I've thinking about the GoR thing. Seems to me that the exit fee in itself is less defensible with the GoR in place. That is, if the GoR is supposed to handle the TV rights issue, how can an exit fee of $60+ million be justified (without TV money factored in)? Just a thought.
Great point. And we already know that the exit fee can't simply be punitive. It's hard to justify having both. There would be *some* loss in value even if the Grant of Rights continued beyond a school's exit because a few additional out-of-conference games would be lost, but $60 million? Not even close.
I think you are overlooking some potential termination scenarios here.
First, although the GoR is from school to conference, it inures primarily to the benefit of the networks, to whom the conferences have assigned the rights. The purpose of the GoR is to give the network security that even if a school leaves a conference, it will retain the broadcast rights or at least get compensation for the lost rights (which didn't happen when e.g. schools left the B12, devaluing the rights but with no drop in compensation).
But, if a school leaves, and the conference ceases to compensate it for its rights as the B12 bylaws provide, why should the school allow the former conference's network to come on campus to film events? A natural termination/breach outcome, unless contracts specify otherwise, is for the two to part ways with neither rights nor compensation continuing. This was in fact the outcome of the Maryland-ACC dispute.
If that's how a GoR agreement terminates, then the conference is stuck. It owes rights to the network (presumably this is enshrined in a contract, e.g. ESPN gave ACC schools an extra $2 mn per year per school or so in exchange for their GoR agreement, so there must be a pass-through agreement between the conference and ESPN). But it doesn't have the school's media rights if the school has breached/terminated. Now the conference is in breach of its agreement with the network. In fact there might be a risk that its whole TV deal could be terminated or radically renegotiated as a result of the departure. If not, presumably the network is entitled to financial compensation.
The network might have a right to sue the school for its failure to provide the rights through the GoR, if the conference had simply re-assigned rights originating with the school to the network. But to secure the rights contained in the GoR, the network would presumably have to compensate the school. You can't have a contract that terminates with one set of obligations continuing but the other side's obligations ending. So maybe the GoR is supposed to continue in some fashion after a school's exit from the conference, but with the conference cut out of its intermediary position.
Now, we haven't seen the agreements, especially the conference-network agreements, so we don't know what the termination provisions are. But it's quite likely that the termination of the GoR leads to a situation where the conference suffers significant financial losses. The only way to compensate the conference for those losses is with an exit fee.
