(08-18-2021 11:45 AM)Jared7 Wrote:  

(08-18-2021 11:19 AM)bullet Wrote:  The 2 years ($80 million) isn't certain. Nobody who has given proper notice (and some who haven't) have paid the full amount of exit fees. And those fees were all much smaller.

TCU was not even a member of the Big East and no notice provision applied, yet paid the full exit fee. UConn just left the AAC and paid $17 million in exit fees despite the AAC by-laws specifying only $10 million. The Big 12's by-laws contain no "exit fee" - rather, they specify a "Buyout Amount" and how it is to be calculated. The 4 years ($160 million) is certain.

It is not at all certain. As I said, if you read the whole section, it anticipates withholding during a 2 year or less notice period. Now it CAN be read the way you describe, but only if you take the agreement as separate parts.

And with the enforceability of the GOR, there are damages and there is specific enforcement. Those are two separate things.

If Texas and OU pull out before 2025, there will be damages from the reduction in the contract. The damages will be enforceable as monetary payments. But will a judge force ESPN to pay the Big 12 part of the SEC contract? Will a judge force Texas and OU to allow Big 12 camera crews onto their campus? That isn't clear. And it seems pretty unlikely the Big 12 would want those actions even if they could force them. Instead they would want monetary compensation.

(08-18-2021 12:01 PM)bullet Wrote:  And with the enforceability of the GOR, there are damages and there is specific enforcement. Those are two separate things.

If Texas and OU pull out before 2025, there will be damages from the reduction in the contract. The damages will be enforceable as monetary payments. But will a judge force ESPN to pay the Big 12 part of the SEC contract? Will a judge force Texas and OU to allow Big 12 camera crews onto their campus? That isn't clear. And it seems pretty unlikely the Big 12 would want those actions even if they could force them. Instead they would want monetary compensation.

The by-laws provide that UT and OU are responsible for any damages - not ESPN. There are no Big 12 camera crews - the camera crews come from the licensee (ESPN or Fox). You're right - any GOR damages are payable via monetary compensation. And there would be lots of them if UT further breaches its agreements. It is certain that the Big 12, absent a settlement agreement, will be withholding $160 million from UT and OU over the next 4 years.

(08-18-2021 11:19 AM)Jared7 Wrote:  

(08-18-2021 10:36 AM)quo vadis Wrote:  You seem to know something about this, so if you could clarify two situations. For both situations, let's assume that the Big 12 conference distribution between the four years from 2021-2022 and 2024-2025 will be steady at $40m per school per year, and that the GOR/Media portion of that payout is $30m per school.

1) If TX and OU do not join the SEC until July 1, 2025, and fully compete in the Big 12 conference up until that date, and no negotiations of any kind take place to alter what the Bylaws say, IOWs the bylaws will be implemented just as they are written, in your view, what money would TX and OU owe the Big 12 conference ?

And if the bylaws say that payments are to be withheld to cover the amount owed, what payments (i.e., overall conference distribution, or just media rights payments) are withheld from what years, and to what amount for each school?

And, what amount would TX and OU each owe on top of that, if the withheld amounts do not cover all that the Bylaws say they owe?


2) TX and OU actually leave the Big 12 earlier than that, join the SEC on say July 1, 2023 and compete in the SEC from that point forward, again, what amounts do the bylaws say will be withheld, and what will be owed.

Welcome back to the world of the sane! I take it that your failure to cite cases and precedents supporting the theory that the Big 12 GOR had/has no consideration means that you have none, so we'll move on and return to the only legitimate issue highlighted by Frank - the amount of damages owed by UT/OU for breaching their 99-year commitment etc...

In your first scenario, the amount of damages is unknown. UT's minions and various internet trolls (witting or unwitting) have been working hard to damage the reputation of the Big 12, which is specified in the by-laws as being additional damages. But UT itself has only said that it will abide by its agreements and OU has actually made statements designed to mitigate damages. In theory, all the reputational damage could be included. But that was why the by-laws also specified a Buyout Amount - to reasonably calculate the amount beforehand and have all parties agree to the methodology and fairness.

So, the amount of damages, as of today, is $160 million because the Interim Period has begun and, in this scenario, won't end until after 4 years. And all of that would be withheld and applied to the Buyout Amount. More likely than not, that'd be the end of it. A lawsuit at that point would probably end up costing the amount of any other recoverable damages and it would probably not be worth it to pursue. That could change by negotiation or if UT/OU (or someone else such as ESPN, the AAC or the SEC) undertook further action to cause damages.

In the second scenario, it's far less clear and seems much more likely to be the subject of negotiations. And the outcome of negotiations would determine it. If it's 2 years early, then $80 million would have been withheld and that would be the floor. The ceiling, however, is much higher. The major factor is what is the SEC's new contract with ESPN going to pay? We don't know. In theory, UT and OU would owe a 1/16th pro rata share of the per year total of those media earnings (not the total conference distribution). And it wouldn't matter whether UT and OU were actually paid that amount or whether they attempt to hide it with an overall revenue distribution not including the media amounts (sort of an entrance fee). The SEC currently has a $45 million revenue distribution, of which, if the Big 12's numbers are transportable, is roughly 2/3rds comprised by media rights ($30 million compared to the Big 12's $28 million). But that's going up - potentially by a lot. Whatever 1/8th of that amount is (both OU and UT's share) would be what the Big 12 could claim. That's at least $40 million per school per year and possibly more. If JR's projections are correct, it could be as high as $60 million per school per year for the last 2 years.

