Is something about to happen?

[CL82]

This is how it plays out.

1. Team leaves conference A for conference B.

2. At its first home game in conference B, Team doesn't let Conference A's announcers in.

3. Networks sues for specific performance. Judge says I don't have to get to likelihood of success on the merits because there is no harm that money (a reduction in the fees being paid by the network to conference A) can't cure.

4. Network asks Conference A to replace the departing team with a satisfactory replacement if it wants the same money. Conference A replaces the departing team with the best replacement available and negotiates with network on whether there is a reduction in TV rights and by how much.

5. If there is a reduction, A sues departing team to pay it. Departing team either pays it or claims it doesn't owe anything because the GOR was never valid as punitive damages or challenges the whole structure of the conference taking its members TV rights as an antitrust violation based on the new O'Bannon ruling.

6. The parties settle for less than the conference wants and more than the departing member wants to pay.

7. Life goes on.

It's really that simple folks. The GOR adds uncertainty to a departing member, and is therefor something of a disincentive, but it's not going to be specifically enforceable so this is still going to come down to money damages. The ACC's loss because VPI is replaced by Cincy is what? It's not in the tens of millions a year.

Interesting BL. I suppose things get more complicated if there are different networks involved as they could be brought into the suit. I do think that uncertainty is the key deterrent. Without precedent, it harder to predict what is the likely the final outcome. That can be a significant deterrent to a risk adverse institution.

 

[businesslawyer]

An oversimplification...and off base some.

1...The concept and language of "punitive" is in the specific language of liquidated damage (exit fee) case law...but has little to do with media law.

2...In media law, the voluntary signing over of media rights and interests is a totally different concept.

lOL. There is a small number of lawyers around the country for whom i have so much respect that if thet tell men I'm wrong I believe them first and figure out why second. Want to guess if you're on that list?

 

[FfldCntyFan]

This is how it plays out.

1. Team leaves conference A for conference B.

2. At its first home game in conference B, Team doesn't let Conference A's announcers in.

3. Networks sues for specific performance. Judge says I don't have to get to likelihood of success on the merits because there is no harm that money (a reduction in the fees being paid by the network to conference A) can't cure.

4. Network asks Conference A to replace the departing team with a satisfactory replacement if it wants the same money. Conference A replaces the departing team with the best replacement available and negotiates with network on whether there is a reduction in TV rights and by how much.

5. If there is a reduction, A sues departing team to pay it. Departing team either pays it or claims it doesn't owe anything because the GOR was never valid as punitive damages or challenges the whole structure of the conference taking its members TV rights as an antitrust violation based on the new O'Bannon ruling.

6. The parties settle for less than the conference wants and more than the departing member wants to pay.

7. Life goes on.

It's really that simple folks. The GOR adds uncertainty to a departing member, and is therefor something of a disincentive, but it's not going to be specifically enforceable so this is still going to come down to money damages. The ACC's loss because VPI is replaced by Cincy is what? It's not in the tens of millions a year.

You hit the nail on the head BL!

I've been saying for a couple of years now that nearly anything can be monetized and if a school attempted to depart while under a grant of rights agreement some financial settlement to cover damages would be reached. There is a bit of risk here as the dollar amount would be unknown until after negotiations were well underway (far past the point of deciding whether to depart for a new conference) but the right move would be well worth that risk in the eyes of some schools.

The kicker here (which BL also pointed out) is that if it reached the point of damages and a replacement school (which would be necessary for the conference to continue under its contract) is substantial enough to roughly replace the lost value, the damages could end up being far less than a departure fee would have been, which may in fact hurt the conference in the long run.

 

[billybud]

lOL. There is a small number of lawyers around the country for whom i have so much respect that if thet tell men I'm wrong I believe them first and figure out why second. Want to guess if you're on that list?

LOL...Great...we seem to have the same opinion of each other. I immediately noticed your hashing of the "punitive" versus media rights...

It's a good thing. I like symmetry.

 

[businesslawyer]

LOL...Great...we seem to have the same opinion of each other. I immediately noticed your hashing of the "punitive" versus media rights...

It's a good thing. I like symmetry.

LOL. Synmetry would imply that you have my Chambers rating, or ABA honors, or track record, or something that would objectively justify your opinion of me. If you'd like to play that game offline, let me know.

 

[freescooter]

Well, we will certainly see how this all shakes out going forward. Just a couple of things to consider, FWIW:

1. Yes, the ACC's original position was that they would not settle. That said, you neglected to mention that UMD's position was also "not to give an inch". Their view was that they did not owe the ACC a dime - and, in fact, they were owed something like $157M(?) in damages. In the end, the ACC "settled" on almost 61% of what they were seeking.

2. GORs are different animals in that there is not a "fee" to be negotiated; as the the Conference owns the media rights to its teams for a specified period of years. A team leaving a conference with a GOR would need to litigate to get those rights back. Unlike the UMD exit fee case, this team would start from a position of challenging something they had voluntarily approved to begin with. For purposes of this discussion, though, let's say that the parties negotiate a "settlement." If it falls along the lines of the 61% exit fee settlement received by the ACC in the UMD case - or even a simple 50-50 split, the loss of even 50% of the value of a team's media rights for the duration of the GOR (in addition to the exit fee) would be a staggering sum which I am not sure any team could accept. IMO, the only realistic course of action for a team pursuing such a strategy would be to go all-in and challenge the GOR and/or the forfeiture clauses since a "settlement' would likely still be financially horrendous for any team given the huge sums involved.

