OT: Florida State to sue ACC over GOR

[uconndogs]

Do you think all of these teams have invites in their pockets? Because if they don't, you're talking about giving up a guaranteed income stream of about $50 million a year (media money plus CFP distributions) for an uncertain situation. Why would you willingly incur the litigation costs and alienate your peer institutions? Wouldn't it make far more sense to let FSU and Clemson be your "stalking horses"?

Keep in mind as well that a departure by FSU and Clemson minimally means an additional $260 million to the conference, and quite possibly that number could end up being close to $1 billion in combined exit fees in GOR buyout. That would position the income stream of the remaining teams well above the big 12.

It makes far more sense to pull up a comfy chair and a tub of popcorn and wait to see the outcome of the lawsuits.

I think it's entirely possible the FSU and Clemson are and will overplay their hands. At the core of this is an emotional response to be among the elites in college football. Emotional responses to business decisions and negotiations usually end with poor results.

 

[CTFAN4LIFE]

I think it's entirely possible the FSU and Clemson are and will overplay their hands. At the core of this is an emotional response to be among the elites in college football. Emotional responses to business decisions and negotiations usually end with poor results.

I don't think University leaders, regents, and state government leaders would be guided by emotion on something of this scale. I think it's much more likely that both universities have been given everything but a guarantee through third party communications that there is a Big10 landing spot the day they have freed themselves from the ACC.

 

[uconndogs]

I don't think University leaders, regents, and state government leaders would be guided by emotion on something of this scale. I think it's much more likely that both universities have been given everything but a guarantee through third party communications that there is a Big10 landing spot the day they have freed themselves from the ACC.

Maybe, but I suspect alot of those University leaders are driven by their passion for football and that puts a lot of political pressure in play.

 

[FfldCntyFan]

I will begin by stating that I have not read any of the documents in question (a couple of which I would never be granted the opportunity).

From what I've read during the duration of this is that the ACC's contract with ESPN (which some have claimed was never made available to individual schools) was available, but only within the ACC offices. If that is true, beyond that it would discredit the public presentation that schools were not allowed to see it, I would wager heavily that every school had a legal team review at some point not long after it was executed. It would be malfeasance on the part of any individual school to not become familiar with its terms.

The idea that confidentiality is problematic is purely posturing. The reality is that in most cases (especially with highly visible entities) contract terms are kept confidential as standard operating procedure. I believe that it is pretty safe to say that the threat of being able to bring confidential contract terms public as a means for gaining some leverage was what FSU and Clemson had been attemptinig. I personally don't see how this could succeed.

The claim that the GOR agreement would allow the return of rights once a school leaves the conference makes zero sense as it basically contradicts the purpose of a GOR. Under the premise that this is truly the case, the would not be the current lawsuits as paying a previously agreed upon exit fee (that was a unanimous vote by ACC members, in place long before any current members considered leaving) would free the school that have brought the lawsuits. On the claim that until recently they did not know this,

 

[speckle]

Do you think all of these teams have invites in their pockets? Because if they don't, you're talking about giving up a guaranteed income stream of about $50 million a year (media money plus CFP distributions) for an uncertain situation. Why would you willingly incur the litigation costs and alienate your peer institutions? Wouldn't it make far more sense to let FSU and Clemson be your "stalking horses"?

Keep in mind as well that a departure by FSU and Clemson minimally means an additional $260 million to the conference, and quite possibly that number could end up being close to $1 billion in combined exit fees in GOR buyout. That would position the income stream of the remaining teams well above the big 12.

It makes far more sense to pull up a comfy chair and a tub of popcorn and wait to see the outcome of the lawsuits.

I hear what you're saying but Im not sure it means the best outcome for the other 6 schools in this case (5 actually with UNC being the 3rd premium product). If Clemson and FSU are able to get out first, in the go it alone route of now, the value of each of the remaining schools will drop more than proportionally once their best, most marketable opponents, have already departed. If anything I could see Louisville and Miami, for instance, having the greater incentive to leave earlier since their values are likely more volatile than Clemson and FSU.

I can't say they have guaranteed money in hand, but I absolutely believe those schools make more over the next dozen years by leaving sooner. I also don't necessarily believe they'd even have to join the lawsuit if they do have a simple majority who believes in game theory greatest mutual outcomes. In the current circumstance they are effectively financing the legal case, via shared ACC legal costs, against their greater individual, financial interests. Attacking the league bylaws as a majority group seems viable way to benefit all of these schools without heading to court. Auction houses don't put their best lots on the block first and hope there's interest in the remaining product down the line.

Last, the recent precedent for conference payouts to remaining schools is $5m per via the Pac12 to OSU and WSU. Waiting for an exit fee windfall once teams leave a broken and now undesirable conference doesn't sound like a strong financial model. Seems more like wishful thinking.

 

[prankster]

It would be malfeasance on the part of any individual school to not become familiar with its terms.

Nonfeasance, actually.

But your basic point still stands.

 

[ScottVib]

I think it's entirely possible the FSU and Clemson are and will overplay their hands. At the core of this is an emotional response to be among the elites in college football. Emotional responses to business decisions and negotiations usually end with poor results.

In the case of Clemson, it's entirely possible that this is the best shot they have to find a P2 home. If they continue into a downturn where they are good, but not great (think the Tommy West and Tommy Bowden eras) they become an ok football brand in a small market that the SEC already has covered and the Big Ten probably doesn't need. They wouldn't have been a target for either conference in the 2010 timeframe and if they are forced to play things out through mid-2030s they may fall back into that range... this might be their best shot.

