ESPN contract with ACC only guaranteed until 2027

[Patman]

I don’t believe that whoever you heard was telling the truth. These are public institutions that can’t just sign multi million dollar contracts and then not have a record of it.

It blows my mind that not only did this happen, but no one ever raised a red flag about the fact that the schools didn’t have the contracts. Hundreds, or possibly thousands of people had to know about this situation. There are auditors and inspectors that do reviews in the ordinary course of their jobs that had to have flagged this situation.

Something doesn’t hold together in this story.

And yet nobody holds a copy outside the central location. They all knew it was in their interest not to or not to upset the apple cart.

 

[Patman]

I believe CTFAN4LIFE is correct from all I have read and heard. It is the multi-media agreement with ESPN that is the double secret document held at the ACC's HQ. The Athletic reports that the original GoR (2013) is very similar to the current one. It probably contains only minor changes such as eliminating references to "Current" and "Accepted" members (under the new agreement all schools would be current members) and, obviously, the term of the agreement would change.

The original document was 16 pages long, but the agreement itself was just three and a half pages. The rest of the document consisted of signature pages - one for the ACC commissioner and one each for the member schools. The copy I got from The Athletic has the UNC signature page signed. Also, this document refers to other documents that are not readily available so the GoR alone isn't that useful without the documents referenced below.

From 'The Recitals' on page one of the 2013 GoR:

WHEREAS, as a condition to the agreement of ESPN to offer additional consideration to​

the Conference as part of a further amendment to the Amended ESPN Agreement (the​

"Additional Amendment"; the Additional Amendment, together with the Amended ESPN​

Agreement, collectively, the "ESPN Agreement"), each of the Member Institutions is required to,​

and desires to, irrevocably grant to the Conference, and the Conference desires to accept from​

each of the Member Institutions, those rights granted herein; and​

I hope this helps . . . but I don't think it does.

I mean its more than I've seen

 

[SoFla Steve]

I mean its more than I've seen

The article was more informative than the GoR document.

Staples: How would a school challenge a grant of rights? We asked a lawyer

 

[nelsonmuntz]

And yet nobody holds a copy outside the central location. They all knew it was in their interest not to or not to upset the apple cart.

There might be some big central fact that impacts the legality of this whole situation that none of the sportswriters covering it have picked up on. Otherwise, this situation of everyone just accepting they are party to a multi-million dollar agreement that most of the people involved have never seen seems crazy.

 

[pepband99]

The contract is not favorable for ESPN in the out years, unless you think cable is making a comeback.

For once, you're spot on. ESPN is hemorrhaging subscribers. Maybe they can stem the tide with their own OTT service coming "real soon now," but it won't keep pace with the escalating payments.

Think of it in reverse: The only reason you put a clause like this in, is to protect yourself from material changes making everything less favorable.

 

[Patman]

There might be some big central fact that impacts the legality of this whole situation that none of the sportswriters covering it have picked up on. Otherwise, this situation of everyone just accepting they are party to a multi-million dollar agreement that most of the people involved have never seen seems crazy.

No, the crazy part is assuming that the people who were party to the document at the time never read it. They did. They'd be insane not to. Now, people move on and so forth. Realty is it wasn't a secret document to the signees when it was signed. Now, the nature of its reviewable nature is nuts but this was the agreement. What you're really saying is the institution shouldn't be bound by an agreement they made in the past because the members of the institution changes.

 

[nelsonmuntz]

No, the crazy part is assuming that the people who were party to the document at the time never read it. They did. They'd be insane not to. Now, people move on and so forth. Realty is it wasn't a secret document to the signees when it was signed. Now, the nature of its reviewable nature is nuts but this was the agreement. What you're really saying is the institution shouldn't be bound by an agreement they made in the past because the members of the institution changes.

It is more complicated than that. Every university is audited, and those auditors need to review all material contracts, of which this one would certainly qualify. How did every ACC university convince their auditors not to review the contract?

There are teams responsible for budgeting and cash management. They apparently have never seen this key contract either.

In other words, there are thousands of people who knew about this insane arrangement where schools are bound by a contract they don’t actually have, and no one said anything? They all just accepted it? Everyone?

 

[pepband99]

It is more complicated than that. Every university is audited, and those auditors need to review all material contracts, of which this one would certainly qualify. How did every ACC university convince their auditors not to review the contract?

There are teams responsible for budgeting and cash management. They apparently have never seen this key contract either.

