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ACC-Maryland lawsuit settlement: What happened and what it means

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Both parties win in contentious exit fee case.

Bradley Leeb-US PRESSWIRE

In the long term, Maryland's ugly legal quarreling with the ACC was never likely to make or break either side's financial future. There was a $35 million gap between the $17 million exit fee Maryland argued it owed and the $52 million fee the conference wanted to collect, but that difference, as big as it is, wasn't as consequential as it probably sounded on a macro scale. The conference has a new school, Louisville, joining up this year, and Maryland's still in line for revenue jumps of several million dollars per year in the Big Ten. The $35 million (and the $157 million sought in Maryland's largely-just-for-show counterclaim) is a lot of money, but it wasn't going to structurally alter alter the long-term outlook for either the university or its now-former conference.

Of course, Maryland and the ACC settled their competing lawsuits last week, with the university agreeing to pay an exit fee of just over $31 million in the form of withheld revenue shares. It was "free money" for the ACC, sports business guru Andrew Zimbalist told The Washington Post. And for Maryland, the $31 million is far closer to the ACC's prior exit fee ($17 million) than the $52 million it became after an ACC presidents' vote just before Maryland bolted in 2012. As part of the settlement, the litigation each side had brought against the other has been terminated.

As we've covered before, the school and conference did made significant claims against each other. The ACC argued Maryland had wrongly flaked on paying the new exit fee and done the conference great fiscal harm, while Maryland countered that the new exit fee was punitive, unreasonable and non-applicable -- and that the conference had gone of its way, in violation of its own rules, to stiff Maryland in numerous other ways over its final months as a member.

For Maryland, the fight was all about saving money before it walked away. For the conference, it was much bigger. Clay Travis wrote thoroughly earlier this year about all the conference had to lose, and he was quite on-point: The ACC wanted to prove its gigantic exit fee (the biggest in collegiate athletic history, Maryland claimed) was enforceable, but it had to at least battle to a draw. Because if Maryland had managed to eek out a positive verdict in the ACC's lawsuit (to say nothing of the state's counterclaim), the broader applicability of the ACC's exit fee would have been torn to shreds. Had that happened, the ACC would be far more vulnerable to school-poaching by other conferences, and the entire league would have been in a tenuous position. Now, it can at least claim its enormous fee is enforceable against any school that tries to leave, and that's at a key starting point in retaining members.

This settlement isn't exactly a ringing endorsement of the larger parting fee, but it doesn't invalidate it, either, and the fee shouldn't become any harder to enforce as time passes. Meanwhile, Maryland forfeits a sum only about $14 million greater than what its best outcome would have been (Of course, you could look at this as "almost double" the initial fee, but this case was always going to be an expensive one). Had the school been forced to pay the ACC's new fee, the cost would have been $20 million greater. Plus, the school can finally and truly move on from the only conference it's known in quite some time. To Maryland, the deal is a small win. To the ACC, it isn't a loss, which was the most important thing all along.