Maryland’s $157 million counterclaim: ACC recruited B1G schools

[btstimpy]

Yes and no. You're forgetting that the ND - ACC announcement was many months after Maryland and Rutgers had already announced their intention to join the Big Ten.

The Big Ten originally hoped to be the preferred major sports conference in the Northeast without having a team in that region based on the popularity of Penn State, Ohio State, Michigan and ND in that area. Once the Syracuse + Pitt were added to the ACC and ND rejected Big Ten's proposal, Delany realized that strategy would no longer work and there was a risk of the ACC boxing out the Big Ten in taking that region so he felt that he needed to react.

Penn State wasn't an immediate flight risk but Penn State joined the Big Ten with the intention of being a major player in the Northeast region. If the Big Ten did nothing and the ACC did establish themselves as the premier conference in the Northeast 20-30 years from now Penn State could have been tempted to reconsider.

The ND-ACC announcement was September, 2012. It was the same week that the exit fee meeting took place. The Maryland - Big Ten announcement was at the end of November, 2012. Was Maryland talking to the Big Ten before September, 2012? Maryland says that they were not. But their discussions are under non-disclosure.

 

[bobbyinaz]

So to summarize the last 20 pages.

stimpy says they owe $52MM
billy says they owe $20MM
cross isn't sure what the number is

Can we please close this thread & start a new one when something actually happens with this?

 

[woomba]

The ND-ACC announcement was September, 2012. It was the same week that the exit fee meeting took place. The Maryland - Big Ten announcement was at the end of November, 2012. Was Maryland talking to the Big Ten before September, 2012? Maryland says that they were not. But their discussions are under non-disclosure.

Yep - you're right. I was the one confused there. For some reason I thought it was after the season was over.

 

[CAHUSKY]

My favorite part of this thread is people, who clearly have no legal background, making definitive pronouncements about the case only to be made to look silly when an actual attorney chimes in.

 

[NickyNewark]

All this is water under the bridge now outside the legal manueuvering by MD and the ACC so I dont get all this interest? If Md was so bad and was willing to chance a 50+M payout to leave what does that say about the perceived strength of the ACC?

 

[billybud]

Nicky...what it says is more about Maryland.

Maryland was broke and desperate. They had just had to cut athletic programs and their programs were bleeding red ink.

They were desperately looking for a limb to grasp as they sank deeper into the sucking financial quicksand. The Big Ten was that limb.

By accounts, the Big Ten was spurred on to offer that limb by Notre Dame's move with the ACC and their fear that Penn State might be next.

Maryland did what they felt that they had to do. Obviously, they have felt all along that the $50 million may not be enforceable as an exit fee.

 

[itgoeslike]

You appear to be supporting Nicky's position in your response. Essentially Maryland felt that remaining in the ACC was a bad financial decision, even in the face of a potential $50M dollar exit fee. It's hard to imagine that's a good thing for the ACC. Additionally, this is compounded by the zealous actions of the ACC to enforce the fee, which makes me believe the GOR isn't as strong as it is made out to be.

 

[billybud]

Naw...I am not supporting Nicky's somewhat confused position.

I stated what I thought fairly clearly, I had thought.

Has nothing to do with any weakness of the GOR...that is wishful dreaming.

It does have to do with Maryland being so desperate that they had to do something, almost at any risk. And I don't think that they, for minute, believed that they would pay the full ticket exit fee.

In the long run, Maryland may well make more money in the Big Ten. I don't see that as any special weakness for the ACC.

Just as FSU will never bring in as much as Florida..the rest of the Big 12 will never match Texas, UConn will never have the money that Michigan and Ohio State do...the ACC won't bring in as much money as the Big 12.

What is interesting in all of this money discussion is that the media contract money is only 20-33% of the athletic revenue. Most comes from ticket sales, concessions, parking etc,

If Alabama made $50 million per year less then UConn in TV money, they'd still bring in more money. Bama reported $143.4 million in athletic department revenue in 2012-13.

http://bleacherreport.com/articles/...port-1434-million-in-revenue-for-2012-13-year

 

[pj]

Seeing as how the ACC was incorporated in the State of NC, and, is bound by NC corporate law, isn't it only natural that the case be adjudicated in NC?

You keep saying that Tobacco Road has too much power. Well, TR's wishes on expansion were overruled in 2003, again in 2011, and, in 2013. Nobody held a gun to the heads of other ACC schools, and, forced them to vote with TR in the past. That is fallacy.

