OT: ACC sues Maryland

Submitted by MaizeAndBlueWahoo on November 27th, 2012 at 4:01 PM

The ACC isn't going quietly.  Looks as though they decided to be proactive and collect their $52 million.  Here is the lawsuit document:

http://apps.washingtonpost.com/g/documents/sports/acc-vs-university-of-maryland-college-park/154/

The document establishes the buyout at a little over $52.2 million, actually.  Likely filed first so as to be able to file in North Carolina instead of Maryland, maybe bring some of that Dukie refereeing to the table.  Strong case in that regard as the lawsuit points out the ACC operates under North Carolina law.

As someone who prefers the ACC stay together, I'm happy to see the conference being proactive here, and IME, the uglier this gets, the better.

Comments

Voltron Blue

November 27th, 2012 at 4:05 PM ^

...where the North Carolinas, Virginias (maybe you have insight), and Georgia Techs - basically the AAU institutions rumored to be candidates for the #15 and #16 slots in the B1G - come out on collecting the penalty.  If they staunchly defend, then it would certainly quell speculation that they have one foot out the door.  If they're all "yeah....don't worry about it, Maryland" then they are probably trying to set a precedent.

MaizeAndBlueWahoo

November 27th, 2012 at 4:09 PM ^

The vote to file was supposedly unanimous among the presidents.

I would consider some of the speculation quelled as of yesterday, as UVA's president issued a statement emphatically denying there'd been any B1G talks, and in fact told the BOV as much.  I'm personally more concerned about FSU, Clemson, and ND.  If the ACC is to break up, it won't be led by UVA and UNC, it'll be led by those three. 

robpollard

November 27th, 2012 at 4:38 PM ^

In one of the earlier rounds of confernece-realignment roulette, the government of the state of Virginia got involved to make sure VA Tech got in the same conference as Virginia.  Plus, with UVA recently going through a VERY messy, poltically-charged breakup (then makeup) with its president (a former provost from U of M, coincidentally), I'm sure UVA wants to keep upheaval to a minimum.

If the B1G goes to 16, the more likely targets are GA Tech and someone else not in the ACC. I can't see UNC - as good a 'fit' as they might be for the B1G - going away from Duke, NC State and Wake Forest unless there really is no other option, which might be the case if the ACC completely implodes. But we're a long ways from that - they have Pitt, Syracuse, Uconn coming in soon. It's the Big East that has caved in, not the ACC (regardless of Maryland and its poorly run athletic dept leaving it)

ShockFX

November 27th, 2012 at 4:47 PM ^

If I recall the 2003 business, the VA Legislature wasn't forcing them together so much saying that UVA had a responsibility to use its influence to prevent VPISU from being left behind in a dying conference the ACC was raiding. Since UNC and Duke were steadfast nos to everyone, UVA added a third no to Syracuse -preventing them from having enough votes to join, and then didn't object to VPISU, allowing them in.

I don't think the VA legislature would force them together if UVA to B1G and VPISU to SEC were on the table. UVA simply can't abandon VT to the wild, which given the current state of the sports world, would be unlikely as VT is more valuable to the SEC than UVA is.

robpollard

November 27th, 2012 at 5:38 PM ^

I agree that if, somehow, UVA got an offer from the B1G and at essentially the same time VA Tech got an offer from the SEC, that would be fine with the VA legislature. I mean, the SEC is the most powerful football conference (and thus the most powerful conference, period).  But the SEC is already at 14 and has bigger fish to fry, such as trying to get FSU, so the timing of that UVA/VA Tech dispersal would be really tough.

More to the point, though, is that now that B1G has the Terps, the B1G doesn't need either of the Virginia schools as much - the DC market is now claimed.  Since this expansion was just about money, as opposed to academics or sports-skills, that means future expansions would also be about money & claiming new markets, such as Atlanta or Miami.

In short, I would be shocked if we added UVA.. Then again, I was shocked we added Rutgers, so what do I know.

ShockFX

November 27th, 2012 at 5:49 PM ^

The SEC might win the most games, but the B1G has the biggest TV contracts, I think for all sports, and also the best conference network. It's also the biggest academic research consortium via the CIC. The B1G is the most powerful conference, not the SEC. Once oversigning stops being allowed (cough Saban, Miles cough) and the B1G returns to being able to compete with Hoke, Meyer, and O'Brien (in 8 years), then it'll even out on the field. I left off Nebraska because Pellini sucks and they don't recruit at a high enough level.

robpollard

November 27th, 2012 at 6:17 PM ^

The whole reason for Delaney (in my mind, misguided in terms of the schools) overreach is that the B1G isn't where the population, and thus the money, is growing fastest. 

Also, TV contracts being the biggest is a matter of timing. Once someone's comes up, there's is the biggest for the next year or three, than when the rights come up for another conference, that competitor jumps into the lead.

Look at this story for an example:

http://www.dailypress.com/sports/teel-blog/dp-teel-time-acc-sec-finance…

To summarize it: for much of last 5 years, the ACC actually had bigger TV money than the SEC. In 2009, the SEC went ahead.  Then, just recently, the ACC moved back up, but now the SEC is renogtiating due to Texas A&M being added, so they'll jump back in front, likely even in ahead of the B1G. But of course, the B1G will likely jump back in front in 2016 (or whenever) for the next contract. And so on.

