Mediator assigned in Maryland vs. ACC lawsuit

[nelsonmuntz]

There is no way in hell that any court will issue an injunction for violation of a GOR or insist on specific performance. It simply won't happen. No court is going to tell Kansas what conference they will play in. You cannot compare it to record deals either, as the deal is not with the artist, but rather with a group. For example, if Journey has a record deal, and Steve Perry leaves, by Journey produces an album, the contract is not breached in the same way it is if an actor walks or George Michael doesn't live up to his solo album requirements. Still in all those cases, the remedy is damages, not an injunction. And damages have to be proven, and actual.

So in my Journey example, losing Steve Perry is like the Big XII losing Texas. The conference still exists, it still plays the games for the network and provides the content, but the value of the content is decreased. Now if the bass player for Journey leaves...nobody can even tell the difference. What are the damages? Nothing. That is how the GOR will work with these conferences. Remember, the contract each school has is with the conference, not with the network. George Michael broke a contract with the label, the equivalent of a network. In the GOR situation that does not happen. That contract is not breached. Instead it is like the contract a band member has with a band. Ever see anybody quit a band? Happens all the time.

Most contracts that require specific performance stipulate injunctive relief. Do you think the GOR does not include language like that? If it doesn't, there is part of your trap door I was talking about. I would be shocked though. The signatories of the GOR have agreed in advance to allow injunctive relief to the league. Try beating that.

In the Journey example, I would assume that there is both a "key man" clause restricting certain members, and a clause restricting the band from reforming under a different name.

You need to stop thinking about the GOR as a contract with damages. It is a sale agreement.

 

[HuskyHawk]

Can someone explain why this analysis of the GOR is incorrect?

http://msn.foxsports.com/college-fo...erage/myth-of-the-big-12s-grant-of-rights.php

It isn't incorrect. It is pretty solid. There is a lot of speculation around ESPN and the practical realities of reduction in payout, but otherwise I agree.

Nelson seems to be ignoring that the contract for rights to broadcast is in the first instance between the Network and the Conference. The school is not a party to that contract. Breaching that contract would be significant. No conference is going to be able to get out of it and sell its rights to somebody else. A GOR is not like that contract.

 

[nelsonmuntz]

That shows ignorance of what a Grant of Rights actually is.

There is no "violating party" in this case. If a school leaves a conference, it isn't in "violation" of anything. The GOR specifically states it's in effect for a set duration regardless of conference affiliation. Withholding payments to a school that leaves would be the violation, not the school leaving. If Kansas left the Big 12 for the Big Ten, it isn't "violation" since the agreement specifically states it doesn't matter whether a school is a conference member... the agreement remains in full force.

The Grant of Rights will hold up, yes, but only if the Big 12 continues to honor its end of the consideration (i.e., the payment)

Can you show me of an example of a media rights dispute that played out the way you are asserting?

 

[kyleslamb]

Grant of Rights agreement, No. 8

Acknowledgment

Each of the Member Institutions acknowledges that the Grant of Rights during the entire Term is irrevocable and effective until the end of the Term regardless of whether the Member Institution withdraws from the Conference during the Term or otherwise ceases to participate as a full member of the Conference in accordance with the Bylaws. [Emphasis mine]

There it is in black and white. If a Big 12 member were to pack up and leave for another conference, it wouldn't be violating anything. The Grant of Rights specifically says the agreement is in full force until termination of the agreement regardless of conference membership. So not honoring the Grant of Rights by withholding payment would be violating the consideration of the retained rights being granted, despite the Big 12's decision to omit that explicitly.

 

[nelsonmuntz]

It isn't incorrect. It is pretty solid. There is a lot of speculation around ESPN and the practical realities of reduction in payout, but otherwise I agree.

Nelson seems to be ignoring that the contract for rights to broadcast is in the first instance between the Network and the Conference. The school is not a party to that contract. Breaching that contract would be significant. No conference is going to be able to get out of it and sell its rights to somebody else. A GOR is not like that contract.

What all the message board Johnnie Cochranes are missing is that very smart lawyers have gone over these agreements ad nauseum. Either they are all wrong, or you are.

I explained why I think the GOR is a sale agreement and can not be broken. You think a school can walk away any time they want. I gave lots of examples that support my case. You have none. I am confident that 5 and 10 years from now, no school will have beaten a GOR. You seem to think someone will. We shall find out.

