OT: Florida State to sue ACC over GOR

[upstater]

Most of the arguments about growing rights fees seem to ignore this thing called “streaming” which is transforming entertainment. I will not rehash every point I have made in the past, but I do believe that every conference is on its last massive linear contract, ever. They are all downhill from here.

Also, ESPN is for sale. Robert Iger, who knows a lot more about trends in the entertainment industry than anyone in this thread, wants out of ESPN. What should that tell us about the future of a linear based sports network?

That ACC contract goes from being mediocre to pretty good for the ACC in the 2030’s. The corollary is also true for ESPN. The contract is pretty good for ESPN right now, but it gets worse every year as people continue to cut the cord. Take a network that is for sale and a tv contract that keeps getting worse for ESPN, and you have a very strong incentive for whoever the next owner of ESPN is to try to get out of or renegotiate the ACC agreement for 2027.

ESPN has a well documented track record of blowing up a league (Big East, PAC 12) when it is in ESPN’s interest to do so. It appears that FSU is the first ACC school to face that reality and try to do something about it, and it certainly won’t be the last.

I agree with most of what you're saying here, but if you're contracted to give me a lot of money from 2027-2036, I'm going to do my best to make sure you can't get out of it.

ESPN has roped themselves into a noose on this one. It's easy to break up a conference when the exit fees and the grant of rights are within a much smaller range, but when they extend so far into the future? It's an enormous amount of money that creates huge incentives for the remaining schools. ESPN has never faced this before.

Is it possible that ESPN can talk to 4 schools TOGETHER about leaving for the B12? Yes. But that would be an incredibly risky gamble given the huge stakes. When there's a pittance in the conference coffers, schools are much less willing to sue. When there's an incredible amount there, and when ESPN has already signaled they're getting out of the business of megacontracts, you're going to have legal blowback finally against ESPN.

Simply put, the deal ESPN made (huge money for extended period of TV rights) was too big for both ESPN and for the ACC. (It's great for the likes of Syracuse and BC though).

 

[billybud]

The problem is that the ACC represented to its members that the ESPN contract was to 2036. It is not. ESPN has the option, after 2027, to extend to 2036. But not an obligation.

 

[upstater]

The problem is that the ACC represented to its members that the ESPN contract was to 2036. It is not. ESPN has the option, after 2027, to extend to 2036. But not an obligation.

I thought the opt out for ESPN was if members left. That's what it says when someone quoted it above.

Is that not true?

 

[nelsonmuntz]

I agree with most of what you're saying here, but if you're contracted to give me a lot of money from 2027-2036, I'm going to do my best to make sure you can't get out of it.

ESPN has roped themselves into a noose on this one. It's easy to break up a conference when the exit fees and the grant of rights are within a much smaller range, but when they extend so far into the future? It's an enormous amount of money that creates huge incentives for the remaining schools. ESPN has never faced this before.

Is it possible that ESPN can talk to 4 schools TOGETHER about leaving for the B12? Yes. But that would be an incredibly risky gamble given the huge stakes. When there's a pittance in the conference coffers, schools are much less willing to sue. When there's an incredible amount there, and when ESPN has already signaled they're getting out of the business of megacontracts, you're going to have legal blowback finally against ESPN.

Simply put, the deal ESPN made (huge money for extended period of TV rights) was too big for both ESPN and for the ACC. (It's great for the likes of Syracuse and BC though).

Every report I have read is that ESPN has an OPTION to extend past 2027. There does not appear to be any trigger for that option, it is just there.

In 2023 the media payments to the ACC are below market which makes that contract is good for ESPN. As the contracted payments escalate, people cut the cord, and the cable bundle comes unwound, that contract is going to become a horror show for ESPN. Months ago I said ESPN was going to try to get out of the back end of the ACC contract, and that was before we knew there was an option for 2027 on.

ESPN is on the block, and has been for at least a year. Analysts are crapping all over it and Disney stock went up about 15% when the Mouse House released summary ESPN financials in October to show it was serious about selling the worldwide leader. Wall Street does not like ESPN. ESPN's business model of extortionary carriage fees on people who don't watch ESPN was great while it lasted, but is as dead as a business model can be.

