Skyhawk
All American
Posts: 4,782
Joined: Nov 2021
Reputation: 589
I Root For: Big10
Location: |
RE: 30,000+ reasons why Florida State will be on Greg Sankey's invite list
(09-06-2022 07:33 PM)Frank the Tank Wrote: (09-06-2022 06:16 PM)Skyhawk Wrote: (09-06-2022 12:02 PM)Frank the Tank Wrote: (09-06-2022 10:40 AM)dbackjon Wrote: (09-06-2022 01:48 AM)Skyhawk Wrote: you both are treating this as if this is a situation where someone forces their way out or is "breaking" the GoR.
That's not the point I'm making here.
I'm saying that the ACC can voluntarily, through a vote, cede the individual rights back to a school.
That's it.
And if that's possible - and I would be utterly shocked if it wasn't - then it's merely a matter of getting the votes.
And whether a particular school can be convinced whether to vote for this, is a subjective question, not a legal one.
So now tell me - since you've read the documents - can the ACC conference cede rights back to a school. I'm not asking "would they". I don't care about guesses at why they would or wouldn't. I'm asking - can they?
But without asking WHY WOULD THEY, the discussion is moot.
I can ask Jeff Bezos and Elon Musk for 5 billion dollars, but why would they?
Correct. I don't even understand the argument from the PP.
Sure, anyone can do anything to an existing agreement if everyone agrees to amend that contract. That's not even some type of deep legal thought, but a truism of life. The definition of an "ironclad agreement" isn't that it can't ever be amended by the parties, but rather an ironclad agreement means that a party can't unilaterally leave it without getting the other parties to agree to such amendment.
In contract terms, there's a massive difference between a party that "can" terminate a contract unilaterally without the consent of the other parties versus a party that "can" terminate a contract but only if every other party needs to agree to terminate such contract.
The ACC GOR is the latter situation where the "can" is merely theoretical (whereas the former is where the "can" is a fact), which is why the "Why would the left behind ACC schools agree to this?" is the only question that matters. The "could" part of it is a pointless discussion because just because anyone could do anything in theory is totally meaningless. That's a concept that applies to the weakest poorly-written contracts and the strongest well-written contracts and everything in between.
Great, thank you.
In order to have a discussion, having a firm foundation to start with is a help.
The threads on this forum are all over the place on this topic.
So the first steps are to figure out what the facts are.
For example, there are a lot here who think that a GoR is between the individual schools and the conference's media partner(s). Not true. It's between the schools and the conference, and then the conference licenses those rights to the media partner(s).
clarity and specificity is important.
And many here seem to think it's impossible for a school to get their rights back. And so it's important to determine if that's true.
The next step would be to determine the "how". What is the process for the school to get their rights back.
You've already started to touch on that.
And once we've determined the process of "how", then we can then, as a next step, look at what would induce the voting members to start that process.
Because if this "is" to happen, from what I can tell, it's apparently either a "throw your fortune to the winds" court case, or convincing the requisite number of voting school to vote in your favour.
neither of those is impossible. But I might argue the second seems more doable - it's just a question of negotiation. And just sitting down, saying "it'll never happen", without even trying, is just a self-fulfilling prophecy of doom.
Achievers try.
So why waste our time talking about "can't", and instead let's talk about the possible, and how could this be achieved.
And trying to stop a discussion by using sticker shock of seemingly really big numbers is just a way to try to impede discussion of the possible.
In any monetary negotiation, one typically tends to start with the extremes - largest and smallest - and try to work for something in the middle.
Since we've established that the conference has something that FSU wants. Now we need to figure out what the conference might want, and where the give and take might lie.
If such processes didn't work, ND would not be part of the ACC right now.
So things like scheduling. Maybe a guarantee that even if FSU is allowed to leave, other certain members are staying. Maybe seeing if espn might be willing to midwife this to benefit their other media partner, sec - agreements written ahead of time guaranteeing fsu is not going to the B10, for example. Or maybe a trade or two could be worked out.
And those are some ideas targeting the conference-as-a-whole. There could be things that an individual school might want. And then discussions about such things with each voting school.
It's merely a question of research, discussion, and honestly, creativity.
But we can't get to discussing these next steps until we agree on what can be done, and what that process is.
So instead people keep their heads in the sand, scared of really big numbers. And so these sorts of threads range and flounder all over the place, typically never actually getting anywhere.
Anyway, thank you for answering the questions, I do appreciate it.
I've been in more financial negotiations than I can even count.
The large numbers that I'm throwing out there aren't for shock value or impeding discussions. The whole reason why the SEC and Big Ten would want the most valuable ACC schools like FSU is that their TV rights are extremely valuable to sell to the TV networks, right? Well, 14 years of the rights of the most valuable ACC schools would cost a ton of money on the open market by any reasonable measure. I'm not exactly sure what people were expecting on that front.
