The Official UMD Exit Fee Thread

[OkaForPrez]

Ladies, Gents,

I love a good HFD rant. The USS CT? I salute you. I follow the WV tweeps and fictional star wars characters in formal attire. I've diagnosed Sue's letter and I've diagnosed other's diagnosis of Sue's letter. I've likely crossed several boundaries in my research of Melo Groovy's twitter followers in New Mexico and their CT roots (apologies MG if you read this).

I'll continue to play detective. I'll stare into a crystal ball until a clouded image of Fishy and Delaney shaking hands appears. I'll keep adding pins into my BC voodoo doll.

But it's time to also get grounded in reality. There is a clear next domino to fall, so let's start talking about it.

What can we expect as a reasonable timetable for the UMD Exit litigation/settlement?
How long did it take in prior negotiations?
What do we expect to be the impact to the timing given that there is a clear correlation between the size of the fee and the ACC's future stability and therefore a motive for the ACC to go after every penny.

And most importantly in my opinion, what is our personal desired outcome?

Logically we've all been rooting for a UMD favorable settlement opening up the flood gates for a ransacked Acc. Why? So Uconn can be a 'process of elimination' addition to a 'hand me down' Acc that could actually tumble down into something close to what we were looking to get out of 6 months ago? Okay, it would beat where we are now, so of course we'll take it. And its likely more plausible than the B1G rescue.

What if the 50 holds though? What if that becomes an insurmountable capital investment hurdle for the top of the B1G's desirable list?

Does the B1G stand pat or does Uconn shoot up the list? All this time we've been rooting for a +1 scenario where Uconn rides shotgun, but maybe its more favorable for us to see the ACC circle the wagons and leave the B1G their 5th or 6th choice, but a valid one none the less.

I can't answer these questions, but would love to hear the educated and delusional theories on all of the above. Link up the knowns and the guesses here. I need something new to digest.

Cheers and Happy Holidays.

 

[AdamBC]

Our president is expecting Swoffy to enforce it to the penny (just over 52M).

Then again, if it's found to be unenforcable, I'll be waiting for the first rights-grant team to litigate granting TV rights as unenforcable too.

 

[Dann]

in the b1g thread i posted a couple of lenghts about time wise the fees and what happened with them

the fees for past schools seemed to be handled anywwhere between 3 to 8 months post announcement. now the interesting part is its random results wise. like the wvu one was quick but the cuse one was long. yet wvu had more to take care of leaving right away. its all about how wuick the school and conf want to get it done i think. with that being said md will try to do it soon for its leagues sake meanwhile the acc is going to make it long as possible while it tries to hurry up its digital network that will change the game completly. if espn gets the accN going before fees and stuff are set, then espn may be able to pony up a lot of $ that could keep the conf happy and stay, it would also slow things down for expansion overall and sights will turn back to the b12 falling apart vs the acc. preception war we talk about a lot.....

now whats best for uconn?
1)that fee being decided fast no matter the answer
2) we want that fee to either hold strong at 50mil or we want it to fall apart and the answer be 20mil. it it holds strong then it will help the acc get its network out, be kept from poaching and add for inventory and go for it. if the fee is low, other confs are quickly going to add before espn tries to get the network going when the schools are solid buys and easy buys. a lot of movement is good for us as it gives us the shot we want to be a partner to a uva type in a b10 add or a b12 filler. the worst case in a major shift is we end up in the acc with lville/cincy/cuse/pitt/bc/wake for starters which is better then the nbe but not the promise land we all know.

 

[pj]

I don't think it matters much what the fee is. A big fee ($50 mn) is still 2 years revenue in the B1G, or 4 years excess payout B1G over ACC. B1G can loan UVa the money and take it out of distributions, matching their ACC payout for 4 years then increasing it. If UVa is comfortable with B1G they'll go whatever the fee. The wait is just to see how much.

I think the issue is that Maryland has a special legal case given that it voted against the exit fee increase and if B1G takes UVa too quickly, they might damage Maryland's case for a discount. If Maryland gets a discount, that is a precedent for other schools. So the Maryland case may affect multiple payouts.

 

[CTMike]

Personal feel- don't see how the $50m will be enforced. I think half is a much more likely sum. I'd be curious what sorts of games they play to shift money around though. Does Maryland want to allow the ACC to save face, or do they want to burn their bridges out the door? Not sure.

Also a good point on GoR- they will have to be challenged eventually... That will be VERY interesting.

 

[Dann]

I don't think it matters much what the fee is. A big fee ($50 mn) is still 2 years revenue in the B1G, or 4 years excess payout B1G over ACC. B1G can loan UVa the money and take it out of distributions, matching their ACC payout for 4 years then increasing it. If UVa is comfortable with B1G they'll go whatever the fee. The wait is just to see how much.

