Is there a point where schools are able to opt out of GOR or conference and not pay penalty? Would conference likely hold payments as penalty if notified the school doesn't want to renew GOR or conference affiliation?

(06-29-2016 09:15 PM)Strut Wrote:  Is there a point where schools are able to opt out of GOR or conference and not pay penalty? Would conference likely hold payments as penalty if notified the school doesn't want to renew GOR or conference affiliation?

When the Big XII executed their GoR, Missouri simply refused to sign it. A month later, Mizzou was in the SEC.

(06-29-2016 09:27 PM)Hokie Mark Wrote:  

(06-29-2016 09:15 PM)Strut Wrote:  Is there a point where schools are able to opt out of GOR or conference and not pay penalty? Would conference likely hold payments as penalty if notified the school doesn't want to renew GOR or conference affiliation?

When the Big XII executed their GoR, Missouri simply refused to sign it. A month later, Mizzou was in the SEC.

Yeah, that's a pretty big 'Tell'.

Good question...and I believe the real reason you won't see a GOR challenged. If a program refuses to sign the renewal, they would in affect, be giving notice that they are leaving. The moment you give notice you are leaving all conference revenues stop.

Hypothetically if The ACC began GOR renewal proceedings 5 years before it was set to expire, and there may be terms set forth in the contract that define when that period is, and say Louisville refused to sign the initial redraft, that could be notice of an intent to leave and theoretically the beginning of 5 years without conference revenues.

A slippery slope indeed.
CJ

(06-30-2016 09:00 AM)CardinalJim Wrote:  Good question...and I believe the real reason you won't see a GOR challenged. If a program refuses to sign the renewal, they would in affect, be giving notice that they are leaving. The moment you give notice you are leaving all conference revenues stop.

Hypothetically if The ACC began GOR renewal proceedings 5 years before it was set to expire, and there may be terms set forth in the contract that define when that period is, and say Louisville refused to sign the initial redraft, that could be notice of an intent to leave and theoretically the beginning of 5 years without conference revenues.

A slippery slope indeed.
CJ

There is nothing about a GoR that requires that a team sign a renewal. Such an action is not a de facto announcement of intent to leave a conference. Therefore, no conference is permitted to withhold anything if a school announces it won't sign an extension of a GoR.

That being said, it would then be up to the individual conference's bylaws to determine whether such a school could be expelled from the conference without cause. Even then, they can't be penalized financially, since there would not only be no permitted withholding of distributions, but there would also be no exit fees due.

In the ACC's case, that would be important, since by then exit fees would probably reach $60 million. If, say, FSU wanted to leave but not pay that fee, their best strategy would be to goad the league to expel them first. Presumably, you would already have a P5 invite in your pocket before employing such a strategy.

I believe most conferences amended their bylaws to require all members to be a party to the GoR. I don't know the legalities but the argument would be that school-x, by it's own action and not that of the conference, chose to leave the conference so any exit fees or penalties would still apply.

(06-30-2016 01:32 PM)Wolfman Wrote:  I believe most conferences amended their bylaws to require all members to be a party to the GoR. I don't know the legalities but the argument would be that school-x, by it's own action and not that of the conference, chose to leave the conference so any exit fees or penalties would still apply.

I have been unable to find any evidence that the ACC bylaws require members to be a party to future GoR contracts. In essence, any league member who agreed to this would be binding themselves to the conference in perpetuity, no matter how bad a future media contract might be. I could see how some league members might agree to this, but I can't imagine that they all did.

(06-30-2016 01:50 PM)ken d Wrote:  

(06-30-2016 01:32 PM)Wolfman Wrote:  I believe most conferences amended their bylaws to require all members to be a party to the GoR. I don't know the legalities but the argument would be that school-x, by it's own action and not that of the conference, chose to leave the conference so any exit fees or penalties would still apply.

I have been unable to find any evidence that the ACC bylaws require members to be a party to future GOR contracts. In essence, any league member who agreed to this would be binding themselves to the conference in perpetuity, no matter how bad a future media contract might be. I could see how some league members might agree to this, but I can't imagine that they all did.

It would not be in the bylaws or constitution, but in the actual contract language. I suspect you are not bound to sign, but if you don't you forfeit your share of the revenue. The 3 x penalty for an exit is already over $75 million based on the most recent distribution. This aspect of the television contract probably gives the conference your television revenue if a GOR renewal is signed by a majority until you sign, or until you leave. Essentially it will be at least a 100 or so million to leave by 2020. Even negotiating this down, it makes the exit daunting.

