Conference Realignment

[forensicbuzz]

While I agree that this is the INTENT of the GOR (to run through 2036), if I am not mistaken, there is also a statement in the GOR saying it is in place to fulfill the ESPN agreement obligations. Even if it was not the intent to dissolve it if the ESPN agreement ends early, I think any decent lawyer could make that a pretty compelling point.
All of that said, we still don’t know exactly what part, if any, of the ESPN agreement can / may end prior to 2036. If the ESPN deal stays in place, it’s a moot point.

I'm pretty sure there is no such language in the GOR extension signed in 2016. There have been discussions about why it was extended to 2036, but that's not part of the document (my understanding).

 

[RonJohn]

That's the part that will be challenged. I'm not a lawyer, but the GOR agreement floating around reads as if it exists for the purpose of the ESPN media contract, despite some on here saying the GOR exists separately outside of the ESPN contract. That's not my interpretation of the GOR (at least the one floating around the internet):

https://storageaccountstart88df.blob.core.windows.net/ndnationshare/ACC-Grant-of-Rights-1.pdf

RECITALS:​

WHEREAS, the execution and delivery of this Agreement enhances the stability of Conference membership, confirms the commitment by each Member Institution to the other Member Institutions of the Conference, and thereby provides valuable benefits to each Member Institution of the Conference;

WHEREAS, the Conference has previously entered into the Multi-Media Agreement with ESPN, Inc. and ESPN Enterprises, Inc. dated as of July 8, 2010, as amended by the Amendment and Extension Agreement dated as of May 9, 2012 (as amended collectively referred to as the "Amended ESPN Agreement'');

WHEREAS, each of the Accepted Members has been accepted for membership in the Conference by the Current Members and each Accepted Member has agreed that its membership shall be effective on the date specified on its signature page to this Agreement;

WHEREAS, as a condition to the agreement of ESPN to offer additional consideration to the Conference as pa11 .of a further amendment to the Amended ESPN Agreement (the "Additional Amendment"; the Additional Amendment, together with the Amended ESPN Agreement, collectively, the "ESPN Agreement"), each of the Member Institutions is l'equired to, and desires to, irrevocably grant to the Conference, and the Conference desires to accept from each of the Member Institutions, those rights granted herein; and

WHEREAS, the Conference and the Member Institutions desire to have this Agreement memorialize their understandings with respect to the matters set forth herein.

NOW, THEREFORE, for and in consideration of the foregoing, the covenants set forth herein and in the ESPN Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and agreed, and intending to be legally bound hereby, the undersigned each hereby agree with the Conference and with each other as follows:

Here they get more specific to the "Grant of Rights":

Grant of Rights. Each of the Member Institutions hereby (a) irrevocably and exclusively grants to the Conference during the Term (as defined below) all rights (the "Rights'') necessary for the Conference to perform the contractual obligations of the Conference expressly set forth in the ESPN Agreement, regardless of whether such Member Institution remains a member of the Conference during the entirety of the Term and (b) agrees to satisfy and perform all contractual obligations of a Member Institution during the Term thatare expressly set forth in the ESPN Agreement.

The Grant of Rights portions goes on to specifically identify what material items (media forms) the GOR covers.

The other detail of the contract that leads me to believe the GOR exists as a binding "companion" of the ESPN media contract, and not a stand alone agreement, is the Term section. The original expiration of the GOR and ESPN contract ran concurrently (originally to 2027), and when the ESPN contract was amended to 2036, the GOR Term was also extended to match the new ESPN media contract. I don't think that was coincidence. In addition, the GOR references and points to the ESPN media contract too many times...in other words, if any mention of the ESPN media contract was removed, what good is the GOR? That's essentially what occurs if ESPN opts out in 2027.

From a strictly business POV, it would not be a good business decision for ESPN to terminate this agreement in 2027. It's been pointed out that the ACC is the most profitable media contract ESPN has in terms of its college assets. HOWEVER, if ESPN does pull of the ACC media agreement, not sure how the GOR is valid beyond ESPN's last pay check to the ACC as the terms of the GOR are heavily influenced by the ESPN media agreement.

I don't think access to the ESPN media agreement would address this issue either. I think the ESPN media contract just addresses the specifics of the terms, $$$ amount, and media rights of the ACC. There's no reason to think the ESPN media agreement would hash out the membership rights outside of the ACC, outside of saying the ACC members need to agree to a binding agreement in order for ESPN to move forward with their investment in the ACC (the ACC network specifically).

Again, I'm not a lawyer, so those more well versed in legalese feel free to correct my assumptions above.

