Conference Realignment

[orientalnc]

The ACC blatantly says in a legal document that a member can attempt to buy back their rights. A well known sports writer makes the not so big jump that the ACC might be open to a member attempting to buy back their rights. GTSwarm: It's wishful thinking and far fetched to think the ACC might consider allowing a member to attempt to buy back their rights.

I guess there is a number out there somewhere (with lots of commas) where the ACC would push FSU out the door to get their hands on the cash. So, I will accept your point.

 

[stinger78]

I guess there is a number out there somewhere (with lots of commas) where the ACC would push FSU out the door to get their hands on the cash. So, I will accept your point.

Great. This has been our point for several days now. I don’t consider it likely but I do consider it possible.

 

[roadkill]

FSU claims their rights are more valuable. If they paid $60 mil per year for their media rights, it would be about a fair deal. FSU is saying they are a valuable enough property that they should get a full share in the Big10–that’s $60 million per year. That sets the market price for their media rights.
It also means that there’s no financial benefit for FSU moving conferences. But, that tells you it’s a fair price.
Those rights would be expected to increase over time, so the payments should too.

Anyway “fair price for the media rights” ==“not worth moving”, pretty much by definition

There's also the element of "diminished value" - like the insurance term for what happens to a car after it has been repaired following an accident. The ACC could (and should) argue that aside from being owed the annual media income for a school, the current value of the ACC's ESPN contract is bolstered by a disproportionate amount via the inclusion of FSU. If FSU games are among the most valuable properties in the conference's current contract, then the loss of FSU would cause the entire conference's media value to be significantly diminished and thus negatively affect future payouts to its members. How much is anyone's guess, but FSU seems to think they are the most valuable team in the conference, so they would have a hard time arguing against this point.

 

[stinger78]

This is the disconnect that I hear consistently from F$U. WTTE: we’re the best you got and we believe we need a discount to leave.

 

[WreckinGT]

There's also the element of "diminished value" - like the insurance term for what happens to a car after it has been repaired following an accident. The ACC could (and should) argue that aside from being owed the annual media income for a school, the current value of the ACC's ESPN contract is bolstered by a disproportionate amount via the inclusion of FSU. If FSU games are among the most valuable properties in the conference's current contract, then the loss of FSU would cause the entire conference's media value to be significantly diminished and thus negatively affect future payouts to its members. How much is anyone's guess, but FSU seems to think they are the most valuable team in the conference, so they would have a hard time arguing against this point.

While this is probably true, im not sure you want to publicly put a downgraded value on the members of your conference when you may be renegotiating TV deals in 2027.

 

[roadkill]

While this is probably true, im not sure you want to publicly put a downgraded value on the members of your conference when you may be renegotiating TV deals in 2027.

Valid point. But should it come to pass that a negotiated exit for FSU is completed before ESPN renews its contract with the ACC, I'm pretty sure that ESPN will use diminished value as a negotiating element regardless of whether or not the ACC used it.

 

[Augusta_Jacket]

This is the passage verbatim:

“…Florida State alleges that the Grant of Rights, as extended, is also a ‘punitive penalty’ upon a withdrawing member (referring to the ‘additional, crippling penalties’ in the Grant of Rights). But there is no provision in the Grant of Rights that could possibly serve as a penalty and, indeed, there is no reference to a monetary payment at all if a Conference member elects to withdraw from a Conference. Rather, the Grant of Rights simply provides that the media rights of all members will remain with the Conference through the term of the agreement. Florida State imagines that this means it has forfeited future revenue as a ‘penalty.’ It posits that the fact that it may choose to repurchase its rights before the end of the term of the Grant of Rights (if it someday withdraws), somehow constitutes a penalty. But in so arguing Florida State misunderstands the nature of this transaction. Florida State (twice) assigned its media rights for a specific term to the Conference for the purpose of entering into agreements with ESPN. The Conference thus controls those rights for that term. If Florida State wishes to regain control of the rights before the end of the term, it could attempt to repurchase them. But having to buy back a right which was assigned is not a penalty; it is simply a commercial possibility. Paying a fair price for rights that were previously transferred cannot be a “penalty” under any reasonable definition of the term.”

