Big 12 Realignment: Accusations, Buyouts, and a Whole Lot of Money

Photo by Ben Hershey on Unsplash

Stephen Stafford, Associate Member, University of Cincinnati Law Review

I. Introduction

On July 27, 2021, the University of Oklahoma (OU) and the University of Texas (UT) submitted a joint letter that informed the Big 12 Conference (Big 12) that they were planning to leave for the Southeastern Conference (SEC) and notified the SEC that they were seeking an invitation for membership.[1] The SEC extended an invitation to both programs, and the board of each school unanimously voted to join the conference.[2] As a result of this shift in the college football conference landscape, three schools, including the University of Cincinnati (UC), are leaving the American Athletic Conference (AAC) for the Big 12.[3] These powerhouse college football programs switching conferences sent shock waves through the college football landscape, but this kind of shift is nothing new. At stake amidst this conference shuffle is the potential for lawsuits, buyouts, and television deals worth millions of dollars.

Conferences are the sole negotiators of media rights deals and, as a result, have substantial control in the market.[4] Conference realignment is a side effect of the conferences’ desire to increase revenue and negotiate unprecedented media contracts.[5] For reference, the Big 12 distributed $345 million to its members just this year.[6] Additionally, the AAC, current home of UC, signed a $1 billion television deal with ESPN.[7] Thus, preeminent athletic programs switching conferences affects far more than the product on the field; it affects a multi-billion dollar industry. Broadcasting giants, like ESPN, are intertwined in potential lawsuits, as well. For example, the Big 12 commissioner, Bill Bowlsby, already sent a cease-and-desist letter to ESPN demanding that the television network end all actions that could harm the conference.[8] Bowlsby accused ESPN of tortious interference with the conference’s contract with its member schools.[9]

First, this article will analyze previous conference realignment lawsuits and how they relate to the current situation. Then, the article will predict outcomes of the potential lawsuits and litigation. Lastly, college football programs should reconsider how conferences control television deals. To avoid constant conference realignment issues, schools should band together under a single representative entity to negotiate television deals.

II. Background

While the current conference realignment surrounding the SEC, Big 12, and AAC captivates the college football world’s attention, this kind of tectonic shift in collegiate sports powers has some precedent. In the late 2000’s, three college football programs in the Big East Conference announced their departure for the Atlantic Coastal Conference (ACC).[10] The loss of the three programs left the Big East in a disadvantageous position and resulted in multiple lawsuits.[11] The University of Connecticut, which remained in the Big East Conference at the time, filed suit against the three departing schools for breach of contract and breach of fiduciary duty.[12] The claims were eventually settled, and the departing programs had to pay $5 million and schedule games against Big East opponents for the next four years.[13] Similarly, in 2010, Fresno State and Nevada left the Western Athletic Conference (WAC) for the Mountain West Conference and the WAC filed suit seeking declaratory and injunctive relief.[14] The WAC alleged that it would suffer irreparable harm based on the financial injury from media rights, scheduling issues, harm to national stature, and the ability to find new members.[15] The suit was settled and each school had to pay the WAC $900,000 and agree to play in the conference for two more years.[16]

From a different perspective, the University of Maryland filed suit against their own conference, the ACC, when the school left for the Big Ten Conference in 2012.[17] The University of Maryland claimed that the withdrawal penalty was invalid based on antitrust laws.[18] The ACC argued that the withdrawal payment was necessary to preserve the integrity of the league and essential to minimize disruption.[19] The Maryland Court held that the provision is subject to antitrust laws because the withdrawal payment is economic protectionism and is not entitled to a procompetitive presumption.[20] However, the court found that the University of Maryland failed to allege market harm and the claim failed.[21]

These cases supply a potential framework of avenues and outcomes for the current conference realignment situation concerning the Big 12 and AAC. On one hand, individual members could file suit against the departing members in either the Big 12 or AAC. On the other hand, the departing schools could file suit against their own conferences, like the University of Maryland. Despite any looming litigation, any lawsuit would likely end in a hefty settlement.

III. Discussion

First, Commissioner Bowlsby likely does not have an effective claim of tortious interference against ESPN. For a tortious interference claim, the plaintiff must establish that (1) there was a contract; (2) the interference was willful and intentional; (3) the intentional act was the proximate cause of the plaintiff’s damage; and (4) there were actual damages or losses.[22] Right now, Bowlsby likely will not be able to state a sufficient claim for tortious interference because he will have trouble proving the last three elements. Bowlsby’s argument for actual damages is weak because the Big 12 was able to mitigate possible damages by adding four new teams to replace OU and UT. Further, OU and UT plan to fulfill the current television deal and stay in the conference through the 2024-25 season.[23] Therefore, if any actual damages were to result from the conference shift, they would not be realized until a new television deal was negotiated. The Big 12 could lose significant bargaining power at the negotiation table, but any actual damage amounts connected to the change are currently unknown. Bowlsby would have a better argument if the Big 12 had been unable to find new members and instead had been forced to dissolve. Additionally, Bowlsby would have difficulty proving that ESPN’s actions were willful, intentional, or the proximate cause of damages.  OU and UT, on their own, formally notified the SEC about requesting an invitation and ESPN has a current television deal with the Big 12. Therefore, ESPN has a current interest in the survival of the Big 12, at least until the completion of their contract. Any alleged interference by ESPN is speculation by Bowlsby.