(06-30-2016 03:21 PM)lumberpack4 Wrote:  

(06-30-2016 01:50 PM)ken d Wrote:  

(06-30-2016 01:32 PM)Wolfman Wrote:  I believe most conferences amended their bylaws to require all members to be a party to the GoR. I don't know the legalities but the argument would be that school-x, by it's own action and not that of the conference, chose to leave the conference so any exit fees or penalties would still apply.

I have been unable to find any evidence that the ACC bylaws require members to be a party to future GOR contracts. In essence, any league member who agreed to this would be binding themselves to the conference in perpetuity, no matter how bad a future media contract might be. I could see how some league members might agree to this, but I can't imagine that they all did.

It would not be in the bylaws or constitution, but in the actual contract language. I suspect you are not bound to sign, but if you don't you forfeit your share of the revenue. The 3 x penalty for an exit is already over $75 million based on the most recent distribution. This aspect of the television contract probably gives the conference your television revenue if a GOR renewal is signed by a majority until you sign, or until you leave. Essentially it will be at least a 100 or so million to leave by 2020. Even negotiating this down, it makes the exit daunting.

If a key member doesn't sign some future GoR, then it's possible that there is no media contract. In effect, everybody could become a free agent. The exit fee is a separate animal from the GoR. Media contracts are going to be tied to GoRs. If the terms of the media deal aren't to the liking of the key players, then there probably won't be a GoR.

But nobody really wants to be a "free agent". On its own, not even Notre Dame commands what P5 schools can get BECAUSE they are part of a conference contract. Together, everyone is more valuable than are apart. Frankly, I think ESPN would be delighted if every school had to negotiate its own deal. It would be a lot cheaper for them. It's the conferences that have gotten smarter in that regard. What I'm waiting for is for some of them to realize they could do even better if they weren't competing with each other, and cooperated like the NFL does.

(06-30-2016 09:00 AM)CardinalJim Wrote:  Good question...and I believe the real reason you won't see a GOR challenged. If a program refuses to sign the renewal, they would in affect, be giving notice that they are leaving. The moment you give notice you are leaving all conference revenues stop.

Since when?

(07-02-2016 08:18 AM)quo vadis Wrote:  

(06-30-2016 09:00 AM)CardinalJim Wrote:  Good question...and I believe the real reason you won't see a GOR challenged. If a program refuses to sign the renewal, they would in affect, be giving notice that they are leaving. The moment you give notice you are leaving all conference revenues stop.

Since when?

That's what happened with Maryland - the money was held in escrow. Look for that to become the policy in the future.

(07-02-2016 08:48 AM)Hokie Mark Wrote:  

(07-02-2016 08:18 AM)quo vadis Wrote:  

(06-30-2016 09:00 AM)CardinalJim Wrote:  Good question...and I believe the real reason you won't see a GOR challenged. If a program refuses to sign the renewal, they would in affect, be giving notice that they are leaving. The moment you give notice you are leaving all conference revenues stop.

Since when?

That's what happened with Maryland - the money was held in escrow. Look for that to become the policy in the future.

That had nothing to do with a GoR. And refusing to sign a GoR is not tantamount to giving notice you are leaving. If you only announce you don't intend to renew your grant of rights at some time in the future, and the conference withholds any payments, they are in breach of contract.

(07-02-2016 12:37 PM)ken d Wrote:  

(07-02-2016 08:48 AM)Hokie Mark Wrote:  

(07-02-2016 08:18 AM)quo vadis Wrote:  

(06-30-2016 09:00 AM)CardinalJim Wrote:  Good question...and I believe the real reason you won't see a GOR challenged. If a program refuses to sign the renewal, they would in affect, be giving notice that they are leaving. The moment you give notice you are leaving all conference revenues stop.

Since when?

That's what happened with Maryland - the money was held in escrow. Look for that to become the policy in the future.

That had nothing to do with a GoR. And refusing to sign a GoR is not tantamount to giving notice you are leaving. If you only announce you don't intend to renew your grant of rights at some time in the future, and the conference withholds any payments, they are in breach of contract.

A conference could make signing a requirement. Not signing would then require withdrawing...

(07-02-2016 08:48 AM)Hokie Mark Wrote:  

(07-02-2016 08:18 AM)quo vadis Wrote:  

(06-30-2016 09:00 AM)CardinalJim Wrote:  Good question...and I believe the real reason you won't see a GOR challenged. If a program refuses to sign the renewal, they would in affect, be giving notice that they are leaving. The moment you give notice you are leaving all conference revenues stop.

