quo vadis
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RE: Grant-of-Rights and Casino Gambling Strategies by Major Players
(08-11-2021 11:13 AM)johnbragg Wrote: (08-11-2021 10:47 AM)quo vadis Wrote: (08-11-2021 10:28 AM)johnbragg Wrote: (08-11-2021 10:00 AM)quo vadis Wrote: (08-11-2021 09:05 AM)johnbragg Wrote: First of all, I don't think the Grant Of Rights is ironclad. There's a very good chance it doesn't hold up in court. On the other hand, it very well COULD hold up in court.
A lot of people argue that the school presidents and commissioners have smart lawyers in expensive suits and so they wouldn't make a bonehead move like write a Grant of Rights that would get thrown out of court by Judge Judy. I'd respond that there is at least a 10% chance that a judge throws out the Grant of Rights as a contract without consideration.
Big institutions are very leery of making decisions with an unknown chance of big downsides. For Texas and Oklahoma, the minimum downside of leaving the Big 12 in 2021, effective 2025 is about $80M each (final 2 years of Big 12 revenue distributions.) That's if UT and OU do their best to abide by the Big 12 bylaws and Grants of Rights as written, and if their effective date of withdrawl is June 30, 2025. For UT and OU that's a manageable number.
Note that UT and OU don't really NEED to be out of the Big 12 and in the SEC by any particular date. This isn't like getting West Virginia into the Big 12 with zero notice to the Big East because the Big 12 needed 10 teams for 2012, or like Missouri leaving the Big 12 with no notice because the SEC couldn't schedule 13 teams when A&M came aboard for 2012.
And, by the Big 12 bylaws, if UT and/or OU challenge the Grant of Rights in court, then they're no longer protected by the Buyout Amount, and the Big 12 can sue for the full damages they suffer from losing OU and UT. Wildly guessing that it's a 50% haircut on the TV contracts, that's ~$300M for losing 50% of the last two years of the Big 12 TV deals. In the eyes of the court, that's probably on top of the $80M standard exit fee, since the next Big 12/"Little 8" contract is likely to be for less than that.
I expect that OU and UT will push to stay in the Big 12 through 2025, rather than be liable for the damages from trashing the TV contract. Or more exactly, OU and UT will position themselves legally that they're not the ones voiding the Big 12 TV contracts.
If the Big 12 takes the position that OU and UT are withdrawing as of June 30, 2023 (which is what is supposed to happen, based on the Big 12 bylaws--they've given notice, June 2023 is the first June 30 after 18 months after the notice of withdrawal), and tries to enforce the Grant of Rights anyway, THEN the lawsuits start.
I actually think everyone's best alternative is to ride it out for 4 awkward years.
Let's assume TX and OU try to leave for Fall 2023, so that would impact two years of the GOR.
If the TV deal is worth $300m a year to the Big 12, and TX/OU are worth half of that, then that is $150 million in value for each of those years, or $300 million total, $150 million for TX and OU each, right?
That's my back-of-the-napkin estimate.
Quote:But if half that deal is with ESPN, and ESPN presumably doesn't care that TX and OU are moving to another ESPN property and are willing to continue paying the Big 12 their full share, then maybe only FOX has an issue. In that case, TX and OU would be on the hook for $75m each total for those two last years. That would seemingly make the B12 whole in terms of continued payouts.
Not sure we can handwave hard enough to say that the Fox share of the contract loses only 50% of its value. Fox might say, without OU and UT on Big Fox, they want to void the contract.
Quote:Another issue though is one of equity. I could imagine that TX and OU would argue that they should not be disproportionately penalized for leaving just because they are worth more than other schools. I could see them arguing "why should say Kansas State get to leave for a pittance, because they don't mean nearly as much to the TV deal, whereas we get socked for $150 million because we are"? A court might not deem that equitable treatment.
If it's about calculating damages, OU and UT leaving cause more damage. that's a reality that the court will recognize.
Quote:A third issue is that maybe FOX can be made whole, and thus not give the Big 12 a haircut, and thus not need big money from TX and OU, is if they just retain the rights to Texas and OU home games while they are in the SEC those two GOR years. Such that FOX would be entitled to broadcast the same number of TX and OU home games in 2023 and 2024 as members of the SEC as they would have had in the Big 12.
That's the Big 12 theory. OU and UT would be SEC members, but their home games would be televised as part of the Big 12 package. So Alabama @ Oklahoma on FOX OTA at 11 a.m. Central time. But I don't think that's acceptable to UT and OU, because they'd be getting no TV money for 4 years. (2 years exit fee, 2 years not being Big 12 members)
Quote:That's not unprecedented, e.g., IIRC, when Navy joined the AAC, they had an existing TV deal with CBS, so CBS remained their broadcast partner, separate from the rest of the AAC and their ESPN deal, for the first few years of their membership.
That's not the same. CBS paid Navy to televise their games. Under the text of the Grant of Rights, OU and UT can join the SEC, they just won't get paid for their TV rights.
Right, which is why I think TX and OU would challenge the GOR text. If they are "working" for the conference by providing games for broadcast, either in the Big 12 or SEC, then there's no valid reason for them not to receive payment for those rights.
If TX and OU begin SEC play in 2023, an equitable solution, IMHO opinion, with regard to the GOR is for FOX and ESPN to hold the rights to the TX and OU home games while they are now in the SEC as per their contract with the Big 12, for the Big 12 to be fully paid by ESPN and FOX just as if they were still playing in the Big 12, and for TX and OU to get the same share of media money from the Big 12 as all other members are those years. Depriving TX and OU a share given that they are providing content for broadcast and the conference is getting fully paid for their work seems unjustifiably punitive and confiscatory. But what do I know?
I agree, from UT & OU's point of view. On the other hand, that pretty much wipes out the value of a GOR for conferences in restraining schools from leaving.
Right, but I question whether a court will want to honor that conference desire.
I mean, if my employer has me sign a "no compete" clause, and the only basis is, "well, you do really good work for us, we want you to keep making money for us and nobody else", and I'm not getting any consideration for being bound to them, I'm not sure a court would uphold that.
(This post was last modified: 08-11-2021 11:22 AM by quo vadis.)
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