By Eric G. Kramer and Michael S. Carroll
Boise State University (BSU) has filed a complaint against the Mountain West Conference (MWC) claiming the conference violated the terms of their Re-Entry Agreement, which was executed in December 2012. The complaint was filed on January 17th, 2020 in response to a new television contract the MWC negotiated with both CBS and Fox in December 2019, which Boise State claims breaches their previously executed Re-Entry Agreement. This article will discuss the case background and the three specific complaints filed by Boise State.
Background
Boise State football is renowned for their distinctive blue football field, memorable upsets in prominent postseason bowl games, and consistent presence as a non-Power 5 (P5) school in the college football Top 25 polls. These attractive and unique attributes have served to create high national interest in its program, which has led to better television ratings for its football games than any other Group of 5 (G5) school in the country. This has also provided Boise State with significant leverage in negotiating their own terms within the MWC’s television rights deals, which ultimately led to the aforementioned complaint.
Boise State joined the MWC in July 2011 following its membership with the Western Athletic Conference (WAC) for ten years. Boise State’s rise in football prominence made their addition to the MWC crucial to the solidification of their membership amongst the chaos of conference realignment in NCAA Division I athletics at the time. However, fitting of the realignment era, Boise State’s MWC football membership appeared to be short lived, as they signed a memorandum of understanding (MOU) with the Big East Conference to be added as a “football only member” just one year after joining the MWC. In true realignment era fashion, prior to the MOU becoming effective, Boise State reneged on its MOU with the Big East Conference, following the exodus of eleven of its fourteen members, which consequentially resulted in the loss of its automatic qualification bid to the Bowl Championship Series (BCS). Subsequent to these dealings, Boise State and the MWC agreed to renew their membership agreement under a new set of terms and conditions explicitly outlined in a Re-Entry Agreement executed on December 31st, 2012.
Re-Entry Agreement
Following Boise State’s near departure from the MWC, a Re-Entry Agreement was negotiated between both parties to entice Boise State to remain in the MWC. Understanding the popularity, success, and revenue generating capabilities of Boise State’s football program, the MWC was willing to provide certain incentives to Boise State in order to secure their continued presence in the conference. Specifically, Boise State was given increased control over television rights for its home football games and a larger television revenue split than all other institutions within the conference. Portions of those elements of the Re-Entry Agreement are outlined as such:
Television Rights. The MWC will ensure that the Boise State home football games are sold as a separate package. Boise State and MWC must mutually agree to whom such Boise State home football game rights are licensed and to the material terms of such license…Material terms include, but are not limited to, monetary terms, time/duration of the license, cancellation terms, network upon which the games are broadcast, time and dates of performance (games), and other terms relevant to payment and performance (Boise State v. Mountain West, 2020).
National Exposure Bonus System. In return for the grant of television rights in paragraph 3 above, the MWC will adopt policies or bylaws that provide additional payments to conference members when they participate in regular season football games broadcast nationally as provide for in this paragraph. A national broadcast will be where a football game is aired on one of the following networks (or their successor as long as they network is in over 90,000,000 homes in the United States) ESPN, ESPN2, ABC network “Over the Air,” NBC network “Over the Air,” CBS network “Over the Air,” or Fox network “Over the Air.” If a conference member plays in a regular season game on a national broadcast as defined herein, then any MWC team participating in such game will receive a bonus of $300,000 from the MWC. Further, if such national broadcast is on a Saturday, the MWC will provide an additional bonus payment of $200,000. Multiple appearances on a national broadcast are cumulative (Boise State v. Mountain West, 2020).
After four years of applying the bonus system within the MWC, it was determined that the uneven nature of the bonus payouts made it difficult for the conference to properly budget from year-to-year. Therefore, an amendment to the Re-Entry Agreement was executed on November 30, 2016. This amendment stipulated that Boise State would receive additional annual revenue in the amount of $1.8 million dollars from the MWC television rights contract in place of the previous national exposure bonus structure. This additional payment was only designated for Boise State. The rest of the television revenue was evenly split between all institutions within the MWC (including Boise State, but excluding the University of Hawaii). It should be noted that the television rights portion of the Re-Entry Agreement was unchanged within the new amendment. In addition, the Re-Entry Agreement, including its amended version, does not contain language regarding the timing of terminating the agreement, nor does it specify an expiration date.