Since when?

That's what happened with Maryland - the money was held in escrow. Look for that to become the policy in the future.

That money that was held in escrow was due to the exit fee issue, the GOR had nothing to do with that.

Besides, the whole concept is ludicrous: The whole point of a GOR is to turn over a school's media rights to a conference, so that then the conference has them and can sell them to get the money. So how can a conference hold your media revenues if you do NOT give them the right to do so? Nonsensical.

(07-02-2016 04:39 PM)Hokie Mark Wrote:  

(07-02-2016 12:37 PM)ken d Wrote:  

(07-02-2016 08:48 AM)Hokie Mark Wrote:  

(07-02-2016 08:18 AM)quo vadis Wrote:  

(06-30-2016 09:00 AM)CardinalJim Wrote:  Good question...and I believe the real reason you won't see a GOR challenged. If a program refuses to sign the renewal, they would in affect, be giving notice that they are leaving. The moment you give notice you are leaving all conference revenues stop.

Since when?

That's what happened with Maryland - the money was held in escrow. Look for that to become the policy in the future.

That had nothing to do with a GoR. And refusing to sign a GoR is not tantamount to giving notice you are leaving. If you only announce you don't intend to renew your grant of rights at some time in the future, and the conference withholds any payments, they are in breach of contract.

A conference could make signing a requirement. Not signing would then require withdrawing...

Yes. But then that would be like Maryland. There would be no money owed by the school to the conference related to the GOR, since the school has not breached the GOR. The school would be liable for the exit fee.

(07-02-2016 05:14 PM)quo vadis Wrote:  

(07-02-2016 04:39 PM)Hokie Mark Wrote:  

(07-02-2016 12:37 PM)ken d Wrote:  

(07-02-2016 08:48 AM)Hokie Mark Wrote:  

(07-02-2016 08:18 AM)quo vadis Wrote:  Since when?

That's what happened with Maryland - the money was held in escrow. Look for that to become the policy in the future.

That had nothing to do with a GoR. And refusing to sign a GoR is not tantamount to giving notice you are leaving. If you only announce you don't intend to renew your grant of rights at some time in the future, and the conference withholds any payments, they are in breach of contract.

A conference could make signing a requirement. Not signing would then require withdrawing...

Yes. But then that would be like Maryland. There would be no money owed by the school to the conference related to the GOR, since the school has not breached the GOR. The school would be liable for the exit fee.

Sounds right. In the case of Maryland, the ACC would not have been able to withhold any money if UMd had not made public they had no intention of paying the exit fee. I assume the ACC learned a lesson - accepting an invitation to join another conference is a withdrawal, and the bylaws should cover it.

(06-30-2016 03:21 PM)lumberpack4 Wrote:  

(06-30-2016 01:50 PM)ken d Wrote:  

(06-30-2016 01:32 PM)Wolfman Wrote:  I believe most conferences amended their bylaws to require all members to be a party to the GoR. I don't know the legalities but the argument would be that school-x, by it's own action and not that of the conference, chose to leave the conference so any exit fees or penalties would still apply.

I have been unable to find any evidence that the ACC bylaws require members to be a party to future GOR contracts. In essence, any league member who agreed to this would be binding themselves to the conference in perpetuity, no matter how bad a future media contract might be. I could see how some league members might agree to this, but I can't imagine that they all did.

It would not be in the bylaws or constitution, but in the actual contract language. I suspect you are not bound to sign, but if you don't you forfeit your share of the revenue.

While I could see a term that says if you don't sign, you forfeit your share of the revenue under the new GOR ... but how would that affect your share of revenue under the current GOR?

If you made an extended GOR for the consideration of a share of conference revenues and then the revenues were withheld, that would seem to breach the current Grant of Rights, release your rights back to you if a court confirmed the breach, and thus free you to move before the contract expiration date of the current GOR. That's not really the kind of result the conference would want.

Some grants of right have performance clauses that allow the grants to be rolled over ... for instance, a few quite bad movies have been made specifically to retain rights to a particular intellectual property ... but there's no particular reason to think that any such term was included in any of the P5 GOR in question here.

(07-02-2016 10:27 PM)BruceMcF Wrote:  

(06-30-2016 03:21 PM)lumberpack4 Wrote:  

(06-30-2016 01:50 PM)ken d Wrote:  

(06-30-2016 01:32 PM)Wolfman Wrote:  I believe most conferences amended their bylaws to require all members to be a party to the GoR. I don't know the legalities but the argument would be that school-x, by it's own action and not that of the conference, chose to leave the conference so any exit fees or penalties would still apply.

