Exit Penalty

[huKSer]

At common law, a liquidated damages clause will not be enforced if its purpose is to punish the wrongdoer/party in breach rather than to compensate the injured party (in which case it is referred to as a penal or penalty clause). One reason for this is that the enforcement of the term would, in effect, require an equitable order of specific performance. However, courts sitting in equity will seek to achieve a fair result and will not enforce a term that will lead to the unjust enrichment of the enforcing party.

Link

If I'm reading this correctly then bb's new TV deal,if real, would screw texass and the little 9 out of any payment from NU or CU.

Whew - you were quoting a source. I thought I was going to be forced to bow down to your superior intellect. Nice to know you are just one of the guys w/ goggle

 

[bbeerma2]

The TV contract won't reduce. ESPN stated it. Split the same money with less schools? Seems like they inherently make more. I feel they have done nothing to reduce the per capita income.

 

[HuskerNMO]

what if we play in a bcs game? do we keep that money?

yes the big 12 by laws only cover money that would have been paid by he confrence, since that money would go directly from the bowl to the school it would not be paid by the confrence and ours to keep.

That's not true, from the bylaws.

2.4 Bowl Game Revenue. All revenue from Member Institutions participating in football bowl games shall be divided equally among all Member Institutions, after predetermined expense allowances have been deducted. The formula set forth as appendix V shall be used to calculate the predetermined expense allowances and is incorporated herein by reference as through fully set forth.

​

EXPENSE FORMULA:

​

The following institutional expense allowances will be provided for bowl participants:

​

Tier I: Bowl Championship Series

​

National Championship Game

​

Expenses................................................... $1,630,000

​

Travel..............................................$300/one-way mi

​

All other Bowl Championship Series Games

​

Expenses................................................... $1,610,000

​

Travel..............................................$300/one-way mi

​

Tier II: Cotton, Holiday, Gator, Alamo, Sun, Insight

​

Expenses................................................... $1,000,000

​

Travel..............................................$300/one-way mi

​

Tier III: Independence, Texas (or substitute bowl)

​

Expenses...................................................... $680,000

​

Travel..............................................$300/one-way mi

​

Participating Member Institutions retain any “incidental” revenue provided by a bowl, including the value of complimentary sleeping rooms (e.g., transportation, meals, etc.) on top of the expense allowance for such bowl. Member Institutions participating in a bowl game are not responsible for the Conference’s guaranteed purchase of tickets to the bowl; however, they will be permitted to retain one-half (1/2) of the revenue from the sale of tickets in excess of one-half (1/2) of the Conference guarantee.

​

 

[HuskerMack]

what if we play in a bcs game? do we keep that money?

yes the big 12 by laws only cover money that would have been paid by he confrence, since that money would go directly from the bowl to the school it would not be paid by the confrence and ours to keep.

found this article from the owh sorry if its already been posted

The most recent figures available (2008-09) showed NU getting $9.73 million from the Big 12. Over a two-year span using that figure, the Huskers would forfeit about $15.5 million under Big 12 bylaws

Link

I pretty sure it is 80% but not over a 2 year plan since we will be out in 2011 if you give a 2 year notice then its 50% for 2 years so I dont's see where they are getting their figures from. We would lose about 7.7 million this year and that would be it. Colorado has to pay 50% next year and the year after that. They made less I think it was 8.1 million so this year they would lose 4 million this year and then 4 next year. So if we gave them a 2 year notice it only saves a little over a million dollars if we have to pay it. Which the one mill is way worth it to not have to put up with them for an other year.

 

[kansas husker]

what if we play in a bcs game? do we keep that money?

yes the big 12 by laws only cover money that would have been paid by he confrence, since that money would go directly from the bowl to the school it would not be paid by the confrence and ours to keep.

That's not true, from the bylaws.

2.4 Bowl Game Revenue. All revenue from Member Institutions participating in football bowl games shall be divided equally among all Member Institutions, after predetermined expense allowances have been deducted. The formula set forth as appendix V shall be used to calculate the predetermined expense allowances and is incorporated herein by reference as through fully set forth.

