Maryland Lawsuit

[UConn9604]

Actually the ACC exit fee is the creation of Dr. Wallace Loh of Maryland. His motion put it in place at $20 million in the first place in 2011. The more interesting question is "When did Dr.Wallace Loh sign the Non-Disclosure with the Big Ten?" "Before his 2012 vote not to increase the fee or after?"

The ACC didn't throw Maryland out. Maryland has announced its intention to leave. And Dr. Wallace Loh was fully disclosed on the amount of the exit fee before making his announcement.

Here's something that I think you're missing. Before all 12 ACC schools walked into a meeting, the penalty for leaving was $20 million. At the meeting, the proposal was voted upon to increase the exit fee to $52 million.

What option does Maryland have if it doesn't like the $52 million fee? Because 10 ACC schools voted "yes," Maryland's exit fee went up by $32 million. Are you saying that there was nothing Maryland could do except take it? That's not going to fly very well, for what it's worth.

 

[Fishy]

I think the disposition of the lawsuit is basically meaningless at this point.

Maryland will leave and will pay some amount of money, but it won't have an effect on future expansion.

 

[btstimpy]

Here's something that I think you're missing. Before all 12 ACC schools walked into a meeting, the penalty for leaving was $20 million. At the meeting, the proposal was voted upon to increase the exit fee to $52 million.

What option does Maryland have if it doesn't like the $52 million fee? Because 10 ACC schools voted "yes," Maryland's exit fee went up by $32 million. Are you saying that there was nothing Maryland could do except take it? That's not going to fly very well, for what it's worth.

Unanimous votes are not required to amend the bylaws. There are rules for how many affirmative votes are required to pass bylaws. Unanimous votes are not required in the court system either, and the judges should understand this.

 

[btstimpy]

1) Well, if you think a GOR is binding, then if Maryland grants one, their potential departure is a non-issue.
2) Regarding the ACC not taking them back, now that would that be interesting. Maryland stipulates it will not leave if the ACC restores full rights, benefits and payments due to them. If the ACC refuses, their claim for damages goes out the window since any damages could be 100% mitigated. Interesting, no?

I see your point, but I find it hard to believe that Maryland is going to start petitioning the ACC to remain in the ACC at this point. Technically could they? Sure. But not likely.

 

[CL82]

I see your point, but I find it hard to believe that Maryland is going to start petitioning the ACC to remain in the ACC at this point. Technically could they? Sure. But not likely.

They don't have to petition. They have a choice. If they don't give their notice, they are in.

So the question is - is B1G membership worth $52 mil more than the new ACC deal? There is some very interesting options available to Maryland and tough choice left to the ACC.

 

[huskymedic]

Actually the ACC exit fee is the creation of Dr. Wallace Loh of Maryland. His motion put it in place at $20 million in the first place in 2011. The more interesting question is "When did Dr.Wallace Loh sign the Non-Disclosure with the Big Ten?" "Before his 2012 vote not to increase the fee or after?"

Non-Disclosure "dated"Oct 2' 2012.

http://www.washingtonpost.com/blogs...aa35c52-6ed8-11e2-aa58-243de81040ba_blog.html

Vote was in September... http://www.washingtonpost.com/blogs...83ff014-fe12-11e1-8adc-499661afe377_blog.html

If you believe there wasn't a draft NDA floated around before September...

 

[The Funster]

Fascinating scenario. An AD that was hemorrhaging $ would have to fork over $52M and get by on reduced payments from the B1G. If MD says that they aren't leaving? I can't see it happening but, damn, that would be as funny as all get out.

 

[btstimpy]

They don't have to petition. They have a choice. If they don't give their notice, they are in.

So the question is - is B1G membership worth $52 mil more than the new ACC deal? There is some very interesting options available to Maryland and tough choice left to the ACC.

Maryland could try that sure. But then they open themselves up to a ton of procedural votes to change the ACC Bylaws that could add some very interesting language to the bylaws involving Maryland specifically that Maryland might not like in addition to legal action by the Big Ten. And the votes would be there to do it. Maryland will be best served by paying the $52 million and joining the Big Ten in 2014. The ACC has already replaced them, and the Big Ten is already incorporating them. They should fulfill their legal obligation and move.

