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Archive for Friday, December 7, 2012

Opinion: TV rights agreement ensures Big 12’s long-term stability

ESPN College Gameday's Rece Davis and Kansas head coach Bill Self scan the Allen Fieldhouse crowd prior to Self's interview on Saturday, Jan. 29, 2011 at Allen Fieldhouse.

ESPN College Gameday's Rece Davis and Kansas head coach Bill Self scan the Allen Fieldhouse crowd prior to Self's interview on Saturday, Jan. 29, 2011 at Allen Fieldhouse.

December 7, 2012, 12:32 p.m. Updated December 8, 2012, 12:19 a.m.

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Throughout Big 12 country, the conference’s “Grant of Rights” agreement has become the phrase du jour. But what does it mean, what does it do and why is it so important?

For starters, it’s the one thing out there that allows Big 12 officials to rest easy at night while the world of conference realignment continues to swirl around them.

The mere fact the Grant of Rights agreement exists is as close to a guarantee as you can get that the conference will be stable for at least the next 13 years. And if those of us who have followed Kansas University football closely throughout the years have learned anything, we know that instability does nothing to promote success.

In its most basic form, the Grant of Rights agreement is written permission by the 10 members of the Big 12 Conference to hand over control of their television rights to the conference for the agreed-upon term of 13 years. The agreement pertains only to the Tier 1 (ESPN/ABC and FOX national games) and Tier 2 (ESPN or FOX regional games) rights and does not include Tier 3 rights, which include endeavors such as The Longhorn Network, Jayhawk Network or any other broadcast produced by the individual schools.

Before we get too far into explaining this thing, it’s important to understand that both the Big Ten and Pac-12 also have Grant of Rights agreements and, because of that, one BCS conference official explained to the Journal-World, all three conferences should be less inclined to poach teams from one another.

“If any conference understands what Grant of Rights means, it’s the Big Ten,” the official said.

With that in mind, if the Big Ten were interested in snagging a school from the Big 12, or even the Pac-12, it would, or at least should, do so with the understanding that the move could weaken the whole GOR concept and, therein, make all three conferences more vulnerable.

Because of that, many within the Big 12 believe its members are as off limits as you can get in today’s world.

Interestingly enough, the SEC has neither a Grant of Rights agreement nor an exit penalty. The ACC, which continues to lose and add members, operates with an exit penalty of $50 million, an amount for which the conference is suing Maryland, which announced recently that it was joining the Big Ten. If the penalty is enforced, many believe the Big Ten will end up paying a large chunk of it to obtain Maryland.

Although there is no concrete dollar value tied to the Big 12’s Grant of Rights agreement, it has been estimated to hold a net worth of more than $250 million per school for the length of the 13-year contract.

Unlike exit fees, which are liquidated damages and can be negotiated in court and proven to be valid or invalid, the GOR agreement is not up for interpretation, according to a report written by Mit Winter of BuisnessofCollegeSports.com. It stands to reason then, that it is much more likely to hold up in court as a legitimate, enforceable contract.

There’s a reason the GOR is perceived by so many within the Big 12 to be a strong-as-oak statement about the members’ commitment to the conference. Not only does it make it tough for a school to leave, but it also makes it even tougher for another conference to open its arms to a Big 12 school.

“Granting of rights is not really a financial issue,” a Big 12 administrator said. “Money can be negotiated, but this issue is a lot more difficult because it affects more than just the member.”

If a team from the Big 12 were to move to the Big Ten in the next 13 years, the rights and, therefore the revenue (except Tier 3), for that Big 12 school’s home football and basketball games would belong to the Big 12, not the Big Ten. Such an occurrence could inspire the Big Ten’s television partners to seek to renegotiate their deal with the conference and could significantly damage the Big Ten’s business plan.

“I don’t think, at this point, that a conference would be willing to take a team if they don’t get their TV rights,” one Big 12 school administrator said. “So, if someone was interested in leaving, you’ve got a situation that really makes it difficult both for the institution and the conference they’re trying to go to.”

So what does all of this mean for Kansas? It’s simple. As has been the case throughout each round of conference realignment, KU’s best option, at both stability and financial gain, is remaining loyal to the Big 12. The GOR makes it nearly impossible for KU to entertain advances from other conferences, of which there seem to be none at the moment. Furthermore, the agreement makes KU far less desirable. Imagine if KU jumped to the Big Ten and played a football game against Michigan or Ohio State at Memorial Stadium and the Big Ten did not get a dime from it. Not happening.

So where does this leave the Big 12? Strong as is. Stronger than ever.

Considering the value of the Big 12’s current TV contracts, along with the revenue that is soon to come as a result of the conference’s partnership with the SEC that created the Champions Bowl, each member of the Big 12 is looking at a guaranteed take of nearly $30 million per year for the length of the contracts.

That sets the bar awfully high for the Big 12 to even entertain the idea of expanding.

“If you’re thinking about taking two schools you’ve gotta go to your TV partners and say, ‘We’re taking these two schools in; we want $60 million more.’ It ain’t gonna happen,” a Big 12 administrator said.

Why not?

Because most high-ranking officials within the Big 12 don’t believe that any schools out there are worth that kind of money.

And why not?

Because that’s what the television partners say.

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