Conference Realignment

[slugboy]

EDIT: Another contradiction in FSU's filings, but not part of the ACC answer. a) FSU's media rights are much more valuable than any other member of the ACC. and b) The value that FSU should pay for the return of their media rights is the average value of the ACC media payouts.

To go further down that path, one argument for another conference taking FSU is that their media rights would be worth more in another conference (better matchups). When a reasonable businessperson sells an asset, they don’t sell it for less than it’s worth to the seller—they sell it for more than that, but somewhere closer to what it’s worth to the buyer.

If FSU’s media rights are worth $500 million to the ACC and $650 million to the SEC, the floor for the asking price should be $500 million—and realistically, more. Arguably, they’re worth more than FSU is estimating.

Certainly, if FSU has the most valuable media rights in the conference, it would damage the ACC to accept average value in return. The ACC should get top dollar.

 

[L41k18]

I'm starting to think the B1G has told FSU something approximating this:

We'd love to have you.
But first you have to do two things:
1) Leave the ACC & pay whatever exit fees apply
2) Be free of the GOR and own all your media rights.

That ain't happening for another 10 years or so. And there is no way to predict what the CFB/ TV market will look like then.

 

[Richard7125]

Curious, if FSU writes a $650m check to the ACC, what should the ACC do? Each school would get a one-time bump of about $40m. In the scheme of college sports, big deal. It’s not like any school is winning the lottery.

 

[slugboy]

Curious, if FSU writes a $650m check to the ACC, what should the ACC do? Each school would get a one-time bump of about $40m. In the scheme of college sports, big deal. It’s not like any school is winning the lottery.

We would be smart to apply that to debt relief.

Arizona just moved to the Big 12 and they’re buried. UCLA moved to the B1G, and they’re filling Chip Kelly’s coaching position on the cheap. 30 or 40 million would make a difference for us

 

[L41k18]

Curious, if FSU writes a $650m check to the ACC, what should the ACC do? Each school would get a one-time bump of about $40m. In the scheme of college sports, big deal. It’s not like any school is winning the lottery.

Take the money and be glad FSU is gone.
That's not happening though.

 

[Techster]

I'm starting to think the B1G has told FSU something approximating this:

We'd love to have you.
But first you have to do two things:
1) Leave the ACC & pay whatever exit fees apply
2) Be free of the GOR and own all your media rights.

That ain't happening for another 10 years or so. And there is no way to predict what the CFB/ TV market will look like then.

This has been rumored for a LONG time now. Other ACC schools have had similar discussions with the B1G (SEE: UNC, UVA...possibly GT/Miami).

FSU is just the only school willing to put their heads above the firing line and catch the bullets. FSU is dumb, but their desperation hail mary through the courts is motivated by something B1G at the end of the tunnel.

 

[CEB]

Curious, if FSU writes a $650m check to the ACC, what should the ACC do? Each school would get a one-time bump of about $40m. In the scheme of college sports, big deal. It’s not like any school is winning the lottery.

This is where my head has been. And if the ACC is agreeing to set a precedent that MIGHT / COULD threaten the future of the ESPN deal (allowing teams out of GOR and ESPN deal), i feel like the number is much larger than this.
Yeah, we could use $40m, but not at the expense of losing $40m annually.

 

[stinger78]

I'm starting to think the B1G has told FSU something approximating this:

We'd love to have you.
But first you have to do two things:
1) Leave the ACC & pay whatever exit fees apply
2) Be free of the GOR and own all your media rights.

That ain't happening for another 10 years or so. And there is no way to predict what the CFB/ TV market will look like then.

Heck, at this point, if F$U is willing to pay the conference half a BILLION $$$$$ to exit, I let them go and take the $$$$$. That’s divided by 16 teams (or maybe 13 plus 4 partial shares - ND, SU, UC, and SMU). So maybe each of the 4 get half a share… that equals 15 shares. That’s $33.3M per share and $16.6M per half share. Right now I’d take that in a skinny minute just to get rid of them. That raises the ACC up near the range of the P2 for 3 years. Let’s see what sEcSPN will negotiate after 2026. F$U is out then anyway, most likely.