Just as a personal note, I've never said that Tobacco Road has too much power. I'm a UConn fan, never concerned myself with ACC politics until recently, and the rivalries between FSU and UNC et al were nothing more than idle entertainment to me. I have always been agnostic on where the power lay, and if there was an imbalance of power, agnostic on whether that was appropriate (should BC be as powerful as FSU? clearly not). But I do think it is quite odd to have disputes among a group of state and private universities that sprawls along the whole eastern seaboard adjudicated in a state court, not federal court.

I happen to do some business in North Carolina and multiple North Carolina businesspeople have told me that there is a good old boy network of North Carolina politicians and leaders with whom they are well connected. If I run into trouble, they tell me, they can contact state legislators and others on my behalf. Fortunately I haven't needed any such interventions, but I am sure they are convinced they can influence government decisions. If medium-sized business executives can do that, what about the combined power of UNC, NC State, Wake, and Duke?

 

[itgoeslike]

If Alabama made $50 million per year less then UConn in TV money, they'd still bring in more money. Bama reported $143.4 million in athletic department revenue in 2012-13.

http://bleacherreport.com/articles/...port-1434-million-in-revenue-for-2012-13-year

If Alabama made $50 million per year less then ***FSU*** in TV money, they'd still bring in more money. Bama reported $143.4 million in athletic department revenue in 2012-13.

http://www.al.com/sports/index.ssf/2013/12/where_do_auburn_and_florida_st.html

But I appreciate you mentioning UCONN, it helps remind me that this isn't an ACC board. . .

 

[billybud]

Huh?

Yep...Alabama will bring in more money...that's my point. I do not really see yours.

But, saying that, Texas has brought in a boat load more money then FSU and has won half the National Championships the last 25 years. My point being that Ohio State, Michigan, and Texas may roll in the dough, but that schools that bring in much less can be as, or more, successful.

 

[woomba]

What is interesting in all of this money discussion is that the media contract money is only 20-33% of the athletic revenue. Most comes from ticket sales, concessions, parking etc.

That's part of the value proposition for the new schools - the bet is that ticket sales will be boosted for Rutgers and Maryland by joining the Big Ten due to the large Big Ten alum base in the area so the revenue projections that they are doing is taking this into account.

I think it makes sense since NYC and DC are #2 and #3 destination cities of Big Ten alumni and it wasn't like those schools were selling out tickets beforehand. At the very worst, I'd imagine it to be a sizable increase over the non-home ACC/AAC turnout for those schools.

 

[itgoeslike]

Huh?

Yep...Alabama will bring in more money...that's my point. I do not really see yours.

But, saying that, Texas has brought in a boat load more money then FSU and has won half the National Championships the last 25 years. My point being that Ohio State, Michigan, and Texas may roll in the dough, but that schools that bring in much less can be as, or more, successful.

The point is that even if you apply your $50M statement to FSU, you get the same outcome—Alabama still makes more money. It's silly to compare Maryland (or UConn) to Alabama, Texas, Ohio State or Michigan with regards to revenue. The bottom line is that Maryland did the math and they determined it would be financially beneficial, in its totality, to depart the ACC, even with a $52M exit fee to contend with. It is what it is.

In defense of UConn, it's been ranked in the top 40 in revenue year after year, even with the old BE's paltry $3.18M in TV revenue. With comparable TV revenue of a P5 conference UConn would likely be ranked in the top 25 in terms of revenue. Of course, based upon Maryland's move, that ranking would be higher if they received an invite from the B1G versus the ACC. . .

 

[SouthronCross]

You appear to be supporting Nicky's position in your response. Essentially Maryland felt that remaining in the ACC was a bad financial decision, even in the face of a potential $50M dollar exit fee. It's hard to imagine that's a good thing for the ACC.

It was a bad financial situation for them because, at least from the outside, it appeared that they spent themselves into a $30M hole without a plan on how to pay for it. Thats nobody else's fault. If our resident UMD fan is around, he can correct me, or, tell me where I was wrong.

The rest of the league seemed to be making out just fine during this time with the same amount of media dollars that they were getting.

Additionally, this is compounded by the zealous actions of the ACC to enforce the fee, which makes me believe the GOR isn't as strong as it is made out to be.

What is the ACC supposed to do? Just let them walk away scott free? No other league has allowed a former member to do that.

And, what does the exit fee dispute have to do with the GOR? They are completely separate agreements.

