Exit Penalty

[sd'sker]

i said this earlier, but, for me, what i think it comes down to is that you cannot stipulate penalties (and liquidated damages would be a penalty if there are no damages), the goal is to make the injured party whole (and it sounds like everyone will receive more without NU and CU), 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.

 

[Nexus]

Post from HI Free Board:

Some members of the Big 12 community are strangely obsessed with getting "Nebraska's money". I feel that the Big 12 and their respective members are probably not going to get much relief from "liquidated damages" from Nebraska and Colorado (if any at all), as the Big 12 is supposedly stronger now.  

I found the following from a lawyer on another site, which supports this view, and which I found interesting:

Not only a lawyer, but a Delaware lawyer:

 

In order for a liquidated damages clause to be considered valid by a Delaware court, it has to meet two main requirements. First, the court has to find that the actual damages that would be caused by the defendant’s breach are either uncertain or not able to be accurately calculated.

 

Second, the amount the parties agreed upon as liquidated damages must be reasonable. With respect to reasonableness, the Court considers whether the amount is rationally related to any measure of damages the plaintiff could conceivably sustain as a result of a breach. And, the harder it is to calculate the loss, the easier it is for the Court to find that the amount agreed upon as liquidated damages is reasonable.

 

Here, where TV contracts were locked in and, apparently, do not contain a penalty clause for a team leaving damages could be readily determined: there were none. Of course you can claim there are "intangible" damages, with the loss of two upstanding schools like NU and CU. Unfortunately for the Big XII, we find statements across Big XII-dom claiming exactly the opposite, that the conference is better off without them, including financially. Finally, the fact that the departures directly led to a BIGGER TV contract shows this was nothing more than a penalty clause, which is not permissible.

 

The fun of litigation would it would allow us to take a deep dive into the world of Texas football and all the stuff that went on behind the scenes as part of this drama. Texas would be very pleased with that, I'm sure.

 

[sd'sker]

Post from HI Free Board:

Some members of the Big 12 community are strangely obsessed with getting "Nebraska's money". I feel that the Big 12 and their respective members are probably not going to get much relief from "liquidated damages" from Nebraska and Colorado (if any at all), as the Big 12 is supposedly stronger now.  

I found the following from a lawyer on another site, which supports this view, and which I found interesting:

Not only a lawyer, but a Delaware lawyer:

 

In order for a liquidated damages clause to be considered valid by a Delaware court, it has to meet two main requirements. First, the court has to find that the actual damages that would be caused by the defendant’s breach are either uncertain or not able to be accurately calculated.

 

Second, the amount the parties agreed upon as liquidated damages must be reasonable. With respect to reasonableness, the Court considers whether the amount is rationally related to any measure of damages the plaintiff could conceivably sustain as a result of a breach. And, the harder it is to calculate the loss, the easier it is for the Court to find that the amount agreed upon as liquidated damages is reasonable.

 

Here, where TV contracts were locked in and, apparently, do not contain a penalty clause for a team leaving damages could be readily determined: there were none. Of course you can claim there are "intangible" damages, with the loss of two upstanding schools like NU and CU. Unfortunately for the Big XII, we find statements across Big XII-dom claiming exactly the opposite, that the conference is better off without them, including financially. Finally, the fact that the departures directly led to a BIGGER TV contract shows this was nothing more than a penalty clause, which is not permissible.

 

The fun of litigation would it would allow us to take a deep dive into the world of Texas football and all the stuff that went on behind the scenes as part of this drama. Texas would be very pleased with that, I'm sure.

the suit would be worth all of the headaches just for discovery. i'd like to see those interrogatories, production of documents, and depositions.

 

[HuskerMack]

Here tells a little more about it about half way down in bold.

link

Kansas AD: Big 12 schools made business plan

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Reddit Text Size: By The Associated Press

Wednesday, Jun 16, 2010 - 09:21:42 pm CDT

LAWRENCE, Kan. — Kansas athletic director Lew Perkins said Wednesday that the five Big 12 schools in danger of being left without a conference came up with a plan that included offering money to keep Texas, Texas A&M and Oklahoma in the league.

Kansas, Kansas State, Iowa State, Baylor and Missouri drafted a “business plan” to persuade the bigger schools to reject any interest from the Pac-10 or Southeastern Conference, Perkins said. The idea was to make sure the three Big 12 South schools would not lose any money by sticking with the Big 12.

“Five schools got together and we tried to develop a business plan like everything else,” said Perkins, who did not disclose financial details of the offer. He said paying to remain aligned with Texas, Oklahoma and Texas A&M is no different from a school giving a pay raise to a coach who wins a national championship and gets other job offers.