 

[kyleslamb]

Can you show me of an example of a media rights dispute that played out the way you are asserting?

It's more appropriate for you to show an example where someone didn't have to keep paying for rights it was being granted. Time and time again in the recording industry when there were legal disputes over royalties, publishers didn't get to keep the rights to works without compensating for them. This is slightly different in that the contract was not stated that money is the consideration, but it is. It always has been. Conferences since tv contracts started in the early 80's are granted schools' rights to home games and in return, distribute funds from the media contract. The Big 12's Grant of Rights is no different from that concept except a) they apply a set term that rights are granted rather than indefinitely as a league member and b) they omit language from the GOR so they can try to withhold funds if a school leaves. But since they were paying for the rights before, they will be in violation of the agreement once they stop paying for them.

 

[nelsonmuntz]

Grant of Rights agreement, No. 8

Acknowledgment

Each of the Member Institutions acknowledges that the Grant of Rights during the entire Term is irrevocable and effective until the end of the Term regardless of whether the Member Institution withdraws from the Conference during the Term or otherwise ceases to participate as a full member of the Conference in accordance with the Bylaws. [Emphasis mine]

There it is in black and white. If a Big 12 member were to pack up and leave for another conference, it wouldn't be violating anything. The Grant of Rights specifically says the agreement is in full force until termination of the agreement regardless of conference membership. So not honoring the Grant of Rights by withholding payment would be violating the consideration of the retained rights being granted, despite the Big 12's decision to omit that explicitly.

That is not what it says. I got to get back to work though. Read it again.

 

[kyleslamb]

What all the message board Johnnie Cochranes are missing is that very smart lawyers have gone over these agreements ad nauseum. Either they are all wrong, or you are.

I explained why I think the GOR is a sale agreement and can not be broken. You think a school can walk away any time they want. I gave lots of examples that support my case. You have none. I am confident that 5 and 10 years from now, no school will have beaten a GOR. You seem to think someone will. We shall find out.

Here's the problem: you don't seem to understand why the Grant of Rights is in place. It's not to keep teams from 'walking away.' It's not, nor has it ever been, meant to be a punitive measure or something that restricts trade.

The reason the GOR was put in place was to give security to the television network that if they're paying a certain amount to the league (which saved the league from destruction), that it would continue to get the value it was paying for in the number of teams. A GOR is not to keep a team bound to a league. It's to protect the media partners' long-term investment.

 

[sdhusky]

That is not what it says. I got to get back to work though. Read it again.

How did you have so much time to get a law degree while posting non-stop about why academics don't work hard?

It's inspirational to see a champion of making every moment count.

PS: Where did you go to law school?

 

[HuskyHawk]

That shows ignorance of what a Grant of Rights actually is.

There is no "violating party" in this case. If a school leaves a conference, it isn't in "violation" of anything. The GOR specifically states it's in effect for a set duration regardless of conference affiliation. Withholding payments to a school that leaves would be the violation, not the school leaving. If Kansas left the Big 12 for the Big Ten, it isn't "violation" since the agreement specifically states it doesn't matter whether a school is a conference member... the agreement remains in full force.

The Grant of Rights will hold up, yes, but only if the Big 12 continues to honor its end of the consideration (i.e., the payment)

Exactly. And the practical effect of this is what? Chaos. Kansas home games under the Big XII contract, and road games in the Big 10. Unlike the media examples Nelson mentions, Kansas is still producing the content, and the right to sell the broadcast rights to it still belongs to the Big XII, regardless of conference affiliation. They haven't violated anything.

But that situation isn't in the interest of the conference or the network, and so it would be resolved, and damages would be determined to compensate the conference and more importantly the network. The GORs were cooked up by the networks as a means to ensure that if the conference content changed, and the value of their deal with the conference changed, they could recover comensurate damages. Otherwise they wouldn't issue these long term, high value contracts to the leagues. As I said before, what it really means for them is that the big properties, who would yield big damages (and Kansas is probably one) are less able to move.

The article takes it a step further and argues that if a school moves from one ESPN conference to another ESPN conference, the damages to ESPN, and thus to the conference are effectively zero. I don't buy that, because the payout to the league, duration of the contract etc. are different. ESPN could either come out ahead or behind in that scenario, depending on the specifics.

 

[UConnJim]

You are looking at the lease from the wrong direction. Once a landlord leases space, they can't turn around and lease it to someone else because that person will pay more. A school can't turn around and resell media rights it has already sold.

