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

[kyleslamb]

This doesn't seem correct, that the school that is leaving would still get paid. According to this story from CBS Sports, the school would NOT get paid:

"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."


http://www.cbssports.com/colle...-of-rights-deal

Putting too much faith in the media might lead one astray. The media seems to be making the same assumptions everyone else has been making.

The problem here is that people are making the Grant of Rights to be something out of the ordinary that doesn't already exist. It's actually no different than any other typical contract between a school and conference.

All schools already "grant" their rights to their conference. Only right now, they grant their rights to broadcast home games to the league indefinitely as long as they remain members, subject to the bylaws and television agreements; A grant of rights addendum simply takes those rights and extends them for a defined period of time that supercedes membership. In this case, all members and future members are bound by those transfer of rights until June 30, 2025 instead of whenever their conference membership otherwise expires.

The GOR agreement applies regardless of conference membership as it clearly states. So a school changing membership would not impact their rights to be compensated for their games broadcast on television because they would still be honoring the agreement by transferring their rights; thus, there is no reason they should have to "forfeit" anything. The league retains their television rights regardless of what conference they are affiliated with, thusly, they still retain the right to be compensated for said rights.

 

[jostar1]

The GOR agreement applies regardless of conference membership as it clearly states. So a school changing membership would not impact their rights to be compensated for their games broadcast on television because they would still be honoring the agreement by transferring their rights; thus, there is no reason they should have to "forfeit" anything. The league retains their television rights regardless of what conference they are affiliated with, thusly, they still retain the right to be compensated for said rights.

Still don't think this is correct. The school that is leaving forfeits the money because the money belongs to the conference and they are no longer a member of the conference and thus no longer entitled to share in the conference's money.

Here is another article:

"The agreement guarantees that if any school wishes to leave the conference, its media rights, including all revenue, would stay with the ACC rather than moving with the school to its new conference.
That means that, in addition to paying an estimated $50 million exit fee, any team wishing to depart the ACC could forfeit hundreds of millions of dollars in television revenue. It also makes the league's schools much less desirable to other conferences, since they can't financially benefit from the schools' media rights."


Read more: http://www.post-gazette.com/stories/sports/pitt-big-east/accs-new-grant-of-media-rights-has-teeth-684600/#ixzz2bFDkdocW

 

[kyleslamb]

Still don't think this is correct.

Here is another article:

"The agreement guarantees that if any school wishes to leave the conference, its media rights, including all revenue, would stay with the ACC rather than moving with the school to its new conference.
That means that, in addition to paying an estimated $50 million exit fee, any team wishing to depart the ACC could forfeit hundreds of millions of dollars in television revenue. It also makes the league's schools much less desirable to other conferences, since they can't financially benefit from the schools' media rights."


Read more: http://www.post-gazette.com/stories/sports/pitt-big-east/accs-new-grant-of-media-rights-has-teeth-684600/#ixzz2bFDkdocW

Stop sourcing writers. You're being led astray. If you think these rights are being given away for free, you either are not understanding how contracts work or you are listening to the wrong people or both. No matter how many uninformed writers you cite, it doesn't change contract law.

These rights aren't being "granted" for free. They're being compensated for them. And the compensation doesn't stop just because they change conferences. In fact, the Grant of Rights explicitly states that these rights continue for a specified duration rather than based on conference affiliation. So changing leagues wouldn't impact the Grant of Rights agreement anyhow. If the GOR exists regardless of conference affiliation, why wouldn't the compensation? Again, for the umpteenth time... these rights aren't being given away for free. They're being given conditionally upon receiving value for them.

 

[Excalibur]

Well, based on the Big 12 agreement posted earlier, the contract is silent on TV revenues. This would mean that the right to revenue can be tied into a separate agreement that is contingent on continued membership in the conference.

One could challenge the B12 GOR agreement on the basis of a lack of consideration. The stated consideration is basically the mutual promises of the other conference members to also grant their media rights to the conference. I think that is sufficient to survive a challenge. Consideration doesn't require a fair deal, just something of value.

Ultimately then, the writers cited by posters above, despite talking out of their collective asses, appear to have stumbled upon the correct conclusion (at least with respect to the B12 agreement).

 

[gars44]

Stop sourcing writers. You're being led astray. If you think these rights are being given away for free, you either are not understanding how contracts work or you are listening to the wrong people or both. No matter how many uninformed writers you cite, it doesn't change contract law.

These rights aren't being "granted" for free. They're being compensated for them. And the compensation doesn't stop just because they change conferences. In fact, the Grant of Rights explicitly states that these rights continue for a specified duration rather than based on conference affiliation. So changing leagues wouldn't impact the Grant of Rights agreement anyhow. If the GOR exists regardless of conference affiliation, why wouldn't the compensation? Again, for the umpteenth time... these rights aren't being given away for free. They're being given conditionally upon receiving value for them.

