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

[RMoore1999]

I give up. Everyone on this board is right. The GoR's have massive holes you could drive a truck through. They aren't really contracts at all. All these high pticed lawyers that drafted the actual agreements, and a lot of the posters on this board, don't know half as much as PJ and rmoore and Mr. Wonderful.

In fact, it turns out a content provider can sell their media rights as many times as they want under this new theory.

I have said:

• "Thanks" for explaining to everyone the educational background entitling one to charge in excess of a Grand per hour.
• I feed my children pet food (dry).

To quote PJ, "You seem to be unable to read."

But no worries, posters like you and HFD are in large part what make this place entertaining to visit from time to time.....

 

[whaler11]

Here is the thing about North Carolina. If they wanted to be in the Big 10 they would have just joined and not signed a GOR.

Just like Florida State - they want to be in the ACC. I'm pretty sure UConn fans know who Ron Cherry is.

 

[SouthronCross]

Here is the thing about North Carolina. If they wanted to be in the Big 10 they would have just joined and not signed a GOR.

Exactly right. The University has influence within the ACC. They would not give that up to go to the B1G.

Just like Florida State - they want to be in the ACC. I'm pretty sure UConn fans know who Ron Cherry is.

Has Ron Cherry actually officiated a UConn game? If he has, I am sure that he or a member of his crew have blown a few pretty obvious calls during the game...LOL.

 

[NEforceUConn]

Is

Has Ron Cherry actually officiated a UConn game? If he has, I am sure that he or a member of his crew have blown a few pretty obvious calls during the game...LOL.

Is Ron Cherry the one related to coach K?

 

[whaler11]

Has Ron Cherry actually officiated a UConn game? If he has, I am sure that he or a member of his crew have blown a few pretty obvious calls during the game...LOL.

LOL. Yeah there may have been one. South Carolina got beat up.

 

[SouthronCross]

LOL. Yeah there may have been one. South Carolina got beat up.

Whenever his crew misses an obvious call, or, makes one, that costs you a game, we call that 'geting Ron Cherry-ed.' LOL.

 

[SouthronCross]

Is Ron Cherry the one related to coach K?

My personal guess is no. Coach K is white, and, Ron Cherry is African-American. Not saying he isn't, but, I sort of doubt it...lol.

 

[Marty Jackson]

For the short team yes, I think they could stomach that (isn't the Big12 GOR up in like 2018 or is it 2022?).

And the reason is two-fold:

1) the B1G would get the rights to all of the road KU match-ups with B1G clubs (most importantly in bball) without having to pay KU anything. Don't you think having KU/OSU; KU/UM; KU/ILL in bball is worth letting the Big12 air home games for a few years?

2) by virtue of having the rights to all of KU's road games (at least when they play in conference) they can force BTN onto KS/MO cable networks well in advance of the GOR expiration.

And remember, the B1G would get all of the above without having to pay anything. This is why the protestation that the Big12 is more stable than the ACC makes no sense. The ACC has an exit fee, the Big12 does not.

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...

 

[DarthGrumpy]

I personally do not see UNC joining the B1G. Had the ACC collapsed last summer, Carolina was headed to the SEC. At least from what the Rams Club (UNC boosters) members I spoke to say. But, who really knows what might've happened.

If the ACC exploded today, yes, UNC would go to the SEC. If the ACC holds it together for 10 to 20 years. Not sure. With the flood of transplants from the Northeast and Midwest invading NC, especially Charlotte and RTP, the state may look more ‘blue’ by then and lean towards the B1G.

 

[SouthronCross]

If the ACC exploded today, yes, UNC would go to the SEC. If the ACC holds it together for 10 to 20 years. Not sure. With the flood of transplants from the Northeast and Midwest invading NC, especially Charlotte and RTP, the state may look more ‘blue’ by then and lean towards the B1G.

Good post, and, very fair points.

It'd be a battle, for sure. I am certain that the faculty and research arm of the University would prefer the stronger academics of the B1G. But, the rank and file of the fanbase would want to remain in the more regionally comfortable SEC. That'd be my personal preference.