It takes some pretty significant intellectual gymnastics to make that read like the ACC is willing to sell FSU its rights back to them.

 

[SOWEGA Jacket]

Talk of “diminished value”. That’s the new motto of the ACC. The SEC says “It just means more” and the ACC says “call the lawyers against your own member”. All ACC schools should sue the leadership who took us to such heights of having your undefeated champ sitting at home and getting a whopping 4 invites to a 64plus tournament. I remember the days when we’d have 2 teams in the Final Four and 8 invites. The team of Swofford and Phillips have done wonders for the SEC.

 

[Techster]

The ACC blatantly says in a legal document that a member can attempt to buy back their rights. A well known sports writer makes the not so big jump that the ACC might be open to a member attempting to buy back their rights. GTSwarm: It's wishful thinking and far fetched to think the ACC might consider allowing a member to attempt to buy back their rights.

Anyone who thinks the ACC stays intact in its current membership till 2036 isn't paying attention to conference realignment, nor understands the value of leverage. Right now the ACC has all the leverage. Every year that goes by, the ACC's GOR leverage over FSU diminishes. Anything with an expiration date loses value over time...that's just the fundamentals of business. There will come a point where FSU's buyout amount will surpass it's GOR value to the ACC, at which point it makes $$$ sense for both sides to negotiate a payout. The multi million $$$ question is when do the two points intersect? Anyone can bookmark this and bring it up later if I'm wrong, but FSU isn't going to be in the ACC by the time 2030 rolls around.

I'll go one step further and say FSU won't be the only school leaving the ACC BEFORE 2036 rolls around.

 

[RonJohn]

Anyone who thinks the ACC stays intact in its current membership till 2036 isn't paying attention to conference realignment, nor understands the value of leverage. Right now the ACC has all the leverage. Every year that goes by, the ACC's GOR leverage over FSU diminishes. Anything with an expiration date loses value over time...that's just the fundamentals of business. There will come a point where FSU's buyout amount will surpass it's GOR value to the ACC, at which point it makes $$$ sense for both sides to negotiate a payout. The multi million $$$ question is when do the two points intersect? Anyone can bookmark this and bring it up later if I'm wrong, but FSU isn't going to be in the ACC by the time 2030 rolls around.

I'll go one step further and say FSU won't be the only school leaving the ACC BEFORE 2036 rolls around.

There have been a lot of people predicting the 2030 time frame. Because the GOR is shorter, and the media contracts for the other conferences begin to expire. In 2030, the Big10 can negotiate full payments for other members. In 2034, the SEC can. I think the Big12 can in 2032, but I might be wrong. If Oregon and Washington are any indications, the media partners are not willing to pay full fare for new members to the Big10 at the moment. If nothing drastic happens with FBS football before then, that is when things will be ripe for more conference reorganization.

The only thing I would have to point to something different is that we have no idea what the situation will be in 2030. Eight years ago, FSU signed the GOR for the second time and their BOT thought it was the best thing for them. Who knows how things will look in six or seven more years. Maybe FSU, Miami, CLemson, UNC, and GT will start dominating in football and the ACC will look really strong. I'm not making predictions, just pointing out that we didn't know eight years ago how today would look, so we can't really believe we can predict the future now.

Going in the other direction, I think there is a substantial chance that conferences will look very different by 2030. If FBS football splits into "professional" and "academic" divisions, how will the current conferences survive? (Not as in they will all dissolve, but they won't look the same as they do now.) That could have the potential to eliminate conferences all together and just have divisions of "professional" college football.