In other words, there are thousands of people who knew about this insane arrangement where schools are bound by a contract they don’t actually have, and no one said anything? They all just accepted it? Everyone?

As stupid as this sounds, it's probably because it's not "their" contract.

Schools contract with the conference for TV rights.

The conference contracts with ESPN to broadcast, and that includes the GOR enticement to sweeten the deal.

IANAL, but it's probably no more complicated than that.

 

[FfldCntyFan]

It is more complicated than that. Every university is audited, and those auditors need to review all material contracts, of which this one would certainly qualify. How did every ACC university convince their auditors not to review the contract?

There are teams responsible for budgeting and cash management. They apparently have never seen this key contract either.

In other words, there are thousands of people who knew about this insane arrangement where schools are bound by a contract they don’t actually have, and no one said anything? They all just accepted it? Everyone?

I imagine that the work around here is that the auditors were able to review the contract(s) in the ACC offices (but not allowed to retain copies) and a confidentiality agreement was signed (standard in most audits, normally only breakable by potentially illegal activities) to keep the information private.

I'm not sure however what would happen if a public institution received an FOI request pertaining to audited information. The state could demand copies of notes and work papers. There may be a good amount of gray area on what the confidentiality agreement can and cannot cover.

Regardless, at some point the GOR agreement will become public information.

 

[Rockford]

I imagine that the work around here is that the auditors were able to review the contract(s) in the ACC offices (but not allowed to retain copies) and a confidentiality agreement was signed (standard in most audits, normally only breakable by potentially illegal activities) to keep the information private.

I'm not sure however what would happen if a public institution received an FOI request pertaining to audited information. The state could demand copies of notes and work papers. There may be a good amount of gray area on what the confidentiality agreement can and cannot cover.

Regardless, at some point the GOR agreement will become public information.

And the ACC Contracts with Disney / ESPN. The ACC will be backing down and settling with a public institution. No way they play hardball as they're trying to settle ESPN. Public relation nigthmare awaits. Careful doing business with public entities partially funded by taxpayers.

 

[UConnJim]

A couple of points on ESPN. ESPN has managed to keep revenues flat recently with the uptake of ESPN+ and the ACC Network to offset cord cutting. But, ESPN+ subscribers and the average revenue per subscriber have flatlined and the ACCN revenues flatlined as well, but will get a boost for a year when the 3 new members join and then they will decline due to cord cutting. So how did ESPN managed to grow earnings last year? Cost reduction. Guess what their biggest cost reduction was from their Q4 earnings report:

"A decrease in programming and production costs reflecting lower college football costs attributable to the non-renewal of certain contracts."

In other words, ESPN lost Big 10 football, but revenues remained flat because they primarily come from the bundle and costs went down leading to an increase in earnings.

Why is the above important? We now know that ESPN has the option to extend the ACC past 2027, but they haven't yet which means the long term viability of the current ACC is in the hands of ESPN. Given cord cutting and ESPN trying to increase earnings, I don't think it's a given ESPN will extend the ACC. And, ESPN has to find money to bid for the NBA contract and the CFP contract which are more important than the ACC to ESPN. That is why ESPN may favor moving some of the brand name schools out of the ACC to the SEC even at higher cost, move some schools from the ACC to Big 12 at the same cost, have a couple depart for the Big 10 to eliminate their cost, and let the rest of the ACC become homeless like Washington St. and Oregon St. generating an overall cost savings for ESPN with no revenue impact. In fact, having FSU and Clemson play an SEC schedule would most likely increase advertising revenues when shown on TV vs playing an ACC schedule. And, which network do you think can more successfully transition to a DTC model, the SECN or the ACCN? I think the SECN.

 

[CL82]

A couple of points on ESPN. ESPN has managed to keep revenues flat recently with the uptake of ESPN+ and the ACC Network to offset cord cutting. But, ESPN+ subscribers and the average revenue per subscriber have flatlined and the ACCN revenues flatlined as well, but will get a boost for a year when the 3 new members join and then they will decline due to cord cutting. So how did ESPN managed to grow earnings last year? Cost reduction. Guess what their biggest cost reduction was from their Q4 earnings report:

"A decrease in programming and production costs reflecting lower college football costs attributable to the non-renewal of certain contracts."

In other words, ESPN lost Big 10 football, but revenues remained flat because they primarily come from the bundle and costs went down leading to an increase in earnings.

