Loyal Cougars

The Next Round of Conference Realignment: Part 1

In this 3-part series, Troy Adams looks at the current stability of the Power 5 conferences, the issues most likely to trigger the next round of conference realignment, and which teams and conferences are most likely to make a change. Today’s Part 1 provides some background on conference “Grant of Rights” agreements and the role they will play in potential upcoming changes to the college football landscape. 

Will There Be Another Round of CFB Realignment?

The answer is a very loud, “Yes” but nobody knows when it will happen or what will be the primary drivers. Aside from the ever-present motivational power of greed, this piece examines what I believe to be the primary force currently holding four of the five Power 5 conferences together. In the next episode, I’ll dive deeper into the timeline in which expansion may occur and which realignment scenario is most likely to play out.

What Is Holding P5 Conferences Together?

After the last round of realignment, three of the five Power 5 conferences executed a grant of media rights (GOR), which gives the conference ownership of the media rights for each member institution. The B1G already had a GOR agreement and the SEC does not have one. The perceived consequences of breaking a GOR is what currently holds most P5 conferences together. A GOR agreement allows the conference to say “if you leave, any money generated by media rights to your future home games will remain with the conference.”

How Does A Grant Of Media Rights Agreement Work?

Let’s say that University A decides it has had enough of Conference X and wants to join another conference. In other words, “I don’t like you so I am leaving.” At this point, University A has decided that the benefits of a new conference outweigh the consequences of leaving the old conference. For example, perhaps there is perceived favoritism that cannot be tolerated, or the travel is too difficult to manage for Olympic athletes, etc.

Whatever the reason, let’s say that University A has determined that a break-up is inevitable. If Conference X allows University A to walk away with no consequence, the Conference has created a dangerous legal precedent whereby other teams can also leave. But if it forces University A to stay, it will have a dysfunctional conference member on its hands. It is in the best interest of everyone associated with Conference X to allow University A to move on. But the Conference needs fines and fees to act as an exit barrier, hence the GOR.

In A Nutshell, What Are the Legal Points Here?

When a university leaves a conference, the conference argues that one less university depletes its media inventory so the university should pay damages.

However, no media entity has ever tried to reduce the financial value of a media contract when a team departs, so what exactly are the damages? The fact is that virtually every university that has left a conference has unsuccessfully used this argument.  But a university has never argued (but maybe should) that since media contracts have never been reduced when a university departs, the conference should pay the departing university a “one less mouth to feed” fee.

Twice in the B12 and once in the ACC, a conference has accepted a reduced penalty and let the university walk, thus maintaining a perceived exit barrier while saving face and legal fees.

Will A GOR Really Work To Keep P5 Conferences Together?

Do pre-nuptial agreements prevent divorce? A GOR is just a threat of a protracted legal battle that conferences hope universities will want to avoid. In fact, GOR agreements have been called a “nuclear option.”1 The reality is that there is so much wiggle room in a GOR (the B12’s GOR agreement is four pages long), that the consequences of breaking it are murky at best. Nobody really knows the consequence of breaking a GOR agreement because nobody has tried. It is just a matter of time.

When Do Conference GORs Expire?

The SEC arrogantly does not have a media GOR, perhaps reasoning that no member school would ever want to leave. The GOR agreements expire for the ACC in 2027, the B12 in 2025, the P12 in 2024, and the B1G in 2017.

Check back tomorrow as Troy predicts which conference will be the next to make a move and what the next era of college football may look like.

Part 2

6 Comments

  1. Dr. Nick

    April 23, 2015 at 2:36 pm

    The difference between GOR and previous exit fees is that the “money” in a GOR has effectively already changed hands. When Maryland left the ACC and the ACC demanded it’s contractual exit fee, Maryland simply refused to pay and forced the ACC into a legal battle. If Maryland had signed a GOR to the ACC, the ACC could have simply let Maryland walk and continued to sell Maryland games to TV networks. The B1G would have added Maryland, but not the rights to televise their games. The onus would then have been on Maryland (and maybe the B1G) to sue the ACC to get their games back and there would have been no pressure on the ACC to settle any lawsuit Maryland did file because while it was all churning through the legal system the ACC would still get all the media money from Maryland’s games. Any team that has signed a GOR to a conference had effectively already paid its “exit fee” and gets the money back from the conference each year as the conference pays out it’s media revenue.

    The bottom line is that I think you are underestimating the difficulty of leaving a conference with a GOR agreement. The only way it could happen is if a conference completely implodes (think the SWC in the 90s) and a majority of the schools in the conference vote to terminate the GOR early. There is no way the 9 other Big 12 schools, for example, would let Texas walk out with their media rights.

  2. DWM

    April 23, 2015 at 4:22 pm

    things seem to have settled, I’m not seeing more college football realignment anytime soon

  3. byuroster

    April 23, 2015 at 5:47 pm

    @Dr Nick. Your first paragraph is an excellent summary of how a GOR works. Thank you.

    It is tough to conjure up ANY estimate of how difficult it would be to break a GOR because nobody has tried! Who knows, maybe they work?

    You mention the possibility that “a conference completely implodes.” This is entirely possible IMO an it will be the B12. Interesting, the B12 GOR agreement says nothing about HOW to terminate or how many votes would be needed. All it does is spell out that early termination is a possibility. Hint: tomorrow is about the B1G who is probably in negotiations for their next media deal right now.

    Read more at http://www.loyalcougars.com/2015/04/23/byu-football/6828-the-next-round-of-conference-realignment-part-1/#RdK0dibIs3Q8dyBk.99

  4. byuroster

    April 23, 2015 at 5:53 pm

    @DWM I think we hear something in the next 12 months. The B1G is redoing their media deal which will be accompanied by a new GOR effective 2017. Check back tomorrow – you may change your tune.

  5. Pingback: The Next Round of Conference Realignment: Part 2 - Loyal Cougars

  6. Pingback: The Next Round of Conference Realignment: Part 3 - Loyal Cougars