 

[WreckinGT]

This is the passage verbatim:

“…Florida State alleges that the Grant of Rights, as extended, is also a ‘punitive penalty’ upon a withdrawing member (referring to the ‘additional, crippling penalties’ in the Grant of Rights). But there is no provision in the Grant of Rights that could possibly serve as a penalty and, indeed, there is no reference to a monetary payment at all if a Conference member elects to withdraw from a Conference. Rather, the Grant of Rights simply provides that the media rights of all members will remain with the Conference through the term of the agreement. Florida State imagines that this means it has forfeited future revenue as a ‘penalty.’ It posits that the fact that it may choose to repurchase its rights before the end of the term of the Grant of Rights (if it someday withdraws), somehow constitutes a penalty. But in so arguing Florida State misunderstands the nature of this transaction. Florida State (twice) assigned its media rights for a specific term to the Conference for the purpose of entering into agreements with ESPN. The Conference thus controls those rights for that term. If Florida State wishes to regain control of the rights before the end of the term, it could attempt to repurchase them. But having to buy back a right which was assigned is not a penalty; it is simply a commercial possibility. Paying a fair price for rights that were previously transferred cannot be a “penalty” under any reasonable definition of the term.”

It takes some pretty significant intellectual gymnastics to make that read like the ACC is willing to sell FSU its rights back to them.

Im sorry but it takes pretty significant mental gymnastics to read:

If Florida State wishes to regain control of the rights before the end of the term, it could attempt to repurchase them.

And think that the ACC is making a statement that they will never allow FSU to attempt to repurchase their rights. In fact, it isn't really mental gymnastics as much as a lack of basic reading comprehension.

 

[WreckinGT]

Anyone who thinks the ACC stays intact in its current membership till 2036 isn't paying attention to conference realignment, nor understands the value of leverage. Right now the ACC has all the leverage. Every year that goes by, the ACC's GOR leverage over FSU diminishes. Anything with an expiration date loses value over time...that's just the fundamentals of business. There will come a point where FSU's buyout amount will surpass it's GOR value to the ACC, at which point it makes $$$ sense for both sides to negotiate a payout. The multi million $$$ question is when do the two points intersect? Anyone can bookmark this and bring it up later if I'm wrong, but FSU isn't going to be in the ACC by the time 2030 rolls around.

I'll go one step further and say FSU won't be the only school leaving the ACC BEFORE 2036 rolls around.

I agree. This is the logical conclusion to all of this. I think it will likely be a bit earlier for FSU though. I think they will be gone around the 2026-2028 range. That is the most likely date range from some of the details in their fundraising efforts. WiIl it cost them more? Probably. Unless ESPN declines the 9 year option. I'm not sure they care much though. They seem hell bent on leaving and paying whatever they have to pay to do so.

 

[yeti92]

Im sorry but it takes pretty significant mental gymnastics to read:

And think that the ACC is making a statement that they will never allow FSU to attempt to repurchase their rights. In fact, it isn't really mental gymnastics as much as a lack of basic reading comprehension.

The ACC cannot prevent FSU from trying to buy back its media rights, but nobody is saying that, except you as a strawman to argue against. FSU can throw out numbers all day to see if the ACC will bite, what's being argued is that the ACC has no obligation to accept an offer.

 

[orientalnc]

I think you might find this podcast interesting. Thorp is the former UNC chancellor.

 

[stinger78]

The ACC cannot prevent FSU from trying to buy back its media rights, but nobody is saying that, except you as a strawman to argue against. FSU can throw out numbers all day to see if the ACC will bite, what's being argued is that the ACC has no obligation to accept an offer.

I think that the ACC having no obligation to sell is true at face value and no one is arguing that they do. However, they might. It’s possible.

The issue is what F$U will do. They can absolutely buy their way out by one of two ways: 1) by paying an amount that the ACC would accept, or 2) foregoing their media rights and raising enough money to cover that for x years.

That’s the main variable here. How long? They know how much under the current contract.

Here’s a possible play, I think. If F$U leaves, there is a strong chance that sEcSPN won’t exercise the option with the ACC at the current price and the GOR will cease or change. Either way, F$U is then free to sign a new media rights contract with a new conference when its renewal comes due. That would likely be 2030 at the earliest.