​

EXPENSE FORMULA:

​

The following institutional expense allowances will be provided for bowl participants:

​

Tier I: Bowl Championship Series

​

National Championship Game

​

Expenses................................................... $1,630,000

​

Travel..............................................$300/one-way mi

​

All other Bowl Championship Series Games

​

Expenses................................................... $1,610,000

​

Travel..............................................$300/one-way mi

​

Tier II: Cotton, Holiday, Gator, Alamo, Sun, Insight

​

Expenses................................................... $1,000,000

​

Travel..............................................$300/one-way mi

​

Tier III: Independence, Texas (or substitute bowl)

​

Expenses...................................................... $680,000

​

Travel..............................................$300/one-way mi

​

Participating Member Institutions retain any “incidental” revenue provided by a bowl, including the value of complimentary sleeping rooms (e.g., transportation, meals, etc.) on top of the expense allowance for such bowl. Member Institutions participating in a bowl game are not responsible for the Conference’s guaranteed purchase of tickets to the bowl; however, they will be permitted to retain one-half (1/2) of the revenue from the sale of tickets in excess of one-half (1/2) of the Conference guarantee.

​

I stand corrected, however the by laws do state that the member institution would keep the money.

 

[VA Husker Fan]

I thought it was 50% over 2 years, or 80% over one year, but the bylaws seem to say that if you give less than 2 years notice, you pay a higher rate than 50% over 2 years, depending on how much notice. Since we gave just over 12 months, it'd be 80%, but there are also words about "financial hardship" which certainly are arguable, but those words seem to say that the hardship is a given--doesn't have to be proven. Here are the B12 bylaws, section 3.2 and 3.3 talk about exiting the conference.

http://www.big12sports.com/fls/10410/pdfs/handbook/Bylaws.pdf

 

[74Hunter]

My only question is asking if Colorado is being fined for jumping from the Big XII to the Pack 10? It sounds to me like another unfair stipulation on Nebraska from the Big XII. I hope Nebraska fights this and the Judge laughs in the Big XII's face.

its for all schools that leave, including Colorado. In no way is nebraska being singled out.

In fact it is looking more and more like Pearlman doest have a leg to stand on. His orginal arguement was that the big12 would disolve. it didnt. now he is agrueing about a tv deal that doesnt exist. Even he wants to argue that the BIG12 would be making more with a new deal once the current one expires he is still off base. Its simple fact that the current big12 tv deal is outdated and under vauled. its like selling your house before a market boom. The big12 signed a huge deal years ago before the market vaule of such deals exploded. That means the current deal sucks and if worth much less now than it would have been if the same deal would have been signed on 2 years ago. Aslo the next deal done would have been much larger regardless of anything that has taken place since december because of this fact. In truth one could argue and would be right to say that if NE and CU had stayed the numbers being estimated for the new deal would be even greater. So really you could say NE & CU are costing the other teams money because they have already estimated a market loss of around 9% with those two leaving. That is a nearly a 10% loss on an estimated $140-150 million dollar deal. Roughly in the ball park of $12-15 million a year that the conference can no longer make due to them leaving.

NU and CU are going to end up paying. I see no way around it. It was a known fact before they even considered leaving. Every school knew about it and so did many fans. Heck, i figured MU would be forking over the money also. IMHO Harvey is starting to look a bit weasel-ish trying to back out of it. He did what he thought was best for the school. That decision came with goods and bads. This is part of that.

But then again, this is just my commonsense opinion.

that is not the point though. they do not have to compensate the conference for future possible increases in revenue, they just have to compensate the conference to make it whole. if the conference will already be whole, plus some, then the liquidated damages will be irrelevant. it would be different if the payout was substantially lessened because of NU and CU departure, and each school received less money than they were expecting from the contracts with NU and CU, but they will be making even more. the goal is to make whole, and no courts do not allow financial windfalls, which is exactly what this would be because the conference would have already been made whole, plus making more money, and any compensation for early departure would just be extra money to penalize NU and CU and give the conference a windfall.

you cannot stipulate penalties, the goal is to make the injured party whole, and the court never allows a windfall (unjust enrichment of the enforcing party, or any party for that matter). those are the principles on which NU's argument will hinge.

I think you are correct. Besides, if the TV money is the same, but split between 10 schools instead of 12, I would think that not only is there no damages, but they actually get more.

 

[EbylHusker]

Nebraska will end up having to pay something. It won't make any difference to us in the end.

