Likely not what people may want to read, but it is always best to know the real truth. This article is arguably the best article I have seen written on this topic.

Please take the time to read it. It is a great read.

http://big12fanatics.com/expansion-p...-grant-rights/

Grant of Rights
...GoR’s are unbreakable, as they have been upheld in court numerous times in multiple industries, but they are not unmalleable. They are often bought and sold within the process of doing business. This is an extremely important distinction.

I’m not a media lawyer, but I’ve talked to a few and what I can tell you about a Grant of Rights (GoR) is they are not unique to Sports Conferences. They are tried and true contracts that are used for nearly every endeavor where someone provides some value to something you created. For instance, you could write a song and grant the rights to a recording label to market it for you. Or, you could be an author and grant the rights to your work to a publishing house to provide it a larger distribution or even grant the rights to make a movie adaptation of your story. Or, you could have produced a TV show and granted the rights to a network to broadcast it.

All contracts can be adapted if both parties sign off on it, but the strength of the Grant of Rights, as opposed to the buyout, is that the GoR has an end date. You will always get your rights back at some future date, as opposed to a buyout which runs indefinitely. Think of it as a contract a baseball player has with a team. They are paid to perform under the contract and at the end of the contract they can become a free agent. However, they cannot walk away from the team and play for another team mid contract and expect to get paid. The only way that works is if the team they are on sells their rights to another baseball team.

This is the basic use of a Grant of Rights. For sports conferences and leagues from the Power Five to the NFL to the MLS, who I spoke too, bundle all the video broadcast rights to their teams home sporting events and granted them to the conference/league to market and sell to broadcasters. Having them secured under a GoR reduces the risk for the media company because they know exactly what inventory they will have for years to come. Less risk means more revenue to those providing the inventory, much like how you’ll receive a lower interest rate on a loan if you are less risk to the bank.

It may feel this way, because the first time most sports fans heard of them was to end realignment, but it is not new. All conferences have used GoRs within their media deals that rolled yearly so that a school could not sell a game twice or pull it back mid-season if they didn’t like the scheduling. What has changed within college sports, however, is the duration of the grant of rights and that happened in 2007 with the advent of the Big Ten Network.

In order to secure the resources needed to build a conference network, the Big Ten needed to bind all of the media rights for the schools together for a long time, which provided the network the inventory it needed to secure a partnership and to build a venture around that asset. This is no different than a label locking up an artist to a multiple album deal.

This grant of rights the Big Ten put in place was apparently for twenty five years, however I have also been told it is a rolling ten year contract. The Pac 12 put one in place with the advent of the Pac 12 Network as well, though I have not heard the duration. The Big 12 and ACC put one together, tied to their media contract, to solidify their strength of commitment to each other within the conference.

To date only the SEC has stated it has neither a buyout nor a Grant of Rights. However, that was prior to the formation of the SEC Network. It is unknown at this time if ESPN required one to alter their contract with the SEC when they bundled all of the SEC’s inventory on all of its channels, including the SEC Network, for the new value of $6 billion over 25 years.

With all that being said, how they work is actually quite simple. The teams have video broadcast inventory, e.g. home games in various sports. They grant the rights to these home games to the conference to bundle and sell to a media channel. No one can force you to sign away your rights, you have to do it yourself, which is another reason why they are difficult to break. Once they are signed, you no longer control those rights until the term of the agreement ends.

What happens then is that any revenue generated from the inventory goes to the conference, who pays out their members based on their bylaws. They do not go directly to the school nor does the school control them during the duration. This acts like a poison pill. If a team without a Grant of Rights leaves a conference, their rights and the revenue derived from those rights flow with them. However, while a team under a grant of rights could move conferences, the revenue generated from their rights would still flow back to the conference that holds the GoR. As an example, if the SEC expanded with North Carolina, the SEC would have to pay the ACC for any revenue North Carolina’s inventory generated. This makes it difficult for both North Carolina and the SEC, because North Carolina doesn’t have much to offer the SEC any longer.