This isn't an exit fee: the ACC *owns* the TV rights of its schools for the next 14 years and they would only sell them back to their schools at the current market price for that time period just as they would if they were signing a new ESPN contract today for the next 14 years. Maybe that's a better way of looking at it for people to grasp the amount of what would be a reasonable settlement figure here. If the ACC could rip up their current ACC TV contract and sell the TV rights to FSU (or pick any other top ACC brand) for the next 14 years, what would that be worth? THAT is the amount that the ACC would be asking for as a *minimum* in any negotiation to waive the GOR. This doesn't even get into the longer term damages of a top brand leaving the league that would go beyond the TV contract amounts, so that's why it would be a minimum amount.
With respect to a contractual exit fee, a school could try to file counterclaims against the conference for not following its bylaws in assessing such exit fee or seek an unjust enrichment claim. That's generally why exit fees have been adjusted downward in past conference realignment moves in negotiations.
Once again, the GOR is *very* different from an exit fee. A conference could breach every single one of its bylaws and it wouldn't have a single thing to do with the GOR. At the same time, there's no unjust enrichment argument available to the a defecting school. As I've repeatedly emphasized, the ACC *owns* its schools' TV rights for the next 14 years. They have the deed to the house of all of these schools, so to speak, and they can choose to sell that deed for whatever price it wants... or not sell it at all no matter what price is offered.
As a result, the leverage in negotiations is completely different in the GOR situation versus a standard exit fee situation. When there's an exit fee without a GOR, it's a pure contractual settlement. The conference and the departing school have relatively equal leverage positions because that departing school is going to take its TV rights to its new league when it leaves no matter what. If that school leaves without settling its exit fee and it ends up that the old conference is still making the same TV money or not really suffering any financial damages, that conference is much more exposed to the unjust enrichment claim by the departing school. So, there's a motivation on both sides to simply get a deal done prior to the official exit date and, as a result, those exit fees generally eventually come down.
In a GOR situation, it's not a settlement, but rather a sale of an asset that the ACC owns (the TV rights of a school until 2036) to a school and where the ACC is under no obligation of reasonableness, good faith or anything else. FSU threatening that it's going to leave a year from now is meaningless because the ACC will just say, "Cool - we get to sell your awesome games against the SEC for our own TV package AND we don't have to pay you a cent since our bylaws state that a withdrawn member receives no conference revenue distributions. See you later!" The ACC has ALL of the leverage because the contract terms and case law are ALL on the side of the ACC. When one side has ALL of the leverage, they effectively have monopoly power in that negotiation to set their price and they're not negotiating down at all.
I've been really consistent on this: if an ACC school wants to leave the league with its TV rights prior to 2036, the only way to do it is to pay a CRAP TON of money. There's no other way to do it legally and no other way to "induce" the left behind ACC schools to allow someone to leave practically.
That's the frustrating part on my end (not with you specifically). The irony is that the most common retort to my analysis of the GOR issue is that the money will solve it or I'm somehow not thinking like a business person, yet when I point out the exact method that anyone halfway trained in finance would value the amount needed to buy out the ACC GOR (taking the net present value of the defecting school's TV rights for the next 14 years), all I see is that these figures can't be possibly that high. Of course they're that high! If USC was worth $150 million per year to the Pac-12 alone, of course it stands to reason that the worth of a school like FSU to the ACC for 14 years would be in the hundreds of millions or even billion dollar range.
Once again, if the ACC could rip up its current ESPN contract and sell the TV rights of FSU or any other top brand for the next 14 years, what is that worth? Well, that's the amount that it would take to buy out the GOR if anyone is actually being objective (as opposed to being a fan wanting movement for their own biased reasons).
First - Who said they have to tear up their espn contract to allow fsu to leave?
Second - that buy-out cost can be any amount the voting members of the ACC decide to accept.
remember - fsu is merely one school. a single member of the ACC conference.
Espn pays the conference, not individual schools.
So, the ACC still receives espn money every year, even if fsu leaves.
so actually, there wouldn't be any loss of revenue for the conference.
this is part of why GoRs are different than exit fees. when talking loss of revenue to the conference, we're really talking about potential loss of revenue.
If anything, if fsu left the ACC, the conference gets the same amount, and each school gets more money. (dividing by 13+ND, instead of 14+ND)
If they backfill, they likely get the same amount. (this is where discussion with/reassurance by espn comes into play)
On top of that, the wake forests of the conference get zero extra dollars if fsu stays in the ACC. so they might well be motivated to vote to allow them to leave.
if fsu stays, that's a lot of potential money being left on the table.
And these are only a couple of points to note for negotiations.
There are a LOT more - both things concerning the conference-as-a-whole, and concerning individual members.
So that "buy-out" amount is very much negotiable.
|
|
/
30,000+ reasons why Florida State will be on Greg Sankey's invite list