Not a lawyer either. I think the important part that could be challenged if there is no ESPN agreement after 2026 is "necessary for the Conference to perform the contractual obligations of the Conference expressly set forth in the ESPN Agreement" Does that mean the agreement or does that mean only the obligations set forth in the agreement. I think it could be argued either way. However, to make that argument, the ESPN Agreement would have to not exist. You can't make a lawsuit claim based on what someone might do in the future. Your landlord can't evict you because you might miss a rent payment in the future. IF ESPN can cancel the entire contract in a couple of years, and they do cancel it then someone can make that claim. Until that point there are still contractual obligations of the agreement, and the agreement. Both are satisfied.

 

[WreckinGT]

Here you are with that "2035" folderol again. No, and I've said before, under present conditions the ACC will likely break up sometime in the early 2030s, as most others have as well, when the cost of doing so becomes manageable. But this is 2024, isn't it?

Good. Im glad that we are all on the same page that the ACC will eventually negotiate exit fees and media rights buyouts for the members that want to leave. I think it will be a bit earlier for FSU and they may pay a bit more but they will exit nonetheless.

 

[RonJohn]

I'm pretty sure there is no such language in the GOR extension signed in 2016. There have been discussions about why it was extended to 2036, but that's not part of the document (my understanding).

There is:

https://news.fsu.edu/wp-content/uploads/2023/12/2016-AMENDMENT-ACC-Grant-of-Rights-Agmt.pdf

https://news.fsu.edu/wp-content/uploads/2023/12/ACC-GOR-2013.pdf

@Techster posted it above. It specifically says: "Each of the Member Institutions hereby (a) irrevocably and exclusively grants to the Conference during the Term (as defined below) all rights (the "Rights'') necessary for the Conference to perform the contractual obligations of the Conference expressly set forth in the ESPN Agreement, regardless of whether such Member Institution remains a member of the Conference during the entirety of the Term"

EDIT: That wording is from the 2013 GOR. The 2016 amendment basically only changes the end date to 2036.

 

[forensicbuzz]

The ESPN contract is under NDA, but the GOR (at least the ones in circulation without all signatures) isn't. The GOR states that it is necessary for the ESPN contract, but not the other way around. The GOR does reference the ESPN contract, so perhaps if ESPN walked away in 2026, the GOR could be successfully challenged. With the usual caveat that I'm not a lawyer.

Are you sure it's in the GOR? I don't think it was in the version I saw.

 

[stinger78]

Is that a serious question?
Greed. The answer is greed.

Yes, it was serious, but the answer is obvious, so I guess it was largely rhetorical.

 

[Techster]

Not a lawyer either. I think the important part that could be challenged if there is no ESPN agreement after 2026 is "necessary for the Conference to perform the contractual obligations of the Conference expressly set forth in the ESPN Agreement" Does that mean the agreement or does that mean only the obligations set forth in the agreement. I think it could be argued either way. However, to make that argument, the ESPN Agreement would have to not exist. You can't make a lawsuit claim based on what someone might do in the future. Your landlord can't evict you because you might miss a rent payment in the future. IF ESPN can cancel the entire contract in a couple of years, and they do cancel it then someone can make that claim. Until that point there are still contractual obligations of the agreement, and the agreement. Both are satisfied.

Agreed. It would take ESPN saying "We opt out" in 2027 for FSU (or any ACC member) to have a legitimate case to leave the GOR...BUT if the GOR self terminates with ESPN opting out in 2027, any lawsuit would be moot anyhow.

 

[forensicbuzz]

But that is what I was saying. By "full fare" I meant the same as what existing Big10 members make. What you said is the same thing, there is a contingency for adding new members that is lower than what existing members get. IOW, if FSU were to join the Big10, they would not get the same payout as Ohio State.

Agreed. But that's not because Ohio State and the others are getting more and FSU less. FSU would just be getting less because of the contracts. Seems we agree and are on the same page now. It seemed to my that you were saying the B1G wasn't giving them a full share for reasons other than the contracts.

 

[forensicbuzz]

Speaking of hyperbole… is this it?
Did you mean 2025?
Very few are talking 2035 by my estimation.
My unscientific polling of this site puts 90% of us in the 2030-2033 range for dissensions.
I would be surprised if anyone is gone in the next five years and SHOCKED if we are intact in 2035.

I do not think the GOR will be broken until it expires in 2036. It requires a unanimous vote and, unless the requisite number of schools votes to disband the ACC and that kills the ACC as a legal entity, any team that leaves will leave their media rights behind until 2036. I don't see Wake Forest being asked to B1G/SEC, so they have zero incentive to vote to abolish the GOR. I'd posit that there's no way to release one of the schools from the GOR without invalidating the GOR, so I don't think that will happen.

 

[bobongo]

Good. Im glad that we are all on the same page that the ACC will eventually negotiate exit fees and media rights buyouts for the members that want to leave. I think it will be a bit earlier for FSU and they may pay a bit more but they will exit nonetheless.