[+]EnlargeKansas athletics director Lew Perkins answers questions during a news conference at Allen Fieldhouse Wednesday, June 16, 2010, in Lawrence, Kan. (AP Photo/Orlin Wagner) Kansas athletics director Lew Perkins answers questions during a news conference at Allen Fieldhouse Wednesday, June 16, 2010, in Lawrence, Kan. (AP Photo/Orlin Wagner)

Perkins and Kansas State athletics director John Currie both said they don’t expect the three big schools to need the money because league revenues are expected to grow in coming years.

Big 12 commissioner Dan Beebe indicated Tuesday that the five schools had offered to give Texas, Texas A&M and Oklahoma their share of whatever exit penalty money Colorado and Nebraska wind up paying for leaving the league over the next two years.

But Perkins said the five offered to take the money out of their share of conference revenues from other sources such as television and NCAA basketball, not the penalty money. Calls to the Big 12 offices in Dallas were not immediately returned Wednesday.

Nebraska, which will join the Big Ten in July 2011, said it does not believe it owes any penalty money.

“The bylaw is structured as ‘damages’ and it’s hard for me to see that there are any damages,” Nebraska chancellor Harvey Perlman said. “The Big 12 is getting more now than they did when we were a member.”

Perlman wouldn’t discuss how much the penalty might be, saying “the distribution is around $9 million so you can figure it out.” Colorado athletic director Mike Bohn said the school’s penalty for bolting to the Pac-10 in July 2012 “could be” around $9 million.

Under Big 12 bylaws, schools must give up 50 percent of their share of conference revenues if they give two years’ notice, as Colorado has done, or 70 percent of the revenue if the notice is less than 18 months before departure, which apparently would apply to Nebraska.

[b]According IRS tax records examined by The Associated Press, the Big 12 in 2008-09 distributed $10.1 million to Colorado and $11.5 million to Nebraska. Using those figures, the overall penalty for Colorado over two years would be $10.1 million and $8.05 million for Nebraska over the next year.[/b]

Divided up among the remaining 10 members, each would get about $1.8 million.

Perkins insisted on referring to penalty money that may be paid by Colorado and Nebraska as “damages,” rebuking reporters during a news conference for calling it anything else.

“Just take the liquidating damages and put an ‘X’ on it,” he said. “Put it over here and don’t even think about it. ... We’re not going to touch that money.”

Currie declined to discuss the details of the smaller schools’ guarantee, but said it was the “right long-term move.”

“We knew that because of the projections and analysis of the marketplace, we knew that we were in an excellent position as a league to continue to grow, to grow our pie,” he said. “The big picture is what we’re focused on right now, which is the fact that our pie will grow, and we have two less mouths to feed around the table at dinnertime from now on.”

 

[BeachBuffs]

excellent point. i also believe that our departure was not by choice but rather brought about as the result of an unethical conspiracy between the universities of texas, missouri and colorado and therefore any penalties are null and void. furthermore, i believe the university of nebraska is due actual and punitive damages from those three entities.

Huh?

What was the conspiracy? The only school that no one knew what they wanted was Texas, Mizzou made no secret they wanted into the Big 10 as soon as the it became rumored that the Big 10 wanted to expand. Colorado made no secret they wanted into the PAC 10 if they expanded to match the Big 10 so I am not following the conspiracy theory approach.

 

[sd'sker]

excellent point. i also believe that our departure was not by choice but rather brought about as the result of an unethical conspiracy between the universities of texas, missouri and colorado and therefore any penalties are null and void. furthermore, i believe the university of nebraska is due actual and punitive damages from those three entities.

Huh?

What was the conspiracy? The only school that no one knew what they wanted was Texas, Mizzou made no secret they wanted into the Big 10 as soon as the it became rumored that the Big 10 wanted to expand. Colorado made no secret they wanted into the PAC 10 if they expanded to match the Big 10 so I am not following the conspiracy theory approach.

conspiracies don't have to be secret. it is just when parties act in unison to accomplish some act, that is obviously a broad definition and does not necessarily fit the criminal law definition, but he is arguing that there was an implicit conspiracy to end the big 12.

 

[schuhbdoo]

excellent point. i also believe that our departure was not by choice but rather brought about as the result of an unethical conspiracy between the universities of texas, missouri and colorado and therefore any penalties are null and void. furthermore, i believe the university of nebraska is due actual and punitive damages from those three entities.

Huh?