Interesting analysis. I have no personal knowledge of how the GOR contracts work. But your assumption that the GOR contract cannot contain a clause that the departing school forfeits rights under the contract due to the departure is unfounded. Typically, in law, a "grant" stands for something other than a "contract," and a grant is often accompanied by a contract such as in the case of a deed and a mortgage. (The deed and mortgage are "granted." The mortgage contract is the "contract.") This just leads me to assume that the "grant" of rights is not just a simple contract as you have posited. There is certainly a contract, and it probably contains a provision or two that impose revenue reductions for a departing school while granting the former conference the media rights otherwise belonging to the departing school. However this works, it presumably results in a financial disadvantage for a school to leave against a GOR. It certainly can't be an advantage.

 

[btstimpy]

Link? Show me. I've provided articles that say the GOR replaces exit fee. I've read quotes from ACC officials that say the same.

No league with GOR has an exit fee as well and the SEC has neither.

Here is one for you to read. http://www.charlotteobserver.com/2013/05/04/4022792/inside-the-deal-how-john-swofford.html

look inside the highlighted box to the right at the top. Here is the content:

What grant of rights means
The ACC is the fourth major conference – joining the Big Ten, Big 12 and Pac-12 – to enter into a grant of media rights agreement. In a grant of rights agreement, schools agree to surrender their television media rights to their conference for the duration of a television contract.

The ACC’s contract with ESPN, which beginning July 1 will pay schools an average of a little more than $20 million per year, runs through the 2026-27 academic year.

The grant of rights extends any time a new TV contract is renegotiated.

If a school left the ACC, its TV rights would remain with the ACC for the duration of the ACC’s TV contract. A departing school would potentially lose hundreds of millions of dollars in TV revenue, and would bring no TV revenue to another conference.

Additionally, any team leaving the ACC still is subject to the exit fee, which is three times the operating cost of the league budget (now more than $50 million).

​

 

[jostar1]

If the GOR exists regardless of conference affiliation, why wouldn't the compensation? .

Because they are no longer a member of that conference and no longer sharing in conference revenues. The grant of rights monies are no longer the school's money, they are the conference's money. The purpose of the GOR is to assign that money to the conference.

 

[kyleslamb]

Interesting analysis. I have no personal knowledge of how the GOR contracts work. But your assumption that the GOR contract cannot contain a clause that the departing school forfeits rights under the contract due to the departure is unfounded. Typically, in law, a "grant" stands for something other than a "contract," and a grant is often accompanied by a contract such as in the case of a deed and a mortgage. (The deed and mortgage are "granted." The mortgage contract is the "contract.") This just leads me to assume that the "grant" of rights is not just a simple contract as you have posited. There is certainly a contract, and it probably contains a provision or two that impose revenue reductions for a departing school while granting the former conference the media rights otherwise belonging to the departing school. However this works, it presumably results in a financial disadvantage for a school to leave against a GOR. It certainly can't be an advantage.

Contracts are still unenforceable without consideration. That isn't unfounded. In fact, that's contract law 101. It doesn't matter what kind of contract it is. A grant as you are referring to is not really a contract, it's just property bestowed on someone else. But that doesn't require fulfillment of the receiving party, and if it does, then by nature it is still a contract.

Secondly, if you think a contract is meant to give a "financial disadvantage" for a school to leave, that right there is also something that invalidates a contract. No stipulation can be made as a punitive measure. A party can protect their interests, but these stipulations are not meant to be disadvantageous to a party.

Furthermore, it isn't an accurate portrayal to suggest that a school retaining its compensation for rights is an advantage. It most certainly is not an advantage to any conference that desires to take them, and that's the whole purpose of a Grant of Rights in this case.

Think about it: if Texas' total value to a television agreement in realized revenue is $60 million, and the Big Ten would only retain rights to 40% of Texas' games, wouldn't you agree that is a detriment to the Big Ten in the short term? Yes, Texas would still be compensated for their rights, but the Big Ten would not receive nearly as much revenue split among its members for taking Texas under a Grant of Rights as it would ordinarily. That is the point people are missing here: this Grant of Rights isn't mean to punish a school or put them ad a "disadvantage." That is a total misnomer. The purpose is to make it less financially viable for another conference to take a team from the league. Texas would still be valuable to the Big Ten. Oklahoma would still be valuable to the Big Ten. However, neither would be nearly as attractive as they would without a Grant of Rights (because, again, the Big Ten would only have rights to about 4/5 football games apiece). The other Big 12 schools, sans perhaps Kansas, would have almost no value to a major conference without the Grant of Rights being bought out or otherwise invalidated.