 

[djct1999]

Maryland could try that sure. But then they open themselves up to a ton of procedural votes to change the ACC Bylaws that could add some very interesting language to the bylaws involving Maryland specifically that Maryland might not like in addition to legal action by the Big Ten. And the votes would be there to do it. Maryland will be best served by paying the $52 million and joining the Big Ten in 2014. The ACC has already replaced them, and the Big Ten is already incorporating them. They should fulfill their legal obligation and move.

lol, yeah ok. .... the acc, since they already replaced them, should drop the $52 million fee and let maryland go for free. whats next? should they forfeit their 2002 basketball championship and give it to duke as part of the exit strategy.

 

[specialisthusky]

Maryland could try that sure. But then they open themselves up to a ton of procedural votes to change the ACC Bylaws that could add some very interesting language to the bylaws involving Maryland specifically that Maryland might not like in addition to legal action by the Big Ten. And the votes would be there to do it. Maryland will be best served by paying the $52 million and joining the Big Ten in 2014. The ACC has already replaced them, and the Big Ten is already incorporating them. They should fulfill their legal obligation and move.

I'm going to have to disagree with you on that one. The ACC is best served. I find it highly unlikely Maryland takes a judgement in this case and the ACC is awarded the full $52 mil...so do they, which is why they are in a legal battle. This is alot of money we are talking. If UMD racks up $20mil in legal fees fighting this but gets the exit fee down to $20mil it is still worth it to UMD and just cost the ACC alot of money.

 

[UConn9604]

Unanimous votes are not required to amend the bylaws. There are rules for how many affirmative votes are required to pass bylaws. Unanimous votes are not required in the court system either, and the judges should understand this.

That's not the point. 12 teams went into a meeting as members of a group, and the price of leaving the group was $20.

Then, a rule change was made to increase the price of leaving the group to $52. What are your options at that point? You're already in the group and you cannot get out for $20 because you just lost a 10-2 vote.

The only recourse that any member of the ACC has in response to an unfair practice of the league is to leave it. Yet the unfair practice in question increased the cost of doing so. Is that fair?

Note that we haven't even discussed the principles of liquidated damages, which exist to prescribe contractual damages in the event of a breach, where the damages are difficult to quantify, where the amount is reasonable based on the harm caused and the difficulty in finding replacement performance, and if the number is structured as a damage -- not as a "penalty." The ACC is going to have an impossible time proving "damages" when it had numerous suitors-in-waiting when Maryland left (including us) and actually upgraded in all sports except lacrosse.

I'd put the over/under on Maryland's "damages" at $26 million (or half) and I'm taking the under. Heavy.

 

[alsacs]

Here's something that I think you're missing. Before all 12 ACC schools walked into a meeting, the penalty for leaving was $20 million. At the meeting, the proposal was voted upon to increase the exit fee to $52 million.

What option does Maryland have if it doesn't like the $52 million fee? Because 10 ACC schools voted "yes," Maryland's exit fee went up by $32 million. Are you saying that there was nothing Maryland could do except take it? That's not going to fly very well, for what it's worth.

Maryland's lawsuit is all about whether or not the ACC followed proper procedure. Even if Maryland and Florida State voted against the 52 million dollar exit fee all it takes is 3/4 of all members being in favor for the bylaws being amended.

I would have thought that the crux of Maryland's case would revolve around procedural issues....such as due notice, as delineated by the Bylaws, prior to a Bylaw amendment.

When speaking of the amendment of the ACC Constitution (Bylaws):

Article X

Section X-1

The constitution may be amended at any regular or special meeting by three-fourths of the members. The proposed amendment shall be submitted, in writing, four weeks before the meeting, through the commissioner to the Constitution and Bylaws Committee for review. The commissioner shall send complete copies of the proposed amendments to all members at least fifteen (15) days before the meeting.

It is my understanding that the proposed amendment was not vetted properly and that it was a surprise proposal.