On the thread I authored (which has moved over here), Bruce theorized that a possible settlement amount would by 50:50 of that depending on negotiating leverage (the Big 12 has the stronger position now, but that will wane as the GOR comes closer to termination) and when a deal is struck. Because we don't know the amounts and don't know the timing of any deal, it'd be just a guess as to what that will end up. The key is that OU and UT cannot leave unless and until a deal is struck; otherwise, there will be a lawsuit and a TRO and an injunction. Your initial guess was $100 million. Bruce's was $120 million. Mine is closer to $160 million. The ceiling is Frank's gazillion, but probably more like $200+ million. All are in the ballpark.

I agree with you that base amount right now by the Bylaws is $160 million. But I think the B12 could be in trouble enforcing that. Here's why: Imagine if TX and OU gave notice that they were leaving on July 1, 2025, but in July 2023. IIRC, the bylaws say that the base buyout amount is the last two year's worth of distribution, which let's say is $40m per year, or $80m total for each. IIRC, they also say that from the moment a school gives notice to leave, it no longer collects any money from the conference from the time of notice until the end of the "interim period", the period between the date of notice and two June 30s later, when the withdrawal becomes "effective".

In that case, the buyout amount and the money withheld would be the same - TX and OU each owe $80m as the buyout/exit fee, and that's how much the conference would have withheld between July of 2023 and July of 2025. July 1, 2025 rolls around, TX and OU exit, the GOR is finished, and everyone is "paid in full" so to speak. Right?

But TX and OU gave notice in July of 2021, last month. IIRC, again, the Bylaws say that the "Effective Date of Withdrawal" is basically two June 30s later (the "interim period"), which in this case would be July 1, 2023. So now, TX and OU are "effectively withdrawn" two years before they say they intend to withdraw, July 1, 2025.

Now based on that, I don't see anything in the bylaws regarding the Buyout Amount that contemplates withholding more than two year's worth of distributions. The bylaws seem to say that TX and OU are actually out of the conference, "effectively withdrawn" as of July 1, 2023. $80m owed, $80m withheld (between now and July of 2023). So how can the Big 12 try to withhold money for the full four years, until 2025?

The only mechanism I see is the GOR. IIRC the bylaws also say that payment of the Buyout amount, the two-years withdrawal withholding, does not apply to the GOR. Even if a school has Withdrawn, it is still bound by the GOR - the conference and its media partners still own its rights until the expiry of the GOR, in this case to 2025. And furthermore, the school in question does not get paid for those rights those years. So the Big 12 owns the rights to the TX and OU games in 2023 and 2024, even though they have Withdrawn from the conference, and TX and OU don't get paid any money arising from the GOR. Since those rights are basically about $40m a year each, voila, we have your figure of $160m each for the four years.

So long story short, the situation seems to boil down to how I've been framing it: Will a court allow the Big 12 to collect monies from TX and OU playing games in 2023 and 2024, and yet not pay them their share of the monies arising from the GOR, just because the Bylaws say so?

I have my doubts. I think a court could say "look, if they are playing the games for you in 2023 and 2024 and the media companies are paying the full contracted amount to you for those years, then you have no justification for not paying them those media monies those years. This is just punitive, even if the Bylaws say it isn't, and even if TX and OU signed on to that effect".

Otherwise, using that logic, if the GOR didn't run out until say 2035, the Big 12 could keep the media rights all the way until then, collecting the money from their own media contract, or if the team has moved on to another conference, the money they make from media from that new conference's deal, for 12-13 years, with the school never collecting anything, an amount that could reach in to several hundred million dollars, all in exchange for .... what consideration even remotely close to that in value? Just because the bylaws say so?

Doesn't compute for me.

But maybe we shall see.

(08-18-2021 12:07 PM)Jared7 Wrote:  

(08-18-2021 12:01 PM)bullet Wrote:  And with the enforceability of the GOR, there are damages and there is specific enforcement. Those are two separate things.

If Texas and OU pull out before 2025, there will be damages from the reduction in the contract. The damages will be enforceable as monetary payments. But will a judge force ESPN to pay the Big 12 part of the SEC contract? Will a judge force Texas and OU to allow Big 12 camera crews onto their campus? That isn't clear. And it seems pretty unlikely the Big 12 would want those actions even if they could force them. Instead they would want monetary compensation.

The by-laws provide that UT and OU are responsible for any damages - not ESPN. There are no Big 12 camera crews - the camera crews come from the licensee (ESPN or Fox). You're right - any GOR damages are payable via monetary compensation. And there would be lots of them if UT further breaches its agreements. It is certain that the Big 12, absent a settlement agreement, will be withholding $160 million from UT and OU over the next 4 years.

There are ESPN and Fox Big 12 camera teams. That is what I was referring to. Different ESPN crews work the SEC games.