About a decade ago, the Big 12 and ACC had discussions about playing future non-conference games against each other. Nothing as radical as reshuffling, but enough that the Big 12 gave the ACC access to the league’s most important legal tool: granting rights.
“It was professional courtesy more than anything,” recalled Big 12 Commissioner Bob Bowlsby.
The award of rights contracts signed by schools, which literally “grant” the “rights” to broadcast their games to their respective conferences for the duration of a league-negotiated media rights deal, have become the basis of the stability of two Power Five- conferences.
While each conference has agreements with member institutions, the ACC modeled its version entirely on the Big 12 document, giving the two conferences an “identical” legal backstop, according to a source who reviewed both documents.
That’s led observer after observer to refer to the contracts with a singular adjective: “Imperfect,” Bowlsby said.
So ironclad, in fact, that the legal minds of the Big 12 developed the strategy based on a landmark 115-year-old Supreme Court case that traced its roots back to British common law in the 17th century. So strong that the Big 12 founded in Delaware, a state so business-friendly that 65% of Fortune 500 companies file their incorporation papers there.
So strong that the verbiage in these contracts could have saved both conferences from near extinction.
While Texas and Oklahoma caused significant uproar in leaving the Big 12, it cost the programs a combined $100 million to leave the league in 2024, a year before the Big 12’s grant of rights was due to expire. (The schools had already notified the Big 12 that they would not agree to an extension of those rights.)
On Wednesday, the ACC fumbled with stiff arms over a mutiny to one. It’s a seemingly unbreakable grant of rights that stifled any talk of a bigger uprising.
A seven-program effort — led by Clemson and Florida State with Miami, North Carolina, NC State, Virginia and Virginia Tech in tow — resulted in few options as the schools’ legal departments reportedly tried to find a way to break that agreement. The current ACC grant of rights binds the schools together until 2036.
While not exactly a paragon of harmony, the Big 12 and now the ACC have successfully maintained their membership. While the ACC changed its revenue model this week, two years ago, the Big 12 quickly recovered by adding BYU, Cincinnati, Houston and UCF to fill some of the void left by Texas and Oklahoma.
If programs attempt to leave conferences without proper notice or negotiation, the granting of rights ensures that the broadcasting rights/revenues of the departing schools remain within their television contracts. Lawsuits over granting rights have largely been avoided in the era of recasting (since 2010), although there have been some bitter battles over the years.
Before Texas and Oklahoma, the Big 12 lost to Colorado, Missouri, Nebraska and Texas A&M in early 2010. As the SEC and Big Ten expanded and pulled in more media rights revenue along the way, they left the rest of FBS in the financial dust.
The problem now isn’t that the SEC and Big Ten are ahead of everyone else, it’s the gulf between those two and the rest of their Power Five brethren. Once the new media rights contracts go into full effect, they will earn at least $30 million more annually than the average ACC school.
That alone has caused consternation within the league. It would reportedly cost an ACC school $120 million to leave early, not to mention monster negotiations to get out of the rights award. But with 13 years left on that ironclad agreement — and with little clout — the ACC made sure its schools followed the rules.
The ACC closed a period of turmoil on Wednesday by announcing that it has adopted “success initiatives” on revenue. Teams that perform successfully in revenue-generating postseason competitions earn extra cash, ending the traditional method of splitting revenue equally.
There was no other choice. Two industry experts with experience valuing media rights told CBS Sports that — despite all the complaints from those seven schools — it’s doubtful they would yield pro rata (equal value) if they left the ACC for the SEC.
Thatand lacked the financial will to challenge the award of rights in court, given its ironclad nature. Start with that incorporation in Delaware.
“It was unusual to build rights around federal copyright law,” Bowlsby explains of the Big 12 contract. “What was important about that was that all disputes would be heard in federal court in Delaware, not state court. “
That’s a huge advantage for a league that might otherwise face Texas (Big 12) or Florida State (ACC) fighting their conference with home court advantage in a state court.
The Big 12 legal team had the answer when their 2012 TV deal was finalized. They needed a strategy that found a fighter jet around the 11th Amendment, which includes the concept of state sovereign immunity.
That 115-year-old landmark Supreme Court case, Ex parte Young, bypasses state sovereign immunity to allow lawsuits in federal courts for warrants against state officials if they act in violation of federal law or the U.S. Constitution. It essentially lays the groundwork for a conference to sue a school that leaves early for another conference.
The Stanford Law Review called the decision “the cornerstone of modern constitutional litigation.”
An attorney who has reviewed the granting of rights by the Big 12 explained, “Each state has different sovereign immunity laws. In Texas in particular, it is very difficult to sue a state institution like a state university. Ex parte Young is a way to get around those problems. It would allow you to sue the president of a university if he tried to take Team X to another conference [violating the grant of rights].”
Outside of Bowlsby, the individuals behind the Big 12’s entitlement research and strategy did not want to be identified.
Challenging the contract in court would expose a school to unknown and uncertain liabilities, both legal and financial. It wouldn’t know how much it would have to pay to get out, while exit fees are largely negotiable. Example: Maryland paid a $50 million exit fee to leave the ACC for the Big Ten in 2014.
In that shocking July 2021 development, Texas and Oklahoma announced they would leave the Big 12 for the SEC after the existing grant of rights expired in 2025. The Big 12 quickly rallied around onefor the two schools. Contrary to what the ACC accomplished on Wednesday, that strategy didn’t work for the Big 12.
Then it just came down to those negotiations. Earlier this year, thefor the Longhorns and Sooners to leave a year early in 2024, netting the league $100 million.
Neither school dared to challenge the granting of rights itself.
After Texas and Oklahoma declared their intentions two years ago, Bowlsby doubled down and investigated the fragility of his grant of rights at a New York litigation office.
“I asked them to break it up,” Bowlsby said. “They came back and said, ‘This is ironclad. You can go to any federal court in the country and win.'”
Due to the rigid nature of the language contained in the rights grant, Bowlsby added that any issue that arises “will ultimately have to be a negotiation, not a lawsuit”.
a duration negotiation therewith.
A source from last year’s ACC league told CBS Sports at the time,to leave the league, including being awarded rights, as there were 14 years left on the deal. Other estimates are lower but still significant.
The ACC is not naive or innocent in this regard. It’s just in internal turmoil. Former Commissioner John Swofford’s daring foray into expanding the league helped the old Big East collapse. He negotiated with ESPN a 2016 media rights amendment that created the ACC Network and extended the agreement for 20 years.
Now that other conferences have passed the ACC, the grant of rights might as well be a one-ton blocking sled on any ACC practice field.
“Well, all I can say is that the same grant of rights has been at other conferences, and no one has really challenged it,” Miami athletic director Dan Radakovich told the Miami Herald this week. “So, I’m not a lawyer, I don’t know the principles of it. But as a layman it must be pretty good if no one has tried to challenge it.”