These media contracts don't account for "equivalent" value. They are SALE CONTRACTS.

I'm glad you are not my real estate lawyer. Leases can and have been broken by both sides. Specific reasons for breaking leases vary by state, but the landlord can break leases FOR CAUSE and NO FAULT. And, if ESPN is the "landlord" in this case, Maryland is still going to be under contract with ESPN in the Big 10.

Without reading specific contracts (and referenced documents), it is impossible for anyone to know what the ACC/Big 10/Big 12... GOR are. The one thing I have learned in business over time is that mutually beneficial contracts that both parties want are the only real enforceable contracts as there are many ways to void a contract.

 

[Chin Diesel]

It comes down to this. If the ACC was hellbent on getting the full $50M from Maryland then having a mediator assigned is bad news for the ACC.

I'm with those who expect a number around $25M-$35M. Based off of nothing more than a hunch.

 

[IMind]

I think the only reason a GOR hasn't been "broken" is because no one has tried... in the end I bet they'll be as useful as exorbitant exit fees have proven to be... for the exact same reason because they parties will settle before the GOR has been put to the test in court. I think the reason expansion hasn't continued has far less to do with the GOR and far more to do with ESPNs money drying up as it's become apparent that NBC and CBS aren't paying the huge money for content everyone thought they were going to.. why should ESPN continue to pay top dollar to the ACC for content it already owns (us). I still think they'll be another round of consolidation mostly because the Big 12 wont stay at 10 schools because everyone else will get sick of both Texas and Oklahoma continually being in the playoffs... you already saw this when the B1G didn't have a title game.... much less likely will be because the B1G or SEC decides to add more.

 

[FfldCntyFan]

IMind is basically correct in that nobody (within the universe of collegiate athletic conferences) has yet tried to get out of a grant of rights agreement. The day that the reward appears to be worth the risk that will change.

Mosre important to the point however is that it will not be broken nor will it need to be broken. Anything (through courts of law) can be monetized at at some point an agreement (or settlement if you will) will be reached in which a school will pay however many dollars both sides agree upon to allow that school to leave for another conference.

 

[Excalibur]

That shows ignorance of what a Grant of Rights actually is.

There is no "violating party" in this case. If a school leaves a conference, it isn't in "violation" of anything. The GOR specifically states it's in effect for a set duration regardless of conference affiliation. Withholding payments to a school that leaves would be the violation, not the school leaving. If Kansas left the Big 12 for the Big Ten, it isn't "violation" since the agreement specifically states it doesn't matter whether a school is a conference member... the agreement remains in full force.

The Grant of Rights will hold up, yes, but only if the Big 12 continues to honor its end of the consideration (i.e., the payment)

You beat me to it.

Still, it's an enormous logistical roadblock to inter-conference movements, and one nobody is going to be in a hurry to navigate.

 

[Willy Gee]

Can someone explain why this analysis of the GOR is incorrect?

http://msn.foxsports.com/college-fo...erage/myth-of-the-big-12s-grant-of-rights.php

The problem with the analysis is that the author assumes that a school which has granted its media rights to one conference can simply transfer those rights to another conference, with the only issue being damages. I am skeptical of that logic. Once a school has transferred its media rights, it can't just transfer them again because they are already gone.

A conference would be stupid to accept a school which has an existing GOR with another conference. The "new" conference would open itself up to liabilities. The media partner of the new conference also likely would want nothing to do with the school.

If a school with a GOR wishes to move to another conference, it would be wise to first negotiate out of the GOR or litigate with the existing conference about the validity of the GOR. Whether it would prevail in that litigation would depend on the terms of the GOR, but I would always prefer to be on the side of the party seeking to enforce a contract, rather than the one trying to get out of an agreement which it freely entered into. Believe it or not, courts tend to honor parties' agreements, unless there is some compelling reason to do otherwise.

 

[UConn9604]

Tom Selleck would not be allowed to work again, would not get paid under his contract with CBS, AND would be liable for all damages related to the loss of the TV show. He has already sold his services. George Michael tried what you are saying and got his ass beat pretty badly in court, and flushed the prime of his career down the toilet in the process. Going back to the 70's, Redd Foxx had endless feuds with the producers of Sanford and Son which usually went Redd Foxx's way. That was 40 years ago and I imagine that the contracts have become a little tighter since.

You may wish to look up the facts of the George Michael case before declaring an apple to be an orange.

