Another B7 article and exit fee mention

[TheSultan]

http://www.washingtonpost.com/sports/colleges/georgetown-takes-lead-in-preserving-basketball-tradition-of-catholic-7/2013/02/21/40193304-7c2d-11e2-82e8-61a46c2cde3d_story.html

"They will also have to agree to surrender their media rights to the conference for a significant number of years — possibly the life of the league’s first TV contract, whether that’s five, seven or 10 years. The Big East’s failure to extract such a commitment, as the Pacific-12 Conference did of its members before signing its recent TV deal, proved the league’s Achilles’ heel. Football-playing Big East schools pledged allegiance to the Big East one day, then bolted for a richer league the next — the $10 million “exit fee” amounting to small change compared with the riches dangled by the ACC, Big Ten and Big 12."

This paragraph is at the back end of the article...most of it is about Georgetown.

[Nukem2]

Makes sense. Akin to buying loyalty...?

[TheSultan]

What I think is positive about this is that it pretty much takes away the threat of Georgetown and St. Johns leaving the conference for something like a bball invitation to the ACC.

[CaribouJim]

What does that translate into $'s then for a SJU and/or a G-Town if they decided to jump ship? Say it is a 10 year TV contract and they decide to bolt after 3 years and the contract was for $3 mil a year for each team do they get hit with a $30 mil exit fee? Is that enough? Would they accrue $3 mil a year in anticipation of maybe bolting at a later time. Obviously I still need help in picturing how it would actually work.

[Orlando]

What does that translate into $'s then for a SJU and/or a G-Town if they decided to jump ship? Say it is a 10 year TV contract and they decide to bolt after 3 years and the contract was for $3 mil a year for each team do they get hit with a $30 mil exit fee? Is that enough? Would they accrue $3 mil a year in anticipation of maybe bolting at a later time. Obviously I still need help in picturing how it would actually work.

It means they surrender their media rights for the length of the contract. If there is a ten year deal and Georgetown left after three years, Fox would still hold the rights to their home games for seven years no matter what conference they went to. So if they went to the ACC, their home conference games would still be televised by FOX for seven years, not ESPN. And the money for those games would go to the new league. Essentially Georgetown and the ACC would be getting no money for Georgetown's home games. No conference is going to take them if they are in an extended agreement for their media rights. It does not ding them financially, but it makes them totally unattractive as an addition to other conferences.

[CaribouJim]

It means they surrender their media rights for the length of the contract. If there is a ten year deal and Georgetown left after three years, Fox would still hold the rights to their home games for seven years no matter what conference they went to. So if they went to the ACC, their home conference games would still be televised by FOX for seven years, not ESPN. No conference is going to take them if they are in an extended agreement for their media rights. It does not ding them financially, but it makes them totally unattractive as an addition to other conferences.

Got it - thank you! Love the concept. You really are pregnant then. Any precedence for that - past or present? I'm sure there are "outs" I would assume, but only in special circumstances?

[Orlando]

Got it - thank you! Love the concept. You really are pregnant then. Any precedence for that - past or present? I'm sure there are "outs" I would assume, but only in special circumstances?

I believe the PAC 12 is operating under such an agreement right now. If there are outs, I would imagine they are very expensive. The whole point is to give assurances to your TV partner that the product they buy is not going to change for the worse.

I have no doubt that this is why the C7 deal for basketball is worth more than the New Big East deal for basketball and football combined. The C7 deal will have this stipulation. No way any of the members in the New Big East are going to agree to that. They are gone the minute they are offered.

[TulsaWarrior]

There has to be a poison pill exit fee in order for the new league to have a chance. The old Big East and the old commissioner blew it big time -- or did some school presidents with more degrees than ethics kill the BE?

[Gato78]

The buyout--really a liquidated damages clause--needs to be reasonably related to the estimable losses to the non-breaching party. If it is deemed a penalty, it is generally unenforcable. The TV rights forfeiture is an interesting concept--not sure about enforcability. Another might be an exclusive rights contract between the network and the schools themselves. Problems with each approach.

[TheSultan]

I believe the Big Ten has a similar arrangement. No exit fee, but it might as well be.

[CaribouJim]

The buyout--really a liquidated damages clause--needs to be reasonably related to the estimable losses to the non-breaching party. If it is deemed a penalty, it is generally unenforcable. The TV rights forfeiture is an interesting concept--not sure about enforcability. Another might be an exclusive rights contract between the network and the schools themselves. Problems with each approach.

I didn't understand one iota of what you said, but I wholeheartedly agree with you 110% if not more - with or without a liquidated damages clause to boot.