According to John Ourand and Michael Smith of Sports Business Journal, the American Athletic Conference is contemplating an offer it hopes no one, including the UCF Knights, can refuse: A Grant-of-Rights. It’s important to know that no sources are named in the story, but John and Michael are good reporters and don’t make stuff up. Nothing has been agreed to yet, and no one official is talking. But this is a big deal.
We’ll get to the UCF part in a second, but first, some background: Make sure you read Matt Brown’s summary of what’s going on here, and then listen to Marc Daniels’ segment on The Beat of Sports here.
Full Disclaimer: We don’t have any crystal ball or highly-placed Deep Throat-level sources on this. This is a summary of what we know based on research, history and reporting. Take it or leave it.
Now, let’s begin.
What is a Grant of Rights?
Glad you asked. TL;DR: A grant-of-rights (GoR) is an agreement between the members of a conference that they’ll stay together for the length of a media contract, and that if any school leaves that conference before the GoR is up, they forfeit their media rights to the remaining members.
Basically, it’s a shotgun marriage: Leave, and we take your house, your car, all your money, and the dog.
The Big 12 has one that’s holding their league together through the 2024-2025 season (some think it’s the only thing holding that league together). The ACC also has one through 2027.
What is The American doing?
AAC Commissioner Mike Aresco is a smart guy, it turns out. While you, dear UCF fan, were tweeting #WheresAresco, he was busy figuring out how to keep the league he carried out of the smoldering, bankrupt wreckage of the Big East together to live another day.
Five years in, the former ESPN executive knows that to preserve and benefit the league as a whole (remember, his job is to do what’s best for all the member schools, not just one of them), he has to keep it together and eschew its reputation as a AAA league for the power conferences to poach from. The best way to do that is to literally bind them together as a package deal.
What about the TV deal?
Remember that The American’s contract for first-tier rights gives Disney and ESPN the first right of refusal. In other words, when contract renegotiation time comes around, only ESPN is allowed in the room with the league, unless they say they don’t want The American anymore. Only then can The American field offers from CBS, NBC, FOX or whomever.
As we’ve seen the last couple of years, it’s been a really beneficial marriage. And if you don’t believe me, go back and look at the TV numbers for UCF in Conference USA (Hint: You can’t)
SIDE NOTE: Anyone notice how quiet the official UCF universe got in the weeks leading up to College GameDay coming to town? That wasn’t a coincidence.
What leverage does The American have?
Aresco is betting that no one is going to leave The American before any grant-of-rights deal expires. He has some good reason to believe that: The Big 12’s TV contract ends in 2025, and the ACC, Big Ten and SEC are not likely to accept any new members from The American (although there are always rumors that they’d poach from one another and set off a chain reaction).
In addition, it’s becoming increasingly likely that, rather than expand, the next round of conference realignment might see the Big 12 blow itself apart. More on that in a second.
To gain more leverage, as Ourand and Smith are reporting, the league is considering offering more money to some schools than others. No specific schools or numbers were thrown out, but UCF, South Florida, Memphis, Cincinnati and Houston would be the most likely candidates to get the bigger checks if it came to pass, since those schools are the ones most likely to bolt if something came around.
Of course, that’s not a panacea. Uneven revenue distribution partially spelled the end of the old Big East, and may do the same with the Big 12 in the coming years.
What would UCF do?
At a glance, the first instinct would be to say HELL TO THE NO. After all, UCF’s brand is peaking right now and they have been a prime candidate for moving to a power league since the ink dried on its move to The American. After all, why give up your leverage?
Now, both Matt and Marc (see above) are a hell of a lot smarter than me, and they also think no school in The American should give up that much leverage for whatever they could get from ESPN. Far be it from me to argue with them, especially if they’re right, and they’re both a lot more connected than I am anyway. Plus, as Marc said in his segment, if Aresco claims he has that kind of leverage on ESPN, then Danny White should call that bluff.
But that’s one hell of a bet:
The point is that it would be a risk for UCF and others to sign a Grant of Rights and pass up on potentially bigger opportunities; it's also a risk to not sign a Grant of Rights and give up the bird-in-hand.— John Ourand (@Ourand_SBJ) December 10, 2018
That is a very fair point.