The requirement that the amendment be approved by three-fourths of the members is not an issue, but I believe that if the ACC failed to follow due process for an amendment, as outlined in the ACC Constitution, it may be a weakness in their case.

Maryland is arguing Swofford didn't give them the proposed amendment 15 days before the meeting where it was amended. If Swofford didn't follow procedure Maryland may win, but if he did then Maryland isn't going to win.

 

[UConn9604]

Maryland is arguing Swofford didn't give them the proposed amendment 15 days before the meeting where it was amended. If Swofford didn't follow procedure Maryland may win, but if he did then Maryland isn't going to win.

The provision still has to satisfy the requirements of liquidated damages clauses. You seem to be implying/assuming that it does, and that the case is all about procedure. I don't think that's accurate.

http://www.forbes.com/sites/darrenh...uit-filed-against-the-university-of-maryland/

 

[IthacaMatt]

Ah but the Big East did that after the schools gave notice, not prior. Big difference.

Yes, in this case (MD), it appears that it was only a verbal notice to leave, without filing the paperwork. I think there's a fair chance they're back in the ACC when the dust clears. That would be sweet in terms of derailing Delaney, who has been as culpable as ESPN when it comes to all this upheaval from realignment. And of course you guys would have a safe landing in the Big 10. I see you guys and Rutgers as a better package deal for them than Rutgers and Maryland.

 

[alsacs]

The provision still has to satisfy the requirements of liquidated damages clauses. You seem to be implying/assuming that it does, and that the case is all about procedure. I don't think that's accurate.

http://www.forbes.com/sites/darrenh...uit-filed-against-the-university-of-maryland/

I don't think Maryland will follow the advice of that article because then Grant of Rights could be argued are liquidated damages and any school wanting to withdraw from a conference would argue GOR are punitive. Also, the ACC can argue that the loss of the Maryland media market for a potential ACC Network will cause the conference to lose money and that is where the 52 million dollars is coming from. I don't think the punitive argument will work for Maryland because the bylaws were amended by the conference, and the conference followed its own bylaws which only require 3/4 support to ratify. This case boils down to whether Swofford followed the bylaws and gave the proposed change to the 12 Presidents 15 days before the meeting to vote on them. Apparently, the reason FSU voted against it was because the FSU president claimed he never received the proposed amendment 15 days prior to the meeting and his BOT chairman told him to vote against it to for any potential litigation. This case is about procedure IMO.

 

[IthacaMatt]

That's not the point. 12 teams went into a meeting as members of a group, and the price of leaving the group was $20.

Then, a rule change was made to increase the price of leaving the group to $52. What are your options at that point? You're already in the group and you cannot get out for $20 because you just lost a 10-2 vote.

The only recourse that any member of the ACC has in response to an unfair practice of the league is to leave it. Yet the unfair practice in question increased the cost of doing so. Is that fair?

Note that we haven't even discussed the principles of liquidated damages, which exist to prescribe contractual damages in the event of a breach, where the damages are difficult to quantify, where the amount is reasonable based on the harm caused and the difficulty in finding replacement performance, and if the number is structured as a damage -- not as a "penalty." The ACC is going to have an impossible time proving "damages" when it had numerous suitors-in-waiting when Maryland left (including us) and actually upgraded in all sports except lacrosse.

I'd put the over/under on Maryland's "damages" at $26 million (or half) and I'm taking the under. Heavy.

Those who argue that the liquidated damages clause is punitive and unrelated to actual harm, because the ACC was able to quickly replace MD with Louisville are missing a big part of the argument, in my opinion.

I think that the risk to the ACC of the MD departure was to destabilize the league, and if Fla State and Clemson suddenly left for the SEC, or another destination, then the league's overall value declines by an enormous amount, regardless of whether or not there are "replacement" schools. Just look at the Big East and see my argument in place - is the Big East worth as much now, or is your new conference, as they were before?

While the contracts might not be too bad for right now, because the Big East was underpaid, the damages will last long into the future, in terms of lost prestige, and lower value of future television contracts. I think that this is the basis for claiming the $52M is rational, in light of the league potentially being destroyed.

