When he learned this week that he was one of only a few people in possession of a copy of the ACC’s original grant of rights agreement, Mark Wilhelm took another look at it. He also examined copies of the Big 12 and Pac-12’s agreements, which he obtained around the same time period as a Villanova law student authoring an article on conference grant of rights agreements that would appear in 2014 in the Harvard Law School Journal of Sports and Entertainment Law.
Advertisement
“If you came to me in my normal practice, and you said, ‘Mark, I want to draft an agreement that does this sort of thing. Can you put something together?’ My gut reaction is that we’re looking at a 20-, 40-, 50-page document,” said Wilhelm, who earned his law degree in 2015 and now handles corporate mergers and acquisitions cases at Philadelphia firm Troutman Pepper. “Because there are a lot of terms, a lot of situations we want to consider — a lot of exceptions we want to include. That’s not what these documents are. These documents are a couple pages.”
Those few pages — especially the ones that make up the ACC’s agreement — could hold the key to this most recent round of college sports realignment. When USC and UCLA announced their move to the Big Ten on Thursday, it pulled the pin on what could be the most chaotic, transformative period in the history of college sports. Geography truly no longer matters. There are two leagues (the Big Ten and the SEC) that everyone wants to join, and in the next income bracket down, there is a mad scramble to either find a ladder to the two big-money conferences or to create the most lucrative next best thing. On Friday, the Pac-12’s presidents authorized an exploration of expansion. More movement is coming, and it’s coming fast.
How that movement happens — and who moves where — depends in large part on whether the ACC’s agreement holds. Unlike the other two, which end when their respective leagues’ media rights deals expire in 2024* and 2025, the ACC’s grant of rights lasts until June 30, 2036.
What’s a grant of rights? In the world of college sports, it’s an agreement in which schools agree to transfer their media rights to their conference for a set period of time. For example, Baylor’s agreement to be part of the Big 12’s grant of rights means that the rights fee for any televised sporting event emanating from Baylor’s campus is owned by the Big 12 until the grant expires. Replace “Baylor” and “Big 12” with “North Carolina” and “ACC” or “Oregon State” and “Pac-12.” These agreements purport to be irrevocable, and for years the general consensus among college sports administrators is that challenging such an agreement would be too risky a proposition. But one such agreement stands between powerful Oklahoma and Texas and an earlier entry into their new home in the SEC. Meanwhile, leaders at some ACC members stare at 14 more years of an ever-widening income gap with schools that once received similar television money and wonder if they can afford to wait.
*It’s no accident that UCLA and USC will join the Big Ten in 2024. That is exactly when the Pac-12 grant of rights expires.
Advertisement
The ACC agreement Wilhelm had — which is linked below in this story — is the original grant of rights. He obtained it in 2014 through an open records request to the University of North Carolina while writing that journal article. The agreement he received appears to be the copy that then-UNC chancellor Holden Thorp signed and sent back to the conference. The document contained signature pages for each school’s CEO, which would allow the signed pages to be combined into one fully executed document. The agreement was drafted in 2013 just after Louisville announced it would join the league and Notre Dame joined in all sports except football. Members were nervous after the Big Ten poached charter member Maryland, and at the time, their desire to keep the league intact superseded any interest in future flexibility. They were scared of the league being pillaged, and they wanted stability. That original agreement ran through June 30, 2027. It was amended in 2016 when the ACC extended its media rights deal with Disney/ESPN. That most recent deal allowed for the creation of the ACC Network. Multiple sources who have seen both said the language in the agreements is similar.
What’s also similar is the language in the original ACC agreement compared to the language in the Big 12 agreement forged a year earlier. Several passages appear to be copied verbatim. This includes a key section titled “Miscellaneous” in each that likely would be of particular interest to anyone wishing to break the agreement.
“This agreement may not be modified or amended other than by an agreement in writing signed by duly authorized representatives of the Conference and each of the Member Institutions that are then members of the Conference,” reads the first sentence of that section in the Big 12 grant of rights and in the original ACC grant of rights.
How many schools would have to agree to amend the agreement in writing is the key question, but it’s safe to assume that it would take something fairly catastrophic to convince a majority of schools in any league to move to dissolve their grant of rights.
So if a school wanted to challenge a grant of rights, it likely would assume considerable financial risk. For Texas or Oklahoma, it could mean a year or two of forfeited television money if either challenged the Big 12’s deal and failed. For an ACC school that tried and failed, the forfeited TV revenue would run into the hundreds of millions. But the current financial stakes may have changed the math. The Big Ten’s next media rights deal, which will begin a year from Friday, could ultimately allow the league to pay out as much as $100 million per school per year. It’s safe to assume that the SEC and Big Ten will each soon be able to pay out at least $70 million per school per year. The ACC distributed an average of $36.1 million per school for the 2020-21 school year.
