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Maryland gives up $31 million to end exit fee spat with ACC

Trials and ArbitrationCollege SportsMaryland TerrapinsAtlantic Coast ConferenceLaws and LegislationBig TenThe Pennsylvania State University

The University of Maryland and its partner of 61 years, the Atlantic Coast Conference, finally agreed on the terms of their messy divorce: a mediated settlement, announced Friday, under which the school will pay $31 million of a $52 million exit fee the conference sought.

The settlement figure is the amount the ACC already has collected by withholding shared conference revenues — without Maryland's consent — to make sure it got at least a portion of what it demanded.

So after nearly 21 months of litigation in Maryland and North Carolina courts, each side can walk away. Maryland, a founding member of the ACC in 1953, formally joined the lucrative Big Ten Conference on July 1.

The $31,361,788 settlement and the $52,266,342 exit fee are both steep, relative to other separations in recent years. ACC members approved the exit fee — three times the conference's annual operating budget — in 2012 as schools around the country were bolting for better deals in other athletic conferences.

In November 2012, Maryland got its own sweetheart offer from the Big Ten and agreed to run off to the richer conference.

The legal tangle began within days, as the ACC sued the school in a court in Guilford County, N.C., seeking to enforce the full exit fee. Maryland followed with its own suit in Prince George's County alleging that the exit fee is anti-competitive and should not be enforced.

Maryland argued that the exit fee was punitive and said the ACC's withholdings blew a hole in its athletic budget. It borrowed money from an auxiliary fund to make up at least some of the difference.

Experts said Friday that the settlement was expected and preferable — for both parties — to continued, expensive legal wrangling and a possible trial.

"You could certainly say Maryland did not lose this battle," said Kent Meyers, an Oklahoma-based lawyer with sports-related antitrust experience. "They get to go where they want to go and it's going to cost them $30 million, but it could have cost them $50 million."

Maryland faced initial opposition to its conference shift from alumni and supporters who remained loyal to the ACC. The school wants its fans looking forward. The football schedule now features matchups with nationally prominent teams such as Michigan, Ohio State and Penn State.

"I'm sure the timing of it is not coincidental," said Robert Shaffer, a Baltimore attorney with the firm Zuckerman Spaeder, who is not connected with the case. "There's a lot of good things happening at Maryland, and this lawsuit was not one of them. This is an opportunity for President [Wallace] Loh to put this chapter behind him and move on to the next."

Shaffer said Maryland is a winner "in some respects, and not just because they saved themselves $20 million from the exit fee, but because they have an opportunity to catapult themselves to a higher field in college athletics and will end up richer in the end."

Maryland will make nearly $100 million more during its first six years in the Big Ten than if it had remained in the ACC, according to internal emails obtained last year under a public records request. Financial stability was a major impetus for the shift.

But the move came at the cost of months of litigation and bruised feelings.

Internal emails, disclosed in public records requests, described how top ACC officials were left in the dark and unable to get their calls returned by the school as Maryland negotiated with the Big Ten in November 2012.

In court, Maryland later accused the ACC of withholding information during the litigation and obtained subpoenas earlier this year to seek data about the exit fee and other topics from at least 10 ACC schools plus various broadcast media partners.

A mediator was named in April to try to bring the sides together.

On Friday, the conflict's tone changed. Loh wished the ACC well, invoking the school's "long and storied 61-year association" with the conference.

ACC Commissioner John Swofford said in a prepared statement that the deal "allows everyone to fully focus their energy and efforts on prioritizing the student-athletes, especially in this significant time of change within the NCAA restructuring."

Swofford even released a separate statement congratulating former Maryland basketball coach Gary Williams on being inducted into the Naismith Hall of Fame.

The settlement was approved by the Board of Regents at a closed meeting on Thursday.

Penn State law professor Stephen F. Ross said both sides won by settling the matter now.

"Any time any case goes to trial, at least one of the parties is an idiot — maybe both," Ross said.

Baltimore Sun reporter Carrie Wells contributed to this article.

jebarker@baltsun.com

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Copyright © 2014, The Baltimore Sun
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Trials and ArbitrationCollege SportsMaryland TerrapinsAtlantic Coast ConferenceLaws and LegislationBig TenThe Pennsylvania State University
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