Expansion never dies – it just sleeps like Cthulhu waiting
to rise from the deeps and wreck havoc upon college football.
Last week I had a very lively Twitter discussion with
@Expansion_Crush and @NebGradDubDub about the Big 12’s grant of rights, hereafter
referred to as GoR, and how secure the GoR actually made the conference.
There is some who believe the Big 12’s GoR is nullified by
the conference’s exit fee. That’s not true.
The GoR doesn’t stop any member from leaving the Big 12. Any
member institution can give notice, pay the exit fee, and withdraw from the
conference. The GoR has absolutely no impact.
That’s right – the Big 12’s GoR isn’t a barrier to leaving
the conference if a member is dead set on leaving.
What the GoR does is retain the departing members tier 1 and
tier 2 television rights for the Big 12 conference.
And it keeps the money allocated to the departing member too.
What it does, very effectively, is remove any benefit for
any conference to add a current Big 12 member.
What about the argument that the Big 12’s GoR is punitive?
Not even close…
The Big 12’s GoR isn’t punitive because its not intended to
stop any member from leaving. It’s also technically not punitive because it’s a
completed business transaction via contract.
Contracts are valid when two parties have a meeting of
minds, have legal terms and due consideration is given. The Big 12’s GoR meets
that standard.
Big 12 members agreed that a GoR was necessary to obtain the
best possible TV contract with Fox Sports and ESPN. They agreed to terms and
they received compensation for signing the contract by way of increased TV
revenues and a $60 million signing bonus.
How is the fact that a departing member doesn't receive their share of TV money not punitive? They signed it. More importantly within the document its clearly stated that the provision within the GoR that forfeits TV money to the conference is not punitive because it was necessary to obtain the TV contract.
Remember that in order for a contract to be valid all the terms of the contract must be legal. The provision that cedes TV rights money to the Big 12 upon leaving the conference is legal and enforceable.
The exit fee is completely different. It’s included in the
by laws to compensate the Big 12 for the loss of the departing member. The amount of the exit fee isn't important. What is important is the method used to determine the exit fee. It must be equal to the damages suffered by the conference.
But the exit fee is moot anyway. Exit fees are recoverable. They are a non-factor in most cases.
What's important to note that despite the fact that they appear linked that paying the exit fee does not void the GoR.
The Big 12 knows that exit fees are recoverable and a non-issue for schools like Texas and Oklahoma. If WVU could pay $20 million to exit the Big East how much could the Longhorns pay?
The GoR is the real glue binding the Big 12 together, but not why you think.
The GoR means that neither the Big Ten or SEC could make money by adding a Big 12 school and that effectively removes the motivation poach from the Big 12.
There are many who doubt the legality of a grant of rights.
They claim it can be circumvented. Some
even go so far as to say its punitive because it prohibits school X from
leaving the Big 12 for the greater profits of conference Y.
That’s not how contract law works. Again the details are
that all ten members of the Big 12 signed the GoR and received compensation.
They received due consideration – somewhat above fair market value – for the
GoR’s implementation. They all agreed,
prior to its implementation, that the GoR was necessary to secure a new
television contract and they each acted in their own best interests by signing
the GoR.
The cost of challenging the Big 12's GoR in court would far exceed, and likely wouldn't be adjudicated before the GoR expired, the profit to be made by adding a current Big 12 school.
Many people I talk to believe the ACC’s GoR could be
circumvented or the same reasons that make the Big 12’s GoR solid: due
consideration i.e. payment.
ACC members did not receive compensation for signing the
GoR. They may have received intangible benefits like a sense of security and
the like but as far as I can tell no money changed hands.
That opens up several valid questions about the ACC’s GoR.
Do intangibles count as due consideration? Can a state institution sign away
rights without receiving due consideration?
The Big Ten believes that’s the case and so may the SEC.
What if the Big Ten and SEC would collude to carve up the
ACC by attacking the ACC’s GoR and using the upcoming autonomy of the big 5 to
make it unlikely that the private schools in the ACC can compete with the rest?
At least four ACC schools will find difficult to meet the financial needs of
the highest echelon of college football.
Their athletic departments run at or near a deficit each and every year
and with the price tag of competing going up I wonder how they will fund the
changes.
Notes:
I’m staring to hear rumblings from SEC sources again. Right
now its nothing more than background chatter but they openly wonder if the SEC
and Big Ten could carve up the ACC with just a little pressure. Both would benefit and neither would be seen
as the villain.
I want to apologize to BYU fans. Certain WV based twitter
personalities started rumors about BYU joining the Big 12 directly after
comments by the Big Ten and SEC about BYU. There was absolutely nothing to
those rumors. The individual who started them is known for trolling distressed
fan bases in order to drive traffic to internet message board ran by equally
nefarious cohorts. I have nothing but
respect for the BYU program and its fans.
