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Washington Post: GOR might weaken ACC lawsuit against UMD
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CardinalJim Offline
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Washington Post: GOR might weaken ACC lawsuit against UMD
04-23-2013 11:32 AM
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RE: Washington Post: GOR might weaken ACC lawsuit against UMD
Looks like the ACC is in good shape. Maryland had it's own issues and took a great bail out offer that almost any school in their position would have taken. Now, the ACC should just come up with a reasonable offer, say half of the original exit fee. Just make this go away and move on... on a positive note, rather than an ugly court battle. Maryland would have probably jumped back in 2010 if invited.
04-23-2013 11:52 AM
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Captain Bearcat Offline
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RE: Washington Post: GOR might weaken ACC lawsuit against UMD
Repeat after me, kids: the $50 million is not about damages. It is an exit fee. Damages do not have to be demonstrated in order to collect an exit fee.

Think of it this way: a lot of home mortgages have a prepayment fee, usually around $2000 or more. This is a fee, not compensation for damages. You can't sue the bank and claim that they suffered no damage when you paid off your loan early. It's the same deal here.
04-24-2013 06:03 AM
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Captain Bearcat Offline
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RE: Washington Post: GOR might weaken ACC lawsuit against UMD
Even if this was about damages (which its not), the very fact that the ACC signed a GOR is damaging to the individual schools in the ACC. Every single school had to surrender its future reallignment options to the conference in order to guarantee stability. Options can have HUGE value.

While its true that they got more money, everyone is ignoring that it came at a huge cost: surrendering all their broadcasting rights for the next 12 years. The only thing that this proves in the way of damages is the other available options (continued instability and eventual dissolution) were even worse.
04-24-2013 06:12 AM
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RE: Washington Post: GOR might weaken ACC lawsuit against UMD
(04-24-2013 06:03 AM)Captain Bearcat Wrote:  Repeat after me, kids: the $50 million is not about damages. It is an exit fee. Damages do not have to be demonstrated in order to collect an exit fee.

Think of it this way: a lot of home mortgages have a prepayment fee, usually around $2000 or more. This is a fee, not compensation for damages. You can't sue the bank and claim that they suffered no damage when you paid off your loan early. It's the same deal here.
Actually no, not the same deal here. A sports conference is a voluntary membership association, which earns revenue by organizing sporting competitions. Imposing an unreasonably high exit fee, even if it is by a majority vote under the bylaws, may be viewed as a collusive restraint of trade ~ especially if the member concerned voted against the increase.

It can't be a collusive restraint of trade if the exit fee is a reasonable compensation for damages done to the organization by the exit of the member.

Also, remember that part of Maryland's claims are that the exit fee vote did not, in fact, actually follow the ACC by laws. If they win on that point, they get off on the previous exit fee in any event.

Also, the prepayment fee is because a mortgage with an option of prepayment imposes prepayment risk on the lending institution ~ you cannot challenge it on the basis of option of prepayment not creating any risk to the lending institution, since financial assets with no prepayment risk attract a premium in financial markets over financial assets that carry prepayment risks. If you get a mortgage without a prepayment fee, it just means that the cost of the prepayment risk is priced into the mortgage origination fees.
(This post was last modified: 04-24-2013 06:19 AM by BruceMcF.)
04-24-2013 06:18 AM
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Melky Cabrera Offline
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RE: Washington Post: GOR might weaken ACC lawsuit against UMD
(04-24-2013 06:18 AM)BruceMcF Wrote:  
(04-24-2013 06:03 AM)Captain Bearcat Wrote:  Repeat after me, kids: the $50 million is not about damages. It is an exit fee. Damages do not have to be demonstrated in order to collect an exit fee.

Think of it this way: a lot of home mortgages have a prepayment fee, usually around $2000 or more. This is a fee, not compensation for damages. You can't sue the bank and claim that they suffered no damage when you paid off your loan early. It's the same deal here.
Actually no, not the same deal here. A sports conference is a voluntary membership association, which earns revenue by organizing sporting competitions. Imposing an unreasonably high exit fee, even if it is by a majority vote under the bylaws, may be viewed as a collusive restraint of trade ~ especially if the member concerned voted against the increase.

