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Following the money, making sense of GOR, what’s next in conference shake-up

Discussing the landscape of college football right now is perhaps as much fun as it is alarming. The Rose Bowl will celebrate the 100th Anniversary of the January 1, 1923 game between Southern Cal and Penn State this year. UCLA, which plays its games in the Rose Bowl, traces its Rose Bowl history against Big Ten schools back to 1947. Who would have imagined that the two Pac-12 schools would one day be members of the Big Ten. Texas and Oklahoma are also just a few years away from competing in the SEC. And the ACC has yet to gain (or lose) a team.

We’re all trying to make educated sense out of what details there are and a current grant of rights document that has not been made public record. We have far more questions than answers but here are some thoughts from Osceola publisher Jerry Kutz and editor Bob Ferrante.

What is driving expansion?

Money and lots of it. The Big Ten is negotiating its media rights contract with Fox and is expected to sign a deal worth well over $1 billion dollars, which breaks down to $100 million per school per year. The SEC is able to distribute some $70 million per year, which will increase with the addition of Texas and Oklahoma. The ACC is able to distribute just $36.1 million per year to its members while the other conferences distribute less.

The discrepancy between ACC schools and SEC and BIG schools will be $30 million to $65 million per team per year, which creates an uneven playing field. In the short term a school like FSU can combat it. The Seminoles finished in the top 15 of collegiate athletics programs once again this year — but for how long? The Seminoles have anted up twice to keep softball coach Lonni Alameda from going to an SEC school and doubled the head baseball coach’s salary to sign Link Jarrett. How many times can FSU up the ante for coaches and facilities before the well runs dry?

(The above graphic is from Navigate, in March 2022)

How does FSU get to the SEC or BIG?

That’s the most-often asked and most-logical question being asked, and you can’t get to an accurate answer without first understanding the roadblock: The Grant of Rights (GOR). 

You may be thinking this is a no-brainer. FSU needs to jump to a BIG-$$ conference, no matter what it takes to get out of the ACC, no matter what the buyout may be. Let me introduce you to a term very few understand the implications of that impedes the path. 

What is the Grant of Rights?

Schools collectively assign their media (television) rights to home games to their conference for a period of years as a condition of membership in that conference and to share in that conference’s television, bowl, the NCAA tournament distributions and for short-term security. The downside comes when a school tries to jump to a more attractive conference and find all of its media rights remain with their conference until that grant of Rights (GOR) expires. 

In plain language, FSU has granted its media rights (revenue) to the ACC through 2036. At just $36.1 million in 2021, that amounts to at least $500 million and likely more as the payouts will increase over those 14 years. 

Can a school buy its way out?

Not per se. While everything can be litigated, the original grant of Rights (GOR) binds the schools’ media rights to the conference for the length of the agreement, rendering those schools of little or no value to another conference as the school’s media rights, including revenues, stay with the ACC.  

We can make Grant of Rights (GOR) very complex for the purpose of this discussion or attempt to keep it simple by saying the Pac-12, Big 12 and ACC each operate under a Grants of Rights that their respective presidents signed. 

Why did so many college presidents sign these GORs? 

They signed to maximize the revenue each would receive from their network television partner, to create security during a period of instability with conferences poaching each other’s members, and to justify the television partner’s investment in the creation of the conference network.

How are the GORs different? 

The distinguishing feature is the expiration date. USC and UCLA will jump to the Big Ten in 2024, exactly when their GOR expires. Ditto Texas and Oklahoma, who are waiting until 2025 to enter the SEC, when their GOR expires with the Big 12. Not so fast for the ACC, whose GOR extends until 2036.

Each ACC president or chancellor signed the deal initially in 2013 with a June 30, 2027 expiration date. The agreement was extended in July 2016 in order for ESPN to build the ACC Network and increased annual television revenue. 

Many media members are writing about the ACC’s GOR based on a leaked copy of the original agreement but it’s essential to understand the media does not have access to the ACC’s extension. Multiple sources say the language in the extension is very similar but that is a leap of faith. The ACC has released few details about the current agreement, so please understand that what the media, including the Osceola, is reporting is based on the assumption that the only material change is the expiration date.   

Why can’t we examine a GOR document?

