OT: Florida State to sue ACC over GOR

[billybud]

Burt Magnus...ESPN President of Content:

We made a calculated decision to go all in with the SEC, (which) I believe is the best college football conference by far. At a time (when) premium rights have escalated to the point where you can’t possibly own everything, we’re all in with the SEC from a regular-season perspective, and we feel really good about that.

 

[Pat125]

There's a few more items: If the ACC commissioner's actions were beyond his authority, when did the petitioning schools find out about them? Once they became aware of the alleged unlawful extension, did they take any action to repudiate or otherwise remedy it? Did they take any action to endorse it? Did they accept the benefits from it?

I suspect that the answers to these questions will be problematic for the FSU and Clemson.

Good points. Something seems sneaky about the way Phillips handled this. This is obviously an important part of the agreement, and the schools should have been able to vote on whether to allow ESPN to have them twisting in the wind for another 3 1/2 years*. On the other hand if Phillips did not communicate this to the schools, any schools with an inkling of leaving should have stepped up and asked Phillips where they stood with the August 2021 deadline. But we are not privy to all of the communications related to this. Maybe there are minutes of presidents meeting where this was discussed and voted on?

* I only heard that the deadline was extended to Feb 2025, but that date was redacted. As a side note, the date of the expiration of the GOR, if it was extended, was also redacted. It is presumed to be 2036. But this shows that a lot of trade secret stuff is bs.

 

[billybud]

No one knew of the ACC-ESPN Agreement only being through 2027 or the requirement to extend by 2021...Remember, this was all ACC secret sauce until FSU's lawyers picked it up in Charlotte in late 2023..

And FSU immediately filed suit.

The press, the members, were all fed the 2036 line for years by the ACC...while the conference hid it's little secret.

 

[uconndogs]

Here's what I don't understand. The ACC is a member organization of its respective universities. I assume governance is a board made up of representatives from those universities, probably the ADs. Board members have a fiduciary responsibility to the conference and university members. Once there was reason to believe that the commissioner was activing without proper authority that board was responsible to invistigage immediately. I recognize that most of the members want the conference to hold together and therefore want to see FSU and Clemson in the fold, but is the moral, ethical and cultural base of these universities so corrupt that they skirt basic fiduciary responsibilities? That's to say nothing of the utter incompetence of the board which, evidently, was unaware of majory contract negotiations by their commissioner. I hope those individual board members have good E&O coverage.....

 

[UConnJim]

Billy,

I believe that you are pointing in the wrong direction as to who is being naive here. Not only is that accusation (the commissioner having overstepped his bounds) exceptionally egregious, it is also something that can be readily determined. FSU could have brought that and that alone to a North Carolina court and received a favorable decision in an afternoon if it were truly as you claim.

This from the supposed ACC bylaws, they specifically state that the "entering into or amending any Material Media Rights Agreement" requires a 2/3 vote by the Board.

1.6.2 Required Vote. Each Director shall be entitled to one vote each. Except as otherwise provided herein or in the Bylaws, if a quorum is present when a vote of the Directors is taken, the affirmative vote of a majority of all Directors present for such vote shall be an act of the Board. For the avoidance of doubt, all references in this Constitution or the Bylaws to the affirmative vote of: (a) a majority or two-thirds (2/3) of all “Directors present”, shall mean a majority or two-thirds (2/3) of all the Directors who are present at a Board meeting at which a quorum exists; (b) two-thirds (2/3) of all the Directors, shall mean two-thirds (2/3) of all the Directors of the Board, even if one or more of such Directors is not present for such vote (“Absolute Two-Thirds Matters”); and (c) three-fourths (3/4) of all the Directors, shall mean three-fourths (3/4) of all the Directors of the Board, even if one or more of such Directors is not present for such vote (“Absolute Three-Fourths Matters”). The Absolute Two-Thirds Matters are as follows: (i) any amendment to Article 2.5 of the Bylaws (Finances), (ii) selecting or changing the location of the Conference office, (iii) entering into or amending any Material Media Rights Agreement (as defined in Section 2.3.1(q)), (iv) the appointment, extension of the term, or removal of the Commissioner or the other matters set forth in Section 1.5.2.1.1, and (v) the initiation of any material litigation involving the Conference (but not, for clarity, the settlement of any

And, the bylaws specifically state the authority the Commissioner has in relation to media contracts and defines "material" as 5% of annual gross revenues:

2.3.1 Duties of the Commissioner.

Media Rights. Negotiate Media Rights agreements on behalf of the Conference, provided that all Material Media Rights Agreements shall be subject to approval by the Board under Section 2.10.3 and all other Media Rights agreements shall be subject to approval by the Executive Committee. “Material Media Rights Agreements” shall include any Media Rights agreement (i) that provides for an average annual value equal to or greater than 5% of the Conference’s aggregate gross revenue...