Advertisement
So how would a school challenge a grant of rights? Wilhelm offered some general guidance. His firm wouldn’t allow him to comment on any league’s specific deal, but since these agreements are similar to ones he sees in his practice, he had a few ideas.
Wilhelm said there are four ways to challenge such a deal.
The first would be for the school to simply leave the conference and leave its rights behind. This is likely a non-starter because without its rights, that school is of considerably less value to another league. The new league wouldn’t be allowed to sell that school’s rights to a network, which likely would put an end to any potential marriage.
The second option is for the school to sue to try to get the rights back. This also would be exceptionally risky. “That’s going to be incredibly expensive,” Wilhelm said, “and there is not a lot of certainty that a school is going to win.”
If a school was willing to take the risk, it might claim the grant of rights isn’t a valid contract. That may sound silly. You can read three such contracts here. But it’s more complicated than that.
For something to be a contract, it must have three components: an offer, an acceptance and consideration. If I walk into a store and buy a pack of gum, my receipt is a valid contract. The store has offered me gum at a specific price. I have accepted those terms. I have given the store that amount of money, and the store has given me the pack of gum.
In the grant of rights, the school has given the conference something of value — its media rights. But what has the conference given the school? It’s not the money for those media rights. That comes from one or several networks based on the terms of the conference’s deal with the network(s). The school’s attorneys could argue that an entirely separate contract covers that consideration.
Meanwhile, the attorneys for the conference and the remaining schools could argue that the consideration the school received was stability in an unstable time.
But first, Wilhelm pointed out, any school challenging any of the grant of rights deals would have to figure out where to sue. This goes back to the brevity of the contracts themselves. “There’s nothing inherently wrong with that,” he said. “That doesn’t mean it’s a bad contract or that it’s unenforceable or anything like that. But what you have is a situation where you’re tying up potentially billions of dollars of rights in three or four pages. That leaves a lot of questions about what everybody was agreeing to at the time.”
Advertisement
One key question: Which state’s law governs the deal? If I look at my employment agreement with The Athletic, it tells me that it is governed by the laws of the state of California. There is no such clause in any of these deals. This, to Wilhelm, is a feature rather than a bug. It adds another layer of complexity for any entity wishing to challenge the deal. “So before we even get to the arguing about ‘Is this a contract’ or ‘Is this enforceable,’ we have to first figure out what court we’re supposed to be in,” Wilhelm said. “And lawyers will spend months arguing about what court you’re going to be in and — even when you’re in the court — what law applies.”
See why even Oklahoma and Texas — with all their fancy lawyers — haven’t challenged the Big 12’s grant of rights? It’s a lot of (expensive) work with no guarantee of success and a steep price for failure. Of course, if the schools could get the cases tried in their states, they might have a better chance of winning. This is especially true if they have friends in the state legislature who can help adjust the state’s contract laws. But again, that is no guarantee.
A much less risky (but probably still expensive) option is to try to negotiate a deal with the conference and the remaining members for an exit fee that is less than the full amount that would be forfeited. That exit fee would allow a school to leave with its rights intact.
While ACC members would be unlikely to agree to such a deal if a few of their schools wished to leave, this seems like the logical route for Oklahoma and Texas should they wish to join the SEC when that league’s new media rights deal begins in 2024. The Sooners and Longhorns could offer a payment that would allow the remaining Big 12 members to receive either an equal amount or more than they would have received had Oklahoma and Texas stayed until 2025, then it would seem reasonable that the other schools would let them leave with their rights. (Unless they really want to be spiteful, which is their right.)
The fourth option? Hope the league dissolves and the grant of rights dissolves with it. In the ACC, that would require the majority of the members to want to leave. That seems unlikely. But what about the Big 12 and Oklahoma and Texas? The Pac-12 could respond to the loss of USC and UCLA by trying to scoop up Big 12 members. The leagues could merge and form an entirely new entity. If that happened, the Sooners and Longhorns could be free to go.
Meanwhile, the grant of rights concept could prove useful elsewhere. If Pac-12 commissioner George Kliavkoff wants to know if any more schools are attempting to leave his conference, he can make a request that the 10 remaining schools sign a new grant of rights agreement that extends to some point in the distant future. The schools that want to stay will jump at the chance to sign. If, say, Oregon or Washington or Utah or Cal or Stanford were exploring whether they might be candidates to join the Big Ten, they’d ask to hold off on signing such a document.
Because if they did, they’d be signing a very short contract with some very long repercussions.
(Top photo of Dabo Swinney: Streeter Lecka / Getty Images)
