Conference Realignment

[iceeater1969]

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?

I am sure the espn acc contract is written in great detail.
Imo, as acc diddles till the last espn will be the acc killer.
Will they simply slightly reduce tv payments.

 

[RonJohn]

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?

Nobody knows what the contract with ESPN says. There are rumors about different stipulations, but I haven't seen a copy of the document, nor analysis from anyone who has actually read the contact. Since it is under an NDA we won't likely get access unless it is made public was part of the lawsuits.

Letting FSU purchase the rights for less than the average media payout would definitely be suicide. It would set a precedent that others might try to follow once the other conference media contracts are close to expiring.

 

[Richard7125]

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.

This isn’t about making the math work. Texas A&M wasn’t trying to make the math work by paying Jimbo $76m not to coach. FSU is looking at leaving the ACC the same way, just on a much larger scale.

 

[MountainBuzzMan]

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.

This can be said for anything. everything dies. But not today.

 

[stinger78]

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?

If they pay the ACC for their rights then they are not “splitting with their rights.”

To CEB: put whatever number you want in the “x” slot. That number can be figured. If F$U can meet that number in funds raised, then they could just leave and say “You keep the media $$$, we’ve got that covered through 2026 (maybe 2030).” Then if sEcSPN doesn’t exercise the option in 2026, the ACC contract they signed is finished and F$U is free to be negotiated in with another conference.

I have to believe that, if F$U is added to the B1G, and has their media rights after 2026, that Fox won’t allow a lookin prior to 2030 for renegotiation.

As you said, and I agree, if sEcSPN checks the option box to continue the same ACC contract through 2036 then F$U is dead in the water. That’s a lot of risk for F$U, the ACC, and for sEcSPN, too. That extension was a hugely risky addendum to sign.

 

[roadkill]

If they pay the ACC for their rights then they are not “splitting with their rights.”

To CEB: put whatever number you want in the “x” slot. That number can be figured. If F$U can meet that number in funds raised, then they could just leave and say “You keep the media $$$, we’ve got that covered through 2026 (maybe 2030).” Then if sEcSPN doesn’t exercise the option in 2026, the ACC contract they signed is finished and F$U is free to be negotiated in with another conference.

I have to believe that, if F$U is added to the B1G, and has their media rights after 2026, that Fox won’t allow a lookin prior to 2030 for renegotiation.

As you said, and I agree, if sEcSPN checks the option box to continue the same ACC contract through 2036 then F$U is dead in the water. That’s a lot of risk for F$U, the ACC, and for sEcSPN, too. That extension was a hugely risky addendum to sign.

Not necessarily. I don't think the GOR is contingent upon the ESPN contract being in place. It runs until 2036 unless the ACC decides otherwise.

 

[yeti92]

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.

This scenario doesn't make sense. If FSU just leaves the conference, their media rights still belong to the ACC via GOR, and by extension ESPN. Assuming they move to the SEC or Big 10, their games become even more valuable, yet ESPN would still be getting them at the ACC price, so it would be incredibly foolish for ESPN to decide not to exercise the option to continue with the ACC. The GOR is not going anywhere, so the only way any of this changes is if FSU can produce enough millions of dollars to satisfy the entire rest of the ACC to let them out of the GOR and buy their media rights back.

 

[CEB]

This isn’t about making the math work. Texas A&M wasn’t trying to make the math work by paying Jimbo $76m not to coach. FSU is looking at leaving the ACC the same way, just on a much larger scale.

Seriously? The whole thing started because FSU couldn’t stomach the thought of being at a $20m annual disadvantage. I guess that was all smokescreen?

 

[stinger78]

Not necessarily. I don't think the GOR is contingent upon the ESPN contract being in place. It runs until 2036 unless the ACC decides otherwise.

Is this correct? Do we know this, or is it hidden behind the NDA?

 

[Augusta_Jacket]

If they pay the ACC for their rights then they are not “splitting with their rights.”

Actually, they would be. If they paid the ACC for their rights then their new conference could monetize those rights, meaning the ESPN/ACC contract would be diminished by the value of said FSU rights.

 

[CEB]

If they pay the ACC for their rights then they are not “splitting with their rights.”

To CEB: put whatever number you want in the “x” slot. That number can be figured. If F$U can meet that number in funds raised, then they could just leave and say “You keep the media $$$, we’ve got that covered through 2026 (maybe 2030).” Then if sEcSPN doesn’t exercise the option in 2026, the ACC contract they signed is finished and F$U is free to be negotiated in with another conference.

I have to believe that, if F$U is added to the B1G, and has their media rights after 2026, that Fox won’t allow a lookin prior to 2030 for renegotiation.

As you said, and I agree, if sEcSPN checks the option box to continue the same ACC contract through 2036 then F$U is dead in the water. That’s a lot of risk for F$U, the ACC, and for sEcSPN, too. That extension was a hugely risky addendum to sign.

I think @Augusta_Jacket point is that even if the ACC accepts a payment and releases FSU from GOR, that doesn’t relieve the ACC of the obligation to provide the media they “sold” ESPN through 2036. Is that a breach of contract? I don’t know, but certainly worthy of consideration (and compensation for that risk).