So then, they may only need to raise ~$40M for 6 years, or $240M to buy themselves out of the conference. If they want to compete with B1G/SECheat “peers,” they would need ~$50M for 6 years, or $300M.

Of course, there’s risk involved. If sEcSPN, knowing that F$U media would stay with the ACC, does check the box, then F$U would have 6 even more expensive years to foot the bill.

How did college football ever get to this point?

 

[slugboy]

I agree. This is the logical conclusion to all of this. I think it will likely be a bit earlier for FSU though. I think they will be gone around the 2026-2028 range. That is the most likely date range from some of the details in their fundraising efforts. WiIl it cost them more? Probably. Unless ESPN declines the 9 year option. I'm not sure they care much though. They seem hell bent on leaving and paying whatever they have to pay to do so.

What point are you actually trying to make?

That FSU pays their exit fees plus buys back their media rights at true market value? That would be a financial loss for them, and there’s no need for the court cases. They just declare their intention to leave and pay what they owe.

That FSU doesn’t have to pay an exit fee? This seems really unlikely

That FSU invalidates the ACC contracts? How? So far, their arguments don’t make sense. Would they have to repay all their disbursements over the last decade?

FSU is in court. They do not want to pay what they would owe in order to leave and get their media rights. However, their legal complaints don’t seem to get them there.

 

[Augusta_Jacket]

Im sorry but it takes pretty significant mental gymnastics to read:

And think that the ACC is making a statement that they will never allow FSU to attempt to repurchase their rights. In fact, it isn't really mental gymnastics as much as a lack of basic reading comprehension.

You're quite the gymnast.

 

[CEB]

I think that the ACC having no obligation to sell is true at face value and no one is arguing that they do. However, they might. It’s possible.

The issue is what F$U will do. They can absolutely buy their way out by one of two ways: 1) by paying an amount that the ACC would accept, or 2) foregoing their media rights and raising enough money to cover that for x years.

That’s the main variable here. How long? They know how much under the current contract.

Here’s a possible play, I think. If F$U leaves, there is a strong chance that sEcSPN won’t exercise the option with the ACC at the current price and the GOR will cease or change. Either way, F$U is then free to sign a new media rights contract with a new conference when its renewal comes due. That would likely be 2030 at the earliest.

So then, they may only need to raise ~$40M for 6 years, or $240M to buy themselves out of the conference. If they want to compete with B1G/SECheat “peers,” they would need ~$50M for 6 years, or $300M.

Of course, there’s risk involved. If sEcSPN, knowing that F$U media would stay with the ACC, does check the box, then F$U would have 6 even more expensive years to foot the bill.

How did college football ever get to this point?

Maybe I misunderstood your point but If FSU really can’t get a full share until 2030, the math makes even less sense.
They have to believe that they have an immediate home for far greater than $40m annually for this to make any sense at all.
If they leave AND buy out their media rights at face value, the true cost of that move is $80m ANNUALLY ($40m they pay for their media and $40m they don’t receive for the same media), PLUS an exit fee (using 6 years as horizon, another $15-$20m annually).
Roughly $100m in annual cost over the next 6 years in order to get a $20m raise 6 years from now? (Not to mention that it may not actually be $20m if ACC continues to increase…)
More likely this is all posturing to figure out logistics of an exit in 2030-2032 when the BIG / SEC money is actually there.
If that’s what you meant by potentially bridging 6 years (buying media rights from 2030-2036), then I agree.
If they are doing anything sooner, they must believe there is an immediate home for them making well north of $40m annually.

 

[CEB]

You're quite the gymnast.

 

[Augusta_Jacket]

I may be wrong, and I've been so before, but I do not think it's as simple as "FSU can buy back their rights and the ACC takes the money and everyone is happy."

ESPN signed a contract with the ACC that included FSUs media rights. No one is really arguing that FSUs TV rights aren't the most valuable of all the schools in the ACC. If the ACC let FSU split with their rights, then wouldn't they be in breach of contract with ESPN? Wouldn't that be financial suicide for the ACC?