What was the conspiracy? The only school that no one knew what they wanted was Texas, Mizzou made no secret they wanted into the Big 10 as soon as the it became rumored that the Big 10 wanted to expand. Colorado made no secret they wanted into the PAC 10 if they expanded to match the Big 10 so I am not following the conspiracy theory approach.

I expect NU will file a lawsuit asap to keep all monies due in 2010. The so called "damages clause" will seal the Big 12s' fate on this. By going to 10 teams, all teams will get more than before CU and NU left. So where are the damages? Business plans were given to the Big 3 in the Little 10 and they were told that the money would be there and they would all make more than they would make in the Pac 10(12) or SEC. I haven't seen one press release by the Big 12 that states that ESPN has taken money out of the current deal. The have gone on record as saying they don't expect to expand in the near future, so the revenue that was meant for 12 is now going to 10. More money per team= no damages. BOOM!!! If if the big 3 of the Little 10 don't receive the extra money from NU and CU, it is their fault for agreeing to this new plan that built in money from "damages".

disclaimer: I am not a laywer but used to watch LA Law 20 years ago.

 

[Fuzzy]

I heard that Texas, Oklahoma, and Texas A&M are getting a bigger cut of the exit penalty from CU and NU.

I don't know about some of you, but if I am a KU, KSU, ISU, or Baylor fan. Im thinking "WTH!"

How are you going to give extra money to programs that would have been good if the conference had dissovled, rather than to the programs that really need to the money to improve their programs to compete with teams like OU, UT, Texas A&M, and Texas Tech.

Just when you thought Beebe couldn't go any lower and ruin the conference, he takes another step that goes even lower.

http://ncaafootball.fanhouse.com/2010/06/15/dan-beebe-texas-texas-aandm-oklahoma-will-get-bigger-slice-of-e/

 

[schuhbdoo]

I heard that Texas, Oklahoma, and Texas A&M are getting a bigger cut of the exit penalty from CU and NU.

I don't know about some of you, but if I am a KU, KSU, ISU, or Baylor fan. Im thinking "WTH!"

How are you going to give extra money to programs that would have been good if the conference had dissovled, rather than to the programs that really need to the money to improve their programs to compete with teams like OU, UT, Texas A&M, and Texas Tech.

Just when you thought Beebe couldn't go any lower and ruin the conference, he takes another step that goes even lower.

http://ncaafootball.fanhouse.com/2010/06/15/dan-beebe-texas-texas-aandm-oklahoma-will-get-bigger-slice-of-e/

THE DESPERATE FIVE - The decision by Missouri, Kansas, Kansas State, Iowa State and Baylor to pool their share of the Nebraska/Colorado penalty money ($35 million to $40 million) and give it to OU, Texas A&M and Texas costs these five in the short-term. But it worked. They helped save the conference, and now they are going to earn between $14 million and $17 million each going forward.

They are referred to as the desperate 5. They were screwed if this conference went bye bye, so they agreed in the short term to pay the prostitutes (Big 3 of Big 12) with their fantasy short term windfall. TTU and OSU have been left out of this plan, so they don't have to give up their share if any money is recovered. This is further evidence that the back stabbing and jealousy will tear the "bad boy" conference apart.

 

[knapplc]

This is why we won't be losing any money in this deal. Texas and the Pips screwed themselves out of millions in "penalty revenue" by renegotiating their TV contract and bringing in more money. Because their revenue is going to go up, they'll have no leg to stand on if they try to claim damages.

Perlman Expects No Penalties
University of Nebraska Chancellor Harvey Perlman is standing his ground on the issue of penalties the school may have to pay for departing the Big 12 Conference.

Perlman told KLIN's Jack & John in the Morning that the conference's bylaws do not spell out "penalties" but rather "liquidated damages" in the event that the remaining conference members are financially hurt by the departure. But with Tuesday's announcement that Texas and the nine other Big 12 schools are remaining with the promise of a lucrative new cable television deal, Perlman says the Big 12 is actually better off than before NU left.

According to reports, the new deal would pay Texas, Oklahoma and Texas A&M $20 million annually while the other seven schools could see 14 to 17 million per year. Previous arrangements saw schools earn from 7 to 12 million dollars per season. Big 12 Commissioner Dan Beebe said that no new television deal is signed and they are still working with their television partners.

Perlman says he doesn't know if the case will end up in litigation and hopes things can be worked out amicably. Regardless, Perlman says he is happy for the remaining Big 12 schools that they were able to stay together.