 

[kyleslamb]

Because they are no longer a member of that conference and no longer sharing in conference revenues. The grant of rights monies are no longer the school's money, they are the conference's money. The purpose of the GOR is to assign that money to the conference.

That makes no sense whatsoever.

Logic 101:

Right now, the Big 12 airs 5-6 Texas home football games a season, roughly. It profits and divides that money evenly among its members.

Let's say five years from now, Texas goes to the Big Ten. The Big 12 still retains rights to roughly six Texas football games a season. It profits and distributes that money evenly among its members.

It makes no sense why Texas wouldn't still receive compensation for those games it's apart of. Nothing has changed... the Big 12 still has the same rights as it did before. Those Texas home football games belong to the Big 12 just as they did before. They still make money just as they did before. The purpose of the Grant of Rights is the same as any normal revenue agreement. The only, literally only, difference is that it assigns it for the duration of the television agreement rather than the duration of a school's conference membership.

You really need to see the big picture here. The Grant of Rights only extends the same rights already owned by the conference. That's literally it. Those rights stand regardless of conference membership (the GOR even says so), so the same obligations would extend as well.

 

[jostar1]

Let's say five years from now, Texas goes to the Big Ten. The Big 12 still retains rights to roughly six Texas football games a season. It profits and distributes that money evenly among its members.

It makes no sense why Texas wouldn't still receive compensation for those games it's apart of. Nothing has changed... the Big 12 still has the same rights as it did before. .

Yes, something has changed. Texas is no longer part of the Big 12 conference and is no longer sharing in their revenues. The money from the Texas games has become conference money.

 

[UConn Dan]

Without also having the conference bylaws and TV contract in hand we would have to assume that Kyle (and others) are correct.

I'm inclined to think that the bylaws have a provision that all payments cease once a member leaves the conference though. Of course that's just my educated guess.

If Texas left for the B1G tomorrow there is still value for the B1G with the addition of all Texas away games under their umbrella.

 

[UConn Dan]

Here is one for you to read. http://www.charlotteobserver.com/2013/05/04/4022792/inside-the-deal-how-john-swofford.html

look inside the highlighted box to the right at the top. Here is the content:

What grant of rights means
The ACC is the fourth major conference – joining the Big Ten, Big 12 and Pac-12 – to enter into a grant of media rights agreement. In a grant of rights agreement, schools agree to surrender their television media rights to their conference for the duration of a television contract.

The ACC’s contract with ESPN, which beginning July 1 will pay schools an average of a little more than $20 million per year, runs through the 2026-27 academic year.

The grant of rights extends any time a new TV contract is renegotiated.

If a school left the ACC, its TV rights would remain with the ACC for the duration of the ACC’s TV contract. A departing school would potentially lose hundreds of millions of dollars in TV revenue, and would bring no TV revenue to another conference.

Additionally, any team leaving the ACC still is subject to the exit fee, which is three times the operating cost of the league budget (now more than $50 million).

​

Touche

 

[jostar1]

A grant of media rights provision means the schools have relinquished control of their TV rights for the duration of the ACC’s deal. If a school leaves for another conference before the 2026-27 season, it forfeits those earnings, a penalty that could be worth hundreds of millions of dollars.
http://hamptonroads.com/2013/04/update-acc-announces-grant-rights-deal

If a school were to leave the ACC, it would "forfeit its television revenue to the ACC through the 2026-27 academic year."
http://www.sportsbusinessdaily.com/Daily/Issues/2013/04/23/Colleges/ACC.aspx

Translation: if a school leaves the ACC before 2026-27 (which is when the league’s ESPN contract runs out), the ACC would retain that school’s media rights, which include media revenue. The ESPN deal alone is worth about $17 million per school per year.
http://www.foxsportswest.com/mobile...ccs-bid-to-secure-?blockID=894941&tagID=11007

The grant of rights guarantees if a school leaves for another league in the 14-year window, that school’s media rights -- including revenue -- for all home games would remain with the ACC and not its new conference.
http://espn.go.com/blog/acc/post/_/id/54678/sources-acc-presidents-approve-grant-of-rights

 

[BCINGYA]

A grant of media rights provision means the schools have relinquished control of their TV rights for the duration of the ACC’s deal. If a school leaves for another conference before the 2026-27 season, it forfeits those earnings, a penalty that could be worth hundreds of millions of dollars.
http://hamptonroads.com/2013/04/update-acc-announces-grant-rights-deal

If a school were to leave the ACC, it would "forfeit its television revenue to the ACC through the 2026-27 academic year."
http://www.sportsbusinessdaily.com/Daily/Issues/2013/04/23/Colleges/ACC.aspx

