Analysis: Where UNC stands amidst conference realignment frenzy, how TV deals tie in

The economics of college sports is powered by behemoth television contracts that each of the major athletic conferences sign with competing networks. Football, long considered to be the cash cow of most athletic departments, is typically the driving force behind these deals.

For an individual school, this means that the more lucrative its conference's TV deal is, the more revenue that school can haul in annually. This structure incentivizes schools to follow the money and seek out athletic conferences that can pay out better, rather than ones that make more sense geographically.

Oklahoma and Texas shook the college athletics landscape in 2021 when the schools announced they were leaving the Big 12 to join the SEC. In June, when California schools USC and UCLA announced they were leaving the Pac-12 to join the Big Ten, a conference headquartered in Illinois, realignment became a national topic of conversation yet again.

“I would’ve bet my life that would never happen,” North Carolina football head coach Mack Brown said of the move at the 2022 ACC Football Kickoff in July.

Realignment, however, isn’t a new concept in college athletics.

“If you go back and look at throughout the whole history of conferences and schools, there's been a lot of realignment,” Louisville head football coach Scott Satterfield said at the ACC Football Kickoff. “It seems to happen a lot. I was a part of it when I was at Appalachian State. We moved divisions and moved conferences.”

There have been multiple instances of realignment in the ACC, which was formed in 1953 when seven members of the Southern Conference, including UNC, left to form the new conference.

The last major conference realignment frenzy happened in the early 2010s.

In 2012, Maryland — a founding member of the ACC — announced it was leaving to join the Big Ten, effective starting the 2014-2015 school year. Syracuse, Pittsburgh and Notre Dame — save for the Fighting Irish's independent football program — all joined the ACC in 2013, and Louisville followed a year later to fill the gap left by the Terrapins' departure.

What's preventing any of the current ACC member schools from defecting, like Maryland did ten years ago, is a contract that the member schools signed in 2013 called the grant of rights.

Grant of Rights

The grant of rights gives the ACC control over media rights for each of its member schools. Essentially, the TV revenue that a school makes from the ACC’s contract with ESPN goes to the ACC, and that pool of money is evenly distributed among the member schools.

When Maryland left the ACC in 2014, it sparked rumors of other schools doing the same, which could have dissolved the conference. To combat this, the ACC had each member school sign the grant of rights to lock the schools into the conference for the long term.

When the ACC and ESPN announced the formation of the ACC Network in 2016, the ACC extended the grant of rights to last until 2036 instead of 2027, when it was originally supposed to end. However, conferences like the Big Ten and the SEC have more lucrative TV contracts than the ACC.

In the fiscal year ending in June 2020, the ACC generated approximately $500 million. However, in that same time frame, the Big Ten and SEC both reported numbers north of $700 million, and thus their member schools will earn more revenue than ACC schools.

So, if this is the case, why would schools not simply leave the ACC and join the Big 10 or SEC?

Because if a school does this, per the grant of rights, the ACC would still control all revenue that the departing school produces from their home games up until 2036, when the grant of rights expires.

What Happens Next?

An ACC school leaving the conference isn't likely to happen anytime soon.

For this to happen, a school would have to challenge the grant of rights, as well as evaluate its ability to sustain the revenue it would lose as a result of leaving the conference and violating the grant of rights. 

“I think you have to be thoughtful, you have to be smart, you have to be strategic," ACC Commissioner Jim Phillips said at the ACC Football Kickoff. "Making a move just to make a move doesn't make any sense.”

At some point in the future, a member school might decide that the money it would lose to the ACC for leaving the conference is worth the additional money it may gain by being a member of the Big Ten or SEC. 

So, what does this mean for UNC regarding how the Tar Heels fit in the grand scheme of realignment?

UNC may have to leave the ACC at some point if it wants to keep its 28 varsity sports intact.

As the Big Ten and SEC school’s revenues increase, UNC will be able to devote the same percentage of that revenue to football. In order to keep the football program up to par with the other conferences, UNC will likely have to dedicate a higher percentage of its budget to the program. Increasing the amount of revenue spent on football would cut the budget allocated for other varsity sports. That is unless UNC moves to a more profitable conference.

If you ask Phillips, however, he’s adamant that the conference isn’t going anywhere.

“I love our 15 schools, and I'm confident in us staying together,” Phillips said at the ACC Kickoff event on Wednesday. “That's all I've heard in all the calls that we've had. We want to work together to try to provide more resources to our student-athletes, so we're all on the same page.”

@thenoahmonroe

@dthsports | sports@dailytarheel.com