I have received a lot of private messages regarding specifics of the rules of the Big 12 agreement as it pertains to schools leaving, fees that would be owe, the grant of rights, and how many votes it takes for expansion, dissolution, etc. As a preface, this post is intended to be mostly informational to answer those questions. I am not trying to lay out my perspective on exactly what will happen.
Just for fun:
From the conference bylaws:
"1.2.3 Agreement to Membership. Each Member agrees with the Conference and with each of the other Members to remain a member of the Conference for ninety-nine (99) years beginning July 1, 2012."
{I thought some of you would get a laugh from that. We made it 9 years and 3 weeks.}
"1.5.2 (b) The following actions may be taken only if approved by the affirmative vote of a Supermajority of Disinterested Directors (as defined below):
(2) The dissolution, liquidation, winding-up, merger, sale, or transfer of all or substantially all of the assets of the Conference;
(3) Admission of a new Member or amendment of Section 1.2.2, 1.2.3, or 1.2.4 above;"
{To add members, merge, or dissolve the conference, you must have a supermajority. OU and UT, although they have announced that they are not renewing the GOR, they are still members of the conference, but not considered disinterested since they have officially served notice of their intention to withdraw.}
"1.5.2.2 (f) The term “Supermajority of Disinterested Directors” with respect to any issue shall mean seventy five percent (75%) or more of all persons who are Disinterested Directors with respect to such issue, whether or not each is Present at a meeting considering such issue or signs a written consent with respect to such issue."
{Below you will see that the buyout does not mean the Grant of RIghts goes away.}
"3.1 Withdrawal. Notwithstanding the commitment of each Member set forth in Section 1.2.3 above, a Member may only withdraw from the Conference, cease to be a member in the Conference, or otherwise fail to fully participate in the activities of the Conference in contravention of its commitment to remain a Member in the Conference for such ninety-nine (99) year period (“Withdraws” or “Withdrawal”) by fully complying with the provisions of these Bylaws and by paying the Buyout Amount (as defined below). Each Member acknowledges and agrees that the Withdrawal of a Member and the payment of the Buyout Amount and implementation of the provisions of these Bylaws does not abrogate the obligations of such Withdrawing Member (as defined below) pursuant to that certain Amended and Restated Grant of Rights Agreement dated effective as of July 1, 2012, or any replacement or extension thereof or other agreement pursuant to which such Member grants the right to telecast some or all of its sporting events to the Conference (a “Grant of Rights Agreement”). The Grant of Rights Agreement which will remain in full force and effect as to such Withdrawing Member and the Withdrawing Member shall continue to be fully bound under the Grant of Rights Agreement after Withdrawal for the remainder of the term of any Grant of Rights Agreement as if it remained a Member of the Conference, but the Withdrawing Member shall not be entitled to payment of any amounts or any other benefits arising under the Grant of Rights Agreement after Withdrawal."
This means that the conference retains the actual media rights to the Member institution's games even after withdrawing unless the conference negotiates a settlement or dissolves. It's important to note the legally crafted wording that OU and UT reps have used about the schools intending to honor their current Grant of Rights Agreements. They are trying to preserve themselves from additional harms allowed for in the bylaws while limiting payment to roughly $80 million each if leaving before July 2025.
To be considered a 'withdrawing member', a school has to give notice of the intent to Withdraw. Oklahoma and Texas have both done so. According to conference bylaws, the Notice Date was the date that they notified the conference (end of July). The effective date is June 30, 2023; however, the carefully worded statements have given UT and OU wiggle room to say that technically they are not planning to leave as soon as possible and that they are merely not going to renew past July 2025. The calculation on their part was that they could keep their voting rights within the conference and hope enough teams could find homes in the next 18 months to bring about a vote to dissolve the conference while paying minimal fees of none at all. That could still happen, but is less likely at the moment due to other forces at work regarding the overall power struggle for the future of college football.
According to section 3.4, the "Buyout Amount” equals the sum of distributions that otherwise would be paid to the Member during the final two years of its membership in the Conference. Those numbers are not yet set, but they can be viewed approximately in the $40 million range per year for each of the last two years. This would mean about $80 million buyout fee from each school. If the rest of the schools held fast together until Texas and Oklahoma exited, they would distribute the $150-160 million 8 ways: $18-$20 million per school. That money could come in handy as Big 12 teams try to roll into new conference homes or as a safety net for a couple years.