Additionally, North Carolina may lose their revenue stream completely. The Big 12’s bylaws are public and they clearly state in section 3.1 that

The Grant of Rights Agreement which will remain in full force and effect as to such Withdrawing Member and the Withdrawing Member shall continue to be fully bound under the Grant of Rights Agreement after Withdraw for the remainder of the term of any Grant of Rights Agreement as if it remained a Member of the Conference, but the Withdrawing Member shall not be entitled to payment of any amounts or any other benefits arising under the Grant of Rights Agreement after Withdraw.

In short, if you are no longer a member you are not paid as a member would be paid, even if your rights are owned by the conference.

When the Big Ten raiding the ACC rumors were spreading the ACC was looking for ways to state publically that no one was interested in moving to the Big Ten. The Big 12 was apparently instrumental and assisting the ACC with crafting their Grant of Rights and stopping realignment cold. It wouldn’t be a stretch to imagine the ACC’s language is similar to the Big 12’s due to this. Additionally, most GoRs in many industries have similar language to protect the owner of the rights, in this case it is the conference, not the university.

So to push our North Carolina example one step forward, if the ACC held UNC’s rights through 2027 and UNC joined the SEC in 2015, the ACC could technically gain 12 years of revenue off of UNC without having to pass any of it back to UNC, since they are no longer a member of the ACC.

This is why University of Oklahoma President Boren called Grant of Rights “handcuffs”, because you don’t sign them unless you plan on staying where you want to be. I’ve seen several reporters try and claim that Texas wouldn’t have signed something they couldn’t break. But from what I have been told Texas signed it because they are where they wanted to be. They wanted to facilitate stability as a means to stop everyone else, namely Missouri and Oklahoma, from looking around as well. Now signing it is a requirement to joining the conference.

However, Grant of Rights are still contracts, which means they can be amended if both parties mutually agree to do so. There are limitless ways that these rights could be bought and sold over the years if realignment needed to occur, but what GoR’s do is take the power away from the schools and hand it to the conferences, who now have all the leverage.

Much like our earlier example about baseball players, the ACC could allow UNC to move, however they may sell the rights to the SEC for some sum, which would be on top of whatever buyout UNC had to pay via the bylaws. The ACC could also be creative and do something like cash over time and guaranteed events against each of the SEC schools a year. Much like a trade in the MLB, all that matters is that it is mutually agreed upon to make the change. GoR’s are unbreakable, as they have been upheld in court numerous times in multiple industries, but they are not unmalleable. They are often bought and sold within the process of doing business. This is an extremely important distinction.

For this discussion quantifying this should be easy; do you have one or not. What is difficult to determine is if any sort of business deal could be brokered to allow a team to move. For now I’ll just give a penalty to a team’s score if they have a grant of rights active for more than the next five years.

If you have any questions or would like some numbers discussed, contact The Number Monkey on Twitter @TheNumberMonkey or via email theNumberMonkey@Big12Fanatics.com.

2015 Number Monkey Media

There is one MAjOR part missing. Yes they are nearly unbreakable; but ONLY if the granting party continues to receive their royalies for said granting of right. Every single time, without exception, the grantee stop payment on said royalties, the contract was made null and void. That opens the opportunity for negotiation.

It's a contract and all contracts have a way out of them.

(07-23-2015 12:10 AM)adcorbett Wrote:  There is one MAjOR part missing. Yes they are nearly unbreakable; but ONLY if the granting party continues to receive their royalies for said granting of right. Every single time, without exception, the grantee stop payment on said royalties, the contract was made null and void. That opens the opportunity for negotiation.

That's the problem I have with his post. It may be true that GORs have been used in a lot of industries, but whether these conference bylaws that let a conference stop paying a defector would hold up in court seems like a unique issue to college football and I have not seen a relevant precedent cited to prove either way.

I remember reading something in the B112 GoR that tied it to membership in the B12. It wasn't clear what would happen if a school were to leave the B12.