 

[orientalnc]

This is where my head has been. And if the ACC is agreeing to set a precedent that MIGHT / COULD threaten the future of the ESPN deal (allowing teams out of GOR and ESPN deal), i feel like the number is much larger than this.
Yeah, we could use $40m, but not at the expense of losing $40m annually.

My point as well. Those rights are worth a lot more than the face value.

 

[WreckinGT]

What? Where do they say anything like that?

What they do is define terms in the ACC Bylaws and apply those terms to what FSU is alleging to have taken place. According the the filing, a board vote is required for any "Material Media Rights Agreement". The definition for that term is that it "provides for an average annual value equal to or greater than 5% of the Conference's aggregate gross revenues". Any media agreement that doesn't fit THAT definition does not require a board vote. That if any deadline was extended it does not fit that definition. Words actually have meanings and actually matter, especially words that are defined in a contract so that they are not subject to interpretation.

I think what @orientalnc was asking is how that gets FSU out of the GOR. They signed away their media rights, period. The ACC owns FSU's media rights until 2036. Even if the ACC breaches the ACC Bylaws, the ACC still owns all of it's members media rights.

They are subject to interpretation because interpretation is actually in the bylaws. What you conveniently left out is that part about otherwise deemed material by the chair or commissioner. Assuming money in the current contract doesn't change, which is actually arguable in this case because money could have changed for the better of the ACC members if the ACC leadership had any competence, the commissioner or chair still has to deem it not material to the members to avoid a membership vote. Saying this extension had no material effect on the members is really dumb. No clue how it will hold up legally with respect to fiduciary responsibility but it's a pretty egregious and pointless move by the commissioner. I'm sure more than one school was pretty upset about it at the time.

 

[BCJacket]

I'm starting to think the B1G has told FSU something approximating this:

We'd love to have you.
But first you have to do two things:
1) Leave the ACC & pay whatever exit fees apply
2) Be free of the GOR and own all your media rights.

That ain't happening for another 10 years or so. And there is no way to predict what the CFB/ TV market will look like then.

This is root of what doesn't make sense to me about what FSU is doing. The FSU fans say the 'B1G told them'... Who told them? When? The B1G commissioner? Some of the B1G presidents? An invite to the conference will require a vote of the Presidents. I can't imagine that they held a secret vote and extended a written contract offer to FSU with a defined payout - not when FSU is bound by a GOR for 10 years without a clear pathway out. Maybe it was a straw-poll hypothetical: 'would you approve FSU for membership if they were available and had their media rights?'

But, if so, that was (presumably) before this lawsuit. Before FSU got left out of the playoffs and pitched a s*** fit. Adding FSU (with their full media rights) would get each school just a few million more per year. Which would be nice, but not a 'must have' for the B1G schools. Saying 'FSU would be a good addition, hypothetically', is one thing. Voting that you want a vindictive, self-important, deep-in-debt, prima donna in your conference for a small percentage pay bump is a different calculation...

Which, maybe FSU will agree to a reduced payout to entice the B1G schools to vote them in. But then... what does FSU gain? The B1G schools (full share) get about $20 million more than the ACC. Let's say FSU got a full share. They borrow $500 million from private equity (a low estimate) to pay off the ACC and get out. Private equity wants to make big money, it won't be a low interest rate. But let's say they get 7%, which would be a very good rate right now. That's $35 million in interest, every year. FSU would lose $15 million a year vs the ACC. But, most likely, they're not getting a full share... Most likely, the interest rate will be more like 10%... Which makes that math even worse for them. Even if the B1G payout rises, they'd have a lot of ground to make up just to break even.

I feel like FSU is going to be the guy who's married to a good woman. But the younger prettier girl at work joked that his wife is so lucky and she wished she could find a guy like him... Bro leaves his wife and goes through a nasty divorce. Loses his house, money and dignity. Now the pretty girl says: 'You're a broke, mean, selfish jerk who treated your wife terribly. Not interested.' He ends up living alone in a one bedroom apartment and flirting creepily with the hostess at the sports bar (aka the Big12). Or he ends up broke and in spiraling into debt trying to pay alimony and satisfy a high-maintenance sugar baby.

