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Volume 21 No. 1
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ACC sues Maryland over unpaid exit fee

When Maryland chose to leave the ACC for presumably bigger dollars in the Big Ten, its president, Wallace Loh, was adamant that the exit fee of $50 million wouldn’t be enforceable. It was excessive in its punishment, and Maryland was one of two ACC schools that didn’t vote for it last year.

The ACC, hearing this, decided to sue the Terrapins in a Greensboro, N.C., court (where the ACC is headquartered) to start the process of collecting the exit fee. The university countered with a lawsuit of its own in a Maryland court to have the fee dismissed. One of the first big issues to be settled is which court — the one in Maryland or North Carolina — will decide the case.

The ACC’s claims in the lawsuit came out at $52.266 million, or three times the total operating budget of the conference.
There is plenty of precedent for conferences collecting exit fees from departing schools. It’s really the only way leagues can protect themselves in cases where a member school leaves and potentially damages its former conference. But a recent development — the decision by ACC schools to grant their rights to the conference through 2017 — could change things.

The Washington Post quoted a legal source as saying that the ACC has not been harmed by Maryland’s departure, and it could be argued that, with the grant of rights

Maryland President Wallace Loh (left) fields a question at a news conference last year as the school announces its move to the Big Ten.
Photo by: Getty Images
and the addition of Louisville, the ACC is actually in a better position now.
Even so, the ACC has not backed off its attempts to collect from the Terrapins. The Big East offers a precedent.

“Unfortunately, we have a lot of experience with exit fees,” said Mike Aresco, commissioner of the Big East, soon to be renamed the American Athletic Conference. Aresco’s league has been dismantled by the defections of the Catholic 7 schools and Syracuse, Pittsburgh, Notre Dame and West Virginia.

“We worked out settlements with those schools, and there was an amount paid on top of the exit fee for schools that left a year early,” Aresco said. “We’ve found the exit fee to be enforceable and we’ve had no issues with it.”

In perhaps the most high-profile case, West Virginia paid $20 million, 1 1/2 times the exit fee, for leaving early to go to the Big 12.

Maryland will argue that it can’t be sued because, as an extension of the state, the university is a sovereign state.