State attorney general calls ACC lawsuit against UM “extortion” -- Gazette.Net


This story was updated 9:48 a.m., Jan. 23, 2013.

Maryland Attorney General Doug Gansler (D) said Friday that he filed a lawsuit in Prince George’s County Circuit Court that argues that the Atlantic Coast Conference has broken state antitrust laws by trying to “extort” the University of Maryland over its planned departure to the Big East Conference with a $53 million exit fee.

“An athletic conference can’t block the free flow of universities and colleges from choosing the conference they feel they would like to join,” Gansler said.

Historically, conference exit fees are supposed to be compensatory, Gansler said, reflecting the amount of money a conference loses when a school leaves. Given that the ACC will be adding Syracuse University and the University of Louisville in coming years, Gansler said $53 million reflects “punitive damages.”

Gansler said that the lawsuit also alleges that the ACC breached its contract with the University of Maryland when it notified the school in a December letter that it would be withholding its $3 million in monthly shared television revenue.

“The conference said they would withhold the December $3 million payment to offset the $53 million owed to them in their view because of the exit fee,” he said. “The exit fee doesn’t become due until a school exits the conference. At that time, they violated their contract to pay [the university] what is due.”

ACC officials did not immediately return calls for comment.

David Ottalini, a UM spokesman, said the university is not issuing a statement at this time.

Gansler also moved to have the ACC’s lawsuit, filed in Greensboro, N.C., dismissed, because he said the conference “doesn’t have jurisdiction to bring a sovereign state into its courts.”

West Virginia University paid the most recent high-profile exit fee when it left the Big East Conference for the Big 12 Conference on July, 1, 2012, sending $20 million the Big East’s way in exchange for a waiver of the conference’s 27-month waiting period.

The Big East instituted an exit fee around 2003, and around 2008, the fee was increased to $10 million, said John Paquette, an associate commissioner with the conference. Sean Cartell, a spokesman with the Southeastern Conference, said the SEC does not have an exit fee.

New Jersey’s flagship state school, Rutgers University, filed a lawsuit against the Big East in December 2012 in an effort to avoid the conference’s $10 million exit fee and 27-month waiting period as it prepares to enter the Big Ten Conference.