3. IMO, if a team were to go "all-in" to overturn the GOR and forfeiture clauses, it would be an interesting litigation given that: (a) they willingly agreed to them and (b) unless the team is going to the SEC, they would be moving to a conference with the same GOR provisions (would make for interesting depositions, IMO!).

IMO, the GORs were never intended to be an absolute lock in preventing a team from ever leaving a conference. For the ACC, IMO, they are intended as a bridge to get the conference closer to the point where they can renegotiate what most consider is an historically undervalued contract. In addition, the landscape will likely change over the next 12 years so its hard to predict just how the future will shake out for any of this.

Just my 2 cents.

Maryland's position is irrelevant. They left and weren't coming back. The ACC adopted the $52 million fee in an effort to stop teams from leaving. For Maryland anything less than $52 million was a win, because that was their ultimate exposure. The rest was posturing to get a settlement. Same thing with GOR. If a school decides to go it will go. The GOR will be ultimately negotiated downward to a number both sides can accept, but the school that wants to leave is going to leave. And nobody wants to go all in on litigation over the GOR. Because both sides have too much to lose. If the leagues and their network partners lose, they lose the basis that underwrites their whole business model. If the school loses, it loses a huge income stream. So they will both negotiate and come to a settlement just like most businesses do when neither can afford a total loss. The other point is this. A school decides it wants to leave your league. Do you really want them as a partner going forward?

 

[FDNY99]

You hit the nail on the head BL!

I've been saying for a couple of years now that nearly anything can be monetized and if a school attempted to depart while under a grant of rights agreement some financial settlement to cover damages would be reached. There is a bit of risk here as the dollar amount would be unknown until after negotiations were well underway (far past the point of deciding whether to depart for a new conference) but the right move would be well worth that risk in the eyes of some schools.

The kicker here (which BL also pointed out) is that if it reached the point of damages and a replacement school (which would be necessary for the conference to continue under its contract) is substantial enough to roughly replace the lost value, the damages could end up being far less than a departure fee would have been, which may in fact hurt the conference in the long run.

The only thing about replacing a school with another of nearly equal value is that outside of UCONN, UC, BYU, UCF and maybe UH and SMU I don't think there are any more schools that you can add that will add equal value in some way to a departing school. At some point one of these P-5 commissioners is going to go to the cupboard to fill a open spot and realize the cupboard isn't endless.

 

[amory]

lOL. There is a small number of lawyers around the country for whom i have so much respect that if thet tell men I'm wrong I believe them first and figure out why second. Want to guess if you're on that list?

LOL...Great...we seem to have the same opinion of each other. I immediately noticed your hashing of the "punitive" versus media rights...

It's a good thing. I like symmetry.

LOL. Synmetry would imply that you have my Chambers rating, or ABA honors, or track record, or something that would objectively justify your opinion of me. If you'd like to play that game offline, let me know.

is something about to happen?

 

[dayooper]

The only thing about replacing a school with another of nearly equal value is that outside of UCONN, UC, BYU, UCF and maybe UH and SMU I don't think there are any more schools that you can add that will add equal value in some way to a departing school. At some point one of these P-5 commissioners is going to go to the cupboard to fill a open spot and realize the cupboard isn't endless.

They know it isn't endless, that's why you see the halt right now.

The Big12 really can't add more as they will lose money unless Fox is willing to up the ante almost $90 million a year (each school would lose approx. $4 million, from $24 million to $20 million along with $48 million for the two new schools). They have no network to help with new income.

The ACC is in a holding patter while waiting to see if an ACCN ever materializes and to see if ND is forced into a conference. They seemed to be tapped out as far as their media deal is concerned so adding a new school would lose them money as well.

For the Big 10, UConn may bring in more money, especially with the new deal coming up in a few years, but who to pair them with?

The SEC is willing to wait out UNC, in my opinion. Much like ND, they are waiting to see what will transpire and move from there.

Pac? Who would they add that would make them money that already isn't in a P5?

 

[amory]

For the Big 10, UConn may bring in more money, especially with the new deal coming up in a few years, but who to pair them with?

Do you think AAU membership is a hardline requirement for entry into the Big 10? Because UConn is more than a few years away from membership. Realistically, we may never get in.

 

[dayooper]

Do you think AAU membership is a hardline requirement for entry into the Big 10? Because UConn is more than a few years away from membership. Realistically, we may never get in.

No. I don't. I never have. I believe that the schools must have an AAU type profile and UConn has moved in that direction. I really don't know if I'm correct or not. We know that certain non-AAU schools have been looked at outside of ND. Oklahoma and FSU come to mind. Why would they look at these schools if they had no chance?