Here is where the fun begins and why you have the language and posturing you are getting from OU, UT, the other conferences, and ESPN. There are legal and financial questions to be addressed.
Further into section 3.4:
"• if (A) by legal action or otherwise, a Withdrawing Member, or any other person or entity, attempts to challenge or oppose or interfere with, or challenges or opposes
or interferes with, (i) the payment of the Buyout Amount by the Withdrawing Member or the withholding of the Distribution Withholding by the Conference, (ii) the enforcement by the Conference of its rights under the Grant of Rights Agreement or the performance by the Withdrawing Member of its obligations under the Grant of Rights Agreement, or (iii) the right of the Conference’s telecast partners to televise games of the Withdrawing Member under the terms of the Grant of Rights Agreement during its then-remaining term; or (B) for any other reason the Conference’s telecast partners are unable to produce and telecast games of the Withdrawing Member during the then-remaining term of the Grant of Rights Agreement or the Conference is unable to realize the revenues relating to those games from its telecast partners, "
"• then the Members agree that such actions, in breach of the Withdrawing Member’s agreements in these Bylaws, cause additional damage to the Conference and therefore that the Buyout Amount shall be increased by, and shall also include, and the Withdrawing Member shall be obligated to pay to the Conference immediately upon the occurrence of any of the foregoing events, the amount of all actual loss, damage, costs, or expenses whatsoever (including but not limited to lost revenues, damage to reputation and public image, and damage to relationships with related parties) incurred by the Conference or any of its remaining Members directly or indirectly related to that challenge or opposition, whether economic or otherwise."
"Each of the Members agrees that Withdrawal of a Member contrary to its commitment to the Conference and the other Members pursuant to Section 3.1 above would cause damage and financial hardship to the Conference and the other Members without regard to the continued enforcement of the Grant of Rights Agreement, that the financial consequences to the Conference and its remaining Members cannot be measured or estimated with certainty at this time, and that the payment of the Buyout Amount is a reasonable method of compensating the Conference and the other Members for such damage and financial hardship and shall not be construed as a penalty."
Just for fun:
From the conference bylaws:
"1.2.3 Agreement to Membership. Each Member agrees with the Conference and with each of the other Members to remain a member of the Conference for ninety-nine (99) years beginning July 1, 2012."
{I thought some of you would get a laugh from that. We made it 9 years and 3 weeks.}
"1.5.2 (b) The following actions may be taken only if approved by the affirmative vote of a Supermajority of Disinterested Directors (as defined below):
(2) The dissolution, liquidation, winding-up, merger, sale, or transfer of all or substantially all of the assets of the Conference;
(3) Admission of a new Member or amendment of Section 1.2.2, 1.2.3, or 1.2.4 above;"
{To add members, merge, or dissolve the conference, you must have a supermajority. OU and UT, although they have announced that they are not renewing the GOR, they are still members of the conference, but not considered disinterested since they have officially served notice of their intention to withdraw.}
"1.5.2.2 (f) The term “Supermajority of Disinterested Directors” with respect to any issue shall mean seventy five percent (75%) or more of all persons who are Disinterested Directors with respect to such issue, whether or not each is Present at a meeting considering such issue or signs a written consent with respect to such issue."
{Below you will see that the buyout does not mean the Grant of RIghts goes away.}
"3.1 Withdrawal. Notwithstanding the commitment of each Member set forth in Section 1.2.3 above, a Member may only withdraw from the Conference, cease to be a member in the Conference, or otherwise fail to fully participate in the activities of the Conference in contravention of its commitment to remain a Member in the Conference for such ninety-nine (99) year period (“Withdraws” or “Withdrawal”) by fully complying with the provisions of these Bylaws and by paying the Buyout Amount (as defined below). Each Member acknowledges and agrees that the Withdrawal of a Member and the payment of the Buyout Amount and implementation of the provisions of these Bylaws does not abrogate the obligations of such Withdrawing Member (as defined below) pursuant to that certain Amended and Restated Grant of Rights Agreement dated effective as of July 1, 2012, or any replacement or extension thereof or other agreement pursuant to which such Member grants the right to telecast some or all of its sporting events to the Conference (a “Grant of Rights Agreement”). The Grant of Rights Agreement which will remain in full force and effect as to such Withdrawing Member and the Withdrawing Member shall continue to be fully bound under the Grant of Rights Agreement after Withdrawal for the remainder of the term of any Grant of Rights Agreement as if it remained a Member of the Conference, but the Withdrawing Member shall not be entitled to payment of any amounts or any other benefits arising under the Grant of Rights Agreement after Withdrawal."
