Jul 28th, 2022 |
127: Power 5 Grant of Rights Contracts: The Prisoner’s Dilemma Revisited
In Realignment 2.0, schools in Power 5 conferences looking to leave their current conference must factor into their decision-making an arcane but powerful contractual barrier: the grant of rights. Grant of rights contracts create stability in the Power 5 conference structure and disincentivize schools from changing conferences. These contracts came into use in big-time college sports after the first major conference realignment between 2012 – 2014 that gave birth to the Power 5. Grant of rights contracts requires conference member institutions to assign their television rights to the conference entity. Existing conference broadcast media contracts quantify the value of these rights. The grant of rights is in place for the broadcast media contract’s full term. By surrendering their television rights to the conference, schools are essentially forfeiting their value in the marketplace should they leave their conference. This provides a powerful incentive for schools to honor their existing conference commitment and an equally powerful disincentive for conferences looking to “poach” schools from other conferences. This episode analyzes grant of rights contracts through a framework offered in a 2017 law journal article titled “Irrevocable but Unenforceable? Collegiate Athletic Conferences’ Grant of Rights” published in the Harvard Law School Journal of Sports and Entertainment Law. I spoke last week with the author of the article, Mark Wilhelm, a corporate transactions attorney with the Troutman Pepper law firm. His article received national attention after Andy Staples (The Athletic) wrote about it earlier this month. Wilhelm’s journal article discusses the factors schools may choose to weigh in decisions regarding a potential switch in conference affiliation. Wilhelm’s analysis also addresses the enforceability of grant of rights contracts.