I think the issue is that Maryland has a special legal case given that it voted against the exit fee increase and if B1G takes UVa too quickly, they might damage Maryland's case for a discount. If Maryland gets a discount, that is a precedent for other schools. So the Maryland case may affect multiple payouts.

uva will wait and you are correct
-if they leave before the fee is agreed, then the acc can say md leaving caused x amount of damage more becuase they caused uva to also leave the league
-if the fee gets blown up, uva may be able to argue that once its brought lower its now the bar to leave until otherwise voted upon. loophole style.

 

[mattp]

HFD, I've had a question about your B1G resuscitation signature for a little while. What school is represented by the desk/bureau?

 

[kingdobbs]

HFD, I've had a question about your B1G resuscitation signature for a little while. What school is represented by the desk/bureau?

That's a "Hoosier cabinet".

http://en.wikipedia.org/wiki/Hoosier_cabinet

 

[ZooCougar]

If I'm ESPN, I pay UMDs fee or at least part of it to keep my little pet 6th best conference together.

 

[Jericho]

The short answer is that there is no timetable. None of the prior negotiations went to trial, and if Maryland settles out of court it would likely be both confidential and a non-binding precedent. So that resolves nothing. If somehow this did go to trial, there's no good timetable and even then the decision may not be binding on other schools that DID vote for the increase (Like Virginia). So it sounds like a long wait for something that will likely reveal little answers.

 

[mattp]

That's a "Hoosier cabinet".

http://en.wikipedia.org/wiki/Hoosier_cabinet

thanks, i had a feeling it was representing the Hoosiers

 

[uconndogs]

Our president is expecting Swoffy to enforce it to the penny (just over 52M).

Really? Father Leahy told you this and then you felt compelled to come to a UCONN board and post this? Any idea how duck'n stupid that sounds?

 

[WestCoastHusky]

Our president is expecting Swoffy to enforce it to the penny (just over 52M).

Of course the presidents want it. BE wanted WVU to stay 2.5 years too. We all know how that worked out. There is no freaking way ACC will get the whole amount. I am guessing it will be settled around $30M or so.

 

[AdamBC]

Really? Father Leahy told you this and then you felt compelled to come to a UCONN board and post this? Any idea how duck'n stupid that sounds?

Yes, Leahy did tell me this. I was at a holiday party where Leahy gave a speech.

http://www.bcinterruption.com/2012/12/20/3787776/my-conversation-with-fr-leahy-last-night

I only posted because your fellow poster asked:

What if the 50 holds though?

And because I had the stand, I also questioned if grant-of-rights are also enforceable.

Try and keep up.

 

[UCFBfan]

HFD, I've had a question about your B1G resuscitation signature for a little while. What school is represented by the desk/bureau?

I had no freaking idea what that grouping of pictures were! Now I know...time to figure it out which team is which

 

[Husky Pete]

TDH, this thread should be pinned. This is the key to the next phase of CR.

 

[OkaForPrez]

http://www.washingtonpost.com/blogs...erreaching-in-exit-fee-dispute-with-maryland/

November article but good explanation of both sides arguments.

 

[Marty Jackson]

Our president is expecting Swoffy to enforce it to the penny (just over 52M).

Then again, if it's found to be unenforcable, I'll be waiting for the first rights-grant team to litigate granting TV rights as unenforcable too.

from what I understand, big difference between an exit fee and a grant of rights. Because one is found unenforceable (exit fee), doesn't mean the GOR will be as well.

 

[Marty Jackson]

interesting article... two thoughts:
1. why would Swofford suggest that the ACC's TV contract is not impacted. Would seem to undermine the case against Md
2. seems to simplify the conference contracts and takes a somewhat pro-MD position. WVU, Syr, and Pitt all paid roughly $20M with arguably less at stake.

My guess is MD will pay north of $30M but less than $50M.

Hypothetically, does a $40M price tag save the ACC?

 

[WestHartHusk]

interesting article... two thoughts:
1. why would Swofford suggest that the ACC's TV contract is not impacted. Would seem to undermine the case against Md
2. seems to simplify the conference contracts and takes a somewhat pro-MD position. WVU, Syr, and Pitt all paid roughly $20M with arguably less at stake.

My guess is MD will pay north of $30M but less than $50M.

Hypothetically, does a $40M price tag save the ACC?

It is really impossible to know until you see: 1) what kind of 'revamped' deal the ACC comes away with and; 2) what the other conference is offering. Based on the kind of money the B1G is throwing around vs. the ACC deal Maryland already gave us the answer: No.

 

[OkaForPrez]

CBS Sports: Exit Fee Could Stall Realignment

Nothing new and noteworthy but reinforcement for the theory that nothing happens until the exit fee is settled with an anonymous quote from an AD.