The bottom line is that if the Commissioner granted an extension to ESPN without 2/3rd approval of the Board, he did not follow the ACC Conference bylaws. Remember, I never said the Commissioner did unilaterally extend the extension date as that is unknown.

 

[UConnJim]

Here's what I don't understand. The ACC is a member organization of its respective universities. I assume governance is a board made up of representatives from those universities, probably the ADs. Board members have a fiduciary responsibility to the conference and university members. Once there was reason to believe that the commissioner was activing without proper authority that board was responsible to invistigage immediately. I recognize that most of the members want the conference to hold together and therefore want to see FSU and Clemson in the fold, but is the moral, ethical and cultural base of these universities so corrupt that they skirt basic fiduciary responsibilities? That's to say nothing of the utter incompetence of the board which, evidently, was unaware of majory contract negotiations by their commissioner. I hope those individual board members have good E&O coverage.....

uconndogs, the ACC has an executive board of 6 Presidents/Chancellors and a full board that is made up of all the Presidents/Chancellors of each university.

 

[KryHavok]

...is the moral, ethical and cultural base of these universities so corrupt that they skirt basic fiduciary responsibilities? That's to say nothing of the utter incompetence of the board which...

Uh, yep. This is the same conference that thought H00kerville would be a better fit for the conference than UConn. That tells me all I need to know about the nimrods in charge.

 

[Excalibur]

This from the supposed ACC bylaws, they specifically state that the "entering into or amending any Material Media Rights Agreement" requires a 2/3 vote by the Board.

1.6.2 Required Vote. Each Director shall be entitled to one vote each. Except as otherwise provided herein or in the Bylaws, if a quorum is present when a vote of the Directors is taken, the affirmative vote of a majority of all Directors present for such vote shall be an act of the Board. For the avoidance of doubt, all references in this Constitution or the Bylaws to the affirmative vote of: (a) a majority or two-thirds (2/3) of all “Directors present”, shall mean a majority or two-thirds (2/3) of all the Directors who are present at a Board meeting at which a quorum exists; (b) two-thirds (2/3) of all the Directors, shall mean two-thirds (2/3) of all the Directors of the Board, even if one or more of such Directors is not present for such vote (“Absolute Two-Thirds Matters”); and (c) three-fourths (3/4) of all the Directors, shall mean three-fourths (3/4) of all the Directors of the Board, even if one or more of such Directors is not present for such vote (“Absolute Three-Fourths Matters”). The Absolute Two-Thirds Matters are as follows: (i) any amendment to Article 2.5 of the Bylaws (Finances), (ii) selecting or changing the location of the Conference office, (iii) entering into or amending any Material Media Rights Agreement (as defined in Section 2.3.1(q)), (iv) the appointment, extension of the term, or removal of the Commissioner or the other matters set forth in Section 1.5.2.1.1, and (v) the initiation of any material litigation involving the Conference (but not, for clarity, the settlement of any

And, the bylaws specifically state the authority the Commissioner has in relation to media contracts and defines "material" as 5% of annual gross revenues:

2.3.1 Duties of the Commissioner.

Media Rights. Negotiate Media Rights agreements on behalf of the Conference, provided that all Material Media Rights Agreements shall be subject to approval by the Board under Section 2.10.3 and all other Media Rights agreements shall be subject to approval by the Executive Committee. “Material Media Rights Agreements” shall include any Media Rights agreement (i) that provides for an average annual value equal to or greater than 5% of the Conference’s aggregate gross revenue...

The bottom line is that if the Commissioner granted an extension to ESPN without 2/3rd approval of the Board, he did not follow the ACC Conference bylaws. Remember, I never said the Commissioner did unilaterally extend the extension date as that is unknown.

Not that cut and dry.

Does the waiver of the deadline constitute an amendment? What does the parties' history say about what they believed on that issue at the time? What did the authorizing resolutions for the original agreement say? Were they broad enough to give the commissioner power to manage the conference's performance of the contract?

 

[UConnJim]

Not that cut and dry.

Does the waiver of the deadline constitute an amendment? What does the parties' history say about what they believed on that issue at the time? What did the authorizing resolutions for the original agreement say? Were they broad enough to give the commissioner power to manage the conference's performance of the contract?

