launches "planning" of network (with ESPN) and signs GoR; Big 12 has no conference network, but has GoR, schools retain Tier 3 rights.

2) Television contracts: B1G(through 2015-16): ESPN, BTN(Fox); Pac-12: ESPN, Fox, Pac12N, SEC: CBS, ESPN, SECN(ESPN), ACC: ESPN; Big 12: Fox, ESPN.

So the Big12 is the only conference firmly committed to "no network", yet it has a "GoR". Given that Big 12 Tier 1 is Fox (and Tier 3 is with the schools, most of whom have allied with Fox), that BTN is Fox and likely Fox will make major effort for B1G Tier 1 for this next contract... hmmm....

If I subscribe to the pj, westharthusk train of thought that the GoR is with the television network, well then, I'd say the odds of Kansas and Oklahoma going to the Big Ten are getting better. (There is still the issue with K-State and OkState, however.)

Yes. This is why the B1G TV contract and the B1G expansion talk are so tightly coupled. If the B1G signs with Fox then they can expand from the B12 but not the ACC. If the B1G signs with ESPN they can expand from the ACC but not the B12. (Assuming the GoRs have no "outs".) And, if the B1G wants to expand, then TV networks may be sweetening their offers by trying to broker some sort of realignment deal; and the B1G itself needs to thoroughly evaluate expansion options before choosing its TV partner.

It does seem like the B12 is a more likely target for a raid, and that Fox may have a leg up with the B1G.
 

UConn Dan

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With the GOR, the television rights (for home games) are retained by the Conferences not the Networks. The networks have deals with the conferences, not the teams. The deal is to air X amount of games per year (not specific teams).

IF Clemson leaves the ACC, then the ACC gets all revenue generated from Clemson's home games aired on whatever network Clemson's new conference has a deal with. Of course it would never come to this because if Clemson were to actually leave the conference it would attempt to negotiate a monetary buyout and games to be played later type deal. Let's just assume the buyout is worth half of the GOR value for the remaining contract - is it worth it? Maybe if the new conference pitches in.

PS - with the ACC GOR (agreed in principal prior to July 1st), there is no more $50million exit fee -- that's gone as of the GOR (but not quite sure if the GOR has been officially signed yet).
 
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you might be right... just doesn't seem right that a school can leave the conference and still collect revenues for tv rights it no longer owns. especially if they are no longer in that conference.

There has to be consideration for the grant -- otherwise you don't have a contract. I haven't seen the contract so I don't know what it may be, but the payout of TV revenue (or some portion of it) seems like a logical place to start.
 

CL82

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Yes. This is why the B1G TV contract and the B1G expansion talk are so tightly coupled. If the B1G signs with Fox then they can expand from the B12 but not the ACC. If the B1G signs with ESPN they can expand from the ACC but not the B12. (Assuming the GoRs have no "outs".) And, if the B1G wants to expand, then TV networks may be sweetening their offers by trying to broker some sort of realignment deal; and the B1G itself needs to thoroughly evaluate expansion options before choosing its TV partner.
It would indeed be ironic if a league obtaining GOR for the benefit of TV resulted in a network brokering a team's departure.
 

pj

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IF Clemson leaves the ACC, then the ACC gets all revenue generated from Clemson's home games aired on whatever network Clemson's new conference has a deal with.

No. The GoR is not a "grant of revenue generated by media rights", it is a "grant of media rights." The conference gets the media rights from the school in exchange for money and assigns them to its TV partner in exchange for money. The conference is a conduit between schools and network. The GoR together with the conference-network TV deal ties the school's media rights to a network, and guarantees a defined revenue stream to the school for those media rights for the duration of the deal. The school in signing the GoR gives up the option of moving its TV rights to greener pastures, in exchange for a bump in revenue from its existing TV partner. If Clemson moved from ACC to SEC or B1G, they would not get an increase in revenue until the current contracts expired, because they'd still be paid out of the ACC deal and it would be the ACC's media partner who would own the rights to televise Clemson home games in SEC or B1G. If Clemson games in the SEC or B1G generate more revenue, that is a windfall to ESPN, not Clemson.
 

CTMike

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PS - with the ACC GOR (agreed in principal prior to July 1st), there is no more $50million exit fee -- that's gone as of the GOR (but not quite sure if the GOR has been officially signed yet).
Is this true?
 
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Let's say the Texahoma 4 bolt the B12 for the Pac12 or SEC or B1G or whatever leaving WVA, Baylor, ISU, KU, KSU, and TCU meaning the B12 has to add some teams...and most likely they are at this point looking at AAC/MWC teams so, Boise, Cincy, mabye even looking at BYU. Would UCONN be interested in this or would you prefer to stay AAC at that point and hope for a B1G or ACC invite?
 

UConn Dan

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No. The GoR is not a "grant of revenue generated by media rights", it is a "grant of media rights." The conference gets the media rights from the school in exchange for money and assigns them to its TV partner in exchange for money. The conference is a conduit between schools and network. The GoR together with the conference-network TV deal ties the school's media rights to a network, and guarantees a defined revenue stream to the school for those media rights for the duration of the deal. The school in signing the GoR gives up the option of moving its TV rights to greener pastures, in exchange for a bump in revenue from its existing TV partner. If Clemson moved from ACC to SEC or B1G, they would not get an increase in revenue until the current contracts expired, because they'd still be paid out of the ACC deal and it would be the ACC's media partner who would own the rights to televise Clemson home games in SEC or B1G. If Clemson games in the SEC or B1G generate more revenue, that is a windfall to ESPN, not Clemson.
The conference gets the money...the school does not. The conference owns the rights to revenue.

Every article describes it the same. Here's just one because I'm busy:

http://www.usatoday.com/story/sport...obbies-florida-state-grant-of-rights/2113527/

The agreement, called a grant of media rights, requires any university leaving the ACC to forfeit all of its television revenue — hundreds of millions of dollars — through the length of the contract.
 

nelsonmuntz

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I don't see how the Big 10 expands anywhere but to the SEC or non-P5. The Big 12 and ACC are off limits now. Missouri is the only SEC school I could see having any interest in leaving. That is pretty much the extent of realignment discussions involving the Big 10.

I also think the SEC would trade Mizzou for Cincinnati without losing much sleep. Better football, better basketball, better recruiting. The SEC doesn't worry about markets.
 

UConn Dan

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Is this true?
Yes. Sorry, I don't have more time... but I've read several articles (that hold up better than the below), stating "Swofford has confirmed that the exit fee is replaced by the GOR."

http://www.cbssports.com/collegefoo...er/22116192/acc-approves-grant-of-rights-deal


Goodbye $50 million exit fee.
The ACC on Monday announced a Grant of Rights agreement among its 15 members.

CBSSports.com reported earlier Monday the ACC presidents were in the process of clearing the Grant of Rights with their departments. The agreement goes to 2026-27, the duration of the league's contract with ESPN.
Unless a member takes the league to court to escape this agreement, the ACC believes a Grant of Rights will protect it from conference realignment poachers. Starting July 1, the ACC's average annual media rights intake per school will surpass $20 million, according to a league source.







The North Carolina-based David Glenn Show reported the news early Monday afternoon.
A Grant of Rights, in basic form, is written permission from league members to relinquish control of television rights to the league for the duration of the deal. If a school leaves, it forfeits those earnings to be spread among the rest of the conference.
 
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