 

[nelsonmuntz]

You may wish to look up the facts of the George Michael case before declaring an apple to be an orange.

It certainly is not a pumpkin, which is what the idea of a school beating a GOR is. In fact, a pumpkin is a bad analogy. You should create a make believe fruit, because there are no examples of a performer selling his rights and then beating that sale in court.

Even my Redd Foxx example is not great. Redd Foxx wasn't trying to leave the show, he just wanted more money. The producers were terrified that their hit show would go on hiatus and so the threw a few more dollars at Foxx.

Give me an example of someone selling media rights, and then going to court and getting them back. I suspect that the only way it can be done was if there was some kind of fraud.

 

[BC1978]

The problem with the analysis is that the author assumes that a school which has granted its media rights to one conference can simply transfer those rights to another conference, with the only issue being damages. I am skeptical of that logic. Once a school has transferred its media rights, it can't just transfer them again because they are already gone.

A conference would be stupid to accept a school which has an existing GOR with another conference. The "new" conference would open itself up to liabilities. The media partner of the new conference also likely would want nothing to do with the school.

If a school with a GOR wishes to move to another conference, it would be wise to first negotiate out of the GOR or litigate with the existing conference about the validity of the GOR. Whether it would prevail in that litigation would depend on the terms of the GOR, but I would always prefer to be on the side of the party seeking to enforce a contract, rather than the one trying to get out of an agreement which it freely entered into. Believe it or not, courts tend to honor parties' agreements, unless there is some compelling reason to do otherwise.

On your first point. It is not only that the rights have been transferred but consideration has been paid for the transfer of those rights.

Agreed with your last point. Just to reinforce, courts tend to honor parties' agreements - especially those which have been willingly entered into.[/quote]

 

[Excalibur]

That is not what it says. I got to get back to work though. Read it again.

You are correct that the agreement prevents a team from granting media rights to a new conference that it has already granted to its old conference. That still does not prevent the team from actually moving to a new conference, and if kyleslamb's theory of consideration is correct, the old conference would still need to pay for the telecast rights granted to it by the departed team.

 

[businesslawyer]

I move from conference A to conference B. I don't let Conference A's Network into the broadcast booth at my stadium. I get sued for specific performance and monetary damages. I ask why monetary damages isn't a satisfactory remedy since my inventory can be replaced in Conference A by someone new joining. I don't know that there is a satisfactory answer to that.

So Waylon can keep repeating that this is easy, and the rights are already sold so it's not about breaking a contract, but since the rights are worthless without access to the building I don't see why anyone thinks this is an open and shut issue.

 

[sdhusky]

I move from conference A to conference B. I don't let Conference A's Network into the broadcast booth at my stadium. I get sued for specific performance and monetary damages. I ask why monetary damages isn't a satisfactory remedy since my inventory can be replaced in Conference A by someone new joining. I don't know that there is a satisfactory answer to that.

So Waylon can keep repeating that this is easy, and the rights are already sold so it's not about breaking a contract, but since the rights are worthless without access to the building I don't see why anyone thinks this is an open and shut issue.

I have no idea what you are saying here.

 

[businesslawyer]

I have no idea what you are saying here.

Well, that must reflect poorly on (at least) one of us. LOL.

 

[kyleslamb]

I move from conference A to conference B. I don't let Conference A's Network into the broadcast booth at my stadium. I get sued for specific performance and monetary damages. I ask why monetary damages isn't a satisfactory remedy since my inventory can be replaced in Conference A by someone new joining. I don't know that there is a satisfactory answer to that.

So Waylon can keep repeating that this is easy, and the rights are already sold so it's not about breaking a contract, but since the rights are worthless without access to the building I don't see why anyone thinks this is an open and shut issue.

While those are excellent points, it depends on who Conference A and Conference B have as networks. If Conference B is on the same network as Conference A, it wouldn't matter. That said, if Conference A is still paying the school for its media rights, why wouldn't Conference B allow the network to broadcast the rights and just deduct the payment to the school from Conference B's share? There's really no reason to deny access. If Conference A is willing to use its network's inventory broadcasting another conference's game, it's not that bad a deal.

 

[businesslawyer]

While those are excellent points, it depends on who Conference A and Conference B have as networks. If Conference B is on the same network as Conference A, it wouldn't matter. That said, if Conference A is still paying the school for its media rights, why wouldn't Conference B allow the network to broadcast the rights and just deduct the payment to the school from Conference B's share? There's really no reason to deny access. If Conference A is willing to use its network's inventory broadcasting another conference's game, it's not that bad a deal.

