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No Penalty Due?

Discussion in 'Colorado Football Message Board' started by SanDiegoBuff, Jun 15, 2010.

  1. SanDiegoBuff

    SanDiegoBuff Club Member Club Member

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    Picked this up from Rivals, and it's a good question for the lawyers.

    That line is there to help the conference if a school leaves and say, for instance, the TV deal drops by 20%. I think there is definitely a case to be made that CU and NU withdrawing does NOT result in a financial hardship for the remaining members.

    A. Even with the original TV deal, the money, I believe would have stayed the same, the remaining schools would have divvied up the additional revenue.

    B. The news of the new TV deal makes it very difficult for anyone to say that CU and NU leaving results in financial hardship for the remaining members.
     
    ScottyBuff likes this.
  2. DBT

    DBT Club Member Club Member

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    Would it be worth a legal battle over the $9 million? I don't know. But if the remaining teams say they are going to INCREASE their revenue with CU leaving, it sure could be argued that our leaving did not create a "financial hardship." Thanks texass! :smile2:
     
  3. El Gringo

    El Gringo Pura Vida Club Member

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    Liquidated damages clauses are intended to be an agreement before the fact. The "if / then" nature indicates this intent, although I find this particular clause to be terribly written. If I were writing it, it would go something like the: The Members hereby agree that, if a Member gives Notice, such withdrawal will cause financial hardship to the remaining institutions ... blah, blah, blah."

    The thing about liquidated damages clauses is that they can be challenged if they are deemed to be a penalty. It's a difficult argument to make, but one that the University lawyers should look at.
     
  4. TheEvilBeak

    TheEvilBeak Member

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    THis is the argument NU's Chancellor is using. The Conference is apparently in better shape without us than with us.
     
  5. Corn_Fan

    Corn_Fan Member

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    Might be if NU and CU lawyers team up :)

    Could be the first time we are on the same side!!!
     
  6. Idot Buff

    Idot Buff Club Member Club Member

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    The Missouri governor confirmed it.
     
  7. ladyblaise

    ladyblaise Club Member Club Member

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    The second time. The first was when we both told Texas to blow itself.
     
  8. azbuff

    azbuff Club Member Club Member

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    Just heard on Sports Center that UT, OU and A&M will split 80% :wow: of NU and CU's revenue share next year. I think that must assume we bolt in 2011.
     
  9. absinthe

    absinthe Ambitious but rubbish. Club Member Junta Member

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    yes
     
  10. Bone Buff

    Bone Buff Well-Known Member

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    Goddammit. Stop having good ideas! The amount of times I've had to agree with someone named "Corn_Fan" is eating at my soul.
     
  11. BuffSurveyor

    BuffSurveyor Club Member Club Member

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    NU and CU team up! Now that's an idea worth pursuing.
     
  12. absinthe

    absinthe Ambitious but rubbish. Club Member Junta Member

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    anything to annoy the whorns
     
  13. 92Buff

    92Buff Well-Known Member

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    Our plan is 2012 and we are sticking to it (at least that is what we are and should be saying)! However, if they want us gone in 2011 then we would be happy to oblige but that year would be penalty free. That will hopefully reduce the overall penalty that we end up paying.

    Hope NU and CU cna get out of any penalty so those three can choke on dust!
     
  14. azbuff

    azbuff Club Member Club Member

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    As an attorney, I would suggest CU take this to litigation. Eventually, both sides will settle for far less than we owe. Although, I would be concerned about our attorneys' fees, which will exceed a million on this project.
     
  15. Idot Buff

    Idot Buff Club Member Club Member

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    Why don't you offer your services to the University at no charge? Come on...do it for us.
     
  16. MiamiBuffs

    MiamiBuffs Wᴉɐɯᴉ qnɟɟs Club Member

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    Under the penalty the conference withholds payment to, in this case CU and NU, rather than expecting payment from. In other words CU and NU will get less revenue payments from the Big 12. CU and NU will not have to pay. But they will have less cash, several million dollars worth, to use to fire DH and budget other things. Really makes me look forward to those $8 sodas and $10 hot dogs this upcoming season. :lol:
     
    Last edited: Jun 15, 2010
  17. NashBuff

    NashBuff CSU Knob-Slobberer

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    MiamiBuffs, that makes sense.

    The big question is has CU already gotten the 2009-10 $$$ from the Big 12 yet? I'm guessing that CU will lose 80% of 2010-11.
     
  18. TheEvilBeak

    TheEvilBeak Member

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    In the grand scheme, who really cares. Both NU and CU will come out so far ahead the next five years it's a non issue. The looming fight over this issue will really be about exposing, publicly, the back room deals Texas was trying to make before NU and CU cut their nuts off. I would expect Texas to let this pass or settle for a substantially reduced amount to make this go away and save face and the release of ugly details.

    Oops, there goes some of that increased projected income...
     
  19. Buffnik

    Buffnik Real name isn't Nik Club Member Junta Member

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    I believe the lead argument is over whether CU and NU left "voluntarily". Remember, we were both given ultimatums at a time when the Bevo cabal were in discussions with other conferences and refused to give a firm commitment to staying in the Big 12 conference. Leaving under those circumstances is hardly voluntary.
     