I disagree as extending the option is a material financial event for the conference as the current ESPN contract expires in 2027. They clearly spell out in the bylaws that only the board has the authority to make changes to material media rights. That said, we do not know if the board was involved in extending ESPN's option or the Commissioner extended the option on his own.

 

[NE Football]

Why would ESPN not extend the contract? They’re making 160 million annually from the ACCN and paying a lot less for the ACC tv deal versus what they are paying to the SEC.

If they don’t exercise their option to extend the contract, then the ACC would be free to put their rights out to bid and get a very good increase.

 

[billybud]

Why not to extend ?

,,,a lot of tail dragger teams that no one watches...BC, Virginia, NC State, Syracuse, GT etc.

...frees up time slots for SEC...ACC has some designated time slots in the contract from what I have read.

...ACC may not be worth what ESPN is paying...a new contract can be renegotiated down...the thought is that when ESPN did not meet the deadline to extend in the contract...it was deliberately so.

 

[UConnJim]

Why would ESPN not extend the contract? They’re making 160 million annually from the ACCN and paying a lot less for the ACC tv deal versus what they are paying to the SEC.

If they don’t exercise their option to extend the contract, then the ACC would be free to put their rights out to bid and get a very good increase.

The cash cow for ESPN is the ACCN and ESPN/Disney owns 80% of the network. And, the ACCN provides additional media cash for each ACC school. But, the risk is that the ACCN revenues have peaked as cord cutting continues and it might not be economical to transition the ACCN to a streaming network.

I think if ESPN doesn't extend the ACC media contract, they will still own the ACCN, but the content may not be readily available. So, if ESPN does not extend the ACC media contract, you could see the bulk of ACC games on another network and a group of games on the ACCN owned by ESPN. Due to cord cutting, I doubt another company would buy the ACCN from ESPN or another company would start up a new ACCN. Of course, the risk is that another company would give the ACC a big raise and the ACCN is left with no content, but if ESPN does not extend the ACC contract, my guess is at least Clemson and FSU would leave and the value of the ACC media rights would decline.

 

[FfldCntyFan]

The cash cow for ESPN is the ACCN and ESPN/Disney owns 80% of the network. And, the ACCN provides additional media cash for each ACC school. But, the risk is that the ACCN revenues have peaked as cord cutting continues and it might not be economical to transition the ACCN to a streaming network.

I think if ESPN doesn't extend the ACC media contract, they will still own the ACCN, but the content may not be readily available. So, if ESPN does not extend the ACC media contract, you could see the bulk of ACC games on another network and a group of games on the ACCN owned by ESPN. Due to cord cutting, I doubt another company would buy the ACCN from ESPN or another company would start up a new ACCN. Of course, the risk is that another company would give the ACC a big raise and the ACCN is left with no content, but if ESPN does not extend the ACC contract, my guess is at least Clemson and FSU would leave and the value of the ACC media rights would decline.

ESPN won't jump the gun on this as there will be no benefit to them by jumping the gun on it. They'll have a room full of number crunchers projecting (under many different economic enviroments) the possible results of the different possible scenarios; keeping the ACC as is vs. allowing the current contract to lapse, therefore allowing the GOR to expire early, then plugging different schools into different conferences, to determine the benefit to them of each possible outcome and their best guess at the likelyhood of each possible outcome.

There could be something here that I am unaware of which could impact their thinking but I find it very difficult to believe ESPN would not extend the ACC. I can't see a collapsed ACC being more valuable to them.

 

[dayooper]

ESPN won't jump the gun on this as there will be no benefit to them by jumping the gun on it. They'll have a room full of number crunchers projecting (under many different economic enviroments) the possible results of the different possible scenarios; keeping the ACC as is vs. allowing the current contract to lapse, therefore allowing the GOR to expire early, then plugging different schools into different conferences, to determine the benefit to them of each possible outcome and their best guess at the likelyhood of each possible outcome.

There could be something here that I am unaware of which could impact their thinking but I find it very difficult to believe ESPN would not extend the ACC. I can't see a collapsed ACC being more valuable to them.

If what’s going around is correct (they have to renegotiate and have the teams sign the GoR again), maybe they wait until the schools that are leaving leave, they can negotiate the cost down and get the quality ACC basketball content for much cheaper than with the football schools? I’m not saying this is correct or not, but if it is, FSU, Clemson and whom ever needs to negotiate their way out for as little as they can, do so. I believe the exit fees are still in effect even at the expiration of the contract. The remaining schools can than take the exit fees and negotiate with ESPN their new contract.