To the rest; I guess I don’t disagree… the notion being that if FSU pushes this to a head in the next couple of years, they have to be pretty confident in a full share somewhere in short order…. But they are worth nothing without media, so the ACC / ESPN situation is paramount. Duh

 

[stinger78]

This scenario doesn't make sense. If FSU just leaves the conference, their media rights still belong to the ACC via GOR, and by extension ESPN. Assuming they move to the SEC or Big 10, their games become even more valuable, yet ESPN would still be getting them at the ACC price, so it would be incredibly foolish for ESPN to decide not to exercise the option to continue with the ACC. The GOR is not going anywhere, so the only way any of this changes is if FSU can produce enough millions of dollars to satisfy the entire rest of the ACC to let them out of the GOR and buy their media rights back.

Again, is this true? Do we know this? So do their media rights actually escalate in the B1G if they are not part of the B1G media contract? Potentially, yes; actually? I don’t know. Or is the ACC option to lock in all teams at the current rate? Again, we don’t know this, I don’t believe.

My premise is a team has no “media rights” except what is assigned via a media contract. If F$U’s media contract remains with the ACC, then that defines their media rights, not their membership in any other conference in which they are not included in the current contract.

 

[TampaBuzz]

I think @Augusta_Jacket point is that even if the ACC accepts a payment and releases FSU from GOR, that doesn’t relieve the ACC of the obligation to provide the media they “sold” ESPN through 2036. Is that a breach of contract? I don’t know, but certainly worthy of consideration (and compensation for that risk).

To the rest; I guess I don’t disagree… the notion being that if FSU pushes this to a head in the next couple of years, they have to be pretty confident in a full share somewhere in short order…. But they are worth nothing without media, so the ACC / ESPN situation is paramount. Duh

I see what you did there with the sneak reference to Paramount+ Very subtle!!

 

[ChicagobasedJacket]

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

This was a really good podcast discussion. The first time that I ever heard about UNC being asked to join the SEC in 2009. The former chancellor’s discussion about the dynamics of competing interest for UNC and NC state affiliated board members hit home.

 

[CEB]

Not necessarily. I don't think the GOR is contingent upon the ESPN contract being in place. It runs until 2036 unless the ACC decides otherwise.

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.

 

[yeti92]

Again, is this true? Do we know this? So do their media rights actually escalate in the B1G if they are not part of the B1G media contract? Potentially, yes; actually? I don’t know. Or is the ACC option to lock in all teams at the current rate? Again, we don’t know this, I don’t believe.

My premise is a team has no “media rights” except what is assigned via a media contract. If F$U’s media contract remains with the ACC, then that defines their media rights, not their membership in any other conference in which they are not included in the current contract.

The value of any media rights is based on number of customers. FSU would be playing schools with larger fanbases and thus have more viewers. Ad space during those games is now worth more.

Agreed we don't know the details of the option, I'm working off the premise that I believe FSU has presented that ESPN has unilateral right to extend at seemingly the same rate or small increase which is part of their complaint.

 

[stinger78]

The value of any media rights is based on number of customers. FSU would be playing schools with larger fanbases and thus have more viewers. Ad space during those games is now worth more.

Agreed we don't know the details of the option, I'm working off the premise that I believe FSU has presented that ESPN has unilateral right to extend at seemingly the same rate or small increase which is part of their complaint.

I would say that is their *potential* media rights, but not their actual contracted media rights. For example, does anyone want to posit that Vandy’s customer base makes their media rights worth the $60M they get from the SECheat? That’s silliness. Their contracted actual media rights are higher than their potential, which is far lower than what that SECheat contract grants them. A reverse situation.

If this is true, then F$U’s actual media rights would stay what the ACC contract says since they hold the contract, even though their media value would potentially be higher in one of the other two conferences.

 

[Augusta_Jacket]

I would say that is their *potential* media rights, but not their actual contracted media rights. For example, does anyone want to posit that Vandy’s customer base makes their media rights worth the $60M they get from the SECheat? That’s silliness. Their contracted actual media rights are higher than their potential, which is far lower than what that SECheat contract grants them. A reverse situation.

If this is true, then F$U’s actual media rights would stay what the ACC contract says since they hold the contract, even though their media value would potentially be higher in one of the other two conferences.

You negotiate off of potential. If FSU enters into a negotiation with the ACC for the purchase of their rights, then the ACC and FSU have to agree what that value is.The ACC would be foolish to sell them for what they got for them in 2016.

For Instance, say you bought a house in 2016 for $250,000. You are contracted for 30 years to pay for that $250,000 house. The contracted value of that house id $250,00, but the current value on the open market now exceeds $400, 000. If the previous owner of the house wants it back, is he entitled to only pay the $250,000 for the house, or is the current owner of the house entitled to get fair market value for the house, realizing that current market conditions have added a lot of value to the house?

 

[stinger78]

You negotiate off of potential. If FSU enters into a negotiation with the ACC for the purchase of their rights, then the ACC and FSU have to agree what that value is.The ACC would be foolish to sell them for what they got for them in 2016.

For Instance, say you bought a house in 2016 for $250,000. You are contracted for 30 years to pay for that $250,000 house. The contracted value of that house id $250,00, but the current value on the open market now exceeds $400, 000. If the previous owner of the house wants it back, is he entitled to only pay the $250,000 for the house, or is the current owner of the house entitled to get fair market value for the house, realizing that current market conditions have added a lot of value to the house?

Certainly, but they are not negotiating a potential value if they leave. Their value is set by the current contract.

It could be argued that they broke the contract, and thus they must negotiate from potential value. However, if they pay the exit fee and leave their rights behind, how can it be said that they broke the contract? They have fulfilled the contract.

 

[L41k18]

How did college football ever get to this point?

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