Conference Realignment

[slugboy]

The acc cut a deal with ESPN guys THAT INCLUDED FSU.
Failure to provide FSU games could be a MATERIAL BREACH OF THAT CONTRACT.
ESPN is running low on AD $ so they may take a hard stance on ANY Reduction in the TV product. At that point ESPN could reduce payments and say take it or sue me.

Why would the ACC fail to produce FSUs games? They have the exclusive broadcast rights to them, and guaranteed access to do so, no matter which conference FSU may be in.

Also, ESPN is not running low on ad dollars. They’re making huge amounts of money. Their issue is that they’ve had ridiculous financial growth— so big, that the financial markets want bigger growth and ESPN can’t figure out how to do it. They’re profitable—they just can’t be a growth stock because they’re running out of room to grow.

 

[iceeater1969]

That depends a lot on how the ACC/ESPN contract is worded. As far as I know, that contract has never been made public.

Contracts wording, wording in supporting documents, wording in relevant law.
Then there are depositions, interogatories.
Then schedule for trial dstes, delays, continuances.
Appeals.

6 years later - negotiations by new managment.

 

[forensicbuzz]

The acc cut a deal with ESPN guys THAT INCLUDED FSU.
Failure to provide FSU games could be a MATERIAL BREACH OF THAT CONTRACT.
ESPN is running low on AD $ so they may take a hard stance on ANY Reduction in the TV product. At that point ESPN could reduce payments and say take it or sue me.

If FSU leaves, that doesn't change anything. The ACC still owns the rights to FSU broadcasts. No reduction in TV product.

 

[iceeater1969]

Why would the ACC fail to produce FSUs games? They have the exclusive broadcast rights to them, and guaranteed access to do so, no matter which conference FSU may be in.

Also, ESPN is not running low on ad dollars. They’re making huge amounts of money. Their issue is that they’ve had ridiculous financial growth— so big, that the financial markets want bigger growth and ESPN can’t figure out how to do it. They’re profitable—they just can’t be a growth stock because they’re running out of room to grow.

Not going to argue with you about why they are short.
I know they used to get 16,000,000,000 total w 6,000,000,000 inad and streaming and 10,000,000,000 in cable which is being cut.

 

[iceeater1969]

If FSU leaves, that doesn't change anything. The ACC still owns the rights to FSU broadcasts. No reduction in TV product.

Again, espn pays the acc to have fsu games - but as u said, they left.

 

[forensicbuzz]

Again, espn pays the acc to have fsu games - but as u said, they left.

Why wouldn't they still have fsu games? Unless the ACC releases the rights back to FSU, ESPN would still be broadcasting the FSU home games, regardless of who they're playing.

 

[slugboy]

Not going to argue with you about why they are short.
I know they used to get 16,000,000,000 total w 6,000,000,000 inad and streaming and 10,000,000,000 in cable which is being cut.

It’s not being cut. FSU has to provide the games to the ACC.
Your assumptions are wrong.
The only way out for FSU is not to play any games—then they get sued and lose.

 

[cpf2001]

Everyone involved could sue everyone else even if not likely to win but I think that’s unlikely since at the end of the day ESPN will still want to broadcast FSU games and other ACC games and the schools will still want a broadcast partner. Suing the people who pay you isn’t always the best move. And while contracts do get renegotiated, I’m finding it hard to see where immediate leverage over the ACC would come from for FSU to force the conference to the table. ESPN has leverage over the ACC - and potentially the ACC has some over ESPN but it’s hard to see them finding a party that would pay more in the immediate future - but what’s FSU-in-particular’s edge? And what’s in it for ESPN to lean on the ACC on their behalf?

It’s not like ESPN was able or willing to lean on the CFP for FSU.

 

[bigrabbit]

Regarding money ESPN generates:

Disney gives investors a look at ESPN financials, including recent revenue declines

Disney reorganized its corporate structure earlier this year, splitting ESPN and sports apart from its entertainment segment.

www.cnbc.com

Looks like ~$1.5B net against $13B revenue for 9 months. After the reorg to separate out sports as a business unit, Disney announced financials recast per the new organization. Revenues slipping slightly, trend line not good.
I don’t follow Disney, but heard Iger talk about seeking “strategic partners” to buy part of ESPN…that’s often code for selling the whole thing, but who knows.

 

[cpf2001]

Fewer people watching ACC games and possibly the whole conference breaking up and some teams going to conferences with deals with other networks seems like it would be bad for ESPN’s ad business, IMO.

Edit: unless they’re five steps ahead in the evil scheme and want to blow up the ACC entirely to get out of that contract completely

 

[RamblinRed]

Keep in mind that is was reported during the expansion talks earlier this year that part of the reason that the ACC expanded was to keep it in a place that even if some schools left that it would keep them above the limit where ESPN could renegotiate the contract downward. FWIW, supposedly that number was dropping below 14 (including ND).

If FSU leaves, unless they can come to an agreement with the ACC over the GOR they will not have the legal right to broadcast their games - nor will any conference they join. All that money would go to the ACC through 2036.

They could announce now that the wanted to leave and pay the exit fee - approx $120M, but ACC would still own their broadcast rights.
No conference would touch them unless they can get their broadcast rights back and even then, whether they could get a full share from the B1G or SEC is not a given. Washington and Oregon only got $30M from the B1G. Good chance that is about what FSU would get on the open market.

The GoR does not have any provisions which allow a school to leave and get their broadcast rights back. FSU would have to sue and take their chances where the ACC likely holds almost all the cards. FSU has signed the GoR multiple times (negating any defense of being 'forced' to sign) and is unlikely to win in court. Their only real option would be to sue and then hope they could negotiate a deal before it went to trial (which could take years).