Why is the above important? We now know that ESPN has the option to extend the ACC past 2027, but they haven't yet which means the long term viability of the current ACC is in the hands of ESPN. Given cord cutting and ESPN trying to increase earnings, I don't think it's a given ESPN will extend the ACC. And, ESPN has to find money to bid for the NBA contract and the CFP contract which are more important than the ACC to ESPN. That is why ESPN may favor moving some of the brand name schools out of the ACC to the SEC even at higher cost, move some schools from the ACC to Big 12 at the same cost, have a couple depart for the Big 10 to eliminate their cost, and let the rest of the ACC become homeless like Washington St. and Oregon St. generating an overall cost savings for ESPN with no revenue impact. In fact, having FSU and Clemson play an SEC schedule would most likely increase advertising revenues when shown on TV vs playing an ACC schedule. And, which network do you think can more successfully transition to a DTC model, the SECN or the ACCN? I think the SECN.

On the other hand ACC is inexpensive content to ESPN. There's not a doubt in my mind that they will weigh the scenarios you're talking about, namely cherry picking a few ACC teams and moving them to the SEC, but in the end it may be more financially worthwhile for them to leave the existing inexpensive contract in place until 2037.

 

[UConnJim]

On the other hand ACC is inexpensive content to ESPN. There's not a doubt in my mind that they will weigh the scenarios you're talking about, namely cherry picking a few ACC teams and moving them to the SEC, but in the end it may be more financially worthwhile for them to leave the existing inexpensive contract in place until 2037.

Even thought the ACC may be perceived as cheap content, ESPN has plenty of content to fill their slots. With a 20 team SEC, they could have anywhere from 10 to 20 football games per week to show on ABC/ESPN/ESPN2/SECN. Throw in Big 12 content as well as American/CUSA/MAC/Sun Belt and ESPN would not really miss the ACC content. And, most of the top ACC brands would either go to the SEC or Big 12.

 

[CL82]

Even thought the ACC may be perceived as cheap content, ESPN has plenty of content to fill their slots. With a 20 team SEC, they could have anywhere from 10 to 20 football games per week to show on ABC/ESPN/ESPN2/SECN. Throw in Big 12 content as well as American/CUSA/MAC/Sun Belt and ESPN would not really miss the ACC content. And, most of the top ACC brands would either go to the SEC or Big 12.

OK, but they also have ESPNU and ESPN+ to fill. Keep in mind too that ESPN broadcasts year-round, not just during the football season. Particularly during the basketball season, the ACC provides good content at a cost-effective price.

 

[nelsonmuntz]

Even thought the ACC may be perceived as cheap content, ESPN has plenty of content to fill their slots. With a 20 team SEC, they could have anywhere from 10 to 20 football games per week to show on ABC/ESPN/ESPN2/SECN. Throw in Big 12 content as well as American/CUSA/MAC/Sun Belt and ESPN would not really miss the ACC content. And, most of the top ACC brands would either go to the SEC or Big 12.

Time slots only matter in cable.

ESPN would need a critical mass of content for customers to justify subscriptions, and they would need enough variety so that SEC couldn't just go DTC. That said, I see ESPN changing the nature of their broadcast agreements soon. The days of big guarantees are coming to an end.

 

[UConnJim]

OK, but they also have ESPNU and ESPN+ to fill. Keep in mind too that ESPN broadcasts year-round, not just during the football season. Particularly during the basketball season, the ACC provides good content at a cost-effective price.

Think AAC/Sun Belt/CUSA/MAC for ESPNU and ESPN+. And, Big 12 games are shown as well. Plus, the new SEC contract had a clause that some SEC football games will be shown on ESPN+.

 

[Patman]

I imagine that the work around here is that the auditors were able to review the contract(s) in the ACC offices (but not allowed to retain copies) and a confidentiality agreement was signed (standard in most audits, normally only breakable by potentially illegal activities) to keep the information private.

I'm not sure however what would happen if a public institution received an FOI request pertaining to audited information. The state could demand copies of notes and work papers. There may be a good amount of gray area on what the confidentiality agreement can and cannot cover.

Regardless, at some point the GOR agreement will become public information.

As I said. These people knew what they were doing when they set up the GOR rules. That was the whole purpose.

 

[NE Football]

Even thought the ACC may be perceived as cheap content, ESPN has plenty of content to fill their slots. With a 20 team SEC, they could have anywhere from 10 to 20 football games per week to show on ABC/ESPN/ESPN2/SECN. Throw in Big 12 content as well as American/CUSA/MAC/Sun Belt and ESPN would not really miss the ACC content. And, most of the top ACC brands would either go to the SEC or Big 12.

