Photo Credit: www.diamondbackonline.com
By: Laura Napolitano
October 27, 2014
Breakups are messy and can be wrought with resentment and bitterness. But when a breakup comes at a price of over $50 million, the already tense situation becomes even more complicated.
The University of Maryland experienced its own contentious divorce from the Atlantic Coast Conference (ACC) when the University made the decision to join the ranks of Ohio State and Penn State in the Big Ten Conference.
In the wake of Maryland’s announcement that it would withdraw from the ACC, the Conference filed a complaint seeking $52.3 million from the University as an exit fee. This complaint marked the beginning of a nearly two-year long legal battle, which was recently resolved through mediation.
But how did we get to this point?
The year is 1953. The ACC is founded in Greensboro, North Carolina. The University of Maryland takes its place in the Conference as an original member, along with six other institutions. The Conference is formed out of geographic necessity, and college sports are still unadulterated by considerations of multimillion dollar television agreements.
Now, fast-forward fifty-eight years to 2011 when an unprecedented amount of conference realignment has begun to take place. The University of Nebraska is set to play its first season as a member of the Big Ten after its departure from the Big 12 Conference, and following Nebraska’s lead, both Texas A&M University and the University of Missouri leave the Big 12 and accept offers to join the Southeastern Conference (SEC). West Virginia University withdraws from the Big East, and along with Texas Christian University, accepts an invitation to join the Big 12 in October.
But what does any of this have to do with the ACC’s 2012 lawsuit against the University of Maryland?
On September 13, 2011, prior to this massive realignment, the Council of Presidents for the ACC unanimously voted to adopt a withdrawal fee proposal Dr. Wallace Loh, President of the University of Maryland, had a hand in crafting. Dr. Loh’s proposal set the withdrawal fee at one and one-quarter times the total operating budget for the Conference.
The following September, after the conference hopping of 2011, the ACC Council of Presidents once again voted on the issue of conference exit fees. This time, the Conference adopted an amendment to increase the withdrawal payment to three times the annual operating budget of the ACC. The University of Maryland and Florida State University were the only two member-institutions that voted against this amendment.
After Maryland announced its withdrawal from the ACC in November 2012, followed by Dr. Loh stating publicly that the university had no intention of paying the exit fee provided in the ACC Constitution, the Conference filed suit to recover the full $52.3 million amount. Although the University’s initial antitrust claims were dismissed, in January 2014 Maryland filed a counterclaim against its former Conference seeking $156.8 million for the ACC’s alleged violations of its own Constitution.
On August 8, 2014, after a couple years of litigation, the divorce was finalized: the parties agreed to a settlement worth $31.4 million. As part of the settlement, the ACC retained Maryland’s shares of conference revenue that it had been withholding, and the University was free from additional payments.
All’s well that ends well, right? Not exactly.
The litigation between the ACC and the University of Maryland could be a precursor of a growing trend in college sports.
As big time college athletics continue to provide universities with lucrative profit sharing schemes, schools will continue to align themselves with the most profitable conferences. Consequently, athletic associations and conferences will seek higher withdrawal fees to prevent member institutions from jumping ship. This could result in increased litigation between universities and conferences concerning contract construction and antitrust laws.
Looking to the future, could the vote count on the ACC’s 2012 exit fee amendment indicate Florida State’s future intentions of leaving the ACC to join a more competitive football conference? After all, FSU was the only other institution to vote against the imposition of the higher withdrawal amount. Time will tell if these divorce papers are ever filed.
Breakups are quite messy indeed.
 Atlantic Coast Conference v. University of Maryland, 751 S.E.2d 612, 613 (2013).
 Steve Berkowitz, ACC, Maryland reach settlement one exit fee: $31.1M, not $52.2M, USA Today Sports, Aug. 8, 2014, http://www.usatoday.com/story/sports/college/2014/08/08/acc-maryland-settle-lawsuits-buyout-big-ten-conference/13781545/.
 Braden Gall, The Complete History of ACC Realignment, Athlon Sports (July 1, 2014, 7:15 AM), http://athlonsports.com/college-football/the-entire-complete-history-acc-realignment.
 Nebraska approved by Big Ten, Associated Press, June 12, 2010, http://sports.espn.go.com/ncaa/news/story?id=5276551.
 Texas A&M officially joins SEC, ESPN College Football (Sept. 26, 2011 , 8:23 PM), http://espn.go.com/college-football/story/_/id/7019493/texas-aggies-officially-get-accepted-sec.
 SEC accepts Missouri for 2012-13, ESPN College Sports (Nov. 7, 2011, 9:01 AM), http://espn.go.com/college-sports/story/_/id/7199062/missouri-tigers-move-sec-official-big-12-hurdles-remain.
 Andrea Adelson, WVU settles suit, to join Big 12 in July, ESPN College Sports (Feb. 15, 2012, 5:54 PM), http://espn.go.com/college-sports/story/_/id/7574104/west-virginia-mountaineers-join-big-12-july-big-east-lawsuit-settlement.
 TCU joins Big 12 for 2012-13, ESPN Dallas Forth Worth (Oct. 11, 2011, 11:12 AM), http://espn.go.com/dallas/ncf/story/_/id/7085749/big-12-vote-unanimous-allow-tcu-horned-frogs-2012-13.
 Atlantic Coast Conference v. University of Maryland, 751 S.E.2d 612, 614 (2013) (stating Dr. Loh “proposed the factor used in the calculation” for mandatory withdrawal payment).
 David M. Hale, ACC, Maryland battle gets mediator, ESPN College Sports (Apr. 28, 2014, 2:53 PM), http://espn.go.com/college-sports/story/_/id/10852255/court-battle-acc-maryland-terrapins-gets-mediator.
 Atlantic Coast Conference, 751 S.E.2d at 614. The $52.3 million was calculated by “[m]ultiply[ing] the annual operating budget of the ACC for the 2012-2013 year,” which was $17,422,114, “by the agreed upon factor of one and one-quarter . . . .” Id. at 614 n.3.
 See Berkowitz, supra note 2. “Maryland claimed that the ACC member schools [created the exit fee] without the conference and commissioner John Swofford adhering to conference rules regarding pre-vote review and notice of the proposed change. [In addition,] [e]ven if the vote had been proper, Maryland alleged that under ACC rules it should not have become effective until July 1, 2013—after Maryland announced . . . its intention to leave for the Big Ten and after Maryland had provided its official notice of withdrawal in June 2013.” Id.