My speculation is that FSU has an over-inflated sense of their own value. They think they are one of the premier brands in the country and the B1G and SEC will have a bidding war over them. That might have been true 10 years ago if they'd left the ACC. But their marginal value to either conference at this point is modest. Maybe the folks at FSU are much smarter than I. Maybe there's some really important information that's not public or in their lawsuit that really changes their calculations. But I've read all of the filings and public info. This just does not seem like a smart business decision at all.

 

[WreckinGT]

This is part my additional thoughts on the GOR.

First, the very notion that a public university would borrow $500 million to finance the move of their football team from one conference to another is abhorrent in the extreme.

Second, just because the ACC could sell FSU's media rights back to the school does not obligate them to do so. Or, that the price is negotiable or favorable to FSU. The conference could demand double or triple the face value of the rights. I think it would be ironic if FSU sold bonds to finance the purchase and then the ACC refused to sell the rights at a price FSU could afford.

Edit: FSU seems to think they could negotiate a lower price for the GOR than the face value. My thought about that is the opposite. If I own the only Honus Wagner baseball card I can pretty much name my price. Those FSU rights might not be as precious as the Wanger card, but the Noles need them if they are going to the B1G.

I mean, if the ACC tried this then FSU would just leave the conference, and refuse payment back to the ACC. Everything will stay in court for years and years. They run a serious risk at that point of getting far less then they could get in a settlement.

 

[RonJohn]

To go further down that path, one argument for another conference taking FSU is that their media rights would be worth more in another conference (better matchups). When a reasonable businessperson sells an asset, they don’t sell it for less than it’s worth to the seller—they sell it for more than that, but somewhere closer to what it’s worth to the buyer.

If FSU’s media rights are worth $500 million to the ACC and $650 million to the SEC, the floor for the asking price should be $500 million—and realistically, more. Arguably, they’re worth more than FSU is estimating.

Certainly, if FSU has the most valuable media rights in the conference, it would damage the ACC to accept average value in return. The ACC should get top dollar.

One thing that I pointed out after first reading the FSU complaint is that they have filed a legal brief in which they explicitly state that the value of the media rights is $429 million. I would agree that from a negotiation standpoint, the ACC can ask for more. In fact, they could ask for $10 billion if they so choose. FSU could offer $1. A negotiated settlement does not have to occur if the parties can't come to an agreement. However, if FSU wants to try to reduce that number legally they appear to have shot themselves in the foot. The ACC can claim that the rights are worth more, but FSU will have issues trying to claim that the legal value is less because they have already claimed in signed legal filings that it is worth at least $429 million.

Some on here believe that I simply try to bash FSU every chance I get. That isn't the case. The original FSU filing is very messy. It contradicts itself. It contains some claims that negate other claims. In the case of the media value, it has already set the minimum amount to repurchase their media rights at a figure higher than what they would be willing to pay for it. Once again, I am not a lawyer, but I think most lawyers would try to avoid saying things in a lawsuit filing that they would not want to have admitted into court. Especially so if it is the original filing in a lawsuit in which you are the plaintiff.

 

[WreckinGT]

My point as well. Those rights are worth a lot more than the face value.

Those rights currently have no known value past 2027. So how does the ACC put a price on them?

 

[L41k18]

This has been rumored for a LONG time now. Other ACC schools have had similar discussions with the B1G (SEE: UNC, UVA...possibly GT/Miami).

FSU is just the only school willing to put their heads above the firing line and catch the bullets. FSU is dumb, but their desperation hail mary through the courts is motivated by something B1G at the end of the tunnel.

The problem is, that's a loooonnng tunnel. By the time FSU can see the exit, who knows what things will be like in the sport?

 

[roadkill]

I mean, if the ACC tried this then FSU would just leave the conference, and refuse payment back to the ACC. Everything will stay in court for years and years. They run a serious risk at that point of getting far less then they could get in a settlement.