 

[specialisthusky]

I don't think Maryland will follow the advice of that article because then Grant of Rights could be argued are liquidated damages and any school wanting to withdraw from a conference would argue GOR are punitive. Also, the ACC can argue that the loss of the Maryland media market for a potential ACC Network will cause the conference to lose money and that is where the 52 million dollars is coming from. I don't think the punitive argument will work for Maryland because the bylaws were amended by the conference, and the conference followed its own bylaws which only require 3/4 support to ratify. This case boils down to whether Swofford followed the bylaws and gave the proposed change to the 12 Presidents 15 days before the meeting to vote on them. Apparently, the reason FSU voted against it was because the FSU president claimed he never received the proposed amendment 15 days prior to the meeting and his BOT chairman told him to vote against it to for any potential litigation. This case is about procedure IMO.

I have my doubts the court awards potential future damages. The ACC network does not exist, did not exist when UMD gave verbal notice, and did not exist when the vote for the exit fee occurred.

 

[06029]

I don't think Maryland will follow the advice of that article because then Grant of Rights could be argued are liquidated damages and any school wanting to withdraw from a conference would argue GOR are punitive. Also, the ACC can argue that the loss of the Maryland media market for a potential ACC Network will cause the conference to lose money and that is where the 52 million dollars is coming from. I don't think the punitive argument will work for Maryland because the bylaws were amended by the conference, and the conference followed its own bylaws which only require 3/4 support to ratify. This case boils down to whether Swofford followed the bylaws and gave the proposed change to the 12 Presidents 15 days before the meeting to vote on them. Apparently, the reason FSU voted against it was because the FSU president claimed he never received the proposed amendment 15 days prior to the meeting and his BOT chairman told him to vote against it to for any potential litigation. This case is about procedure IMO.

The only CR case that ever went to trial was decided based on bylaws and procedures. The BE did not follow its bylaws and procedures and lost their case against BC. If the ACC did not learn from that example, then they lose this case. Whether or not MD voted for the change, as a member of the conference, they are subject to whatever is voted whether they supported it or not provided it follows all bylaws. If they were dead set against it, they could have withdrawn from the conference before it became effective.

At some point, after the lawyers get paid a lot of money, this thing settles in the high $20 million range. MD will be in the B1G in 2014.

 

[freescooter]

Those who argue that the liquidated damages clause is punitive and unrelated to actual harm, because the ACC was able to quickly replace MD with Louisville are missing a big part of the argument, in my opinion.

I think that the risk to the ACC of the MD departure was to destabilize the league, and if Fla State and Clemson suddenly left for the SEC, or another destination, then the league's overall value declines by an enormous amount, regardless of whether or not there are "replacement" schools. Just look at the Big East and see my argument in place - is the Big East worth as much now, or is your new conference, as they were before?

While the contracts might not be too bad for right now, because the Big East was underpaid, the damages will last long into the future, in terms of lost prestige, and lower value of future television contracts. I think that this is the basis for claiming the $52M is rational, in light of the league potentially being destroyed.

Problem with that analysis is that they weren't destroyed. In fact, and argument could be made that they are actually better off with Louisville and Notre Dame. They certainly had a few uncomfortable days, but that was about all. But that would have been the case even if Maryland ponied up the $50 million. This case has all the earmarks of one to be settled at some point probably with a smaller payment and maybe a couple of football games.

 

[The Funster]

Yes, in this case (MD), it appears that it was only a verbal notice to leave, without filing the paperwork. I think there's a fair chance they're back in the ACC when the dust clears. That would be sweet in terms of derailing Delaney, who has been as culpable as ESPN when it comes to all this upheaval from realignment. And of course you guys would have a safe landing in the Big 10. I see you guys and Rutgers as a better package deal for them than Rutgers and Maryland.

Delany has been less culpable for conference upheaval than Swofford. Delany has been on record that he does not want a part of his legacy to be that he helped wreck a conference. In comparison, Swofford has gone all out to tear apart the Big East.