Translation: if a school leaves the ACC before 2026-27 (which is when the league’s ESPN contract runs out), the ACC would retain that school’s media rights, which include media revenue. The ESPN deal alone is worth about $17 million per school per year.
http://www.foxsportswest.com/mobile...ccs-bid-to-secure-?blockID=894941&tagID=11007

The grant of rights guarantees if a school leaves for another league in the 14-year window, that school’s media rights -- including revenue -- for all home games would remain with the ACC and not its new conference.
http://espn.go.com/blog/acc/post/_/id/54678/sources-acc-presidents-approve-grant-of-rights

That is the most clear concise breakdown of the GOR that I have seen. Very well done and documented. Please post it multiple times over the short term so it gets a good read. So many people claiming to have the formula(wrong) as gospel.

 

[jostar1]

The Big 12 By Laws clearly state that the departing school does not get any money from the GOR. Thanks to Hurtlocker on the WVU board for posting the following:

Here are the bylaws, key points:

Section 1.4.1 -
"Rights of Members. Except for any Member that has Withdrawn (as defined below), or is subject to Sanctions (as defined below) to the contrary with respect to any right, each Member, in its capacity as a member of the Conference, shall have the right and obligation, and only the right, to: (i) certify to the Conference the name of its Chief Executive Officer (as defined below) and have such individual automatically appointed to serve as a Director on the Board of Directors; (ii) receive distributions of Conference revenue in accordance with these Bylaws and the Rules; and (iii) participate in Conference athletic events in accordance with these Bylaws and the Rules."

SECTION 3

WITHDRAWAL AND SANCTIONS

3.1 Withdrawal. Notwithstanding the commitment of each Member set forth in Section 1.2.3 above, a Member may only withdraw from the Conference, cease to be a member in the Conference, or otherwise fail to fully participate in the activities of the Conference in contravention of its commitment to remain a Member in the Conference for such ninety-nine (99) year period (“Withdraws” or “Withdrawal”) by fully complying with the provisions of these Bylaws and by paying the Buyout Amount (as defined below). Each Member acknowledges and agrees that the Withdrawal of a Member and the payment of the Buyout Amount and implementation of the provisions of these Bylaws does not abrogate the obligations of such Withdrawing Member (as defined below) pursuant to that certain Amended and Restated Grant of Rights Agreement dated effective as of July 1, 2012, or any replacement or extension thereof or other agreement pursuant to which such Member grants the right to telecast some or all of its sporting events to the Conference (a “Grant of Rights Agreement”). The Grant of Rights Agreement which will remain in full force and effect as to such Withdrawing Member and the Withdrawing Member shall continue to be fully bound under the Grant of Rights Agreement after Withdrawal for the remainder of the term of any Grant of Rights Agreement as if it remained a Member of the Conference, but the Withdrawing Member shall not be entitled to payment of any amounts or any other benefits arising under the Grant of Rights Agreement after Withdrawal.

 

[kyleslamb]

That's great. Now again, without regard to what the Big 12 wants to do, the point still stands: a contract without consideration is unenforceable.

If you want to continue to hang yourself up on the details of what the Big 12 is trying to do, that's your prerogative. But if it comes to a member school actually litigating their television revenue being withheld, the Big 12 "says so" won't fly. There's going to be justification necessary as to what, exactly, a school received for their rights beyond their time as members.

 

[jostar1]

That's great. Now again, without regard to what the Big 12 wants to do, the point still stands: a contract without consideration is unenforceable.

If you want to continue to hang yourself up on the details of what the Big 12 is trying to do, that's your prerogative. But if it comes to a member school actually litigating their television revenue being withheld, the Big 12 "says so" won't fly. There's going to be justification necessary as to what, exactly, a school received for their rights beyond their time as members.

I never said that there was no consideration in the contract; there obviously is. The amended GOR agreement even refers to "the Telecast Rights Agreements, and other good and valuable consideration". You are not looking at the contract as a whole.

I think the court will "hang itself up" on those pesky "details" contained in the by-laws.

 

[The Funster]

I never said that there was no consideration in the contract; there obviously is. The amended GOR agreement even refers to "the Telecast Rights Agreements, and other good and valuable consideration". You are not looking at the contract as a whole.

I think the court will "hang itself up" on those pesky "details" contained in the by-laws.

And I think that even if there are outs, the cost to litigate will be exhorbitant, moreso for an individual instituition than for a conference. Would there eventually be a settlement? Of course, there usually is. However, the cost to arrive at that settlement makes a very effective deterrent for trying to escape a conference with a GOR. My only caveat would be if a school were to jump to a conference with the same network. That would be interesting.