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Pete ThamelESPN
Only in times of chaos in college sports does the wonky jargon grant of rights intersect with mainstream conversation. Perhaps no factor looms larger for the future of the entire enterprise of college athletics than the consequences that come with signing — or the potential need to sign — a grant of rights.
A grant of rights is a legal term that comes up in the college landscape almost exclusively during times of conference realignment. The definition of the term itself is a fitting duality — both simple and complicated — considering how differently the grants are being viewed amid the latest starburst of realignment in 2022.
By extending their grant of rights in 2016, ACC schools did what the legal phrase says: They granted the rights to all their home games to the ACC until the league’s television contract with ESPN expires in 2036. After granting them, schools are finding complications in the legal quagmire of the exploration of getting them back.
There has already been an extreme amount of analysis by multiple schools’ general counsels examining the legal strength of the document, though one source familiar with one of those studies said there “doesn’t appear to be much wiggle room” for schools eager to depart.
In the ACC, the grant of rights looms largest because of the 14 seasons that remain on the contract. The per-team estimated payouts project to hundreds of millions less over that span than teams in the Big Ten and SEC. The ACC should be about $40 million per team in upcoming years. The Big Ten and SEC should be north of $70 million in the early years of their upcoming deals, as the Big Ten is difficult to predict until it gets signed in the coming weeks. How big that gap grows — and there’s always variance with league success — will only amplify the angst in the ACC.
Any conversation about future ACC members, departing ACC members or unhappy ACC members all links back to the length and strength of that grant of rights.
For the ACC, the grant of rights serves as the ultimate paradox — the glue holding the ACC together but also a wedge threatening to divide the league. The grant of rights serves to protect or suffocate, depending on whether your chair is at Syracuse or Clemson. It is the golden handcuffs that represent either long-term financial security or financial inequity.
The grant of rights was designed to bond the schools through equal revenue share for two decades and to end realignment speculation. But with the top brands Clemson, Florida State, North Carolina, Miami and Virginia all worried about the financial gap for the next 14 years, there are schools at the top feeling trapped. (Or those who’ve been at the top in the past and expect to return.)
The grant of rights is being hailed by ACC officials behind the scenes as an ironclad bond of commitment. But there’s also a bottom-line reality that counters that: It would be naive to think that no school will challenge it within the next 14 years if the financials in the league don’t change. While there’s no known legal precedent in college sports for going to court to break a grant of rights, the only variable seemingly is time before someone in the ACC begins a risky game of financial roulette that comes after an exit fee that is projected to be nearly $120 million per school.
It’s one math problem or another. Can you afford to stay in the ACC and fall behind? Or would the cost be more significant by trying to fight your way out?
It’s not just the ACC’s future that revolves around the grant of rights. The safest predictor of what happens next in realignment is that grants of rights will loom as a large factor in the deal. (Or, perhaps, allowing schools to not sign one could be a negotiating play).
Here’s a peek at what’s next in realignment and how grants of rights can factor in.
What happens out West?
In the Pac-12, the expiration of the grant of rights running congruent with the current television deal in two years gave USC and UCLA the freedom to jump to the Big Ten.
And that hasn’t gone unnoticed by Oregon and Washington, which both strongly desire a new address amid the financial excess of the Big Ten. With the TV deal expiring soon, the Ducks and Huskies are going to have to commit somewhere in the near future. And that’s where a grant of rights will loom over the future of television football in the West outside of Los Angeles.
Both schools certainly would be hesitant to sign up for a lengthy grant of rights in the current league or elsewhere, as there’s no chance the money would come close to what they hope to get in the Big Ten. For those schools, the grant of rights could be a tether, leverage point or perhaps even a negotiating tactic.
Executives around the realignment campfire are all saying that we’re in a period of calm after the jarring move of USC and UCLA to the Big Ten. That’s correct until it isn’t. And the unknown variable is time, which could mean weeks, months or years.
It’s important to remember that USC wasn’t eager to have Oregon in the league, hence no invitation in Round 1. Considering that USC and UCLA are both expected to deliver only slightly more than a full share to the Big Ten, it’s reasonable to project that the Pacific Northwest schools would cost the Big Ten money to add. Not a lot of moves in the history of college sports have been done to lose money.
This is where the financial gap to the “Power 2” of the Big Ten and SEC has gotten so big that even a small chance to join one of those leagues needs to be kept open. So how does that get addressed in negotiations? That’s where things will get interesting, as it’s hard to imagine the Big Ten wanting Oregon and Washington imminently but seemingly just as difficult to project a pair of 20-team Power 2 leagues without them.