“I think (the Big Ten) will stay quiet until that happens,” said an athletic director from a power conference who spoke on condition of anonymity because of the sensitivity of the issue. “When that decision is rendered, that will create a whole nother series of questions. It will either create concern or strengthen the (ACC).”

 

[OkaForPrez]

Link to FSU Thread discussing washington post article

Interesting POV from a FSU poster which suggests some legal knowledge but should only be taken as random Internet chatter:

I do agree that it would be smart for the ACC to settle, because if this thing goes to court, they could lose. If the ACC loses this case, and the court states that the liquidated damages clause (exit fees) is punitive in nature, then it will strike the clause from the contract. There will be no exit fee going forward, and the ACC will have to scramble to vote on a fee that would not be struck down by the court going forward. In that time frame, other schools could bolt like roaches under a stove. If I am the ACCs lawyers, in private, I am telling my client that they stand lose a whole lot if the trial does not go their way. Now ACC lawyers have been very confident about the iron clad nature of the exit fee, according to the ACC. I am guessing that is posturing by the ACC and its leadership. I do not think any decent lawyer will tell a client anything in contract law is absolutely a sure thing, ESPECIALLY a liquidated damages clause. Any lawyer that says something is absolutely certain to a client in private, is probably a crappy lawyer. Lawyers are naturally very careful about guarantees. They do not want malpractice suits, and that is a sure fire way to get sued, making promises you cannot keep.

The reason the ACC passed the 52 million exit fee against FSU and MDs wishes are the following: 1) They figured the dollar amount was something that would freeze FSU in its tracks, if it was really looking elsewhere, and 2) there was an argument that could be made that 52 million would be a reasonable amount of damages that FSU could cause the ACC by leaving. Assuming the lawyers said this number was a good idea (the ACC offices may have pushed this number against their lawyers advice, clients can and will do that to an attorney), they may have been under that impression when applying these arguments for FSU. They might not have predicted MD was the one that would challenge the clause. Suddenly MD has a better argument than FSU in killing the clause, because it is less reasonable to think MD would cause 52 million in damage by bolting. To some extent, I think MDs departure and vote against the fee was a surprise to the ACC and its lawyers. If it was a surprise, and the ACC lawyers are not certain that MD will lose the argument, the ACC should settle. It is better to settle now, then to risk losing your exit fee all together. Just because MD gets a settlement does not mean the ACC has to give FSU the same deal. Settlements are not really precedent that can be used in a legal argument in a case, in the sense that "oh since MD got one, FSU should get one." If FSU refuses to pay in the future, and MD settled but the ACC does not agree to settle with FSU, then the arguments will once again center around the liquidated damages clause and if it is punitive or not. Whether MD settles or not would probably not come up in arguments.

I hope MD does not settle and wins in court, and this exit fee is blown up. A settlement does not help FSU as much as people would think. An outright win by MD in court is what FSU needs if it wants the exit fee destroyed.

-FSUUMB FSU Scout Forums

This guy has several other posts in the thread including comments on burden of proof on fraud and collusion. Interesting insight and worth the trip over to the forums to read the tit for tat, but he does lose some credibility with me late in the thread with his inability to understand the present value of future revenue streams.

 

[CL82]

I'd be surprised if MD ends up pay significantly more than 20M, and could end up paying less.

 

[OkaForPrez]

The Business of College Sports:
Grants of Television Rights, Not Increased Exit Fees, Are The Solution To Realignment Frenzy

Assuming that the ACC’s liquidated damages provision fulfills the first element of the test, it is questionable whether it would meet the second element. The requirement to pay three times the conference’s operating budget does not appear to be related in any way to the actual amount of damages the ACC would suffer if a member withdraws. It just seems like an easy way to ensure that the exit fee continues to grow without having to continually vote on it. This makes it look like a penalty.
And the actual number that results from this provision, $52 million, is not a reasonable estimate of the ACC’s actual damages. For example, Maryland’s departure will not result in the ACC’s tv deal being reduced by $52 million. A good argument can be made that the ACC actually suffered no damage when Maryland left. Maryland’s departure allowed the conference to add Louisville. And the general consensus is that the ACC is now stronger athletically as a result (at least in the two sports that matter for tv revenue purposes, football and men’s basketball).

Best reading I've come across so far.

 

[UConn9604]

Another thought: all of these exit fees assume that the teams are equally valuable and also irreplaceable units, an absurd assumption on its face. As to the latter, Maryland's argument will be, look, the ACC had its choice of one of the most valuable Tier III properties in all of college athletics (Louisville) or a ten-time national basketball champ that just made the Fiesta Bowl and the College World Series just two years ago (us). A $52 million fee to us is downright arbitrary and punitive.

As to the former, Florida State's assumed departure would be a whole other story, for they'll greatly bring down the value of the ACC's football deal if they leave.