The University of Maryland officially joins the Big Ten at the end of June, but the Terrapins stormy divorce from the ACC has the potential to be really entertaining for those of us who paid scads of attention to realignment and felt as if only part of the story trickled out. It’s no coincidence that potential lawsuits involving Big 12 and Big East schools all died on the vine and ended in quiet out-of-court exit fee settlements. When it comes to realignment there are very few clean hands.
Only one lawsuit is currently pending.
But, man oh man, is it a doozy.
On Friday came news that Maryland had sent detailed subpoenas to ten ACC schools, seeking information about their role in realignment. But that wasn’t all, Maryland also subpoenaed ESPN, alleging, once more, that ESPN drove the ACC’s realignment decisions. You probably haven’t heard much about this lawsuit because ESPN doesn’t write much about ESPN being involved in a lawsuit.
But back in January, when Maryland filed a $156.8 million counterclaim against the ACC, the school alleged the ACC’s desire to expand was driven “in large part on counsel and direction that the conference received from ESPN.” ESPN denied the allegation then, but now Maryland has stepped up the accusation and demanded documents consisting of “all communication with ESPN relating to the ACC’s broadcast rights, strategy meetings involving the integration of Syracuse, Pittsburgh and Notre Dame into the league, and contact with any Big Ten members about joining the ACC.”
Oh, this could get really good.
A messy college divorce and a trial about that messy college divorce would be gold.
That’s why it’s in the best interests of both Maryland and the ACC to settle this lawsuit right now. Only, here’s the deal, the ACC desperately needs to prove that its $52 million exit fee is valid. Why? Because there are other ACC schools that might leap at the opportunity to leave if that exit fee isn’t as robust as we’ve been led to believe it is. If, for instance, the ACC came back to Maryland and said, “Okay, we’ll take $26 million,” this case would go away. But the ACC can’t do that. It needs to prove that its willing to fight to keep schools in the conference and it needs to prove that the $52 million is enforeceable.
Otherwise other ACC schools might follow Maryland to the Big Ten, delivering a potentially crippling blow to the ACC. That’s the story behind the story, what’s driving this case to more and more contentious levels. The ACC is fighting so hard because it has to, otherwise the conference might implode. Meanwhile, Maryland’s looking around at the rest of collegiate realignment and thinking, rightfully, “Hold on, no one else paid this kind of penalty to leave a conference. What’s the worst thing that can happen to us? Our legal fees plus $52 million. Okay, let’s fight. Hell, the ACC did exactly what the Big Ten did, looked out for its own interest and stole schools to protect itself. How can they hold us liable for what they were doing too?”
(This gets even more interesting, by the way, when you consider that the Big Ten’s television rights package is probably going to be decided this year. Given that Fox and NBC and ESPN are all planning on bidding, do you think Fox or NBC might love it if, say, Virginia and Georgia Tech both left the ACC for the Big Ten, hurting the value of ESPN’s ACC deal while at the same time improving the value of their Big Ten deal? That’s why this lawsuit is the linch-pin for another potential round of realignment. If Maryland gets out cheaply, look out.)
ACC leaders aren’t dumb. They know, for instance, that if Virginia and Georgia Tech bolted for the Big Ten that the SEC would immediately go after Virginia Tech and, probably, North Carolina, a school whose fans wouldn’t mind being in the SEC already. (With the SEC Network, it’s a foregone conclusion that one day there will be SEC teams in North Carolina and Virginia). Then you’d probably have Florida State and Clemson or Miami trying to interest the Big 12 in adding them. Suddenly you’re talking about a gutted ACC that would consist of Pittsburgh, Syracuse, Boston College, Louisville, Duke, N.C. State, Wake Forest, and half of Notre Dame’s season.
ESPN would be left holding an imploding conference television deal in the ACC.
That’s why the ACC is fighting so hard in this lawsuit, because it needs schools to believe that the $52 million exit fee is binding. Even if it takes years to prove that it isn’t, and if this case goes to trial that’s how long it would take to be resolved, so be it, that’s years of default protection.
To a large extent, the ACC’s existence as a major conference is tied to the outcome of this Maryland lawsuit.
The ACC, while giving off the impression of strength, is actually still a house of cards.
Before you grant of rights fee people blow up my email, let me spend a moment on the so-called grant of rights and why I believe it’s mostly a sham. The grant of rights, signed in both the ACC and the Big 12 as a means to further bolster conference solidity, purports to tie all television rights to a conference even if a member leaves that conference. The easiest example is this, say Texas suddenly decided it wanted to leave the Big 12 for the Big Ten. Well, the grant of rights people would argue that Texas couldn’t afford to leave for the Big Ten because their TV games would remain in the Big 12’s television package even though Texas was now in the Big Ten. Supposedly this is an iron-clad binding agreement. If there’s one thing that you should be skeptical of, it’s people saying that anything is iron clad. Especially when the people writing this are just regurgitating what people who are incentivized to make others think their agreements are iron clad are telling them.
I think these grant or rights agreements are castles built in the sky.
Let me explain why. (In a paragraph for now. I could spend longer on this, but I’m just laying out the general idea here.)
Let’s still presume that Texas has left for the Big Ten.
First, all conference television rights deals only cover home games. If you play on the road those games are covered by the hosting team’s deal. So immediately four, five, or six road games are taken off the table. No school has ever lost the rights to its own home football games, that’s not happening. That leaves the Texas home games as potentially covered by the grant of rights. A school like Texas already gets a couple of home games a year that it retains as part of its local rights deal on the Longhorn Network. So those games are off the table too, running up the tally of games not covered by the grant of rights deal to as many as eight, or two-thirds of the football schedule. That leaves four conference games that might be played at home. On this remaining one-third of games, there are already preexisting contractual agreements with Big Ten rights holders about those conference games. So you have a conflict here, does the Big 12 get the value of four Big Ten games televised at Texas based upon a grant of rights deal that occurred after the Big Ten’s preexisting contractual terms or is the grant of rights effective for these four games?
Essentially, in this example, does the Big Ten or the Big 12 get the value of these four games?
That’s not an easy call for a judge to make since it involves two conflicting conference agreements. Particularly when there’s a third element here, exit fees already included in these agreements which are designed to cover the costs of leaving a conference. Many judges, including this one if I was sitting in chambers, would find the grant of rights unenforceable. It’s altogether possible that a school could end up owing nothing in a grant of rights lawsuit. So what’s likely to happen? Probably a long lawsuit. But I’d come down pretty firmly on the grant of rights not being found to have any significant value associated with it when you actually examine the details. The bigger part of any lawsuit would be the exit fees, as we’re presently seeing with Maryland. So beware all the people who are walking around saying these grant of rights agreements are impenetrable and iron clad. When you actually examine the details, they fall apart upon scrutiny.
And if the ACC doesn’t want to fall apart, it has to win this Maryland lawsuit.
That means the ACC isn’t likely to settle. Which also means, look out, there’s likely to be a ton of eye-opening revelations that are coming out through discovery.
I can’t wait.