I love academics, but this expansion has nothing to do with that - as long as the schools are pretty good, we're bringing them on board.

So, with the money essentially being sky high for everyone, it comes down to results on the field. And as much as I hate the SEC, they've won a bunch of titles in a row, and they're going to have another team in the title game again.  I sure hope it gets turned around on the field for the B1G soon, but I'll believe it when I see it.

funkywolve

November 27th, 2012 at 7:25 PM ^

The SEC, like the Big Ten, is looking to break into new markets.  FSU adds nothing in that regard.  FSU would love to make the move to the SEC but has not made the cut the previous times the SEC has expanded.  The SEC would more than likely look to the North Carolina and Virginia schools if they were to expand.

MaizeAndBlueWahoo

November 27th, 2012 at 4:41 PM ^

No, but considering what went down this summer, she probably would share it with the BOV.  Besides, at some point you have to take them at face value, otherwise you're sharing argument tactics with conspiracy theorists, i.e., I believe what I want to and everything official is a coverup.

ShockFX

November 27th, 2012 at 4:11 PM ^

Maryland voted against it, then swiftly left the conference. No one wants this actually litigated, it's Pandora's box. If you're in a group voluntarily, how can the group impose a $50M breakup fee on you? My bet is that Maryland argues they never consented, this never goes to discovery, and Maryland settles for about $17.5M.

MaizeAndBlueWahoo

November 27th, 2012 at 4:17 PM ^

Because your membership in a conference like this implies a pre-emptive agreement to abide by that group's decisions.  If Maryland tries to make the argument you made, the ACC will probably point to any number of decisions that the ACC made where Maryland voted yes and benefited despite a handful of no votes.

ShockFX

November 27th, 2012 at 4:23 PM ^

I wouldn't disagree with that, I'm just saying that I believe Maryland has the upper hand here since absolutely no one wants this to go to trial, and the conferences can't really risk a finding for Maryland.

If I had to guess, I'd see the settlement being at what the prior amount was, assuming Maryland voted yes on that, as the logical argument would be that it is what Maryland agreed to, and then the rest of the conference voted to raise it over Maryland's dissent, who promptly left.

While I realize I'm playing amateur lawyer and this is baseless, I can't imagine a jury finding for the ACC for the full amount. Analogously, if your condo association feared you were going to move and put in a $20k penalty, which you voted down but was put into the bylaws, then you moved, would it hold up in court? I doubt a jury would uphold it.

I'm a big ACC guy as well, though I think they signed their death warrant when they signed the deal with ND. A big thing in the past kerfluffles was the ACC telling Texas that it's an everything is shared conference where all members are the same, like the B1G. Then they give ND preferential, partial treatment. Oops. Swafford. Dude. STUPID.

MaizeAndBlueWahoo

November 27th, 2012 at 4:37 PM ^

Oh I dunno....I think the ACC would love for this to go to trial.  I think it's in the ACC's best interest to band together and fight for every penny of the buyout.

I also disagree with the ND thing; a Texas/ACC marriage was never anything but internet speculation.  ND allows the conference to weather a potential southern-teams departure.  ND isn't really getting preferential treatment because they had to meet the ACC more than halfway, and the ACC is going to get real, actual benefits from ND's presence, as opposed to the Big East where ND gave the BE nothing and got free rides on their bowl affiliations.

ShockFX

November 27th, 2012 at 5:00 PM ^

It's not in the ACC's best interest in my mind. You're talking about <$2M a school in going for the full buyout against the chance that a court voids the whole thing. 

Did ESPN up the value of the ACC contract for the existing members after ND was announced as a partial member? I don't believe they did. So now they get ND's non-rev sports for basically nothing back. The ACC doesn't need exposure via ND, it needed FSU, VT, and Miami to win some damn non-con and bowl games after 2001. It also needed UNC to wake the hell up and be useful, and maybe Clemson to stop climping.

ND is not a team player. They voted against the deal that would have increased BE tv contract, and then it fell through, BE fell apart, ND bolted. ND prizes it's football independence over everything. The ACC and B1G don't need ND. They should tell them to screw off and see how well ND can schedule against the SEC and Big12 going forward.

MaizeAndBlueWahoo

November 27th, 2012 at 5:23 PM ^

It's closer to $4 million a school, but that's the wrong way to look at it.  Settling is the same as nothing, because a settlement is likely to encourage defections.  If you believe the conventional wisdom that the conference's future hinges on whether or not Maryland pays the full fee, then there's no difference at all between settling and losing.  Settling is losing.

As for ND, no, ESPN did not boost the contract immediately because ND is not joining immediately.  They will when ND starts their ACC schedule.  Of course you're right that the ACC needed its big-time acquisitions to not suck, but that's obviously water under the bridge now.  Now what they need is enough TV money to compete at the big table.

