University President Wallace Loh has said he will attempt to negotiate an exit fee lower than the ACC’s fee of $50 million. The conference raised its exit fee from $20 million in September, and Loh expressed “legal and philosophical” objections to the hike.
The ACC has filed a lawsuit against the university and the Board of Regents in North Carolina state court to ensure it pays the entirety of the conference’s $50 million exit fee, just more than a week after the university announced its exit from the conference.
University President Wallace Loh has said he will likely attempt to negotiate a lower exit fee than the one the conference instituted in September after it voted to bring in Notre Dame in all sports except football. Loh and Florida State President Eric Barron were the only two ACC presidents to vote against the hike, with Loh citing “legal and philosophical” reasons for opposing it.
However, the ACC expects the university to fulfill its exit fee obligation — due within 30 days of the university’s July 2014 exit — ACC Commissioner John Swofford said in a statement.
“On Friday, the ACC Council of Presidents made the unanimous decision to file legal action to ensure the enforcement of this obligation,” he said. “We continue to extend our best wishes to the University of Maryland; however, there is the expectation that Maryland will fulfill its exit fee obligation.”
The ACC raised its exit fee after conducting “further assessment of the potential harm for Conference members in the event of withdrawal and from additional changes related to the structure of collegiate athletics,” according to the lawsuit. The lawsuit points to Loh directly, noting he “freely participated in discussions and votes” regarding the adjusted exit fee.
However, requiring an exit fee that is more than three times the ACC’s operating budget may go beyond compensating conference members, said sports lawyer Bradley Shear, who also teaches a sports management class at George Washington University.
“This type of fee could be seen as punitive, meaning it’s done to punish Maryland or any other member that would want to leave,” he said.
While the university’s next move is not yet clear — Loh and University System of Maryland officials declined to comment yesterday — it’s likely the school and conference will “meet in the middle” on an exit fee, Shear said, to avoid a drawn-out legal process, which would be costly for both parties.
“Uncertainty could literally destroy the conference. It’s in the best interest of both parties to come to some type of mutual agreement, that ‘X’ dollars will satisfy all obligations,” Shear said. “Having this drag out is not in the best interest of either party.”
The university will likely seek to pay the ACC’s old exit fee of $20 million, Shear said, while the conference would push for a figure as close to $50 million as possible.
“I think, to expedite the matter, they’ll come to some sort of agreement,” Shear said. “Problem is, it can’t be just $20 million, because then other schools in the ACC will say, ‘Wait, if it’s 20, why do we have this vote?’ And there will be other schools who may say they’re willing to write a check for $20 million. Obviously, the ACC wants to protect its turf.”
No school has completely reneged on financial obligations to its conference, but few, if any, have paid their conference’s full exit fees. Nearly all ensuing lawsuits have been resolved through negotiations.
In July, future ACC members Pittsburgh and Syracuse agreed to pay the Big East $7.5 million each to leave the conference early; the conference stipulates schools must provide 27 months’ notice or face a higher fee. Nebraska and Colorado negotiated their fees to the Big 12 to about half of what the conference asked when leaving for the Big Ten and Pac 12, respectively; in February, Missouri and Texas A&M settled on fees of about $12 million, down from nearly $30 million to join the SEC from the Big 12. When West Virginia finalized its departure from the Big East to the Big 12 in February, the school paid $20 million, but the considerable fine bought them an immediate exit.
The spate of realignments — including moves by Tulane in all sports and East Carolina football yesterday to the Big East — has prompted rumors that several other schools’ conference ties will be the next cut. In response to a rush of emails, University of North Carolina athletic director Bubba Cunningham reassured students he was “looking forward to many more years of success in the ACC.”
“We believe the ACC is the finest conference in the nation,” Cunningham wrote in an email to the University of North Carolina community, according to ESPN.com. “The ACC has been our home for nearly 60 years and we want it to be our home for another 60 years at least. Our speculating on what other league may be better for the Tar Heels would not be productive. We are part of a great league with a strong future and we know that the ACC leadership is serious in its efforts to strengthen the conference and position it for long-term success.”
