The "UN"-Official SDSU to the Pac thread.

[SalinasSpartan]

On 6/20/2023 at 11:16 PM, soupslam1 said:

They allegedly have a TV deal already. The hold up in signing it is distribution among members. With the LA schools gone UW and UO are the PAC’s most valuable members and they know it. They also have the leverage. The TV deal will shrink by half if they don’t agree to it. 

What are UO/UW going to do? Threaten to go independent? Threaten to leave for the Big 12 and give up years of NCAA tourney credits and pay exit fees to make similar TV money with significantly increased travel expenses? 
 

I’m not seeing any real leverage here. 

[Headbutt]

On 6/21/2023 at 1:16 AM, soupslam1 said:

They allegedly have a TV deal already. The hold up in signing it is distribution among members. With the LA schools gone UW and UO are the PAC’s most valuable members and they know it. They also have the leverage. The TV deal will shrink by half if they don’t agree to it. 

I've posted this before, but I'll repeat it.  Oregon does not currently have a sitting president.  No interim guy in his right mind his putting his stamp on all this.  The incoming guy (will be seated July 1) has no authority to sign the deal until he becomes president of the university.  Everybody is running in circles just screaming look at me in the interim.  The deal will be signed in July.  If it's a bad deal, some folks won't sign it.  I very much doubt that there are any Pac prez's that don't know what the deal is.  None of them have left.

[SalinasSpartan]

@soupslam1

To expand just a little more, what makes the UO/UW situation different from the ACC schools that forced changes to revenue distribution is UO/UW don’t have the numbers. With the ACC so many of their schools are attractive to the B1G/SEC that it’s conceivable a big enough group could form to just vote away the GOR and basically blow up the conference now. That’s just not going to happen in the Pac-12, where you can count the schools that have ANY shot to join the B1G on one hand, and no schools have a real shot at joining the SEC. 

[OrediggerPoke]

On 6/20/2023 at 2:55 PM, Willie Cee said:

This is credited to an AM poster (who is obviously legally trained) I have seen this theory and it makes sense out of all that has transpired in the last few days. 

Courts are very reluctant to enforce contracts that say, "If you breach this contract, you must pay the other party $X." They strongly prefer that you prove that you suffered a certain amount of damages as a result of the breach and then sue for the amount of your losses. That's why schools almost never pay the full exit fee specified in a contract when they leave a conference. Maybe the contract says that the exit free is $17 million, but unless the conference can prove that they will lose $17 million because a school left the conference, a court will probably not enforce that contract.

As a person who has litigated similar issues, I disagree with the analysis to an extent.  In contract law, we call these provisions ‘liquidated damages’ provisions.  Courts will typically enforce these provisions so long as they are not grossly disproportionate to the actual damages which would be suffered in the event of a breach (I.e not merely a penalty).  This is especially true in agreements between sophisticated parties.  Courts typically view sophisticated parties as being fully capable of entering into their own contracts and estimating damages, and, few courts are willing to impose their Monday morning quarterbacking judgment over that of the parties at the time the contract was entered into.  
 

Without knowing the facts of the current SDSU dispute (ie who signed what and when), it is my experience that courts will typically tell a sophisticated party that you signed the damn thing and you are stuck with the contractual terms.  
 

 

[OrediggerPoke]

On 6/20/2023 at 5:39 PM, VandalPride97 said:

Liquidated damages are easier to get if the parties agreed to it at a time when damages could not be calculated and if they're reasonably close to the damages sustained.  I find that Courts usually grant them and tell the losing side "you agreed to it, you pay it."  Getting the $17 million is reasonable in my mind, but double that will probably get shot down or trimmed as excessive or arbitrary.

One thing I will say about this board is that the flaccid positions taken by the conference in the past has bred this mindset that "well, it's just going to be litigated and we'll settle in the middle."  F that, it set a bad precedent.  Had the conference played hardball, as they appear to be doing now, it would be much more cut and dry.

If I were counsel to the conference, I'd say "you pay $17 million.  You can do it in 2-3 payments, but you have to agree to a consent judgment if you miss a payment."  Then, if they miss a payment, you enter judgment, garnish the bank accounts and walk home with the cash.  

 

Just read your post after posting my response  - I agree with your take on liquidated damages provisions.  

[utenation]

On 6/21/2023 at 12:16 AM, soupslam1 said:

They allegedly have a TV deal already. The hold up in signing it is distribution among members. With the LA schools gone UW and UO are the PAC’s most valuable members and they know it. They also have the leverage. The TV deal will shrink by half if they don’t agree to it. 