New MWC Television Rights Deal
With the CBS/ESPN television rights agreement expiring at the conclusion of the 2019-20 football season, the MWC began negotiations with potential suitors for a new television deal in the Spring of 2019. Following negotiations, a new television deal with CBS and Fox was proposed to MWC membership that would more than double the payout to member institutions compared to their previous television rights deal. Provided the same payout and bonus structure remained in place, Boise State would receive over $5 million dollars annually from the new deal.
In December 2019, following the negotiation process, the Commissioner of the MWC, Craig Thompson, shared with Boise State’s Athletic Director, Curt Apsey, and its President, Dr. Marlene Tromp, that the increased revenue from the new television deal was due in large part to the significant interest in televising Boise State football games. Dr. Tromp made it a point to discuss Boise State’s financial expectations with Commissioner Thompson during this meeting. Specifically, she made it known that her expectation was that Boise State’s $1.8 million annual bonus would be proportionately increased based upon the overall increase in television revenue distributed to conference schools. Based on their meeting, Boise State also anticipated that MWC would support their expectations in the upcoming MWC Board of Directors meeting of not only maintaining their $1.8 million annual bonus, but to increase it a proportionate amount.
In contrast, during the December 2019 Board of Directors meeting, the MWC did not provide an option for its members to support the notion that Boise State would receive an increased portion of its $1.8 million bonus. Instead, the Board of Directors were provided eight different options to approve the new television deal, and none of those options included increasing Boise State’s annual bonus. In fact, each of the options included a clause to phase out the $1.8 million annual bonus Boise State had been receiving. Ultimately, the Board of Directors voted on two key matters regarding the new television deal. One, to vote on whether or not to accept the proposed CBS/Fox deal. Two, to vote whether or not to continue paying Boise State’s $1.8 million annual bonus for another six years (upon expiration of the new television deal). Both measures were ultimately approved by the Board of Directors of the MWC. Conversely, Boise State opposed both measures.
Count I — Breach of Contract
Boise State claims that the MWC violated the terms of their Re-Entry Agreement and the subsequent Re-Entry Agreement Amendment by entering into a new television rights agreement without receiving its fully informed consent to the material terms of the contract. The Re-Entry Agreement stipulates that MWC and Boise State must mutually agree upon the terms regarding to whom and the material terms of licensing its televised home football games.
In addition, since the Re-Entry Agreement as amended by the Re-Entry Agreement does not specify a termination date, the actions by the MWC to terminate Boise State’s $1.8 million annual bonus in six years without Boise State’s consent also materially breaches their contract.
Count II — Breach of the Implied Covenant of Good Faith and Fair Dealing
Boise State claims that the MWC did not conduct an honest, fair, and good faith dealing with respect to the provisions set forth in the Re-Entry Agreement as amended by the Re-Entry Agreement Amendment. Boise State believes the MWC violated, nullified and significantly impaired Boise State’s ability to justly execute the contract between both parties.
Count III — Declaratory Judgment
Boise State claims that their right to consent to the material terms of the new television agreement between the MWC and CBS/Fox and to continue their receipt of a $1.8 million annual bonus is explicitly provided within the Re-Entry Agreement as amended by the Re-Entry Agreement Amendment. As such, a judicable disagreement has occurred between both parties based upon their rights and obligations within the Re-Entry Agreement as amended by the Re-Entry Agreement Amendment.
One potential reason/justification for the MWC wanting to change the compensation terms for Boise State is that Boise State’s football performance has taken a dip in recent years. While the school remains one of the best teams in the conference year to year, their last major bowl appearance was in 2014, and from 2014-2019, the school has had only one top 20 ranking, finishing two of those seasons unranked. In contrast, the six years prior to 2014, Boise State enjoyed four top-10 finishes and a victory in the prestigious Fiesta Bowl.
Eric G. Kramer is an Associate Director of Athletics for Compliance and Sport Administration at Missouri Western State University and PhD student at Troy University specializing in research related to sport law and risk management in sport and recreation.
Michael S. Carroll is an Associate Professor of Sport Management at Troy University specializing in research related to sport law and risk management in sport and recreation. He has published over 30 articles and delivered over 50 presentations at professional conferences. He lives in Orlando, FL.