 

[kansas husker]

I thought it was 50% over 2 years, or 80% over one year, but the bylaws seem to say that if you give less than 2 years notice, you pay a higher rate than 50% over 2 years, depending on how much notice. Since we gave just over 12 months, it'd be 80%, but there are also words about "financial hardship" which certainly are arguable, but those words seem to say that the hardship is a given--doesn't have to be proven. Here are the B12 bylaws, section 3.2 and 3.3 talk about exiting the conference.

http://www.big12sports.com/fls/10410/pdfs/handbook/Bylaws.pdf

3.3 Effect of Withdrawal From Conference Other Than by Giving Proper Notice. If,other than by giving a proper Notice pursuant to Section 3.1, a Member Institution (a

“Breaching Member”) withdraws, resigns, or otherwise ceases to participate as a full

Member Institution in full compliance with these Rules, or gives notice or otherwise

states its intent to so withdraw, resign, or cease to participate in the future (a “Breach”),

then the Member Institutions agree that such Breach would cause financial hardship

to the remaining Member Institutions of the Conference, and that the financial

consequences cannot be measured or estimated with certainty at this time. Therefore,

in recognition of the obligations and responsibilities of each Member Institution to

all other Member Institutions of the Conference, each Member Institution agrees that

after such Breach, the amount of Conference revenue that would otherwise have been

distributed or distributable to the Breaching Member during the two (2) years prior to

the end of the Current Term or the then-current Additional Term, as the case may be,

shall be reduced by an amount that equals the sum of the aggregate of such revenues

times the following percentages (such sum being the “Aggregate Reduction”); if Notice

is received less than two years but on or before eighteen months prior to the Effective

Date, 70%; if Notice is received less than eighteen months but on or before twelve

months prior to the Effective Date, 80%; if Notice is received less than twelve months

but on or before six months prior to the Effective Date, 90%; or if Notice is received

less than six months prior to the Effective Date, 100%.

I agree it seems like we will end up paying around 80% of our tv revenues, what I don't understand is taht 80% of the 2010-2011 revenue or the estimated 2011-2012 revenue?

 

[GBRsal]

http://betteroffred....ch-of-contract/

I like the analogy - if 3 guys pull guns on me and threaten to kill me, then i pull a gun and kill them first, the threat to me is hypothetical but - i have a very strong self defense case.

 

[knapplc]

Trust me - this isn't a cut-and-dry issue. Bylaws are nice things, but they are not laws. This will be battled out in courts and from what I'm seeing Nebraska has a strong case not to pay a cent... or, have a cent withheld from them, as the case may be.

And my original contention stands - this will languish in court for long enough that there won't be a Big 12 to collect when it's all said and done.

That money isn't going to go straight from the networks to the Big 12. NU will file suit and the money will be put aside until the dispute is settled. In order for the Big 12 to collect, they'll have to be in existence long enough to win the court battle. With the appeals process, that'll take years - years this conference doesn't have.

Either way, the Big 12 will have to pay millions in legal fees to see this thing through, and at some point they're going to have to make a decision whether it's worth it to pursue the action rather than forgo the penalty. NU will have to make that decision as well.

The other option is that Nebraska doesn't contest it at all, allows the money to be taken from them, and rides off into the sunset richer by far in the long run than any remaining Big 12 school. Remember, no matter how big Texas' TV contracts are, the money the University of Nebraska will see from the CIC will make the TV contracts look like lunch money.

Frankly, I'm not too concerned about it. At first I didn't want to pay it, but now... I just don't care. Bon nuit, Big 12. Sweet dreams.

 

[deedsker15]

Trust me - this isn't a cut-and-dry issue. Bylaws are nice things, but they are not laws. This will be battled out in courts and from what I'm seeing Nebraska has a strong case not to pay a cent... or, have a cent withheld from them, as the case may be.

And my original contention stands - this will languish in court for long enough that there won't be a Big 12 to collect when it's all said and done.

That money isn't going to go straight from the networks to the Big 12. NU will file suit and the money will be put aside until the dispute is settled. In order for the Big 12 to collect, they'll have to be in existence long enough to win the court battle. With the appeals process, that'll take years - years this conference doesn't have.

Either way, the Big 12 will have to pay millions in legal fees to see this thing through, and at some point they're going to have to make a decision whether it's worth it to pursue the action rather than forgo the penalty. NU will have to make that decision as well.