It can't be a collusive restraint of trade if the exit fee is a reasonable compensation for damages done to the organization by the exit of the member.

Also, remember that part of Maryland's claims are that the exit fee vote did not, in fact, actually follow the ACC by laws. If they win on that point, they get off on the previous exit fee in any event.

Also, the prepayment fee is because a mortgage with an option of prepayment imposes prepayment risk on the lending institution ~ you cannot challenge it on the basis of option of prepayment not creating any risk to the lending institution, since financial assets with no prepayment risk attract a premium in financial markets over financial assets that carry prepayment risks. If you get a mortgage without a prepayment fee, it just means that the cost of the prepayment risk is priced into the mortgage origination fees.

Dd Maryland vote againstu it, Bruce?
04-24-2013 06:34 AM
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Wilkie01 Offline
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RE: Washington Post: GOR might weaken ACC lawsuit against UMD
Rejoice, Maryland tax payers, your beloved University of Maryland is going to raises your taxes by $50 million for its exit fee from the ACC. plus the millions for the entrance fee to the Big, and oh all those millions in court costs. Have a nice day! 07-coffee3
(This post was last modified: 04-24-2013 07:59 AM by Wilkie01.)
04-24-2013 06:52 AM
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RE: Washington Post: GOR might weaken ACC lawsuit against UMD
How were they 'restrained' ?
They freely moved to a new home instantly doubling their revenue while also receiving unprecedented 'travel expenses'.
04-24-2013 06:55 AM
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johnbragg Offline
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RE: Washington Post: GOR might weaken ACC lawsuit against UMD
(04-24-2013 06:03 AM)Captain Bearcat Wrote:  Repeat after me, kids: the $50 million is not about damages. It is an exit fee. Damages do not have to be demonstrated in order to collect an exit fee.

That's not what the judge said when BC and the Big East sued each other.

"For the withdrawal fee to be construed as liquidated damages, the amount should provide no more than the protection needed, must approximate the actual loss suffered, and cannot be insufficiently related to the harm involved. If the exit payment is otherwise, it would constitute an unreasonable penalty which would be void and legally unenforceable."

http://mysite.verizon.net/fethrs/Judgmen...v%20BE.pdf

If there are no damages, the exit fee is unenforceable.
04-24-2013 07:47 AM
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SeaBlue Offline
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RE: Washington Post: GOR might weaken ACC lawsuit against UMD
(04-24-2013 07:47 AM)johnbragg Wrote:  If the exit payment is otherwise, it would constitute an unreasonable penalty which would be void and legally unenforceable."

"Void"? Hmm... 04-deal
04-24-2013 08:09 AM
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XLance Offline
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RE: Washington Post: GOR might weaken ACC lawsuit against UMD
Maryland WILL have to pay. That writer is just wishin' and whistlin' in the dark. He should be very afraid for the Terps.
04-24-2013 02:22 PM
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BruceMcF Online
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RE: Washington Post: GOR might weaken ACC lawsuit against UMD
(04-24-2013 06:34 AM)Melky Cabrera Wrote:  Did Maryland vote againstu it, Bruce?
AFAIR, Maryland and FSU were the two "no" votes.

(04-24-2013 06:55 AM)TIGER-PAUL Wrote:  How were they 'restrained'?

They freely moved to a new home instantly doubling their revenue while also receiving unprecedented 'travel expenses'.
Something can be a restraint of trade even if it is unsuccessful in completely preventing the activity that it is aimed at preventing.

(04-24-2013 07:47 AM)johnbragg Wrote:  
(04-24-2013 06:03 AM)Captain Bearcat Wrote:  Repeat after me, kids: the $50 million is not about damages. It is an exit fee. Damages do not have to be demonstrated in order to collect an exit fee.

That's not what the judge said when BC and the Big East sued each other.

"For the withdrawal fee to be construed as liquidated damages, the amount should provide no more than the protection needed, must approximate the actual loss suffered, and cannot be insufficiently related to the harm involved. If the exit payment is otherwise, it would constitute an unreasonable penalty which would be void and legally unenforceable."

http://mysite.verizon.net/fethrs/Judgmen...v%20BE.pdf

If there are no damages, the exit fee is unenforceable.
See, there's the reason that people on forums talk about it in terms of liquidated damages: because a judge in deciding a similar case did so.