Media who cover Florida State as well as those who cover various ACC schools have requested the GOR document under various states’ open records laws. There are two answers. First, the GOR has not been mailed or emailed to FSU, which negates the trail that would lead to a public records request being fulfilled. Why? Likely to circumvent the public records laws but also to protect ESPN, who wishes to keep its propriety contracts from their competitors. 

TheAthletic.com published a 2013 version of the ACC’s GOR, which the writer, Andy Staples, said was acquired by a law school student through a public records request at the University of North Carolina years ago. That PDF of the GOR is just 3-4 pages, plus signature pages for all of the ACC’s presidents or chancellors. (The authenticity of the document is uncertain.) It’s plausible a 2019 ACC GOR document contains similar or identical language, but we’re going into a gray area. The Osceola is among the news outlets seeking the 2019 GOR between ACC schools. 

TheAthletic.com also published the GORs of the Big 12 and Pac-12 and many of the paragraphs are verbatim and the documents are of a similar length.

It has been reported that Notre Dame has a contractual obligation with the ACC for all sports but football, where Notre Dame remains a football independent. Multiple sources say ND is contractually required to join the ACC if they choose to join a conference but we don’t have the details of that “contractual obligation” either and therefore don’t know if it has the same teeth as the GOR other ACC schools have signed.

How can a school get out of the GOR?

A lawsuit is one option that a school, or a collection of schools, could pursue. There is legal precedent, but it has not been favorable to a specific school when looking to exit a conference. When Maryland chose to bolt for the Big Ten, the ACC withheld Maryland’s share of the league’s revenue. The ACC claimed it was owed $52.5 million and after a battle (lawsuit and countersuit) was forced to forfeit $31.4 million. 

The instability created by the loss of Maryland to the Big Ten (as well as those ensuing lawsuits) led to Grant of Rights being written to avert lawsuits as well as to stabilize the conferences from further raids as both North Carolina and Duke were Big Ten targets. There is more legal precedent: West Virginia lost $20 million when it moved from the Big East to the Big 12, while Rutgers settled for $11.5 million after leaving the Big East for the Big Ten.

It has been reported that the GOR can be dissolved by the membership but without the contract we can’t know how many members it would take? Some have reported a majority, eight or nine, but are there eight if only six members have a better option?

Who is driving the moves?

Follow the money trail. ESPN owns the SEC’s broadcast rights and will have expanded rights with a new deal in 2024, taking over CBS’s game of the week. And ESPN owns a share of the SEC Network. ESPN has a significant vested interest in the success of the SEC, just as Fox does with the Big Ten. There will be other players, notably NBC, which has an existing $15 million deal with Notre Dame through 2025. Amazon is also broadcasting NFL games, while Apple TV is streaming MLB games. Peacock, which is NBC’s streaming service, is also making a notable jump into the live sports arena.

Where does FSU, ACC schools stand?

Jim Phillips
Jim Phillips could re-open the ACC’s deal with ESPN, if the league could add Notre Dame or an attractive school to the mix.

Florida State’s ratings have frequently been quite good. The Seminoles are often designated for national primetime games, including an FSU-LSU game on Sept. 4 and the Florida-FSU game on the Friday after Thanksgiving. Eyeballs drive the discussion and FSU’s brand is one that a national audience opts to watch. A legacy built by Bobby Bowden, assistant coaches and decades of players helps FSU even today as ratings influence the discussion. Ratings aren’t just a number, they are a reflection of deep-rooted fan support for the Seminoles and a compelling reason to believe FSU will have a seat when the music stops.

Take the tradition, the brand, the location in a football-rich area of the Southeast with top prep prospects from Florida, Georgia, Alabama, Mississippi and Louisiana. Those are all advantages. The Seminoles showed steady improvement in Mike Norvell’s second year, and a season with six-seven wins as well as a bowl berth are realistic. Donors are stepping up to fund a proposed football operations building, with December as a potential groundbreaking. 

That said, the current TV contract with the ACC and ESPN is a long-term liability for the next 14 years. Winning will make fans happy but won’t solve the expansion issues in the short term. Winning will make FSU attractive to a suitor (SEC, Big Ten or a to-be-named super conference) down the road but is unlikely to move the needle for the ACC any time soon. 