Also I believe Maryland is better fit for the B1G than UConn. Maryland does pull in the DC market which is a plum that cannot be ignored. I can see Delany thinking that if he cannot get MD that Rutgers isn't worth it. And, while I did not believe it possible a year ago I am now convinced that the B1G will not invite anyone that doesn't have AAU status and that leaves UConn out.

In the end, I don't think it matters because I cannot see MD returning to the ACC. They will get into the B1G and it will probably get pretty messy before it eventually happens but it will happen.

 

[CL82]

Maryland could try that sure. But then they open themselves up to a ton of procedural votes to change the ACC Bylaws that could add some very interesting language to the bylaws involving Maryland specifically that Maryland might not like in addition to legal action by the Big Ten. And the votes would be there to do it. Maryland will be best served by paying the $52 million and joining the Big Ten in 2014. The ACC has already replaced them, and the Big Ten is already incorporating them. They should fulfill their legal obligation and move.

Not at all sure how you envision the ACC "changing Maryland bylaws.

Regardless, whether by accident or design, Maryland has the ACC outflanked on this. There is zero, repeat zero, chance that they'll be ponying up $52 million.

 

[CL82]

Those who argue that the liquidated damages clause is punitive and unrelated to actual harm, because the ACC was able to quickly replace MD with Louisville are missing a big part of the argument, in my opinion.

I think that the risk to the ACC of the MD departure was to destabilize the league, and if Fla State and Clemson suddenly left for the SEC, or another destination, then the league's overall value declines by an enormous amount, regardless of whether or not there are "replacement" schools. Just look at the Big East and see my argument in place - is the Big East worth as much now, or is your new conference, as they were before?

While the contracts might not be too bad for right now, because the Big East was underpaid, the damages will last long into the future, in terms of lost prestige, and lower value of future television contracts. I think that this is the basis for claiming the $52M is rational, in light of the league potentially being destroyed.

That argument at its best was speculative, but now, given that the value of their contract has improved since Maryland's departure, is meritless.

Yes, in this case (MD), it appears that it was only a verbal notice to leave, without filing the paperwork. I think there's a fair chance they're back in the ACC when the dust clears. That would be sweet in terms of derailing Delaney, who has been as culpable as ESPN when it comes to all this upheaval from realignment. And of course you guys would have a safe landing in the Big 10. I see you guys and Rutgers as a better package deal for them than Rutgers and Maryland.

I wish this were true Matt, but I highly doubt it.

 

[btstimpy]

Delany has been less culpable for conference upheaval than Swofford. Delany has been on record that he does not want a part of his legacy to be that he helped wreck a conference. In comparison, Swofford has gone all out to tear apart the Big East.

Also I believe Maryland is better fit for the B1G than UConn. Maryland does pull in the DC market which is a plum that cannot be ignored. I can see Delany thinking that if he cannot get MD that Rutgers isn't worth it. And, while I did not believe it possible a year ago I am now convinced that the B1G will not invite anyone that doesn't have AAU status and that leaves UConn out.

In the end, I don't think it matters because I cannot see MD returning to the ACC. They will get into the B1G and it will probably get pretty messy before it eventually happens but it will happen.

I'm waiting for the results of Delany's deposition as well as the other ACC schools that the Big Ten did approach because there were some especially if they were approached before Maryland's September vote on the exit fee increase. We'll finally get a clean public look at what the Big Ten put in front of Maryland as far as projections.

 

[upstater]

Problem with that analysis is that they weren't destroyed. In fact, and argument could be made that they are actually better off with Louisville and Notre Dame. They certainly had a few uncomfortable days, but that was about all. But that would have been the case even if Maryland ponied up the $50 million. This case has all the earmarks of one to be settled at some point probably with a smaller payment and maybe a couple of football games.

Especially since the conference destroyed another conference...

 

[06029]

Especially since the conference destroyed another conference...