 

[74Hunter]

THE DESPERATE FIVE - The decision by Missouri, Kansas, Kansas State, Iowa State and Baylor to pool their share of the Nebraska/Colorado penalty money ($35 million to $40 million) and give it to OU, Texas A&M and Texas costs these five in the short-term. But it worked. They helped save the conference, and now they are going to earn between $14 million and $17 million each going forward.
They are referred to as the desperate 5. They were screwed if this conference went bye bye, so they agreed in the short term to pay the prostitutes (Big 3 of Big 12) with their fantasy short term windfall. TTU and OSU have been left out of this plan, so they don't have to give up their share if any money is recovered. This is further evidence that the back stabbing and jealousy will tear the "bad boy" conference apart.

I'm trying to figure out where they get the 35 to 40 million dollar amount. Using last years figures, NU would pay 70% of about 11 million and CU would pay 2 years at 50% of 10 million, give or take a few. I thought that the total payout by both NU/CU would be about 18 million, if we have to pay it?

 

[krc1995]

What if they replace us with Houston and Arkansas?

Anyone think that Texas wanted us to jump ship and maybe a few other schools too so they could ride the B12 welfare system all the while getting their own revenue from Bevo network? Then they can pick whatever conference that will have them and their tv baggage.

 

[VA Husker Fan]

THE DESPERATE FIVE - The decision by Missouri, Kansas, Kansas State, Iowa State and Baylor to pool their share of the Nebraska/Colorado penalty money ($35 million to $40 million) and give it to OU, Texas A&M and Texas costs these five in the short-term. But it worked. They helped save the conference, and now they are going to earn between $14 million and $17 million each going forward.
They are referred to as the desperate 5. They were screwed if this conference went bye bye, so they agreed in the short term to pay the prostitutes (Big 3 of Big 12) with their fantasy short term windfall. TTU and OSU have been left out of this plan, so they don't have to give up their share if any money is recovered. This is further evidence that the back stabbing and jealousy will tear the "bad boy" conference apart.

I'm trying to figure out where they get the 35 to 40 million dollar amount. Using last years figures, NU would pay 70% of about 11 million and CU would pay 2 years at 50% of 10 million, give or take a few. I thought that the total payout by both NU/CU would be about 18 million, if we have to pay it?

70% is not correct, 80% is the number based on the notice we gave. And the way I read the bylaws, it's for 2 years. A heftier penalty for giving less notice. I've heard $15.5 thrown around for us which sounds about right, which would make it about $25M total. Whoever first said it'd be 80 or 90% of one year--I think it was taken from a local sportswriter's article--misread the bylaws. It really doesn't make sense to bolt earlier and pay less of a penalty.

My guess is that we'll negotiate a smaller amount based on little or no real damages incurred by the other schools.

 

[huKSer]

THE DESPERATE FIVE - The decision by Missouri, Kansas, Kansas State, Iowa State and Baylor to pool their share of the Nebraska/Colorado penalty money ($35 million to $40 million) and give it to OU, Texas A&M and Texas costs these five in the short-term. But it worked. They helped save the conference, and now they are going to earn between $14 million and $17 million each going forward.
They are referred to as the desperate 5. They were screwed if this conference went bye bye, so they agreed in the short term to pay the prostitutes (Big 3 of Big 12) with their fantasy short term windfall. TTU and OSU have been left out of this plan, so they don't have to give up their share if any money is recovered. This is further evidence that the back stabbing and jealousy will tear the "bad boy" conference apart.

I'm trying to figure out where they get the 35 to 40 million dollar amount. Using last years figures, NU would pay 70% of about 11 million and CU would pay 2 years at 50% of 10 million, give or take a few. I thought that the total payout by both NU/CU would be about 18 million, if we have to pay it?

70% is not correct, 80% is the number based on the notice we gave. And the way I read the bylaws, it's for 2 years. A heftier penalty for giving less notice. I've heard $15.5 thrown around for us which sounds about right, which would make it about $25M total. Whoever first said it'd be 80 or 90% of one year--I think it was taken from a local sportswriter's article--misread the bylaws. It really doesn't make sense to bolt earlier and pay less of a penalty.

My guess is that we'll negotiate a smaller amount based on little or no real damages incurred by the other schools.

So in 2012 we will be getting 20% of what we would have got for free since we are not playing in the Big 12 conference plus the Big 10 money?

 

[VA Husker Fan]

So in 2012 we will be getting 20% of what we would have got for free since we are not playing in the Big 12 conference plus the Big 10 money?

I don't know which years they base the 80% on but I can guarantee we won't get 20% free.