Texas, Longhorn Network & "Buyouts"

I follow Frank The Tank on Twitter and he handles a lot of conference realignment & financial questions really well.  Has extreme patience with a lot of it.  Patience that I don't have, or wouldn't have without erasing a tweet two or three times before pressing "Tweet".

So with the Big 12 (and Sun Belt?) getting a victory with respect to the parameters required to hold a conference championship game, two things came out of it:

1) Oklahoma's president spoke.  And continued speaking.  I leave it to your judgement to agree or disagree with him.  Dan Wolken was correct with this assessment:

One thing that would help get the Big 12 off the kids’ table is to keep their family issues in the family. https://t.co/vCwvfnMmXi

— Dan Wolken (@DanWolken) January 15, 2016

I've said that in the past too.  Being so publicly negative about things makes you look weak to everybody else.  Here's part of the problem with that: At times, being vocal worked for DeLoss Dodds, the former AD at Texas.  It feels right out of the Texas playbook.

2) The part I intended to write this whole post about - "ESPN just buy out Texas of the Longhorn Network".  I've seen it asked of Frank a couple times and he's politely put it down.  Here are several other things to consider.  I'm going to reference several items from the open records request The Midnight Yell did several years ago:

• Are you buying out Texas or IMG?  IMG is a party to this network.  Texas sold them the rights to market the content.  In fact, when you look at the license agreement, courtesy of The Midnight Yell, it is clear that IMG is sublicensing Texas's rights to ESPN (see page 3 under Television Rights).
• Also, if I'm reading this correctly and I may not be, I believe ESPN is covered in the event IMG is no longer Texas's marketing partner.  There's a few sentences in there that ESPN would be granted the rights directly in the event the "Rights Agreement" expires or is terminated and I believe that pertains to IMG, who may not have had a 20 year agreement with Texas.
• What is the price you are buying out at and what exactly are you buying out?  If I'm Texas or IMG, and there aren't buyout provisions in the contract, my answer is "Not a penny less than what is due over the life of the contract".
• If ESPN were to sell the operations of the network to someone, or find a buyer to take it off their hands, ESPN has to majority own & manage that "buyer" and Texas gets to approve any equity partners within reason, typically for marketing purposes & not to delay network distribution (page 11 under ESPN Obligations).  So selling it to FOX doesn't seem possible.
• ESPN is also kinda, sorta paying for the right to negotiate for Texas football & other sports should they ever go independent.  Its a clause in the contract (see page 4 under First Negotiation/First Refusal), so there is value in having that around.  
• Remember when ESPN sued C-USA over contractual terms regarding this clause?  ESPN attempted to put a value on it in the court documents, so it should probably be considered an asset here.
• How about bankruptcy?  I don't believe that's an option because ESPN, as the 100% owner of the Longhorn Network, would have to declare bankruptcy.  Or Disney and/or Hearst (?, since they own 20% of ESPN) would.  ESPN2 or ESPNU can't declare bankruptcy.  ESPN can shut it down, but that's not a bankruptcy.
• To be clear:
• ESPN owns 100% of the equity in Longhorn Network and its operations
• Big 12 television contracts allowed the construction of Longhorn Network, SoonerSports.TV, K-StateHD.TV, etc. as they allowed for a package of games to be controlled by each school.
• Texas receives only a rights fee.  Nothing more.
• Well, how did CSN Houston declare bankruptcy?  There was a company (LLC?) called Houston Regional Sports Network, run by Comcast (22%), the Astros (46.5%) and Rockets (31.5%).  HRSN was dissolved as part of those bankruptcy proceedings and there was a different corporate structure to CSNH compared to Longhorn Network, or there at least appears to be.
• The Big Ten Network is set up as an LLC.
• Let's be clear - Texas is not buying out of this venture.  They're getting paid without having to put up any money of their own.  They have leverage.
• Further, if there is some form of buyout that goes to Texas, my assumption is that Texas will then be able to go to the open market and re-sell those rights a second time.  So they've been paid per year, then get paid to "go away", then get paid again on the rebound.  There's a real chance that if they're told to "go away" and re-sell those rights, the money is still above Oklahoma's payment from FOX for institutional rights. What does that solve?
• ESPN still can grow financially, though possibly not at the rates seen in prior years.  They could eventually figure out how to fend off cord cutting and as long as their revenues grow via subscriber fees and aren't completely washed out by people cancelling their pay TV subscriptions, they'll be pulling in money.  Why use that cash up front to buy out these agreements, if the agreements require a full payment (sorry, I didn't read the 51 pages, it could be in there) if that payment to Texas can be lower and made over 20 years, and you get content out of it?

(There is a decent argument to be made about how much ESPN paid in comparison to what others pay Big 12 schools for similar rights, and how much more ESPN paid over the offer FOX allegedly presented to Texas.  That's another story.)

To be clear, lawyers can come together, negotiate and find equitable solutions to just about any written document.  So some of what is written about can surely be overcome with documents that render this one null and void, probably.  Maybe.  But it isn't just a quick and dirty answer to buy them out and send them packing.