Does the chancellor have the authority to sign away rights? Does the BoT? State legislature?

Thanks, NF.

The CFA TV contract was thought to be unbreakable until the Univ of Oklahoma won in court.

I'll try one last time:

Nebraskafan, why is a (supposed) fan of a school that hightailed it out of the XII, for their own good, so adamant on shouting down everyone who says that the XII is not going to survive??


But you ignored my question in two other threads, so I don't expect you to expose your true agenda now.

(07-23-2015 12:10 AM)adcorbett Wrote:  There is one MAjOR part missing. Yes they are nearly unbreakable; but ONLY if the granting party continues to receive their royalies for said granting of right. Every single time, without exception, the grantee stop payment on said royalties, the contract was made null and void. That opens the opportunity for negotiation.

But the conferences all provide that if you leave you forfeit your share of the money. That's a massive red flag.

But here is what the article misses.

If School A wants to leave Conference 1 for Conference 2, School A can leave only thing Conference 1 holds rights to is the 6-7 home games that A plays but the four league road games belong to conference 2.

If School A is desired four games under the contract is worth something (see Notre Dame playing 2-3 per year under the ACC deal).

Add to that A receiving its stream of payments from Conference 1 and moving can make sense, take that stream plus a partial share of Conference 2 until the GOR expires and it can be good money.

The only way GOR truly blocks A from moving is if a court upholds the provision that A forfeits its share of money and none of the entertainment sector cases indicate that is going to fly.

(07-23-2015 07:43 AM)MplsBison Wrote:  I'll try one last time:

Nebraskafan, why is a (supposed) fan of a school that hightailed it out of the XII, for their own good, so adamant on shouting down everyone who says that the XII is not going to survive??


But you ignored my question in two other threads, so I don't expect you to expose your true agenda now.

What question? I work for a living and don't read every post. So, what question you have?

What does Nebraska being in the B1G have anything to do with the current environment of GOR's????????

Your post is very odd.

I was told that the Big 12 GOR's own all media income of each university. That is radio, TV, etc. It would be hard to leave that behind.

So is Kimmy Schmidt.

(07-23-2015 07:02 AM)Wolfman Wrote:  I remember reading something in the B112 GoR that tied it to membership in the B12. It wasn't clear what would happen if a school were to leave the B12.

Does the chancellor have the authority to sign away rights? Does the BoT? State legislature?

The Big 12 is the party to the TV contracts and the networks pay the conference, not the individual schools. As a result, the conference will hold or retain money during the duration of the dispute, which gives the conference huge leverage over any school seeking to depart early.

Therefore, FOX isn't going to just give the rights to ESPN and ESPN isn't going to give the rights to FOX by trading the rights between schools for changing a conference.

The only way I can see a conference's GOR fall flat is if the ACC 2017 Network tie-in is real or not. But I'm not a lawyer and not going to try and pretend to speak lawyer speak.

If the strength of a GoR is that it has an end date, what does that say about conference bylaw provisions that impose exit fees? I don't recall seeing anything in the ACC bylaws, whose exit fees some might challenge as unnecessarily punitive, that allows a school to withdraw at some future date without penalty. Nor is there an "evergreen" clause which requires members to periodically renew their agreement to this provision.

So, it appears that ACC schools are bound by an onerous exit penalty in perpetuity even those who agreed to the provision reluctantly and/or under duress. Florida State could not announce that it intended to withdraw at the end of the ACC GoR contract and mitigate any part of an exit penalty that could easily be $60 million by then.

Does that lack of an end date make exit fees subject to legal challenge?

(07-23-2015 09:16 AM)Nebraskafan Wrote:  

(07-23-2015 07:02 AM)Wolfman Wrote:  I remember reading something in the B112 GoR that tied it to membership in the B12. It wasn't clear what would happen if a school were to leave the B12.

Does the chancellor have the authority to sign away rights? Does the BoT? State legislature?