I assume you are referring to the exit fee here, and the risk of it being tied up in court.
The GOR doesn't involve payments from FSU to the ACC, unless the ACC decides to sell back the rights. So, why would FSU leave the conference without their media rights?

 

[RonJohn]

This is root of what doesn't make sense to me about what FSU is doing. The FSU fans say the 'B1G told them'... Who told them? When? The B1G commissioner? Some of the B1G presidents? An invite to the conference will require a vote of the Presidents. I can't imagine that they held a secret vote and extended a written contract offer to FSU with a defined payout - not when FSU is bound by a GOR for 10 years without a clear pathway out. Maybe it was a straw-poll hypothetical: 'would you approve FSU for membership if they were available and had their media rights?'

I think the rumors started in the Summer of 22 when Rival's FSU sight posted that GT was about to announce a departure for the Big10. I didn't re-read that, but I think it theorized that as soon as GT left, it would open things up for FSU to leave. It has been two years, and GT didn't leave for the Big10. However, the FSU rumors keep morphing. Last summer, they supposedly had a written offer from the Big10 and were voting in a couple of weeks to leave. Did that happen? There is a twitter user that supposedly posts Big10 information, but there is no Big10 information in his stream, only FSU lawsuit information. People are far to eager to believe what they read on Twitter without any confirmation, except maybe other people on Twitter repeating said claim. People even still believe Greg Swaim even though he has repeatedly proclaimed that FSU was announcing their departure on such and such date. That date passes, he posts another date and people believe him. At this point for me to believe that FSU actually has an offer from the Big10 I would need to see pictures of a contingent of FSU BOT members and lawyers entering the Big10 headquarters.

 

[RonJohn]

Those rights currently have no known value past 2027. So how does the ACC put a price on them?

How does an owner of a 1965 Ford Mustang put a price on it? There is no intrinsic price. It is only what the owner is willing to accept to allow the car to leave his ownership. The ACC could say $100 billion and accept nothing less. The ACC could say $50 and a cup of coffee. The ACC decides at what price they would be willing to sell media rights to FSU. That is how it works in a free market economy.

 

[slugboy]

Those rights currently have no known value past 2027. So how does the ACC put a price on them?

They can take the estimated distributions from either the B1G or SEC. Neither conference would offer membership at a financial loss, so that’s a floor for the FSU value.

I mean, if the ACC tried this then FSU would just leave the conference, and refuse payment back to the ACC. Everything will stay in court for years and years. They run a serious risk at that point of getting far less then they could get in a settlement.

Worst case, the ACC is the exclusive broadcaster for FSU home games. The ACC gets money no matter what. FSU is contractually required to support this. From a negotiating point of view, FSU needs to offer the ACC a better deal than what they already have—or, at least, the ACC has little incentive to accept less value than they get from FSU now.

FSU’s best card is “we are an unwilling partner”. It’s not a winning hand. Every other card is something that the conference can turn to their advantage

FSU will position their case as favorably as possible. So will the ACC. The ACC filings look more realistic so far.

This is where my head has been. And if the ACC is agreeing to set a precedent that MIGHT / COULD threaten the future of the ESPN deal (allowing teams out of GOR and ESPN deal), i feel like the number is much larger than this.
Yeah, we could use $40m, but not at the expense of losing $40m annually.

The conference isn’t going to settle for a substantial financial loss.** They don’t have any reason to. FSU’s lawyers are going to cite only values that support their case; I would not accept any of those numbers at face value. I wouldn’t accept the ACC numbers either—I would use values paid to comparable schools

**The ACC could accept less. That would be stupid, and they’ve done stupid things.

 

[WreckinGT]

How does an owner of a 1965 Ford Mustang put a price on it? There is no intrinsic price. It is only what the owner is willing to accept to allow the car to leave his ownership. The ACC could say $100 billion and accept nothing less. The ACC could say $50 and a cup of coffee. The ACC decides at what price they would be willing to sell media rights to FSU. That is how it works in a free market economy.

lol. That's not how it works at all. Let me ask you this. Could the ACC sell FSU's media rights to OnlyFans?