Now raise your hand if you think ESPN wants any part of an escalating media rights contract until 2036 that is predicated on a cable bundle that may not exist in 24 months. Given that the ACC will not even share the contract with its own members, the contract is likely to be even uglier than that for the ACC. I would not be surprised if ESPN has a unilateral renegotiation period, which it will use to tear the league apart.

ESPN has a well-tested model for breaking up a league. Take the two marquee programs, and then keep picking away 1 or 2 programs at a time until the league collapses and can't get a new contract, at which point ESPN offers peanuts to whatever is left.

 

[nelsonmuntz]

The problem is that the ACC represented to its members that the ESPN contract was to 2036. It is not. ESPN has the option, after 2027, to extend to 2036. But not an obligation.

Maybe. The better way out for FSU is to go to ESPN and convince them to pay the SEC to take a few ACC schools, and then refuse to exercise the option on the media agreement. At that point, the GOR would have no value to the ACC since there is no media contract, therefore, even if the ACC won a lawsuit against FSU and whoever else left, there would be no damages. I bet the ACC's GOR has some loose language in it, which is why they won't let anyone take a copy or even transcribe the contract verbatim. There are probably quite a few ways out of this for FSU.

I have never even heard of parties to a contract not having the right to a copy of the contract, but FSU may be able to invalidate the agreement on that basis alone. There is no way to tell if the ACC has unilaterally amended the contract if there are not other copies with the parties to the contract.

My prediction: FSU wins easily in Florida court, and then has a better than 50/50 shot in federal court when the Florida ruling is appealed.

 

[nelsonmuntz]

I am not predicting this will happen, but there is a realistic scenario where BCU, Syracuse, and Pitt need a life raft, and come to the Big East looking for help.

FSU, Clemson, Miami, UNC, Virginia and probably Georgia Tech are going to be saved. Not clear what happens to everyone else in that scenario.

 

[upstater]

Every report I have read is that ESPN has an OPTION to extend past 2027. There does not appear to be any trigger for that option, it is just there.

Someone pasted the link here.

I agree that if there are no triggers, then ESPN will not need to do much, and furthermore, a school like FSU can just negotiate its rights.

However, if there is a trigger, then there's huge incentive to prevent the top schools from moving freely, and there's nothing ESPN can do at that point to break up the conference. The other schools will hold to the contract to 2036 with an iron fist.

Here's why I think this whole discussion about 2027 is moot. The grant of rights are held by the conference until 2036. They hold the rights. Nothing changes here UNLESS you believe that ESPN does not want FSU or Clemson at the current price they're paying.

The only thing that would make me think that is that the addition of SMU, Cal and Stanford has ESPN regretting this deal. In which case, the other ACC schools will have shot themselves in the foot.

FSU is locked in until 2036; it doesn't really matter what ESPN does.

 

[AllHusky]

I am not predicting this will happen, but there is a realistic scenario where BCU, Syracuse, and Pitt need a life raft, and come to the Big East looking for help.

FSU, Clemson, Miami, UNC, Virginia and probably Georgia Tech are going to be saved. Not clear what happens to everyone else in that scenario.

Common sense and history are in your corner. Much has happened in CR that no one had ever envisioned. Why wouldn't the scenario in the second paragraph occur, no matter what lawyers say? Common sense tells you that sooner or later BC, Syr and maybe Pitt are cooked.

 

[nelsonmuntz]

Someone pasted the link here.

I agree that if there are no triggers, then ESPN will not need to do much, and furthermore, a school like FSU can just negotiate its rights.

However, if there is a trigger, then there's huge incentive to prevent the top schools from moving freely, and there's nothing ESPN can do at that point to break up the conference. The other schools will hold to the contract to 2036 with an iron fist.

Here's why I think this whole discussion about 2027 is moot. The grant of rights are held by the conference until 2036. They hold the rights. Nothing changes here UNLESS you believe that ESPN does not want FSU or Clemson at the current price they're paying.

The only thing that would make me think that is that the addition of SMU, Cal and Stanford has ESPN regretting this deal. In which case, the other ACC schools will have shot themselves in the foot.