This means that the conference retains the actual media rights to the Member institution's games even after withdrawing unless the conference negotiates a settlement or dissolves. It's important to note the legally crafted wording that OU and UT reps have used about the schools intending to honor their current Grant of Rights Agreements. They are trying to preserve themselves from additional harms allowed for in the bylaws while limiting payment to roughly $80 million each if leaving before July 2025.
To be considered a 'withdrawing member', a school has to give notice of the intent to Withdraw. Oklahoma and Texas have both done so. According to conference bylaws, the Notice Date was the date that they notified the conference (end of July). The effective date is June 30, 2023; however, the carefully worded statements have given UT and OU wiggle room to say that technically they are not planning to leave as soon as possible and that they are merely not going to renew past July 2025. The calculation on their part was that they could keep their voting rights within the conference and hope enough teams could find homes in the next 18 months to bring about a vote to dissolve the conference while paying minimal fees of none at all. That could still happen, but is less likely at the moment due to other forces at work regarding the overall power struggle for the future of college football.
According to section 3.4, the "Buyout Amount” equals the sum of distributions that otherwise would be paid to the Member during the final two years of its membership in the Conference. Those numbers are not yet set, but they can be viewed approximately in the $40 million range per year for each of the last two years. This would mean about $80 million buyout fee from each school. If the rest of the schools held fast together until Texas and Oklahoma exited, they would distribute the $150-160 million 8 ways: $18-$20 million per school. That money could come in handy as Big 12 teams try to roll into new conference homes or as a safety net for a couple years.
Here is where the fun begins and why you have the language and posturing you are getting from OU, UT, the other conferences, and ESPN. There are legal and financial questions to be addressed.
Further into section 3.4:
"• if (A) by legal action or otherwise, a Withdrawing Member, or any other person or entity, attempts to challenge or oppose or interfere with, or challenges or opposes
or interferes with, (i) the payment of the Buyout Amount by the Withdrawing Member or the withholding of the Distribution Withholding by the Conference, (ii) the enforcement by the Conference of its rights under the Grant of Rights Agreement or the performance by the Withdrawing Member of its obligations under the Grant of Rights Agreement, or (iii) the right of the Conference’s telecast partners to televise games of the Withdrawing Member under the terms of the Grant of Rights Agreement during its then-remaining term; or (B) for any other reason the Conference’s telecast partners are unable to produce and telecast games of the Withdrawing Member during the then-remaining term of the Grant of Rights Agreement or the Conference is unable to realize the revenues relating to those games from its telecast partners, "
"• then the Members agree that such actions, in breach of the Withdrawing Member’s agreements in these Bylaws, cause additional damage to the Conference and therefore that the Buyout Amount shall be increased by, and shall also include, and the Withdrawing Member shall be obligated to pay to the Conference immediately upon the occurrence of any of the foregoing events, the amount of all actual loss, damage, costs, or expenses whatsoever (including but not limited to lost revenues, damage to reputation and public image, and damage to relationships with related parties) incurred by the Conference or any of its remaining Members directly or indirectly related to that challenge or opposition, whether economic or otherwise."
"Each of the Members agrees that Withdrawal of a Member contrary to its commitment to the Conference and the other Members pursuant to Section 3.1 above would cause damage and financial hardship to the Conference and the other Members without regard to the continued enforcement of the Grant of Rights Agreement, that the financial consequences to the Conference and its remaining Members cannot be measured or estimated with certainty at this time, and that the payment of the Buyout Amount is a reasonable method of compensating the Conference and the other Members for such damage and financial hardship and shall not be construed as a penalty."