  20. NashBuff

    NashBuff CSU Knob-Slobberer

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    Things seem to be clearing up on the Big 12 "penalities". From what I understand, the Big 12 is only WITHOLDING 80% of what CU and NU would have gotten. There are no exit $$$ in the Big 12 bylaws. It looks like NU's Chancellor Harvey Pearlman was right...NU and CU would owe nothing.

    This is typical Texas propaganda.
     
  21. SanDiegoBuff

    SanDiegoBuff Club Member Club Member

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    In addition to UTs last minute change of heart. I'm sure there are plenty of documented communications in which UT says it will go. If you say you're going to take you six friends and your ball and leave, then two other people leave, can you really charge them (withhold) just because you changed your mind at the last minute?

    Regardless, it's not like the admin went into this assuming there would be no buyout. They assumed the penalty and hoped for no buyout.
     
  22. tante

    tante Club Member Club Member

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    how did it get to 80% all of the sudden? did we give a notice we are out next year?
     
  23. Lt.Col.FrankSlade

    Lt.Col.FrankSlade Well-Known Member

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    I think the Bylaws are fairly specific. A 50% reduction in league revenues.

    CU will still get paid by the Big 12 for as long as they remain in the conference. Just 50% less.
     
  24. Buffnik

    Buffnik Real name isn't Nik Club Member Junta Member

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    50% is the 2-year reduction if a breaching member gives 24- or more months notice.
    70% is the 1-year reduction if a breaching member gives less than 24-months but at least 18-months notice.
    80% is the 1-year reduction if a breaching member gives less than 18-months but at least 12-months notice.
    90% is the 1-year reduction if a breaching member gives less than 12-months but at least 6-months notice.
    100% is the 1-year reduction if a breaching member gives less than 6-months notice.

    Annual terms in the Big 12 begin on July 1.

    So, how I interpret the bylaws is that CU is down 80% for its 2010-11 Big 12 disbursement if it chooses to leave after 1 year ($9 million x 0.8 = $7.2 million). If we choose to stay for the 2 years through 2011-12, it would be 50% per year ($18 million x 0.5 = $9 million at $4.5 per year). Time value of money closes that gap a bit, but not all the way. It's cheaper for CU to leave after this year. Edit: The above assumes that CU remains at the $9 million in conference payouts we've averaged the past couple years.

    Further, the Big 12 does not want an "outsider" competing in the conference for 2 years. It's in the Big 12's best interest for this to be CU's last season as a Big 12 member. My best guess is that a deal will be worked out that reduces the CU penalty for leaving after 1 year to at least the 50% level if not lower.

    Here's a link to the Big 12 bylaws, and I've copied the relevant sections below for the majority of AllBuffers who are too lazy to click a link: http://www.big12sports.com/fls/10410/pdfs/handbook/Bylaws.pdf?DB_OEM_ID=10410

    SECTION 3 DURATION
    3.1 Membership. Each Member Insttuton shall reman a member of the Conference until July 1, 2006 (the “Current Term”) and during any Additional Term (as defined below). Unless a Member Insttuton gves wrtten notce that t wll wthdraw from the Conference at the end of the Current Term or the then-current Addtonal Term to all other Member Insttutons and the Conference (a “Notce”) not less than two (2) years before the end of the Current Term or the then-current Addtonal Term, as the case may be, each Member Insttuton shall reman a member of the Conference for an additional five-year period after the end of the Current Term or the then-current Addtonal Term, as the case may be (each, an “Addtonal Term”) unless such member s a Breachng Member. Each Member Insttuton agrees that n the event such Member desres to wthdraw from the Conference, that t wll n good fath gve Notce not less than two (2) years before the end of the Current Term or any Addtonal Term, as the case may be. No Member Insttuton shall be enttled to dstrbuton of the then-current revenues from the Conference after the effectve date of ts wthdrawal, resgnaton, or the cessaton of ts partcpaton n the Conference (the “Effectve Date”).

    3.2 Effect of Giving Notice. If a Member Insttuton gves proper Notce pursuant to Secton 3.1 (a “Wthdrawng Member”), then the Members agree that such wthdrawal would cause financial hardship to the remaining Member Institutions of the Conference, and that the financial consequences cannot be measured or estimated with certainty at this time. Therefore, n recognton of the oblgatons and responsbltes of each Member Insttuton to all other Member Insttutons of the Conference, each Member Insttuton agrees that the amount of revenue that would have been otherwse dstrbutable to a Wthdrawng Member pursuant to Section 2 herein for the final two (2) years of the Current Term or the then- current Additional Term, as the case may be, shall be reduced by fifty percent (50%), with the remander to be dstrbuted to the other Member Insttutons who are not Wthdrawng Members or Breaching Members (as defined below) as additional Conference revenues in accordance wth Secton 2 heren. The Member Insttutons agree that such reducton n the amount of revenues dstrbuted to a Wthdrawng Member s reasonable and shall be n the form of liquidated damages and not be construed as a penalty.