FSU is locked in until 2036; it doesn't really matter what ESPN does.

If ESPN doesn't exercise its option for 2027, and I don't think they will, then the GOR will effectively be over.

The fact that the ACC leadership won't let member schools have a copy of the agreements is insane, and a huge red flag about those agreements. It is a safe bet that there are one or more problems in them for the ACC.

I think Iger and Disney gets something to happen with ESPN in the first half of the year, and I think Private Equity may step into the breach. They have mountains of money, and ESPN is still cash rich. The big PE firms' return hurdles are pretty low, and they can get a lot of money to work on a high profile deal that will not faceplant on them if managed correctly. It won't be much fun for the content providers if that happens because PE will do everything it can to drive down costs. If college programs thought ESPN was tough to deal with before, they have not seen anything yet.

 

[Rufus]

Yeah, I don’t see that happening. Maybe a decade ago but I don’t think they bring enough to keep what the Big10 has with their contract. I believe there are 4 schools that can potentially can break even on their media deal and those are FSU, ND, UNC and maybe Clemson. That’s it. No one else moves the needle. The SEC might be able to bring in UVA or VT as well, but I’m not even sure on either of those schools.

Greg Flugaur said that FOX prefers Miami over Clemson because of the demographics it can sell to advertisers.

Fox preferences would be:

1. Notre Dame
2. North Carolina
3. Miami
4. Clemson

 

[FfldCntyFan]

The problem is that the ACC represented to its members that the ESPN contract was to 2036. It is not. ESPN has the option, after 2027, to extend to 2036. But not an obligation.

Are you sure that the conference members did not know that the contract was through 2027 with an option for ESPN to extend to 2036?

I haven't seen anything by anyone supporting this and in all candor, if this was true there would have been some complaints (and likely legal action) long before now by a minimum of three or four members of the conference. We are nearly a decade after the fact (and a few years after the option deadline was extended). If things were truly as FSU is currently attempting to represent, the lawsuits would have begun years ago.

 

[The Yakk]

I am not predicting this will happen, but there is a realistic scenario where BCU, Syracuse, and Pitt need a life raft, and come to the Big East looking for help.

FSU, Clemson, Miami, UNC, Virginia and probably Georgia Tech are going to be saved. Not clear what happens to everyone else in that scenario.

Syracuse, Pitt, Wake, NC State, Duke, and even SMU, Stanford, and Cal are all welcome. I bet a nice Cali trip every year would even help our basketball recruiting.

BCU can go to the Patriot League.

 

[John]

Syracuse, Pitt, Wake, NC State, Duke, and even SMU, Stanford, and Cal are all welcome. I bet a nice Cali trip every year would even help our basketball recruiting.

BCU can go to the Patriot League.

would be a nice all-sports league.

 

[Rufus]

Are you sure that the conference members did not know that the contract was through 2027 with an option for ESPN to extend to 2036?

I haven't seen anything by anyone supporting this and in all candor, if this was true there would have been some complaints (and likely legal action) long before now by a minimum of three or four members of the conference. We are nearly a decade after the fact (and a few years after the option deadline was extended). If things were truly as FSU is currently attempting to represent, the lawsuits would have begun years ago.

Yes, 2027 is the new info that came out in FSU meeting last week. The ACC commissioner illegally granted ESPN an extension to extend its option past 2027. ESPN still hasn’t exercised that option and may have no plans to do so. Conference bylaws require the ACC schools to vote on offering a deadline extension to ESPN and this did not happen. This is definitely a legal loophole to get out.

 

[billybud]

Are you sure that the conference members did not know that the contract was through 2027 with an option for ESPN to extend to 2036?

I haven't seen anything by anyone supporting this and in all candor, if this was true there would have been some complaints (and likely legal action) long before now by a minimum of three or four members of the conference. We are nearly a decade after the fact (and a few years after the option deadline was extended). If things were truly as FSU is currently attempting to represent, the lawsuits would have begun years ago.

And you won't...FSU's lawyers could only recently review the ESPN contract (after demanding access) by travelling to North Carolina and reviewing it while under watch...no phones/pictures or note taking of the verbage was allowed.