You are completely misinformed regarding content. G5 conferences are fine for Tuesday and Wednesday nights, but they don’t come close to the viewers that the ACC gets. ESPN is not trading ACC content for G5 content.

 

[Hoophound]

You are completely misinformed regarding content. G5 conferences are fine for Tuesday and Wednesday nights, but they don’t come close to the viewers that the ACC gets. ESPN is not trading ACC content for G5 content.

The ACC, without its top 4+ brands isn’t going to be getting ratings. Memphis will pull in more viewers than Wake or BC.

 

[UConnJim]

You are completely misinformed regarding content. G5 conferences are fine for Tuesday and Wednesday nights, but they don’t come close to the viewers that the ACC gets. ESPN is not trading ACC content for G5 content.

If the top brands from the ACC leave for other ESPN properties, they will still show their games and increase content for the other conferences. In fact, FSU playing an SEC schedule would get better ratings than playing an ACC schedule. Most of the ACC ratings are driven by FSU/Clemson/Notre Dame and by getting prime TV spots on ESPN/ABC. Give BC an AAC schedule with games on ESPN2/ESPNU/ESPN+ and their TV ratings would collapse. Plus, the Big 12 has comparable ratings as the ACC even after extracting Texas and Oklahoma. Look at week 15 and compare ratings for some games:

Iowa St./Kansas St. 3.29 million FOX
BYU/Oklahoma St. 2.89 million ABC
UTSA/Tulane 1.72 million ABC (right after the BC/Miami game)
Miami/BC 1.43 million ABC

 

[NE Football]

If the top brands from the ACC leave for other ESPN properties, they will still show their games and increase content for the other conferences. In fact, FSU playing an SEC schedule would get better ratings than playing an ACC schedule. Most of the ACC ratings are driven by FSU/Clemson/Notre Dame and by getting prime TV spots on ESPN/ABC. Give BC an AAC schedule with games on ESPN2/ESPNU/ESPN+ and their TV ratings would collapse. Plus, the Big 12 has comparable ratings as the ACC even after extracting Texas and Oklahoma. Look at week 15 and compare ratings for some games:

Iowa St./Kansas St. 3.29 million FOX
BYU/Oklahoma St. 2.89 million ABC
UTSA/Tulane 1.72 million ABC (right after the BC/Miami game)
Miami/BC 1.43 million ABC

If ESPN actually shared your view they would not have paid equal shares for SMU, Stanford & Cal. They could have easily killed the expansion by telling the ACC that they would not exercise their option to extend the contract. Instead they chose to pay the ACC another 70 plus million per year.

 

[UConnJim]

If ESPN actually shared your view they would not have paid equal shares for SMU, Stanford & Cal. They could have easily killed the expansion by telling the ACC that they would not exercise their option to extend the contract. Instead they chose to pay the ACC another 70 plus million per year.

It was in the ACC's contract with ESPN to pay for expansion. And, the ACC needs 15 schools to keep their ESPN contract in good standing which was one of the motivators to expand now instead of waiting for a possible conference move by one or more of their current schools.

ESPN can extend the ACC contract at any time, yet they haven't. If the ACC media deal is a great bargain for ESPN, why haven't they extended the contract?

 

[Rufus]

It was in the ACC's contract with ESPN to pay for expansion. And, the ACC needs 15 schools to keep their ESPN contract in good standing which was one of the motivators to expand now instead of waiting for a possible conference move by one or more of their current schools.

ESPN can extend the ACC contract at any time, yet they haven't. If the ACC media deal is a great bargain for ESPN, why haven't they extended the contract?

Exactly. ESPN let the first deadline pass without extending the contract. The ACC Commissioner - on his own and without the required approval of league members - extended the deadline for ESPN to decide if they want to extend the contract. And even after that, still no ESPN extension.

 

[FfldCntyFan]

Exactly. ESPN let the first deadline pass without extending the contract. The ACC Commissioner - on his own and without the required approval of league members - extended the deadline for ESPN to decide if they want to extend the contract. And even after that, still no ESPN extension.

I will ask again, please provide evidence that the bolded is true.

 

[Chin Diesel]

The ACC, without its top 4+ brands isn’t going to be getting ratings. Memphis will pull in more viewers than Wake or BC.

Or at least a close enough difference that paying a premium for WFU doesn't make sense.