The Big 12 is the party to the TV contracts and the networks pay the conference, not the individual schools. As a result, the conference will hold or retain money during the duration of the dispute, which gives the conference huge leverage over any school seeking to depart early.

Therefore, FOX isn't going to just give the rights to ESPN and ESPN isn't going to give the rights to FOX by trading the rights between schools for changing a conference.

The only way I can see a conference's GOR fall flat is if the ACC 2017 Network tie-in is real or not. But I'm not a lawyer and not going to try and pretend to speak lawyer speak.

But again, the school grants rights to the conference in exchange for pay - withhold the pay and I think there is a huge poblem. For those of you who dont know this a penalty is not an enforceable contract right (regardless of whether a party assents to it). The basic test to determine if a provision is a penalty or an approximation of damages is whether it is designed to compensate the non-breaching party or prevent a party from breaching. Every indication that i have seen is that it is designed to keep parties from breaching. Therefore, it is likely that the GOR as structured prevents efficient breach and is therefore unenforceable.

IMO, people who believe the GORs have a chance to be overturned in a court are missing the point.

Even if a school or conference felt they might have a shot of overturning a GOR, the risk of failing to do so is so enormous that it is likely to prevent such an attempt. Remember, by their very nature, these organizations are risk adverse and rolling the dice in this manner is something that Boards of Trustees would be reluctant to do, IMO. (If you are a BOT member of a state school, for example, do YOU want to go back and to explain to your state legislature, and, more importantly, the taxpayers, the huge hole the school YOU had a fiduciary responsibility for was put into based on YOUR decisions?)

Added to this huge potential hole are the exit fees. The recent ACC situation is a case in point. According to reports, UMD agreed to pay over $31M in exit fees despite the fact that they did NOT support the previous hike in the fee. (Does anybody believe a school that DID support the hike would get a better or even the same deal?). Sure, it wasn't the full exit fee, but it was hardly chump change either!

Finally, since 4 of the 5 P5's have similar GORs, it would seem illogical for a conference to try to bust one in court since they would be virtually litigating against their own GOR as well.

I just don't see any school or conference challenging one of these.

(07-23-2015 09:30 AM)uconnwhaler Wrote:  

(07-23-2015 09:16 AM)Nebraskafan Wrote:  

(07-23-2015 07:02 AM)Wolfman Wrote:  I remember reading something in the B112 GoR that tied it to membership in the B12. It wasn't clear what would happen if a school were to leave the B12.

Does the chancellor have the authority to sign away rights? Does the BoT? State legislature?

The Big 12 is the party to the TV contracts and the networks pay the conference, not the individual schools. As a result, the conference will hold or retain money during the duration of the dispute, which gives the conference huge leverage over any school seeking to depart early.

Therefore, FOX isn't going to just give the rights to ESPN and ESPN isn't going to give the rights to FOX by trading the rights between schools for changing a conference.

The only way I can see a conference's GOR fall flat is if the ACC 2017 Network tie-in is real or not. But I'm not a lawyer and not going to try and pretend to speak lawyer speak.

But again, the school grants rights to the conference in exchange for pay - withhold the pay and I think there is a huge poblem. For those of you who dont know this a penalty is not an enforceable contract right (regardless of whether a party assents to it). The basic test to determine if a provision is a penalty or an approximation of damages is whether it is designed to compensate the non-breaching party or prevent a party from breaching. Every indication that i have seen is that it is designed to keep parties from breaching. Therefore, it is likely that the GOR as structured prevents efficient breach and is therefore unenforceable.

So how does that relate to the question I asked about exit fees? It seems to me that the ACC explicitly avoided suggesting it was an approximation of damages when it set the amount as a multiple of the conference budget. If a school were to leave, and ESPN did not reduce the per team payout to the remaining members, could they not have a good argument that there were no real damages?

The ACC avoided having a court make such a ruling by negotiating Maryland's exit fee out of court. I assume they do do whatever they could to avoid any more court tests in the future as well.