The beauty of the GoR is its simplicity. The whole document is only 3 pages. It basically says the signees have agreed to give their broadcast rights to the ACC through the end of the media contract. There is no provision in the legal document for getting those rights back. Once you signed it, you have agreed to give up your media rights with no rights to get them back until 2036. It is reportedly the same basic GoR that both the B12 and PAC had/have and shows you why no school yet has tried to challenge one. I guarantee at least 30 schools have had lawyers look at those documents and no one has found a 'loophole' yet.

I would also suspect that the ACC would vote to withhold any future payments to FSU as soon as they made an announcement of departure.

Texas and OK ultimately negotiated with the B12 to pay $50M each to be able to leave 1 year early. If FSU did something similar they would be looking at paying the ACC $650M.

They are also getting angry over a system that no longer exists. If the same situation came to pass next year they would be in the CFP win or lose the ACC CG. They seem so blinded by anger and entitlement that they are missing the bigger picture.

 

[stinger78]

Why would the ACC fail to produce FSUs games? They have the exclusive broadcast rights to them, and guaranteed access to do so, no matter which conference FSU may be in.

Also, ESPN is not running low on ad dollars. They’re making huge amounts of money. Their issue is that they’ve had ridiculous financial growth— so big, that the financial markets want bigger growth and ESPN can’t figure out how to do it. They’re profitable—they just can’t be a growth stock because they’re running out of room to grow.

I dunno. I've seen some articles stating otherwise, that profit margins are going down. Yes, they're generating a lot of income, but they live in a very expensive neighborhood.

 

[Papa Foxtrot]

Need to stock up on popcorn....

 

[Papa Foxtrot]

Not really sure what they think their options are....

 

[L41k18]

Keep in mind that is was reported during the expansion talks earlier this year that part of the reason that the ACC expanded was to keep it in a place that even if some schools left that it would keep them above the limit where ESPN could renegotiate the contract downward. FWIW, supposedly that number was dropping below 14 (including ND).

If FSU leaves, unless they can come to an agreement with the ACC over the GOR they will not have the legal right to broadcast their games - nor will any conference they join. All that money would go to the ACC through 2036.

They could announce now that the wanted to leave and pay the exit fee - approx $120M, but ACC would still own their broadcast rights.
No conference would touch them unless they can get their broadcast rights back and even then, whether they could get a full share from the B1G or SEC is not a given. Washington and Oregon only got $30M from the B1G. Good chance that is about what FSU would get on the open market.

The GoR does not have any provisions which allow a school to leave and get their broadcast rights back. FSU would have to sue and take their chances where the ACC likely holds almost all the cards. FSU has signed the GoR multiple times (negating any defense of being 'forced' to sign) and is unlikely to win in court. Their only real option would be to sue and then hope they could negotiate a deal before it went to trial (which could take years).

The beauty of the GoR is its simplicity. The whole document is only 3 pages. It basically says the signees have agreed to give their broadcast rights to the ACC through the end of the media contract. There is no provision in the legal document for getting those rights back. Once you signed it, you have agreed to give up your media rights with no rights to get them back until 2036. It is reportedly the same basic GoR that both the B12 and PAC had/have and shows you why no school yet has tried to challenge one. I guarantee at least 30 schools have had lawyers look at those documents and no one has found a 'loophole' yet.

I would also suspect that the ACC would vote to withhold any future payments to FSU as soon as they made an announcement of departure.

Texas and OK ultimately negotiated with the B12 to pay $50M each to be able to leave 1 year early. If FSU did something similar they would be looking at paying the ACC $650M.

They are also getting angry over a system that no longer exists. If the same situation came to pass next year they would be in the CFP win or lose the ACC CG. They seem so blinded by anger and entitlement that they are missing the bigger picture.

Very well said. Everyone interested in this subject should be forced to read this post.

FSU has no option other than to scream and stomp and be a toddler in a room of grownups, hoping against hope to maybe get a small cookie tossed their way (slightly increased revenue share)

 

[Papa Foxtrot]

FSU has no option other than to scream and stomp and be a toddler in a room of grownups,

It's what you do when you can't actually take any action. IMO, it's all theatre to appease the fan base and create other enemies so the anger is not directed at them. We'll see if anything comes of the "emergency" BoT meeting other than more noise...

 

[slugboy]

I dunno. I've seen some articles stating otherwise, that profit margins are going down. Yes, they're generating a lot of income, but they live in a very expensive neighborhood.

If you compare them to the CBS’s and the NBC’s of the world, ESPN has been like Facebook (a growth stock) while NBC has been like Whirlpool (slow growth and pays dividends—not much innovation).
What’s going on is that ESPN is shifting from a “you can spend money like it’s water” growth phase into a “we’re bringing in the bean counters” mature company phase. They’re in much better shape than CBS and traditional TV, and much more profitable, but there’s not much more greenfield market for them to corner. They’re not going to corner MLB. They have about as much NFL as they’re going to get. They’re not going to take over soccer (and it’s not growing fast enough to matter).
They took over CFB, and there’s not another CFB. They don’t have another huge unaddressed market to consume.
The bean counters at Disney are all over them now.

 

[Thwg777]

If free shoes leaves, how does the ‘buyout’ money get distributed? I would assume each remaining team would get a cut of the loot?

 

[GoJacketsInRaleigh]

If free shoes leaves, how does the ‘buyout’ money get distributed? I would assume each remaining team would get a cut of the loot?

We should take our share and use it as NIL money to go buy their best players

 

[Papa Foxtrot]

The bean counters at Disney are all over them now.

You leave out the part where the rest of DI$ is hemorrhaging red ink. ESPN has always been the cash cow, but carriage fees are dropping at a time when DI$ badly needs that cash...