According to the Big 12 Conference’s bylaws, a withdrawing member must pay a buyout fee that is equal to the sum of the amount of distributions that otherwise would be paid to the member during the final two years of its membership.[24] Additionally, the AAC currently requires a $10 million buyout fee for departing members.[25] Therefore, regardless of a lawsuit, OU, UT, and UC are going to have to pay a buyout fee to their respective conferences. According to the Big 12, in the event that they decide to leave early, the schools will be required to pay the amount of actual losses and damages.[26] The effect of leaving early would be a violation of the Grant of Rights Agreement referenced in the bylaws, which gives the right to the conference’s television partners to televise the departing team’s games until the end of the contract.[27] OU and UT would have to negotiate a settlement amount or pay hefty damages to the conference for causing the conference to be unable to fully realize the revenue from their television contract. Similar to the WAC and Big East cases, member schools or the conference itself could file suit against OU and UT. Premature departure could result in a negotiation for a higher buyout fee and an agreement to schedule Big 12 opponents for a specified amount of time. To further expedite this impending issue, the AAC stated that it is willing to negotiate a higher exit fee to allow the three departing teams to leave for the Big 12 earlier than expected.[28] If any schools decide to leave earlier than agreed upon, this will increase the likelihood of lawsuits and higher buyout fees.

To avoid litigation and constant change in college football, schools should consider moving away from the traditional conference format with television deals. College football television broadcasting began when individual schools televised their own events before banding together under the College Football Association and ultimately having conferences negotiate their own television deals.[29] A return to a single organization or the individual university as the principal negotiator in television contracts would prevent conference realignment issues. In the current situation, programs change conferences and leave the teams in their previous conference at a disadvantage. Individual universities negotiating their media deals would make each school independent and immune to the consequences of a conference opponent making a unilateral move to another conference. However, this solution is troublesome because smaller programs depend on revenue sharing within their conference. Less successful programs may not be able to keep up and any parody left in college football would be completely lost. In contrast, college football should return to a single entity, like the College Football Association, to negotiate media deals. The absence of conferences having their own media deals would protect smaller programs from the disadvantages of conference realignment. This deal would have unprecedented value and would have to be lucrative enough to prevent teams from deciding to stay independent or in a conference. Under this solution, conferences could remain for competitive and on the field reasons. However, conferences would not have their own media deals.

IV. Conclusion

Departing schools usually must pay a buyout fee to their conferences, but the amount depends on when and how they leave the conference. There are many potential lawsuits that could be filed for damages because of conference realignment. Broadcasting giants, like ESPN, can be included and accused of tortious interference. When the dust settles, college athletics is all about money and how schools or conferences can get their piece of the pie. The grass is always greener in a new conference with a more lucrative television deal. To prevent teams from changing conferences for a better deal, universities and their sports programs should negotiate television deals under one entity.

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[1] Heather Dinich, Oklahoma Sooners, Texas Longhorns Formally Notify SEC of Membership Request for 2025, ESPN (July 27, 2021), https://www.espn.com/college-football/story/_/id/31897367/oklahoma-sooners-texas-longhorns-formally-notify-sec-membership-request.

[2] Heather Dinich, Texas Longhorns, Oklahoma Sooners Unanimously Accept Invitation to SEC, ESPN (July 30, 2021), https://www.espn.com/college-football/story/_/id/31920686/texas-longhorns-oklahoma-sooners-unanimously-accept-invitation-sec.

[3] Heather Dinich, American Athletic Conference Willing to Let Departing Teams Go Before 2024 for Higher Exit Fee, ABC News (Sept. 10, 2021, 9:09 PM), https://abcnews.go.com/Sports/american-athletic-conference-departing-teams-2024-higher-exit/story?id=79951694#:~:text=AAC%20bylaws%20require%20schools%20to,a%20%2410%20million%20buyout%20fee.

[4] Christian Dennie, Conference Realignment: From Backyard Brawls to Cash Cows, 12 Miss. Sports L. Rev. 249, 253 (2012).

[5] Id.

[6] Associated Press, Big 12 Commissioner Bob Bowlsby Warns of 50% Hit to TV Contract Value After Texas, Oklahoma Leave for SEC, ESPN (Aug. 2, 2021), https://www.espn.com/college-football/story/_/id/31945492/big-12-commissioner-bob-bowlsby-warns-50-hit-tv-contract-value-texas-oklahoma-leave-sec.

[7] Kyle Brown, Report: American Athletic Conference, ESPN Agree to Billion Dollar Media Rights Deal, Cincinnati Enquirer (Mar. 19, 2019), https://www.cincinnati.com/story/sports/2019/03/19/espn-american-athletic-conference-deal-1-billion-over-12-years/3215436002/.

[8] Wilton Jackson, Big 12 Accuses ESPN of Destabilizing Conference, Issues Cease and Desist, Sports Illustrated (July 28, 2021), https://www.si.com/college/2021/07/29/big-12-cease-desist-espn-realignment.

[9] Id.

[10] Dennie, supra note 4, at 258.

[11] Id.

[12] Id.

[13] Id.

[14] Id. at 259.

[15] Id. at 259-260.

[16] Id. at 260.

[17] Bd. of Regents v. Atlantic Coastal Conference, No. CAL13-02189 2013 Md. Cir. Ct. LEXIS 4, at *1-2 (Md. Cir. Ct. June 27, 2013).

[18] Id. at 1.

[19] Id. at 5.

[20] Id. at 14-15.

[21] Id. 43-44.

[22] 3 Texas Torts and Remedies § 46.02.

[23] Dinich, supra note 1.

[24] THE BIG 12 CONFERENCE, INC. BYLAWS, § 3.4.

[25] Dinich, supra note 3.

[26] THE BIG 12 CONFERENCE, INC. BYLAWS, § 3.4.

[27] Id.

[28] Dinich, supra note 3.

[29] Dennie, supra note 4, at 250.