The other option is that Nebraska doesn't contest it at all, allows the money to be taken from them, and rides off into the sunset richer by far in the long run than any remaining Big 12 school. Remember, no matter how big Texas' TV contracts are, the money the University of Nebraska will see from the CIC will make the TV contracts look like lunch money.

Frankly, I'm not too concerned about it. At first I didn't want to pay it, but now... I just don't care. Bon nuit, Big 12. Sweet dreams.

yep, in five years it won't matter

well that and the big 12 won't be around in 5 years

 

[VA Husker Fan]

And my original contention stands - this will languish in court for long enough that there won't be a Big 12 to collect when it's all said and done.

That money isn't going to go straight from the networks to the Big 12. NU will file suit and the money will be put aside until the dispute is settled. In order for the Big 12 to collect, they'll have to be in existence long enough to win the court battle. With the appeals process, that'll take years - years this conference doesn't have.

Either way, the Big 12 will have to pay millions in legal fees to see this thing through, and at some point they're going to have to make a decision whether it's worth it to pursue the action rather than forgo the penalty. NU will have to make that decision as well.

Except that the money isn't going to "the Big 12". It is going to the Big 12 schools, or it seems, 3 of them. Those schools will be around long after the Big 12 collapses, and they can and will pursue it as long as they see fit.

We're going to be paying legal fees to fight this just as they do. If there's anything worse than paying money to UT, A&M and OU, it's paying additional money to lawyers. How much can we afford to put into a weak legal case?

I don't think our case is very strong, but again I'm not a lawyer. We signed an agreement that there is an exit penalty. The way I read it, there doesn't have to be actual damages for them to collect that exit fee. If I'm reading that wrong, then we have a decent chance. But if our case is that we thought we were forced to leave since it looked like the conference was going to crumble, it didn't. What we thought is not relevant since we were wrong about that.

 

[knapplc]

And my original contention stands - this will languish in court for long enough that there won't be a Big 12 to collect when it's all said and done.

That money isn't going to go straight from the networks to the Big 12. NU will file suit and the money will be put aside until the dispute is settled. In order for the Big 12 to collect, they'll have to be in existence long enough to win the court battle. With the appeals process, that'll take years - years this conference doesn't have.

Either way, the Big 12 will have to pay millions in legal fees to see this thing through, and at some point they're going to have to make a decision whether it's worth it to pursue the action rather than forgo the penalty. NU will have to make that decision as well.

Except that the money isn't going to "the Big 12". It is going to the Big 12 schools, or it seems, 3 of them. Those schools will be around long after the Big 12 collapses, and they can and will pursue it as long as they see fit.

We're going to be paying legal fees to fight this just as they do. If there's anything worse than paying money to UT, A&M and OU, it's paying additional money to lawyers. How much can we afford to put into a weak legal case?

I don't think our case is very strong, but again I'm not a lawyer. We signed an agreement that there is an exit penalty. The way I read it, there doesn't have to be actual damages for them to collect that exit fee. If I'm reading that wrong, then we have a decent chance. But if our case is that we thought we were forced to leave since it looked like the conference was going to crumble, it didn't. What we thought is not relevant since we were wrong about that.

That's true, but if the Big 12 Conference doesn't exist those schools could be entitled to nothing. And when the Big 12 collapses as it inevitably will, Texas, Oklahoma and A&M have no claim to money owed to a conference that doesn't exist.

I can see a decent case for Nebraska and I can see a weak case. You're right in that we did sign that agreement, but the gray area is how we can leverage the instability of the conference, and the flirtation of Texas with the Pac-10, Big 10 and SEC into a situation where we had to act out of self-preservation, since there were no guarantees that the conference would survive. That's where I see our best case - evidence that half the conference, which would constitute a death blow, were leaving, giving us no choice but to cut a deal somewhere.

Seriously - where are our lawyer members? Don't we have anyone besides AR who could weigh in here on the legal side of this?

 

[VA Husker Fan]

If there's money on the table, the Big 12 will stay alive as a shell conference to collect that money. There's nothing that says you can only belong to one conference. Villanova is in the Big East in some sports and the Colonial Athletic Assoc in football. The tobacco company defense isn't going to work for us.