ACC commissioner Jim Phillips could push for ESPN to re-evaluate the TV deal if he is able to add a school. If that school is Notre Dame, you can be sure ESPN will load up the Brinks truck to attract arguably the most valuable brand in college athletics.  And it will take a significant ESPN bump for Phillips to make a compelling case to a university with options. 

It has been reported that ND’s annual revenues are less than what they would receive as a member of the ACC. The Irish enjoyed a good test drive playing five games per year in the ACC and making the playoffs twice. Multiple sources have reported there is bad blood between ND and the Big Ten and that the ACC is a better fit. With a hefty endowment, the Irish may be willing to take less than the $70 million the SEC is paying out or the $100 million the BIG is likely to pay out after their contract with Fox is negotiated next year to find a better fit. But ND won’t take ACC nickels ($36 million per team per year) over Big Ten dollars. ESPN and Fox are in fierce competition for Notre Dame, so will ESPN try to win ND to the ACC by turning those nickels into quarters or more?

What’s the number?

“What’s the number?” a longtime athletics administrator answered to a question about where the ACC or more specifically FSU would land. By the number, he meant the number of conferences the puppet master (the television executives) have in mind. “Is it two conferences: the SEC and BIG?” he asked. “Is it four?”

“If it’s the Big Two, then how many schools do they want in each conference?” he continued. “Twenty? More?”

No one, save the puppet masters, know the answers, leaving the media to speculate, which drives clicks and nervous chatter. 

A case for the ACC and FSU

What if the number of conferences planned is four? The ACC is the third strongest conference right now and would be stronger yet with Notre Dame, who is contractually tied to the ACC but taking official visits to the BIG and, reportedly, the SEC. It seems logical that the Big 12 and the Pac-12 would merge to give you four conferences with 16 to 20 teams each.

Phillips could push ACC presidents and chancellors to expand but other than Notre Dame, who would add enough value to bring ESPN back to the table to bridge the gap, at least with the SEC? Expanding with a school(s) that adds value will open ESPN’s purse strings, which could increase the existing ACC schools’ per-year distribution. Adding a school that does not add value would only lower the per school distribution.

The fledgling ACC Network does offer one built-in advantage the Big 12 doesn’t and that’s a league-specific TV network. The Pac-12, which is scrambling to add schools, has a network but one that lost money during the pandemic-shortened 2020 season. And the Pac-12 Network distribution is low, in just 15 million homes, compared to an ACC Network that is in 91 million homes — a real asset if the ACC and ESPN re-configure the league. Is it possible an ACC would attract Pac-12 schools – an Oregon, Washington, Stanford or Arizona school, or a Big 12 school – like Cincinnati — who want to dart for the ACC?

While it makes geographic sense for the Pac-12 and Big 12 to merge into the fourth conference, does it make financial sense for a western division of the ACC with a group of Pac-12 and/or Big 12 schools? Sure, it’s possible. And it may be feasible if the ACC could find revenue by taking on a school(s) that add households and revenue on a per-subscriber-basis in those states. But would the revenue be there to help close the financial gap between the SEC, Big Ten and everyone else? And would it offset the cost of cross-country travel, which would skyrocket for ACC schools?

A source told ESPN.com on Tuesday that there are no Big 12 schools looking to jump to the Big Ten or SEC, beyond of course the prior decisions by Texas and Oklahoma. It appears likely the Big 12 will take three steps back (losing Texas and OU) but make a step forward with the future expansion of UCF, BYU, Houston and Cincinnati and maybe another step forward with select teams from the Pac-12.

What is the timeline?

As we mentioned at the start, there are more questions than answers but with the Big Ten negotiating its television contract this fall, they’d like to do it with Notre Dame in the fold so one would expect we’ll know much more sooner than later.

The inability to review a GOR document is one of the biggest question marks. It’s the unstable foundation for much of the reporting by local and national media. The total of what we don’t know — the contents of the GOR — limit the media from knowing the cost of a settlement or the potential framework for a lawsuit. Phillips and the ACC’s lawyers and member schools know the details of the agreement too. While Phillips works with ESPN to sustain or expand the conference, member institutions will assess their individual path forward, including lamentably what ESPN decides for FSU and for other prominent schools.  

ESPN and to some extent Fox and the streaming channels are the puppet master, pulling the strings on the future of college athletics.

Coming next

In the coming days, we will take a look at the factors that need to be considered for an FSU move to the SEC.