We're all going to "exit" someday. But not today, and not tomorrow. FSU isn't going anywhere any time soon - unless, as I've said, they can prove fraud in that they signed the contract under false pretenses.

 

[forensicbuzz]

Because it becomes more "affordable" to leave then. You would only have to buy out a few seasons worth of rights vs more than a decades worth of them.

IF the ACC were to implode, I would bet on 2033-2034 as the initial years of the exodus.

This isn't true. The cost doesn't change. It is whatever the ACC decides it to be. What goes down, I think, is the exit fee. If there's no media contract, then there's no exit fee because there's no earnings. I'm not sure The ACC can sell a single team their media rights back without invalidating the entire GOR. Then the ACC would collapse.

 

[CEB]

Using their position to overcharge FSU for their media rights in order to leave is extortion. Again. Not hyperbole.

You say “overcharge” as if FSU’s (or the internet’s) made up figure of $500m is accurate.

We know that no one here has seen the ACC / ESPN agreement.
We know that the ACC has this cumbersome GOR to prevent teams from leaving.
We can reasonably surmise that a team (or teams, we don’t know the number) leaving would jeopardize the ESPN deal or there would be no need for this onerous GOR.

Therefore, with 13 teams (excluding FSU and ND because I don’t know what they make) making $35m annually for 12 years, that’s roughly $5.5B in total. If FSU departing blows up that deal and the ACC (as their fanboys would have us believe), why would it be unreasonable for the ACC to insist on $5.5B (or at least the net present value of that) to let FSU walk away? No one would argue that is the value of FSU is $5.5B, but it may well be the value (damage) to the ACC.

Is that extortion?

 

[orientalnc]

FSU is actively fund raising and working with private equity firms to front the money for the buyout. Sure they are going to try to get it reduced, but they are gone no matter what the price is.

If you have not already, you should listen to the podcast I posted earlier. I am reposting it below. In it the former chancellor of UNC talks about private equity firms and what they do and ponders how that might work with college athletics. He is very doubtful as to how a public university could enter into an agreement like that. Would they be able to pick the AD or would they have the power to overrule the AD? How much control would they demand before investing the AA? You know it would not be zero.

Also, my UNC attorney friend thinks it very unlikely FSU would be welcome in the B1G without their media rights. Even if they joined the conference with a zero share.

 

[forensicbuzz]

The ESPN contract may have language requiring the GOR, but the GOR does not have any language about contracts. It's a very simple document. There's not enough language in it to have any loopholes.

Well, apparently this is not correct.

 

[forensicbuzz]

I'm pretty sure there is no such language in the GOR extension signed in 2016. There have been discussions about why it was extended to 2036, but that's not part of the document (my understanding).

Again. Apparently wrong.

 

[CEB]

I do not think the GOR will be broken until it expires in 2036. It requires a unanimous vote and, unless the requisite number of schools votes to disband the ACC and that kills the ACC as a legal entity, any team that leaves will leave their media rights behind until 2036. I don't see Wake Forest being asked to B1G/SEC, so they have zero incentive to vote to abolish the GOR. I'd posit that there's no way to release one of the schools from the GOR without invalidating the GOR, so I don't think that will happen.

Fair points… although it think we will reach a point where WF will take “their money now” knowing that the writing is on the wall.
That said, I think there is a far better chance of this thing holding to 2036 than there is of teams leaving in the next 5-6 years.
My money would be on things starting to unravel in 7-8 years.

 

[yeti92]

There is no evidence that the Big 10 will pay that much for FSU, nor is there any evidence that FSU's value in the ACC is equal to FSU's value in the Big 10. Overcharging significantly, making it impossible to leave without paying a clear penalty on top of fair market rights is certainly extortion.

Like FSU, you are continuing to co-mingle separate issues. There is a clear defined exit fee to pay to leave the ACC. They can do that today and be out tomorrow if they put up the money. Return of their media rights is a completely separate issue.

 

[orientalnc]

This would just start a price war that would be settled in court. The ACC can't just attempt to extort them for any unreasonable amount they feel like. That would just boost FSU's case against them.

If I own the Honus Wagner card and you want it badly enough to offer me $100 million, I don't have to accept your offer. I don't even have to counter the offer. I can just say no. But, that did not stop you from attempting to buy the card. I may have no intent to sell the card under at any price, but that doesn't mean I have tell you up front.

If two other Swarmers also want the card and offer $200 million, that is not a price war. I ain't selling. I am also not extorting any you Swarmers who want that card. I do not care that you promised your grandson he could have it. It is NOT extortion when one party refuses to sell property he owns to a second party.