Don't misunderstand me, membership in the B1G would a prise in and of itself. Institutionally speaking, UNC has more in common with those institutions. But, the SEC would mean shorter trips to away games, and, more of our fans could attend. Not to mention, cut down on travel for our Olympic sport athletes.

 

[nelsonmuntz]

It was high priced lawyers that approved these agreements as well. They are no dummies either. Nobody said breaking the contract would be clear cut and easy, but all contracts have provisions for termination. ESPN or FOX, the conference, and each school likely has termination clauses. When invoked, the departing party would be subject to adhearing to additional clauses for media rights (ie home games remain with network) or monetary damages or a combination of both. Because no network wants to televise a competing conference's games, a network will sue for monetary damages. Just like every other contract that exists, it is always about the money.

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?

Here is what would happen if Kansas tried to leave the Big 12 for the Big 10. They would not have the media rights to any home games, period. They would also have created damages to every Big 12 school that was expecting Kansas to visit. If you take the per school ($22-24/year) and divide by 7 homes games, each home game is worth about $3.5MM a year plus gate, which may be another $3? Let's round to $6MM to be conservative. In that situation, Kansas would get zero revenue and owe the Big 12 $24MM a year in damages if it left. Now assume that the Big 12, as a consequence for tortious interference of contract for inducing Kansas to leave the Big 12 (a layup case by the way), would be responsible for treble damages. In other words, the Big 10 and Kansas would have to pay the Big 12 $100 million a year, and not get the rights to any Kansas home games for the BTN in order to get Kansas in the league.

That is the Big 12's opening position based on the contract. So will the "GOR's don't matter" crowd walk me through how to beat a GOR.

edit: for those that think it is easy to walk out on a media sale, just watch a few reruns of "Behind the Music". It won't take long to find some musician who thought they could walk out on their contract for some number of future albums, and then proceeded to light their music career on fire fighting it out and losing in court. Boston and George Michael are two that jump to mind. George Michael managed to recover and still does well on tour. The members of Boston play theme parks. Billy Joel managed to get out of a bad contract when a record exec threatened to break a man's legs. So there is that strategy.

 

[nelsonmuntz]

I only went to a Top 25ish law school and a Top 20ish (though admittedly it was ranked much worse back then -- not even #1 in NEngland) state public univ for undergrad, so now I finally understand why I couldn't crack $400 per hour prior to leaving private practice.

Mystery solved!! Thanks Nelson!

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.

 

[SubbaBub]

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.

If we can all agree that the GOR can be beat only by briefcases full of cash, then can we stop talking about it?

Yes, a judge will uphold the contract provisions, but it will not hold a team from leaving if the ransom is paid.

Sent from my MB860 using Tapatalk 2

 

[UConnJim]

If we can all agree that the GOR can be beat only by briefcases full of cash, then can we stop talking about it?

Yes, a judge will uphold the contract provisions, but it will not hold a team from leaving if the ransom is paid.

Sent from my MB860 using Tapatalk 2

Agreed. GORs can be beaten by briefcases full of cash. They could also be beaten by any outs in the contract. Since we don't know if there are any outs or what they are, we can only assume the cash option for now.

 

[businesslawyer]

[quote="nelsonmuntz, post: 655146, member: 833"

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.[/quote]

Everything that can be said about the enforceability of GORs, without at the very least seeing the contracts, has been said. But Nelson's statement above is 1000% wrong. I, and other good lawyers, put clauses in contracts all the time that may or may not be enforceable, but where the calculation is made that the best way to deal with the situation is to put something in where the uncertainty may scare the other side even if your side has uncertainty as well. That's just part of how things get done.

 

[CL82]

Might not use the word scare, but it never hurts to show that an issue was negotiated and part of an agreement.

 

[UPitt]

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]

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]

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.

 

[UPitt]

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]

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]

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]

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.

 

[Marty Jackson]

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]

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?

 

[clmssun]

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]

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]

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.

 

[Excalibur]

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.

 

[clmssun]

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...)