 

[Rdkid]

In the case of Clemson, it's entirely possible that this is the best shot they have to find a P2 home. If they continue into a downturn where they are good, but not great (think the Tommy West and Tommy Bowden eras) they become an ok football brand in a small market that the SEC already has covered and the Big Ten probably doesn't need. They wouldn't have been a target for either conference in the 2010 timeframe and if they are forced to play things out through mid-2030s they may fall back into that range... this might be their best shot.

Absolutely. The combo/intersection of 1) money. 2) Gamecocks being in the haves terrifies this fanbase and football program. They have been riding high for over a decade and the university has grown and benefitted as much as any from football wins. They will do whatever it takes to get in the P2, same as FSU. They probably could get 75% of alumni to foot the bill. Ironically, the school the P2 wants the most (UNC) has real mixed feelings about sinking the league they are central to. Money will probably fix that unfortunately.

 

[CL82]

Clemson and FSU are able to get out first, in the go it alone route of now, the value of each of the remaining schools will drop more than proportionally once their best, most marketable opponents, have already departed

What evidence do you have to support that? If you are correct that would defeat FSU and Clemson argument that the exit fee and GOR buyout are a penalty.

Regarding the notion that schools like Louisville would make more money if they left the ACC, where do you think they are going? Right now the ACC and the big 12 are essentially a wash (and when the ACC escalator clauses kick in, the ACC is scheduled to earn slightly more). Why would any entity leave, which entails significant risk, and possibly exit fees and a GOR buyback income is going to, at best, stay flat. It doesn't make economic sense.

Your game theory argument doesn't incorporate a risk factor and also ignores the value of the buyout. That changes the risk reward of abandoning the conference.

Finally I'd respectfully suggest that imagining that the terms of the conference agreement is going to be ignored, and instead the parties will embrace the Pac 12 settlement, kind of seems like magical thinking to me. it seems more reality based to assume the terms of the contract will be enforced until you can find a compelling argument why they will not.

 

[speckle]

What evidence do you have to support that? If you are correct that would defeat FSU and Clemson argument that the exit fee and GOR buyout are a penalty.

Regarding the notion that schools like Louisville would make more money if they left the ACC, where do you think they are going? Right now the ACC and the big 12 are essentially a wash (and when the ACC escalator clauses kick in, the ACC is scheduled to earn slightly more). Why would any entity leave, which entails significant risk, and possibly exit fees and a GOR buyback income is going to, at best, stay flat. It doesn't make economic sense.

Your game theory argument doesn't incorporate a risk factor and also ignores the value of the buyout. That changes the risk reward of abandoning the conference.

Finally I'd respectfully suggest that imagining that the terms of the conference agreement is going to be ignored, and instead the parties will embrace the Pac 12 settlement, kind of seems like magical thinking to me. it seems more reality based to assume the terms of the contract will be enforced until you can find a compelling argument why they will not.

I consider the first part common knowledge. Unless they are playing each other, FSU and Clemson are at the top of the value-add column of every ACC football game. It's part of why they, with UNC, they voted 3-12 against adding the new teams. They also make up a significant proportion of the ACCs CFP pathway, definitely not 1/9th and possibly even the majority, and therefore represent a disproportionate amount of anticipated league revenue. Very simply, they're looking to stop subsidizing the rest of the league and capture their own market value. It's also why the ACC is fighting tooth and nail to keep them from leaving, bc the rest of the league would never get close to same payout without the FSU and Clemson games, ie disproportionate value.

The game theory argument works perfectly as there would be significantly less risk associated with the majority of the league electing to amend the bylaws to facilitate a breakup. If you're following the disproportionate value explanation, you can't assume the Louisville, Miami, VT, etc. payouts would continue at their current or future expected rates, which would then make a Big12 membership slot more valuable assuming their current valuation as peers.

Finally, while the P12s TV contract had entirely ended and that opened the door for a financially manageable conference exit, the $5m fee is on the books and sets a watermark for future school athletics valuations in legal arguments. When the ACCs contract ends at its original date in under 2 years, the league would be looking for a 20-30X multiple, which is the basis for the "punitive" exit fee argument.

I believe there are just too many schools that are better off, sooner, for the ACC to survive much longer. Especially if those schools choose to work together.

I'd expect the 12 to be actively involved in all ACC members other than Wake, BC, and maybe Syracuse and SMU. No idea about Cal and Stanford but I wouldn't rule them out of the 10. At some point the 10 will be able to self finance a stand alone network and ESPN/FOX/whomever will either have to pay up or gain a legit competitor. Watch the NCAA tournament on the B1G network lol.

 

[CL82]

I consider the first part common knowledge.

Ah, so no actual evidence. Got it.

The game theory argument works perfectly as there would be significantly less risk associated with the majority of the league electing to amend the bylaws to facilitate a breakup

Not really. You are imagining outcomes and then treating them as a fact. That's a losing recipe.

I believe there are just too many schools that are better off

I'm sure you do believe that, you just don't have any evidence to support it.

I'd expect the 12 to be actively involved in all ACC members other than Wake, BC, and maybe Syracuse and SMU. No idea about Cal and Stanford but I wouldn't rule them out of the 10.

I'm sure you do expect that, you just don't have any evidence to support it.

Which is fine, people speculate here all the time, but it's better a few distinguish between unsubstantiated guesses and actual informed statements.