That is also a possibility. But I just think the more aggressive position -- just don't let Conference A's network in your building -- is likely to produce a satisfactory result.

 

[Carl Spackler]

I move from conference A to conference B. I don't let Conference A's Network into the broadcast booth at my stadium. I get sued for specific performance and monetary damages. I ask why monetary damages isn't a satisfactory remedy since my inventory can be replaced in Conference A by someone new joining. I don't know that there is a satisfactory answer to that.

So Waylon can keep repeating that this is easy, and the rights are already sold so it's not about breaking a contract, but since the rights are worthless without access to the building I don't see why anyone thinks this is an open and shut issue.

I was discussing this with some friends in NYC during the regional finals a few weeks ago. The wording of the contracts has to be very specific I think, for them to have any meaning for exactly these reasons.

Specific to football now - (not sure basketball) - but visiting teams, have no say in broadcasting rights. A program from conference A - only makes money from a broadcasting network for conference A games, and non conference HOME games. Non-conference away game revenue, to my knowledge, is entirely individual contract payout by the home team. (which would be drawing from their own broadcasting revenue stream, ticket sales, merchandising, etc.)

So the games that are of actual value (by actual being in the stadium with broadcasting equipment) for a program from conference A - are any home games (in or out of conference) and the away - in - conference games.......

So - say program X leaves conference A for conference B.

Conference B - now holds the rights to bring those broadcasters in to the arenas for program X home games. Or does conference B allow Conference A to continue to incur the expense/income of doing the actual broadcasts? The number of games that would be an actual revenue loss for conference A is entirely dependant on their ability to fill the holes in the schedule left by program X. If conference A fills those holes, there is no loss - excepting 2 possibilities: #1. The broadcasting contract terms were changed by the broadcasting company as a result of the loss. To my knowledge, that's not happening. An existing broadcasting contract is not getting knocked down because of any of this, no matter who the schedule is filled with. #2. Conference A actually does the broadcasts and incurs the expenses. That's also not happening - and if it would happen - would only involve 6-7 games a year at most, as non-conference away games, and conference away games would not apply - as the broadcasting rights would be held already by other conferences.

Grant of rights is nothing more than a promise ring.

 

[businesslawyer]

Grant of rights is nothing more than a promise ring.

I think it would be premature to go that far in the other direction from Waylon. There are arguments to be made for both sides on this, and anyone who thinks otherwise is wrong. It was done by conferences because it was viewed as the strategy most likely to keep teams from bolting. That doesn't mean anyone determined, or legally advised anyone, that it would keep schools from bolting.

 

[06029]

I think it would be premature to go that far in the other direction from Waylon. There are arguments to be made for both sides on this, and anyone who thinks otherwise is wrong. It was done by conferences because it was viewed as the strategy most likely to keep teams from bolting. That doesn't mean anyone determined, or legally advised anyone, that it would keep schools from bolting.

Schools, and the expanding conference, will make an economic decision when it comes to leaving if under a GOR. If they are going to increase their revenue in a new conference by 2 or 3x, then they will leave and let lawyers make a ton of money battling it out. Once the lawyers have made their millions on the case, the decision to continue litigation or settle comes. By that time, economic impact is measured, and likely mitigated thru some new arrangement, and the settlement that allows both sides to claim victory happens.I doubt that any conference movement that involves GOR goes to a full trial because the only conference expansion law suit that did go all the way to trial went against the conference (different circumstances but it established that the burden of proof is very high and that any small deviation from bylaws oust the conference on the wrong side). Since then, every team has bought their way out of a conference to move.

Every school subject to a GOR probably has a legal opinion or analysis regrading its enforcability and how to get out of it necessary. And in the end, the answer will be buy your way out, just like it always has been.

 

[Carl Spackler]

I think it would be premature to go that far in the other direction from Waylon. There are arguments to be made for both sides on this, and anyone who thinks otherwise is wrong. It was done by conferences because it was viewed as the strategy most likely to keep teams from bolting. That doesn't mean anyone determined, or legally advised anyone, that it would keep schools from bolting.

Premature? Sure. I'm not a lawyer - I can have those strong opinions!!

 

[sdhusky]

Well, that must reflect poorly on (at least) one of us. LOL.

Gosh. Don't take it personally BL