 

[SouthronCross]

Just as a personal note, I've never said that Tobacco Road has too much power. I'm a UConn fan, never concerned myself with ACC politics until recently, and the rivalries between FSU and UNC et al were nothing more than idle entertainment to me. I have always been agnostic on where the power lay, and if there was an imbalance of power, agnostic on whether that was appropriate (should BC be as powerful as FSU? clearly not). But I do think it is quite odd to have disputes among a group of state and private universities that sprawls along the whole eastern seaboard adjudicated in a state court, not federal court.

I happen to do some business in North Carolina and multiple North Carolina businesspeople have told me that there is a good old boy network of North Carolina politicians and leaders with whom they are well connected. If I run into trouble, they tell me, they can contact state legislators and others on my behalf. Fortunately I haven't needed any such interventions, but I am sure they are convinced they can influence government decisions. If medium-sized business executives can do that, what about the combined power of UNC, NC State, Wake, and Duke?

Completely fair point.

From my own experiences, the good ol' boy network exists everywhere, in some shape, form, or fashion. It may just not be called that.

My post wasn't intended to be aimed at you personally, bro. I was speaking in general terms. Sorry I did not clarify that. My bad.

 

[billybud]

What Maryland has to keep on eye on is that the same water that floats a boat can swallow it.

Maryland will have to build a better football program with their additional monies in order to not be just schedule fodder in the Big Ten, along with Indiana.

Their division mates, Ohio State, Michigan State, Penn State, and Michigan could make it very difficult for the Terps once they go east-west in 2016.

 

[B1GALUM]

What Maryland has to keep on eye on is that the same water that floats a boat can swallow it.

Maryland will have to build a better football program with their additional monies in order to not be just schedule fodder in the Big Ten, along with Indiana.

Their division mates, Ohio State, Michigan State, Penn State, and Michigan could make it very difficult for the Terps once they go east-west in 2016.

The B1G actually goes east-west starting 2014. Maryland will play all the teams you mentioned this fall and will have to visit Wisconsin.
http://grfx.cstv.com/photos/schools...f/2012-13/misc_non_event/future-schedules.pdf

 

[SouthronCross]

The B1G actually goes east-west starting 2014. Maryland will play all the teams you mentioned this fall and will have to visit Wisconsin.
http://grfx.cstv.com/photos/schools...f/2012-13/misc_non_event/future-schedules.pdf

I'd be interested to hear the opinions of B1G fans, the first time Terp fans throw batteries at them on a trip to College Park.

Or, when they complain about B1G officiating the first time they lose a FB or BB game in controversial fashion to the likes of MSU, UM, or OSU. The conspiracy theories will fall like rain.

 

[Pat125]

What is the ACC supposed to do? Just let them walk away scott free? No other league has allowed a former member to do that.

And, what does the exit fee dispute have to do with the GOR? They are completely separate agreements.

Yes, apparently Maryland did make some bad financial decisions, in particular, with their previous AD. The other thing is that Maryland keeps the athletics budget separate. I don't think that finances was the sole issue here. Things have changed, and the ACC is no longer the conference it used to be (it's better or worse depending on one's point of view). Granted, Maryland voted to invite all the teams that were added (including ND), except for Florida State. If, finances aside, Maryland thought that the ACC was still a better fit, they should have stayed. They could have restructured the budget to make it work, especially since there are benefits to having athletics that don't appear on the balance sheet.

Before all this lawsuit stuff happened, I believe that Maryland was bound by the $20 million or so that they agreed to in the past. But if the courts decide that Maryland should get out scot free, then I'm fine with it in light of all that has happened. But I also understand the courts could find the $50 million plus fee was enacted in the correct manner and legal, which Maryland is prepared to do.

The exit fee and Grant of Rights are different, but they may end up being related depending on the conclusion of the lawsuit. If $50 million is found to be punitive, it seems this would be the case for a school who leaves a conference with a GoR. I don't know howo GoRs work, as I've seen experts on this disagree. But if a team who leaves while GoR is still fresh, this may involve forfeiture of revenue in the hundreds of millions. I would imagine courts would also find this punitive.

 

[billybud]

pat125...the thing is that the law, in regards to liquidated damages, does deal with the fact that the damage estimate must not be just a punitive measure.

A Grant of Rights is not a damage...it is the granting of media rights..and has a completely different context and case law.

There just is not much cross over between a GOR and an Exit Fee although they may end up serving the same purpose.