Regular folk can talk all we want about whether it should or should not be valid, but in the end, if it goes to court, its up to a judge deciding based on the applicable laws, the details of the case, the by-laws of the association and the relevant precedents.

In order for an exit fee of three times the annual conference per member payout to be upheld under that precedent, it must be the case that the ACC will suffer a loss of about three times the annual conference per member payout. Also and independently, the ACC has to show that it followed the procedure in its own by-laws in order to pass the exit fee.
(This post was last modified: 04-24-2013 02:38 PM by BruceMcF.)
04-24-2013 02:27 PM
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Dasville Offline
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RE: Washington Post: GOR might weaken ACC lawsuit against UMD
(04-24-2013 02:27 PM)BruceMcF Wrote:  
(04-24-2013 06:34 AM)Melky Cabrera Wrote:  Did Maryland vote againstu it, Bruce?
AFAIR, Maryland and FSU were the two "no" votes.

(04-24-2013 06:55 AM)TIGER-PAUL Wrote:  How were they 'restrained'?

They freely moved to a new home instantly doubling their revenue while also receiving unprecedented 'travel expenses'.
Something can be a restraint of trade even if it is unsuccessful in completely preventing the activity that it is aimed at preventing.

(04-24-2013 07:47 AM)johnbragg Wrote:  
(04-24-2013 06:03 AM)Captain Bearcat Wrote:  Repeat after me, kids: the $50 million is not about damages. It is an exit fee. Damages do not have to be demonstrated in order to collect an exit fee.

That's not what the judge said when BC and the Big East sued each other.

"For the withdrawal fee to be construed as liquidated damages, the amount should provide no more than the protection needed, must approximate the actual loss suffered, and cannot be insufficiently related to the harm involved. If the exit payment is otherwise, it would constitute an unreasonable penalty which would be void and legally unenforceable."

http://mysite.verizon.net/fethrs/Judgmen...v%20BE.pdf

If there are no damages, the exit fee is unenforceable.
See, there's the reason that people on forums talk about it in terms of liquidated damages: because a judge in deciding a similar case did so.

Regular folk can talk all we want about whether it should or should not be valid, but in the end, if it goes to court, its up to a judge deciding based on the applicable laws, the details of the case, the by-laws of the association and the relevant precedents.

In order for an exit fee of three times the annual conference per member payout to be upheld under that precedent, it must be the case that the ACC will suffer a loss of about three times the annual conference per member payout. Also and independently, the ACC has to show that it followed the procedure in its own by-laws in order to pass the exit fee.

There is a "time element" that also comes into play with a schools departure. Please see Syracuse, Pittsburgh, WVU, and current Big 12 exit fee escalators! I know, I know, MD is not leaving early! I'm just saying that time of departure does impact exit fee amount (and in this case exit fee "factor") This will go the distance and a court will decide this matter. The ACC has nothing to lose now, absolutely nothing! Either a Conference's bylaws are legal or they are not. Period!
04-24-2013 04:27 PM
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Jericho Offline
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RE: Washington Post: GOR might weaken ACC lawsuit against UMD
(04-24-2013 07:47 AM)johnbragg Wrote:  
(04-24-2013 06:03 AM)Captain Bearcat Wrote:  Repeat after me, kids: the $50 million is not about damages. It is an exit fee. Damages do not have to be demonstrated in order to collect an exit fee.

That's not what the judge said when BC and the Big East sued each other.

"For the withdrawal fee to be construed as liquidated damages, the amount should provide no more than the protection needed, must approximate the actual loss suffered, and cannot be insufficiently related to the harm involved. If the exit payment is otherwise, it would constitute an unreasonable penalty which would be void and legally unenforceable."

http://mysite.verizon.net/fethrs/Judgmen...v%20BE.pdf

If there are no damages, the exit fee is unenforceable.


Yes, but liquidated damages are meant to roughly approximate the damages likely to occur. Note it does not matter what does happen afterwards. The fact the ACC may have become more stable after the fact does not really change how enforceable the clause is. Actual damages only become a factor if the liquidated damages clause is ruled invalid.
04-24-2013 08:03 PM
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