Who pushes the button?
In realignment, the only constant is change, which makes it hard to imagine that both the Big Ten and SEC won’t jump from 16 to 20 teams in the next five years. So what’s the impetus for the next move?
It’s quite plausible that both the SEC and Big Ten are set at 16 teams for now. It’s equally plausible that they’re only likely to move if they anticipate the other league moving. So they watch — “Spy vs. Spy” — with binoculars from Birmingham, Alabama, to suburban Chicago. It’s a cold war with little trust between either side and two competitive television networks as the primary revenue sources behind the leagues.
The SEC might not be eager to add a school like Clemson, North Carolina or Florida State because the league already has a presence in those states. There’s also the legal thicket of the grant of rights. But the SEC also likely wouldn’t be eager for one of those schools to go to the Big Ten. Hence, the binoculars are perched.
The most likely course of action for the ACC — see below — is selective expansion. If the ACC wanted to add a Western wing and required a grant of rights from Oregon and Washington, would that change the Big Ten’s mind? Again, it’s hard to imagine those two schools not in someone’s long-term plan.
What if the Pac-12 stayed together and signed a 10-year deal with a grant of rights? Would the Big Ten feel good about not adding those properties for a decade? It’s clear Oregon and Washington want to get across the moat to a Power 2 league, and the SEC doesn’t feel like it would mean more in Eugene or Seattle. So how good would the offer need to be from the Pac-12 or ACC to take Oregon and Washington off the table for an extended period? The Pac-12 would likely have to offer them unequal revenue share, which has been a proven conference killer in past decades, with the Big 12’s bickering as the prime example.
One of the few things uniting the Power 2 leagues right now is that neither wants anything to do with the legal untangling that would come with breaking a grant of rights. The unofficial posture of both leagues, if they ever were to take an ACC school in the near future, would be — well, you figure all that out. Then come approach us.
What will the ACC do next?
Conference officials are waiting on a bevy of numbers from consultants. There’s the scheduling arrangement with the Pac-12, which has virtually no chance to have the financial clout to get traction.
The next logical move would be selective expansion, which combined with some type of creative revenue sharing could help the schools that are most anxious about the revenue gap with the Big Ten and SEC. The timing of how the ACC addresses that and the size of the gap are likely going to determine the league’s future. (Is it enough that the potential of joining another league without the rights to home games — depending on legal gymnastics — would seem off-putting?)
The Pac-12 schools in prime markets are the obvious ACC target, as it’s unlikely any TV entity is going to come in and bid high on the league now that they are vulnerable and lack the Los Angeles market. (Adding San Diego State and Boise State, which both seem like obvious choices, still doesn’t move the financial needle.)
Whatever financial estimates the Pac-12 schools get amid their current open negotiating window will inevitably underwhelm. Does that allow the ACC to make a targeted strike to take the best available from the Pac-12 — Oregon, Washington, Stanford and California — and then take either two or four others? Those could be either two or all of these — Arizona State, Colorado, TCU, Cincinnati — to form a Western wing of the league.
The question would loom large whether this wing would want a 14-year commitment, similar to the current schools.
If the Pac-12 schools are tempted, it would seemingly bring a bigger annual payout to the San Francisco Bay Area and Pacific Northwest schools while trimming the fat that USC and UCLA wanted to escape. If those programs could come pro rata with the ACC, perhaps the extra ACC Network money from adding a flurry of big markets could create a pool of revenue that is distributed to the league’s top performers. More revenue that’s distributed unequally is the key for the ACC making sure the grant of rights doesn’t drive the league apart.
Unequal revenue has been an ongoing ACC discussion, and amid these tense times of grant of rights examination, common sense would dictate the opportunity for more revenue for the winning teams.
North Carolina’s run to the men’s basketball national title game last year will earn the ACC $8 million in NCAA units over the next few years. What if half of that went to the Tar Heels instead of being divided evenly? What about the $6 million per year from Clemson’s six straight College Football Playoff appearances? Do the Tigers still get an equal share with Duke?
Very early discussions are underway at the ACC about how that could look.
“I think it has to be part of an earned model, but some of it is going to be based on history and market,” one ACC source said. “You have to be pretty creative how you come up with the model.”
With the grant of rights weaving through every conversation, creativity and billable hours appear to be necessities in the near term.