Not saying any of this is correct, just a thought.

 

[FfldCntyFan]

I could be wrong but from what I understand, if ESPN picks up the option, it would be a continuation of the contract that the GOR was tied to (and locked up the rights until 2036). If an entirely new contract is signed, a new GOR would also need to be signed (if a GOR is needed for the contract).

 

[baggerbob]

I could be wrong but from what I understand, if ESPN picks up the option, it would be a continuation of the contract that the GOR was tied to (and locked up the rights until 2036). If an entirely new contract is signed, a new GOR would also need to be signed (if a GOR is needed for the contract).

If FSU and Clemson, leave there wouldn't be any reason for the rest of the league to sign a new contract with ESPN. The rest of the team's would be better off signing with Fox and join the Big 12.
ESPN would have broken the contract, and shouldn't be rewarded with a new one.

 

[dayooper]

I could be wrong but from what I understand, if ESPN picks up the option, it would be a continuation of the contract that the GOR was tied to (and locked up the rights until 2036). If an entirely new contract is signed, a new GOR would also need to be signed (if a GOR is needed for the contract).

The issue is that we don’t know what the contract says. Up until a year ago, we thought the contract was through 2036 and 2027 was just a look in. It wasn’t until people got the redacted version did we realize that 2027, at the very least, was a chance for ESPN to pick up the contract. Unless we get the full version, we won’t know.

 

[UConnJim]

If FSU and Clemson, leave there wouldn't be any reason for the rest of the league to sign a new contract with ESPN. The rest of the team's would be better off signing with Fox and join the Big 12.
ESPN would have broken the contract, and shouldn't be rewarded with a new one.

The Big 12 media contract is with FOX and ESPN. And, ESPN owns the Big 12 football and basketball championship games as well as most of top football games.

 

[Patman]

I could be wrong but from what I understand, if ESPN picks up the option, it would be a continuation of the contract that the GOR was tied to (and locked up the rights until 2036). If an entirely new contract is signed, a new GOR would also need to be signed (if a GOR is needed for the contract).

I thought the gor gave the negotiating rights with any partner to the ACC itself for a fixed time. Isn't that the whole point. The conference holds those rights until 2036

 

[CTFAN4LIFE]

I thought the gor gave the negotiating rights with any partner to the ACC itself for a fixed time. Isn't that the whole point. The conference holds those rights until 2036

I might be wrong, but I think if/as soon as ESPN doesn't take the option in 2026 that the GOR is immediately null and void.

 

[Patman]

I might be wrong, but I think if/as soon as ESPN doesn't take the option in 2026 that the GOR is immediately null and void.

Seems to me that would defeat the whole point of a GOR?

 

[dayooper]

Seems to me that would defeat the whole point of a GOR?

Why? The GOR exists for the media contract. If there is no contract, or a very poor one, how can the rights holder keep them there. It’s why most GORs expire at the end of the contract. It’s also why the PAC schools didn’t have to go to court over their rights and Texas/Oklahoma had to negotiate the last year of theirs.

 

[Patman]

Why? The GOR exists for the media contract. If there is no contract, or a very poor one, how can the rights holder keep them there. It’s why most GORs expire at the end of the contract. It’s also why the PAC schools didn’t have to go to court over their rights and Texas/Oklahoma had to negotiate the last year of theirs.

because the rights holder would then negotiate one with somebody else. Otherwise we're saying the only partner can be ESPN... which seems silly... If the oprah channel offers 100 mill you're going to say no?

ultimately I'm not saying that things aren't that way... its just that it would seem to me that the point is to grant sole negotiating to the ACC. Not the sole rights to ESPN.

 

[CTFAN4LIFE]

Seems to me that would defeat the whole point of a GOR?

I don't think so - the GOR is a standalone agreement that specifies who the media partners are and if/when it lapses allows the conference to negotiate with any and all potential media partners (including the ones they were with). The conference's member exit fees are what is devised to keep the conference schools together.

 

[CL82]

I don't think so - the GOR is a standalone agreement that specifies who the media partners are and if/when it lapses allows the conference to negotiate with any and all potential media partners (including the ones they were with). The conference's member exit fees are what is devised to keep the conference schools together.

The devil is in the deals. The GOR could be a grant conditioned upon a contract being in place with a specific media partner or it could be a general grant to the conference. Since the conference prepared it, I'd guess it is the latter.