 

[WreckinGT]

Like FSU, you are continuing to co-mingle separate issues. There is a clear defined exit fee to pay to leave the ACC. They can do that today and be out tomorrow if they put up the money. Return of their media rights is a completely separate issue.

They aren't separate issues. The issue is leaving the conference. If a program can't possibly leave due to a lack of media rights crippling their athletic program then the exit fee and bylaws related to leaving are meaningless. You can keep saying they are separate all that you want. It's impossible to leave without your media rights unless you are just planning to shut down your athletic department.

 

[roadkill]

Are you sure it's in the GOR? I don't think it was in the version I saw.

That's the part that will be challenged. I'm not a lawyer, but the GOR agreement floating around reads as if it exists for the purpose of the ESPN media contract, despite some on here saying the GOR exists separately outside of the ESPN contract. That's not my interpretation of the GOR (at least the one floating around the internet):

https://storageaccountstart88df.blob.core.windows.net/ndnationshare/ACC-Grant-of-Rights-1.pdf

RECITALS:​

WHEREAS, the execution and delivery of this Agreement enhances the stability of Conference membership, confirms the commitment by each Member Institution to the other Member Institutions of the Conference, and thereby provides valuable benefits to each Member Institution of the Conference;

WHEREAS, the Conference has previously entered into the Multi-Media Agreement with ESPN, Inc. and ESPN Enterprises, Inc. dated as of July 8, 2010, as amended by the Amendment and Extension Agreement dated as of May 9, 2012 (as amended collectively referred to as the "Amended ESPN Agreement'');

WHEREAS, each of the Accepted Members has been accepted for membership in the Conference by the Current Members and each Accepted Member has agreed that its membership shall be effective on the date specified on its signature page to this Agreement;

WHEREAS, as a condition to the agreement of ESPN to offer additional consideration to the Conference as pa11 .of a further amendment to the Amended ESPN Agreement (the "Additional Amendment"; the Additional Amendment, together with the Amended ESPN Agreement, collectively, the "ESPN Agreement"), each of the Member Institutions is l'equired to, and desires to, irrevocably grant to the Conference, and the Conference desires to accept from each of the Member Institutions, those rights granted herein; and

WHEREAS, the Conference and the Member Institutions desire to have this Agreement memorialize their understandings with respect to the matters set forth herein.

NOW, THEREFORE, for and in consideration of the foregoing, the covenants set forth herein and in the ESPN Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and agreed, and intending to be legally bound hereby, the undersigned each hereby agree with the Conference and with each other as follows:

Here they get more specific to the "Grant of Rights":

Grant of Rights. Each of the Member Institutions hereby (a) irrevocably and exclusively grants to the Conference during the Term (as defined below) all rights (the "Rights'') necessary for the Conference to perform the contractual obligations of the Conference expressly set forth in the ESPN Agreement, regardless of whether such Member Institution remains a member of the Conference during the entirety of the Term and (b) agrees to satisfy and perform all contractual obligations of a Member Institution during the Term thatare expressly set forth in the ESPN Agreement.

The Grant of Rights portions goes on to specifically identify what material items (media forms) the GOR covers.

The other detail of the contract that leads me to believe the GOR exists as a binding "companion" of the ESPN media contract, and not a stand alone agreement, is the Term section. The original expiration of the GOR and ESPN contract ran concurrently (originally to 2027), and when the ESPN contract was amended to 2036, the GOR Term was also extended to match the new ESPN media contract. I don't think that was coincidence. In addition, the GOR references and points to the ESPN media contract too many times...in other words, if any mention of the ESPN media contract was removed, what good is the GOR? That's essentially what occurs if ESPN opts out in 2027.

From a strictly business POV, it would not be a good business decision for ESPN to terminate this agreement in 2027. It's been pointed out that the ACC is the most profitable media contract ESPN has in terms of its college assets. HOWEVER, if ESPN does pull of the ACC media agreement, not sure how the GOR is valid beyond ESPN's last pay check to the ACC as the terms of the GOR are heavily influenced by the ESPN media agreement.

I don't think access to the ESPN media agreement would address this issue either. I think the ESPN media contract just addresses the specifics of the terms, $$$ amount, and media rights of the ACC. There's no reason to think the ESPN media agreement would hash out the membership rights outside of the ACC, outside of saying the ACC members need to agree to a binding agreement in order for ESPN to move forward with their investment in the ACC (the ACC network specifically).

Again, I'm not a lawyer, so those more well versed in legalese feel free to correct my assumptions above.

I think your take that the two agreements are "companions" is correct. Thus the GOR may be contingent upon an ACC-ESPN media contract, although the ESPN contract could be renewed at a different rate.

Regardless, as long as the ESPN contract is valid, if an ACC member leaves before 2036, the GOR will still be binding on their media rights.