(07-23-2015 08:21 AM)Nebraskafan Wrote:  

(07-23-2015 07:43 AM)MplsBison Wrote:  I'll try one last time:

Nebraskafan, why is a (supposed) fan of a school that hightailed it out of the XII, for their own good, so adamant on shouting down everyone who says that the XII is not going to survive??


But you ignored my question in two other threads, so I don't expect you to expose your true agenda now.

What question? I work for a living and don't read every post. So, what question you have?

What does Nebraska being in the B1G have anything to do with the current environment of GOR's????????

Your post is very odd.

You read it just fine in the previous two threads. Just like you avoided it here.

The question, as it was plainly stated multiple times: why are you so adamant on making sure the XII is going to survive??

In other words, a Nebraska fan should be rooting for the demise of that conference.

(07-23-2015 09:39 AM)Eagle78 Wrote:  IMO, people who believe the GORs have a chance to be overturned in a court are missing the point.

Even if a school or conference felt they might have a shot of overturning a GOR, the risk of failing to do so is so enormous that it is likely to prevent such an attempt. Remember, by their very nature, these organizations are risk adverse and rolling the dice in this manner is something that Boards of Trustees would be reluctant to do, IMO. (If you are a BOT member of a state school, for example, do YOU want to go back and to explain to your state legislature, and, more importantly, the taxpayers, the huge hole the school YOU had a fiduciary responsibility for was put into based on YOUR decisions?)

Added to this huge potential hole are the exit fees. The recent ACC situation is a case in point. According to reports, UMD agreed to pay over $31M in exit fees despite the fact that they did NOT support the previous hike in the fee. (Does anybody believe a school that DID support the hike would get a better or even the same deal?). Sure, it wasn't the full exit fee, but it was hardly chump change either!

Finally, since 4 of the 5 P5's have similar GORs, it would seem illogical for a conference to try to bust one in court since they would be virtually litigating against their own GOR as well.

I just don't see any school or conference challenging one of these.

I think the "risk of failing to overturn" one of these GORs just reduces the pool of schools you consider taking to those in a populous state that is new for your conference. For example, let's say the B1G wanted to add a Texas, UNC or VA.

If the B1G guaranteed them that if the GOR holds up, they still make what they were getting from the B12 or ACC, the absolute worst case scenario for the B1G is that they have pay them approx $20 million without getting any of their home games, but they still get to add that school to their conference AND they get to make a lot more BTN carriage fees from those state's cable households to offset any payouts.

If that is the absolute worst case, and the upside is so high for those schools mentioned, I don't see the risk as that much of a deterrent.

(07-23-2015 08:19 AM)arkstfan Wrote:  

(07-23-2015 12:10 AM)adcorbett Wrote:  There is one MAjOR part missing. Yes they are nearly unbreakable; but ONLY if the granting party continues to receive their royalies for said granting of right. Every single time, without exception, the grantee stop payment on said royalties, the contract was made null and void. That opens the opportunity for negotiation.

But the conferences all provide that if you leave you forfeit your share of the money. That's a massive red flag.

But here is what the article misses.

That doesn't matter. The GOR agreement is in essence in exchange foe yearly payments for TV rights. Stop payment on those, and the contract is null. Something you learn the first day, first minute of contract law class, is that a contract is the exchange of a promise, obligation, or good for consideration. The equal revenue sharing portions of these agreements make it nearly impossible to withhold money from a party and keep the contract afloat. That is why these conferences make these separate clauses in their bylaws, for example, to try to enforce it, because they know a GOR will not allow them to withhold payment if a school leaves, which is the major flaw. The only way they could do it, is if the consideration for the GOR was a lump sum payment, designed to buy the rights indefinitely (see the Beatles). But they didn't sign over their rights indefinitely for a lump sum: they signed them over for a set period of years in exchange for an annual payment equal to an equal share of the TV money. Thus the conferences have to keep paying those monies, in order to keep the rights, whether the school is in the conference or has left. This has been proven time and time again in court for over a century.