    3.3 Effect of Withdrawal From Conference Other Than by Giving Proper Notice. If, other than by gvng a proper Notce pursuant to Secton 3.1, a Member Insttuton (a “Breachng Member”) wthdraws, resgns, or otherwse ceases to partcpate as a full Member Insttuton n full complance wth these Rules, or gves notce or otherwse states ts ntent to so wthdraw, resgn, or cease to partcpate n the future (a “Breach”), then the Member Institutions agree that such Breach would cause financial hardship to the remaining Member Institutions of the Conference, and that the financial consequences cannot be measured or estimated with certainty at this time. Therefore, n recognton of the oblgatons and responsbltes of each Member Insttuton to all other Member Insttutons of the Conference, each Member Insttuton agrees that after such Breach, the amount of Conference revenue that would otherwse have been dstrbuted or dstrbutable to the Breachng Member durng the two (2) years pror to the end of the Current Term or the then-current Addtonal Term, as the case may be, shall be reduced by an amount that equals the sum of the aggregate of such revenues tmes the followng percentages (such sum beng the “Aggregate Reducton”); f Notce s receved less than two years but on or before eghteen months pror to the Effectve Date, 70%; if Notice is received less than eighteen months but on or before twelve months prior to the Effective Date, 80%; if Notice is received less than twelve months but on or before six months prior to the Effective Date, 90%; or if Notice is received less than six months prior to the Effective Date, 100%.

    After such Breach, none of the revenues that otherwse would be dstrbutable to a Breachng Member shall be pad to the Breachng Member untl the aggregate amount so withheld (the “Withheld Amounts”) equals the Aggregate Reduction; thereafter, all revenues that would otherwse have been dstrbutable to the Breachng Member shall be so dstrbuted. If the Wthheld Amounts are less than the Aggregate Reducton, then the Member Insttutons acknowledge and agree that the Conference shall assess such Breaching Member an amount that equals the difference of the Aggregate Reduction less the Wthheld Amounts, and the Breachng Member agrees that on or pror to the Effectve Date t shall repay to the Conference such amount from revenue that prevously had been dstrbuted to such Breachng Member. The Wthheld Amounts and any such repayment of the dfference of the Aggregate Reducton less the Wthheld Amounts shall be dstrbuted to the other Member Insttutons who are not Wthdrawng Members or Breachng Members as addtonal Conference revenues n accordance wth Secton 2 heren. The Member Insttutons agree that such reducton n the dstrbuton of revenues to a Breaching Member is reasonable and shall be in the form of liquidated damages and not be construed as a penalty.
     
  25. Crash Davis

    Crash Davis MA....THE MEATLOAF!!! Club Member

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    While I understand the semantics of having revenue withheld vs. paying a fine, the bottom line is our AD barely turns a profit, i.e. they depend on that money. Meaning that money will have to come from somewhere else for the next few years. AD getting another loan from the General Fund would be my guess. So there's no denying that this will hurt us, short term.
     
  26. chipwich

    chipwich Administrator Club Member Junta Member

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    I believe the PAC 10 was going to absorb the initial hit and allow us to pay it back over time.
     
  27. Buffnik

    Buffnik Real name isn't Nik Club Member Junta Member

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    Yep. CU will have its PAC disbursement reduced a bit over a few years to make up the difference (assuming we lose Big 12 money).
     
  28. Lt.Col.FrankSlade

    Lt.Col.FrankSlade Well-Known Member

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    So it would really be to CU's benefit to be a ****ty team this year, and be on television as little as possible.
     
  29. Junction

    Junction Moderator Club Member

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    How's that? Even if we forfeit 80% of the additional revenue, we still keep 20% of it...

    You sound like my clients who look for ways to spend money on **** they don't need, just because they'll reduce their taxes by 1/3 of what they spend.... :huh:
     
  30. SanDiegoBuff

    SanDiegoBuff Club Member Club Member

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    I don't see where the 1 year reduction comes into play. If you read it, either way it's a two year reduction.

    So the way I read it if we give two years notice, we give up 50% of our revenue for '10-'11 and '11-'10.

    If we give one year notice we give XX% of our revenue for '09-'10 and '10-'11, where XX% is based on how much notcie is given. In this case, 80% since we're giving just more than a years notice.

    That said, I'm not sure there's a case for the Big 12 to withhold anything.

    A. They're better off without us, the conference commissioner has gone on record himself saying this.

    B. There's enough dirty laundry in UTs closet that would get aired during a trial, there is incentive just to leave things well enough alone.

    C. The clauses themselves are ambiguous.

    D. I'm willing to bet it's a verifiable fact through FOIA, that UT had agreed to go to the Pac-10 as well, which creates 'bad faith' with regards to the by-laws as a whole. They were playing both sides and got a better deal, good for them, so did CU and NU.

    There is more than enough evidence to get an injunction stopping the withholding of disbursements while this is fought in court. There will be no penalties or an agreement for significantly reduced penalties to make this all go away.
     
    Last edited: Jun 16, 2010

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