University of Maryland President Wallace D. Loh voted against an increase in the ACC’s exit fee based on “purely legal and philosophical” grounds, he told The Post in a telephone interview Thursday evening.
The decision to increase the exit fee from around $20 million to $50 million ultimately passed, 10 votes to 2. Maryland and Florida State were the two dissenters on the resolution, which needed nine votes to pass. The vote coincided with Notre Dame’s acceptance as the conference’s 15th member, which was passed unanimously by the conference’s school presidents.
Loh, a former dean of the University of Washington Law School who holds a law degree from Yale, said that he believes very strongly in freedom of contract, wherein people are free to enter into and exit from relationships, provided they pay a reasonable amount of damages for breaking out of the relationship. The definition of “reasonable,” Loh said, is up for legal bodies to decide, but should not be “a damage that is so punitive and so overwhelming that it deters people from entering an agreement” in the first place.
In Loh’s view, the $50 million charge for leaving the ACC, which equates to three times the annual operating budget, represents not an exit fee but an “exit penalty,” which Loh believes is “illegal and philosophically not a good idea.”
“The most important part is this is a great conference, and what we should be doing is making it so attractive that others want to join the conference and stay in the conference, rather than threatening them to stay,” said Loh, pointing out that the Big East’s exit fee is “something around $3 million to $5 million.”
Loh stressed that his objection stemmed solely from personal beliefs, and not a desire on Maryland’s part to protect itself in the event that it one day decides to leave the ACC. In fact, Loh repeatedly praised the relationship between Maryland and the ACC, saying that the school will continue to be a part of it for years to come.
Philosophically, however, Loh disagrees with “punishing people if they simply exit a relationship.” Loh said he checked with other administrators on campus, including Athletic Director Kevin Anderson, to inform them of his intended vote.
“The law says that when you have liquidated damages, and in advance you anticipate a breaching of the contract, we will decide what the damages will be,” Loh said. “You talk about damages, not penalties, and it has to be a reasonable estimate. That’s the law. We live in a free economy. We want people to move freely in and out of relationships. That’s the philosophical principle. What constitutes reasonable? That’s for a court to decide.
“But if the damages are so huge that it prevents the mobility, the free movement of people, then I think it’s not good for society. Others may not be looking at it from this principle, and that’s their prerogative.”
The issue was raised one year ago, when the ACC decided to admit Syracuse and Pittsburgh into the conference and raised the exit fee from roughly around $12 million to $14 million to $20 million. Loh said he objected to that increase, as well.
The ACC announced the move Wednesday. Notre Dame will begin playing five football games against ACC opponents in the 2014-15 season, and will join the ACC for all other sports except ice hockey beginning in 2015-16. Loh said the process of adding Notre Dame began around a year ago, when both he and Anderson, among others, actively pushed for expansion. At the time, that resulted in the addition of Pittsburgh and Syracuse, with the door left open for another round.
“This was in the aftermath of major conference realignment elsewhere. I think this is a new day, a new time for a whole variety of reasons, the landscape is changing, and we needed to think about expansion,” Loh said.
According to Loh, discussion among university presidents about Notre Dame concluded around 10:30 p.m. Tuesday, resulting in a “fantastic fit” for the ACC.
And because his dissention for the exit fee increase came from his legal and philosophical beliefs and nothing politically charged, the real focus in Loh’s mind should center on the mutually beneficial decision for the ACC, Notre Dame and the fans.
“At least for me, the story is not the exit fee,” Loh said. “The story is a very good outcome that is good for both the ACC and for Notre Dame, and for institutions and the fans.”