ShockFX

November 27th, 2012 at 5:44 PM ^

$2M being the difference between full and partial buyout, but I feel ya on the rest. Maryland isn't going to pay the full fee though, that never happens. The lawsuit needed to happen, but only because it'll set the benchmark for what, if any, the fee for leaving really is.

As for TV money, I think the ACC, already behind the B10, and behind the SEC by $10M (I think?) and locked until 2027, is only going to be falling farther and farther away. The SEC Network, which is modeled after the BTN (I think, again) will only up the SEC money, the B1G is looking at a record breaking contract with ESPN in 2016, and the BTN may print money if it gets on the Philly, DC, and NYC DMAs with Rutgers and Maryland.

The ACC just might be in a world of hurt, without its own network, with the already big gap (to grow) between the SEC and B1G on the east. It's also not in the Sugar/Champions or Rose Bowl, which relegates them to 2nd tier status as well. It's stupid, but as long as football is being relied on to drive the bus for all non-revenue sports, then schools are going to look to leave if the B1G or SEC call and they can afford the buyout.

The whole thing is stupid, but since they aren't going to be able to effectively be able to bar schools from leaving, what can you do?

bluebyyou

November 28th, 2012 at 8:20 AM ^

Question for someone who knows more law than I about the court which will hear the case - the suit was filed in a North Carolina court.  I appreciate that the ACC is incorporated in NC, but could Maryland get the case moved to a Federal district court based upon diversity (obviously the amount in contention is adequate for the Federal courts).?

The only thing I can think of why a state court would be binding would be some mandatory provision in the ACC's member agreement.

cseeman

November 27th, 2012 at 4:15 PM ^

Not that I am a legal scholar - but I do not believe you can sue a state entity (such as a giant state school) in the courts of another state.  So you essentially cannot sue Maryland in NC.  That is certainly the case with Michigan.  When we sign a contract for library resources at Michigan, the only laws that can apply are those in the great state of Michigan.  I suspect the case will be moved - but that they will be sued in another court. 

MaizeAndBlueWahoo

November 27th, 2012 at 4:19 PM ^

You are probably referring to yesterday's meeting, called expressly for a different purpose, which everyone assumed was for discussing the B1G, which they denied, and at which the president told the BOV she had not had and did not plan to have talks with the B1G.

But none of that stopped everyone from believing what they wanted to.

ndscott50

November 27th, 2012 at 4:22 PM ^

How this plays out will have a big impact on who fills out the Big Ten.  I would agree that Florida State and Clemson would be first to bolt if a settlement with Maryland comes in low.  At that point you probably have ND looking towards the big 12 and then North Carolina and Virginia become targets of both the SEC and Big Ten. Gorrgia Tech would be ours for the taking as the SEC is not interested in adding teams in exisiting markets.  

profitgoblue

November 27th, 2012 at 4:23 PM ^

For those interested, NC is a unique state in that jury trial waivers in contracts are unenforceable.  I assume all the ACC documents contain such waivers and it the lawsuit ever got near trial (most definitely will not) the ACC would be in an interesting situation.  Not sure which side would benefit from a jury trial more . . .

 

CRex

November 27th, 2012 at 4:25 PM ^

As much as I'd like to see the ACC lawsuit stop this terrible expansion from occuring, there is no way the B1G is going to lose to face by letting the ACC win.  It seems more likely this ends with the B1G fronting some amount of money to make this go away, so in the end it just means we pay more more mediocrity.  

LSAClassOf2000

November 27th, 2012 at 4:55 PM ^

I remember that Forbes had published a piece about Kevin Plank selling 1.3 million shares of Under Armour for what was termed as "asset diversification, tax, estate planning and charitable purposes", or something in the neighborhood of $56 million, but the Baltimore Business Journal reports that he will not contribute financially to his alma mater's exit fee, although it should be noted that Plank has only said things through other people about this. Whether he ultimately contributes in any way is probably yet to be seen, I imagine. If he doesn't give anything, I have to wonder where a deficit-ridden athletic department gets $52.3 million.

 

Tauro

November 27th, 2012 at 5:00 PM ^

This is what I believe as well.  The Maryland president was adamant that no school funds would be used to pay any buyout amount.  I doubt the B1G is fronting much cash in this move.  If they are, it will be paid out Maryland's future earnings from the conference.  I think the Under Armour guy will see it as an investment to gain access to other schools - he may be able to swing future contracts for Under Armour gear with other B1G schools.

ak47

November 27th, 2012 at 4:24 PM ^

Everyone knew this was coming so its not a surprise, if the acc loses this case fsu is most likely gone to the big 12 and the acc falls apart so they have no choice but to sue.  At this point i'm hoping the acc falls apart and duke winds up boned, if somehow unc could go down too that would be ideal the all carolina conference is getting dropped by a bunch of schools that never had an equal say and know it.  Also if l'ville joins there will be more big east teams than original acc teams, the acc is already dead, they just haven't admitted yet.

EQ RC Blue

November 27th, 2012 at 4:56 PM ^

At least, i doubt MD will have to pay the full exit fee of nearly $53 million.  It looks like a penalty clause, and those generally are not enforced.