I have been unable to find any evidence that the ACC bylaws require members to be a party to future GOR contracts. In essence, any league member who agreed to this would be binding themselves to the conference in perpetuity, no matter how bad a future media contract might be. I could see how some league members might agree to this, but I can't imagine that they all did.

It would not be in the bylaws or constitution, but in the actual contract language. I suspect you are not bound to sign, but if you don't you forfeit your share of the revenue.

While I could see a term that says if you don't sign, you forfeit your share of the revenue under the new GOR ... but how would that affect your share of revenue under the current GOR?

If you made an extended GOR for the consideration of a share of conference revenues and then the revenues were withheld, that would seem to breach the current Grant of Rights, release your rights back to you if a court confirmed the breach, and thus free you to move before the contract expiration date of the current GOR. That's not really the kind of result the conference would want.

Some grants of right have performance clauses that allow the grants to be rolled over ... for instance, a few quite bad movies have been made specifically to retain rights to a particular intellectual property ... but there's no particular reason to think that any such term was included in any of the P5 GOR in question here.

It's not really about the GOR agreement itself (which is a fairly short and straightforward document). Instead, the leverage from a GOR renewal comes from the signing of a GOR being a condition to entering into a new or revised TV contract. For instance, if ESPN decides to move forward with a new ACC Network, it will almost certainly require all of the ACC members to sign a GOR that is equal to the length of the revised TV contract as a condition. If there are GOR holdouts, then there is no new TV deal at all. So, if schools want to receive any money from a revised TV deal, they're going to have to sign the GOR renewal. In theory, you could have a holdout, but that would mean that a school is leaving *immediately* (such as the Mizzou to the SEC situation mentioned previously). It's not realistic to have a holdout on principle since nearly every school needs/wants the additional revenue from a revised TV deal first and foremost (the old adage of the "bird in the hand").

(07-02-2016 09:40 PM)Hokie Mark Wrote:  

(07-02-2016 05:14 PM)quo vadis Wrote:  

(07-02-2016 04:39 PM)Hokie Mark Wrote:  

(07-02-2016 12:37 PM)ken d Wrote:  

(07-02-2016 08:48 AM)Hokie Mark Wrote:  That's what happened with Maryland - the money was held in escrow. Look for that to become the policy in the future.

That had nothing to do with a GoR. And refusing to sign a GoR is not tantamount to giving notice you are leaving. If you only announce you don't intend to renew your grant of rights at some time in the future, and the conference withholds any payments, they are in breach of contract.

A conference could make signing a requirement. Not signing would then require withdrawing...

Yes. But then that would be like Maryland. There would be no money owed by the school to the conference related to the GOR, since the school has not breached the GOR. The school would be liable for the exit fee.

Sounds right. In the case of Maryland, the ACC would not have been able to withhold any money if UMd had not made public they had no intention of paying the exit fee. I assume the ACC learned a lesson - accepting an invitation to join another conference is a withdrawal, and the bylaws should cover it.

IIRC the Big12 bylaws provide that if a member has negotiated a move to another conference, the other Big12 CEOs can vote to deem that member has withdrawn from the Big12.

(07-02-2016 09:40 PM)Hokie Mark Wrote:  

(07-02-2016 05:14 PM)quo vadis Wrote:  

(07-02-2016 04:39 PM)Hokie Mark Wrote:  

(07-02-2016 12:37 PM)ken d Wrote:  

(07-02-2016 08:48 AM)Hokie Mark Wrote:  That's what happened with Maryland - the money was held in escrow. Look for that to become the policy in the future.

That had nothing to do with a GoR. And refusing to sign a GoR is not tantamount to giving notice you are leaving. If you only announce you don't intend to renew your grant of rights at some time in the future, and the conference withholds any payments, they are in breach of contract.

A conference could make signing a requirement. Not signing would then require withdrawing...

Yes. But then that would be like Maryland. There would be no money owed by the school to the conference related to the GOR, since the school has not breached the GOR. The school would be liable for the exit fee.

Sounds right. In the case of Maryland, the ACC would not have been able to withhold any money if UMd had not made public they had no intention of paying the exit fee. I assume the ACC learned a lesson - accepting an invitation to join another conference is a withdrawal, and the bylaws should cover it.

No doubt, these big exit fees and GORs - and how courts will treat them- are relatively new and there are still many unknowns, so conferences probably need to work out procedural kinks of this kind.