 

[Pat125]

I'd be interested to hear the opinions of B1G fans, the first time Terp fans throw batteries at them on a trip to College Park.

Or, when they complain about B1G officiating the first time they lose a FB or BB game in controversial fashion to the likes of MSU, UM, or OSU. The conspiracy theories will fall like rain.

I'm a Terp fan and would glad to give my opinion. I believe any Terp (or other) fan who throws batteries or engages in any criminal activity be arrested and prosecuted. These disgusting activities have no place in sports.

 

[Pat125]

Billybud, I guess this shows how much I don't understand the GoR. I see a school losing out on revenue, especially in the hundreds of millions of dollars as damage, no matter how or what it is called in a contract.

 

[btstimpy]

I'd be interested to hear the opinions of B1G fans, the first time Terp fans throw batteries at them on a trip to College Park.

Or, when they complain about B1G officiating the first time they lose a FB or BB game in controversial fashion to the likes of MSU, UM, or OSU. The conspiracy theories will fall like rain.

I'm just glad that our team and fans only have to worry about it one more time in the Comcast Center. Then we're done. It won't be missed. As for Big Ten fans experiencing the behavior of fans in College Park, that's their decision to enjoy.

Both of our lacrosse teams have to go up there one more time, but those crowds are smaller. No baseball series. The softball series is in Charlottesville. We've already beaten the wrestling team. Maryland flushed many of the other spring sports, so we're basically done after 1 basketball game and 2 lacrosse games with College Park appearances. I don't envision anything continuing other than potentially lacrosse.

 

[billybud]

Sure...One could say that a GOR would damage a school that left a conference since that could be the effect...

Paul McCartney was furious that the Beatles lost their anthology of songs to Michael Jackson, who acquired them in 1985. He was "damaged" but has lost those rights until 56 years after they were written, after which they become his property.

A GOR is a media assignment contract and if one damages themselves in signing one..it could be tough luck. The court would look at the wording of the contract for enforcement.

In a GOR, as in media law, one is talking about assigning rights. There is a plethora of case law re assigned rights. It has been pretty well defined. Now GOR's in college sports is a newish territory for the law without as much specific developed case law.

But the principle of assigning a media right and the parties rights and obligations therein, have been tested in the courts.

 

[billybud]

And another difference between the exit fee and the GOR...each school individually and voluntarily signed away the grant of media rights.

It was not a case of a majority ruling

 

[CL82]

The exit fee and Grant of Rights are different, but they may end up being related depending on the conclusion of the lawsuit. If $50 million is found to be punitive, it seems this would be the case for a school who leaves a conference with a GoR. I don't know howo GoRs work, as I've seen experts on this disagree. But if a team who leaves while GoR is still fresh, this may involve forfeiture of revenue in the hundreds of millions. I would imagine courts would also find this punitive.

I agree.

 

[billybud]

I do not agree....based on the fact that there is no "punitive" in media rights deals...as there is in an exit fee.

Jeez guys.....agree? based on what set of facts?

Oh...because exit fees as liquidated damages must not be so unrelated to damages as to be punitive. Soooo...I expect if you voluntarily signed away media rights..well...it must be the same thing. Right?

Well no.

 

[SouthronCross]

I'm a Terp fan and would glad to give my opinion. I believe any Terp (or other) fan who throws batteries or engages in any criminal activity be arrested and prosecuted. These disgusting activities have no place in sports.

Amen, Terp fan. Amen.

 

[itgoeslike]

Trust me, I am aware that they are separate documents. I'll be a little more specific. If the GOR was iron clad it's likely that the ACC would have settled and moved on, but they haven't. The percentages say the ACC either has a weak agreement or a weak case.

I find it amusing how some posters make definitive comments on the GOR without even seeing it. Has anyone actually seen a copy of the document? If so, please forward. Most GOR's assign their rights to a media entity, I suspect that could be the case here. In addition, Virginia was the last to sign, which probably prompted the inclusion of contingencies (perhaps time-based) in order to get them to sign. Also, please note that I don't hold in high regard biased comments from conference and media representatives and/or sloppy, lazy journalism, so no need to pelt me with what so-and-so said. That's not definitive proof.

 

[billybud]

Probably...might...conjecture...guess...

Yeah... that's what you have....

I like your post "most GORs assign their media rights to an entity"...

WTF? I reckon they do rather then mom , dad, or other individual...But how would you know since you haven't seen a GOR (your big argument)?