Jim Delany has a way of planting seeds. He (or a Big10 President) had a conversation with UMD President Loh several years before the move was discussed. He talked Big10 with UNL years before as well. I can't find it, but shortly after the Rutgers/UMD move was made, he made a comment on how UConn really surprised him with their metrics. It was a brief comment, but it seem ed to indicate that they were looking at UConn. Does that mean UConn was vetted? Absolutely not. Does it mean they were looked at? Probably.

AAU is a dream for many universities. I don't know if UConn will ever get in, but it seems if they are heading for that profile. Whether they get a Big10 invite or not, the investment will payoff with a better school. In the long run, isn't that what universities are for, education and not sports entertainment?

 

[Sea Goat]

This is how it plays out.

1. Team leaves conference A for conference B.

2. At its first home game in conference B, Team doesn't let Conference A's announcers in.

3. Networks sues for specific performance. Judge says I don't have to get to likelihood of success on the merits because there is no harm that money (a reduction in the fees being paid by the network to conference A) can't cure.

4. Network asks Conference A to replace the departing team with a satisfactory replacement if it wants the same money. Conference A replaces the departing team with the best replacement available and negotiates with network on whether there is a reduction in TV rights and by how much.

5. If there is a reduction, A sues departing team to pay it. Departing team either pays it or claims it doesn't owe anything because the GOR was never valid as punitive damages or challenges the whole structure of the conference taking its members TV rights as an antitrust violation based on the new O'Bannon ruling.

6. The parties settle for less than the conference wants and more than the departing member wants to pay.

7. Life goes on.

It's really that simple folks. The GOR adds uncertainty to a departing member, and is therefor something of a disincentive, but it's not going to be specifically enforceable so this is still going to come down to money damages. The ACC's loss because VPI is replaced by Cincy is what? It's not in the tens of millions a year.

Not dissimilar to an analysis on the FTT blog in August, 2013. My take is that there are conference members and then there are conference members... If FSU leaves the ACC, it creates a lot more havoc and financial impact than if a Wake or BC left. The money impact would dictate. Chances are that the media buyers would cut payouts in one scenario but not in the other. Does it create a special class of your most valuable conference members to essentially pay a TBD additional exit fee? I think so. It will never be referred to as such, but isn't that the net effect? The analysis of actual damages would be pretty simple to determine it seems - I suppose ESPN could say a FSU departure will reduce media payout by a $100mm and a BC departure would reduce said payout by say $1mm.

Ironically, a conference (ACC in this scenario) would have to plead that a FSU departure caused significant damages thus warranting a significant settlement for breach of the GOR because ESPN said so. A FSU departure perhaps would cause significant monetary impact, but once that happened wouldn't the ACC be listing 30 degrees to port anyways? Certainly, the ACC would have a perception problem by virtue of pleading a case claiming the FSU departure is a near mortal blow. Can't have it both ways - plead that you have suffered huge damages and also claim you are strong as ever? Swofford will need a thick prayer rug if he attempts that.

If a FSU leaves, how much will new conference payout be? Will new conference help cushion the blow brought on by say FSU departing the ACC? When you have the B1G and SEC primed to get north of $40mm per soon, there is enough money around. I must say, if in the end, the ACC becomes what it set about to destroy - the old BE - just able to throw a lavish funeral reception - I'm good.

In a perverse way, doesn't the GOR just guarantee that if the best of the ACC leaves, the remnants essentially will just have more "exit fees" to split up when they too end up in the gulag.

 

[businesslawyer]

is something about to happen?

Are you asking me? I have no reason to think that something is. But the GORs, while making "something happening" somewhat more difficult, will not actually stop it from happening when it's otherwise ready to happen. That was my point.

 

[Fairfield_1st]

Are you asking me?

I think he comically meant between you and BillyBud.

 

[pj]

I think he comically meant between you and BillyBud.

Bidwell Tavern. 11 pm. Billybud, be there or bizlaw will come for you.

 

[CTMike]

Whether they get a Big10 invite or not, the investment will payoff with a better school. In the long run, isn't that what universities are for, education and not sports entertainment?

Crazy talk!!

 

[billybud]

is something about to happen?

Hell no...internet tough guys abound.....

Just another form of internet bully. Call someone on an issue and they want to get personal.

The guy knows, or should know, he hashed up liquidated damages with the consignment of media rights....in term of how "punitive" applies..

Not that I claim much experience in the area.

 

[RMoore1999]

Bidwell Tavern. 11 pm. Billybud, be there or bizlaw will come for you.

Hopefully someone brings a ruler...

 

[Rappin'Rodney]

Hopefully someone brings a ruler...

Forget the ruler. Let's do this right.

 

[Athlete94]

Nothing will happen soon, but something will happen with the next shift. All the signs are there we just need to be patient. Diaco will right the ship, the Rent will be expanded and UC will have a new home in the BIG.

 

[CL82]

Conspiracy Kitty says:
And now it looks like ND will join a conference....
Conference realignment dead?
I.....think....not.

 

[pj]

Conference realignment dead?
I.....think....not.

Totally wrong, Conspiracy Kitty. The yellow school is going to connect with the green conference.