Consider UCF’s possible destinations: The Pac-12 and Big Ten are just no for obvious reasons. Miami and Florida State aren’t letting another Florida school into the ACC (and they ain’t leaving with their GoR), and neither is Florida in the SEC.
The Big 12 is basically the only option left, but as I mentioned earlier, the league is barely hanging together with its uneven revenue structure (Texas and Oklahoma make more money than the others due to the Big 12’s third-tier rights deals being left to the schools), and might not much longer anyway, if other conferences knock on Texas and Oklahoma’s doors.
Lest we forget that UCF, South Florida, and a few others had a fling with the Big 12 a couple of years ago, and the conference decided to do nothing, thereby wasting everyone’s time and extorting more money from ESPN. Indeed, Smith and Ourand also state here in an article from one week ago that we might be heading for a period of stability in conference membership:
With no hard offer on the table, UCF may be in a position where it may have to commit itself to The American when the time comes. So in the end, the best long-term answer for UCF may also be the best long-term answer for The American.
What don’t we know yet?
A lot. Specifically, I want to know:
- How much money would each school get per year? (Right now it’s around $2 million)
- Who would get second and third-tier media rights?
- How long would the grant-of-rights last?
It’s also possible that the reason Aresco could be shopping around this grant-of-rights idea is that Disney, with whom he is exclusively negotiating the next media rights deal because they have the first right of refusal, could be offering the league more money overall if it keeps its growing brands (UCF, South Florida, Houston, Memphis, Cincinnati) under its umbrella. Without that guarantee, that property is not worth as much to ESPN, as replacing UCF and USF with, say FIU and FAU is not as attractive.
Of course, Danny White could also have something up his sleeve. He is on the media rights advisory committee for the conference, and is extremely well connected within the college sports community, so he’s on both sides of the gambit, so to speak.
The thing we do know is that both sides are interested in making the most money possible at that given moment. How much that would be is the key to unlocking this mystery.
When will we know?
Probably fairly soon, but we don’t really know for sure.
Oh come on, just tell us what you think might happen.
Wanna get wild?
Oh yeah. Let’s get wild.
Alright, you asked for it. Strap yourself into the Reckless Speculatron and let’s go for a ride.
Based on the very limited information we have at the moment, here’s what I think should happen (which is probably a guarantee that it won’t):
The remaining members of The American should sign the Grant of Rights, but UCF, USF, Cincinnati, Memphis and Houston should insist they won’t sign anything that lasts past 2025.
The American should sign on with Disney/ESPN through 2025, but negotiate their second- and third-tier media rights (including the fledgling American Digital Network) with a new player in the space - I’m thinking along the lines of Netflix or Amazon. Get in early on the next wave of sports television.
Oh that’s sexy. Tell me more.
OK. Your bet is now that the Big 12 will cease to exist after the summer of 2025. So let’s say Texas, Oklahoma, Oklahoma State, Kansas and possibly Texas Tech and/or Kansas State all leave the Big 12 for greener pastures.
Now you swoop in for the kill. The American can then offer membership to the remaining Big 12 schools - West Virginia, Baylor, TCU, Iowa State and possibly Kansas State and/or Texas Tech.
Now you’ve got some options. For example, UConn has reportedly had a desire to return to the Big East, even if that means dropping its football program down to FCS (given its recent performance, that might not be a bad idea). Or, perhaps Navy football and Wichita State everything else could take their talents elsewhere if they wanted. That could create a 16-team superconference that could look like this:
- East: UCF, South Florida, Cincinnati, West Virginia, ECU, Memphis, Temple, UConn
- West: Houston, Tulane, Tulsa, Iowa State, SMU, Baylor, TCU, Texas Tech/K-State
I don’t know about you, but with the Big 12 out of the way, and seven more years of brand-building, that’s a lot more leverage on hand for The American come the next College Football Playoff negotiations.
Long Live the Power
Six Five. But for now, we wait.