Friday, June 6, 2014

Big 12 Grant of Rights - SEC Rumblings - Apologies to BYU

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.


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.