But FSU lawyers saw the clause and included it in the lawsuit...it was the deal breaker...

Now, the ACC is asking the court to not make the ESPN contract public because it is a "trade secret"...

 

[billybud]

Has any ESPN contract with any conference been leaked to the internet in entirety? Or just generalities ?

 

[Kolumbo]

Syracuse, Pitt, Wake, NC State, Duke, and even SMU, Stanford, and Cal are all welcome. I bet a nice Cali trip every year would even help our basketball recruiting.

BCU can go to the Patriot League.

Privates. Publics. Public State-related. cuse. It would be a nice conference for us...

 

[CL82]

BCU can go to the Patriot League.

Assumes that the will have them. That's not guaranteed.

 

[nelsonmuntz]

And you won't...FSU's lawyers could only recently review the ESPN contract (after demanding access) by travelling to North Carolina and reviewing it while under watch...no phones/pictures or note taking of the verbage was allowed.

But FSU lawyers saw the clause and included it in the lawsuit...it was the deal breaker...

Now, the ACC is asking the court to not make the ESPN contract public because it is a "trade secret"...

How can a FOIA entity sign a media deal that is a trade secret?

There must be a train wreck for the ACC given how they are treating the contract. How did every lawyer and school administrator involved let this bullspit of the secret contract last this long?

 

[noeynox]

How can a FOIA entity sign a media deal that is a trade secret?

There must be a train wreck for the ACC given how they are treating the contract. How did every lawyer and school administrator involved let this bullspit of the secret contract last this long?

This has been my argument since this thing started. College presidents, i get it, but surely they have counsel for these matters. Who the hell do they hire?

 

[dayooper]

This has been my argument since this thing started. College presidents, i get it, but surely they have counsel for these matters. Who the hell do they hire?

Most college presidents know nothing of how all of this works. Besides their chosen academic study, they know fundraising and do PR, that’s about it. Most don’t understand athletics, let alone the intricacies of media deals. Throw in their egos and you have it.

 

[upstater]

If ESPN doesn't exercise its option for 2027, and I don't think they will, then the GOR will effectively be over.

The fact that the ACC leadership won't let member schools have a copy of the agreements is insane, and a huge red flag about those agreements. It is a safe bet that there are one or more problems in them for the ACC.

I think Iger and Disney gets something to happen with ESPN in the first half of the year, and I think Private Equity may step into the breach. They have mountains of money, and ESPN is still cash rich. The big PE firms' return hurdles are pretty low, and they can get a lot of money to work on a high profile deal that will not faceplant on them if managed correctly. It won't be much fun for the content providers if that happens because PE will do everything it can to drive down costs. If college programs thought ESPN was tough to deal with before, they have not seen anything yet.

I understand that a conference without a TV deal effectively has no GOR, but in this situation, is it possible the schools gave their rights over to the ACC because of the ACC network? Who owns the network?

This is why I think 2027 is irrelevant

 

[upstater]

Most college presidents know nothing of how all of this works. Besides their chosen academic study, they know fundraising and do PR, that’s about it. Most don’t understand athletics, let alone the intricacies of media deals. Throw in their egos and you have it.

College presidents spend 75% of their time on budgets. Granted, they are ill-equipped. But they have accountants around them 3/4rs of every day predicting the ramifications of any adjustment. This is their daily life and it's why so many of them burnout.

 

[upstater]

How can a FOIA entity sign a media deal that is a trade secret?

There must be a train wreck for the ACC given how they are treating the contract. How did every lawyer and school administrator involved let this bullspit of the secret contract last this long?

Do the colleges have private foundations running athletics? This happens in many states where the foundation (i.e. endowment wing) of public universities hides basic information.

 

[upstater]

And you won't...FSU's lawyers could only recently review the ESPN contract (after demanding access) by travelling to North Carolina and reviewing it while under watch...no phones/pictures or note taking of the verbage was allowed.

But FSU lawyers saw the clause and included it in the lawsuit...it was the deal breaker...

Now, the ACC is asking the court to not make the ESPN contract public because it is a "trade secret"...

It is a huge stretch for anyone to believe the FSU lawyers just now traveled to NC to undertake this mission when they could've done it at any point.