The University of Maryland and the ACC announced a settlement Friday that allows the conference to keep $31.3 million in exit fees paid by the school in the wake of its move to the Big Ten.
The agreement, which ends nearly two years of contentious litigation, frees Maryland from making any future payments to the ACC, of which it was a founding member. While it closes a round in the multimillion dollar game of conference realignment, the settlement also could set a precedent — and send a stark message — for schools looking to move and conferences seeking to stop them.
“I think what most conferences will do is make it more difficult to exit in the future,” said Gabe Feldman, director of the sports law program at Tulane University. “I think the ACC has made that clear.”
The ACC filed suit against Maryland in November 2012, shortly after the school announced it was joining the Big Ten, seeking enforcement of a withdrawal payment of approximately $52 million. Maryland filed a counterclaim in January seeking $157 million plus punitive damages. The lawsuits will be dismissed and are considered closed.
“Our student-athletes, coaches, staff, fans and alumni will forever hold dear the memories of six outstanding decades in the Atlantic Coast Conference,” Maryland Athletic Director Kevin Anderson said in a joint statement. “Today marks the next chapter in the history of Maryland Athletics, and we look forward to creating new memories in the decades to come.”
The ACC and the University of Maryland said in the joint statement that they would have no further comment.
In College Park, Maryland football Coach Randy Edsall showed little emotion in discussing the agreement before practice Friday afternoon, telling reporters, “Just glad that it’s over and we can just focus on the season and focus on football.”
Andrew Zimbalist, a professor of economics at Smith College, called the settlement an area that is “highly subjective.” Maryland will be plugged into the Big Ten revenue-sharing stream, including lucrative television and licensing options, he said, which is likely to make Friday’s terms financially sensible for the school.
“With a $31 million settlement, I think Maryland probably does pretty well. . . . The trade-off with the extra revenue with the Big Ten will make it worth their while,” Zimbalist said. “On the other hand, the ACC gets $31 million, and basically it’s free money. It’s good for them, too. It’s a compromise that works out pretty well for both sides.”
Rutgers, which officially joined the Big Ten along with Maryland on July 1, announced in February that it agreed to pay the American Athletic Conference $11.5 million to withdraw its membership from that league.
Maryland President Wallace D. Loh had publicly questioned the legality of the increase of the ACC’s exit fee before the school left the conference. The Maryland state’s attorney general office filed a counterclaim on behalf of the school in January, alleging the conference violated its own constitution by increasing the exit fee from about $20 million to $52 million.
Maryland’s countersuit alleged antitrust violations by the ACC. The suit also alleged that two league schools were prompted by ESPN and lucrative television opportunities when it attempted to sway other Big Ten schools to leave and join its conference.
Both sides agreed to mediation in April, and Judge John R. Jolly Jr. assigned Bethesda-based mediator Jonathan B. Marks to meet with the parties. But the suit dragged on even as Maryland celebrated its inclusion into the Big Ten and the ACC welcomed Louisville into the fold.
There had to be financial consequences for Maryland in this case, said Sheldon Steinbach, a former legal counsel to American Council on Education who has been monitoring university athletic legal issues for more than four decades. The question wasn’t whether Maryland would pay the ACC, Steinbach said; it was how much it would pay.
“It seems to me, having surveyed the scene for 47 years, Maryland has walked away with a fair deal. The ACC has preserved its contractual rights, and everyone can go on to play another day,” Steinbach said.