At some point, people need to look and acknowledge that the BE and its member schools played a large role in destroying itself. It did nothing to make itself more attractive to its most valuable FB members. The FB schools bowed to the wishes of the BB-centric leadership and the BB schools over and over again based on a quaint idea that what started the conference remained ideal 25 years later. When Miami and VT left, the FB schools had the right idea but let the BB leadership move them away from the right solution. Whatever money was being left on the table 10 years ago if the schools split is minor in comparison to the money being lost now.

 

[upstater]

At some point, people need to look and acknowledge that the BE and its member schools played a large role in destroying itself. It did nothing to make itself more attractive to its most valuable FB members. The FB schools bowed to the wishes of the BB-centric leadership and the BB schools over and over again based on a quaint idea that what started the conference remained ideal 25 years later. When Miami and VT left, the FB schools had the right idea but let the BB leadership move them away from the right solution. Whatever money was being left on the table 10 years ago if the schools split is minor in comparison to the money being lost now.

I'm referring to the ACC's argument that it's been damaged by B1G poaching Maryland.

 

[IthacaMatt]

Problem with that analysis is that they weren't destroyed. In fact, and argument could be made that they are actually better off with Louisville and Notre Dame. They certainly had a few uncomfortable days, but that was about all. But that would have been the case even if Maryland ponied up the $50 million. This case has all the earmarks of one to be settled at some point probably with a smaller payment and maybe a couple of football games.

Well, time hasn't stopped moving, so saying "the ACC wasn't destroyed" isn't completely a moot point. If MD were to defeat the exit fee, and the SEC suddenly wanted Florida State and Clemson, they would be a world of trouble, sure to earn less than they are now under their TV contracts. So you can't just brush that off so easily.

Louisville may have better major sports than Maryland - at least right now - but that doesn't mean that losing the Maryland market, and having a potential competitor open up shop in the middle of your territory isn't going to cause further harm to the ACC brand.

And then with regard to Notre Dame, you can argue that their presence destabilizes the ACC, just like it did in the Big East. If the ACC has competent lawyers, which I presume they do, then they have lots of different ways to validate and justify the exit fee.

The ACC isn't truly "safe" until (a) the MD suit is decided, (b) the ACC Network gets launched, and (c) Notre Dame joins a conference.

 

[IthacaMatt]

At some point, people need to look and acknowledge that the BE and its member schools played a large role in destroying itself. It did nothing to make itself more attractive to its most valuable FB members. The FB schools bowed to the wishes of the BB-centric leadership and the BB schools over and over again based on a quaint idea that what started the conference remained ideal 25 years later. When Miami and VT left, the FB schools had the right idea but let the BB leadership move them away from the right solution. Whatever money was being left on the table 10 years ago if the schools split is minor in comparison to the money being lost now.

Surprisingly, a big part of what did in the Big East was being cheap and acting small time, even into the 2000's. I still am dumbfounded that the Big East did not exist as a legal entity (i.e. it was never incorporated as a not-for-profit corporation) until after the 2003 raid. The by-laws were not especially rigorous, and they never really "lawyered up". That lack of legal advice led them to getting short-changed in contract negotiations, and left them open to the raids, just as much as anything else. And maybe if they spent a little more money on lawyers and were a little more forceful with Notre Dame, ND wouldn't have taken their bowl games so often, and for so little in return.

 

[pj]

The ACC isn't truly "safe" until (a) the MD suit is decided, (b) the ACC Network gets launched, and (c) Notre Dame joins a conference.

(b) and (c) are at least 15 years away. At least you'll have (a).

 

[CL82]

Surprisingly, a big part of what did in the Big East was being cheap and acting small time, even into the 2000's. I still am dumbfounded that the Big East did not exist as a legal entity (i.e. it was never incorporated as a not-for-profit corporation) until after the 2003 raid. The by-laws were not especially rigorous, and they never really "lawyered up". That lack of legal advice led them to getting short-changed in contract negotiations, and left them open to the raids, just as much as anything else. And maybe if they spent a little more money on lawyers and were a little more forceful with Notre Dame, ND wouldn't have taken their bowl games so often, and for so little in return.

Why do you care Matt, it's not like they took them from Syracuse.