Link?

There’s been a million wild rumors flying around the last year. For posts like yours, you’ll need to provide evidence for obvious reasons. 
 

Some Twitter ranger is not going to cut the mustard. 

[Spaztecs]

On 6/21/2023 at 12:35 AM, SalinasSpartan said:

What are UO/UW going to do? Threaten to go independent? Threaten to leave for the Big 12 and give up years of NCAA tourney credits and pay exit fees to make similar TV money with significantly increased travel expenses? 
 

I’m not seeing any real leverage here. 

OUW would be fine if they go Indy or to the New12

They will always be able to schedule their in State brethren and Boise.

 

[AztecSU]

On 6/20/2023 at 11:50 PM, OrediggerPoke said:

As a person who has litigated similar issues, I disagree with the analysis to an extent.  In contract law, we call these provisions ‘liquidated damages’ provisions.  Courts will typically enforce these provisions so long as they are not grossly disproportionate to the actual damages which would be suffered in the event of a breach (I.e not merely a penalty).  This is especially true in agreements between sophisticated parties.  Courts typically view sophisticated parties as being fully capable of entering into their own contracts and estimating damages, and, few courts are willing to impose their Monday morning quarterbacking judgment over that of the parties at the time the contract was entered into.  
 

Without knowing the facts of the current SDSU dispute (ie who signed what and when), it is my experience that courts will typically tell a sophisticated party that you signed the damn thing and you are stuck with the contractual terms.  
 

 

True, but it seems the liquidated damages clause is reliant on proof of damages and, as you say should not be disproportionate. JMO, but the MW will probably have a hard time proving they'll experience more than $17m in damages from SDSU's departure. 

[AztecSU]

Curious if the earnings SDSU is forfeiting, tourney credits/etc, play into the assessment of damages?

[OrediggerPoke]

On 6/21/2023 at 9:24 AM, AztecSU said:

True, but it seems the liquidated damages clause is reliant on proof of damages and, as you say should not be disproportionate. JMO, but the MW will probably have a hard time proving they'll experience more than $17m in damages from SDSU's departure. 

Keep in mind - it’s a reasonable forecast of damages at time of contracting and not a measure of actual damages suffered years later (I.e of television contract future projections were higher years ago, that’s the number that matters…not what the actual television contract turns out to be).  

[OrediggerPoke]

On 6/21/2023 at 9:27 AM, AztecSU said:

Curious if the earnings SDSU is forfeiting, tourney credits/etc, play into the assessment of damages?

Why would they? Tourney credits are shared equally amongst conference members and would be considered ‘conference money’ and not SDSU money. Plus the credits are already earned and is already a conference asset.   Therefore, it is a zero sum.  It is irrelevant that SDSU earned the majority of credits.
 

Damages are a measure of the harm sustained going forward.  Monies already earned (whether paid out in the future or presently) is an existing asset and not a future asset.  

[East Coast Aztec]

On 6/21/2023 at 8:49 AM, OrediggerPoke said:

Why would they? Tourney credits are shared equally amongst conference members and would be considered ‘conference money’ and not SDSU money. Plus the credits are already earned and is already a conference asset.   Therefore, it is a zero sum.  It is irrelevant that SDSU earned the majority of credits.
 

Damages are a measure of the harm sustained going forward.  Monies already earned (whether paid out in the future or presently) is an existing asset and not a future asset.  

So 1/11th of 4M dollars per annum for the remaining life of the contract seems reasonable.  Contract ends in 2026 so 3 years x 380k-ish.

[jdgaucho]

On 6/21/2023 at 8:21 AM, Spaztecs said:

OUW would be fine if they go Indy or to the New12

They will always be able to schedule their in State brethren and Boise.

 

 

Where would all their other sports go?

[East Coast Aztec]

On 6/21/2023 at 9:02 AM, jdgaucho said:

 

Where would all their other sports go?

Any conference that actually cares about having good programs.  So apparently not the Big West.

[OrediggerPoke]

On 6/21/2023 at 9:55 AM, East Coast Aztec said:

So 1/11th of 4M dollars per annum for the remaining life of the contract seems reasonable.  Contract ends in 2026 so 3 years x 380k-ish.

Contract law doesn’t work that way. The tourney credits and liquidated damages are essentially separate contractual provisions related to conference affiliation.  
 

 A simple example comparison I would give is the commercial real estate tenant who exits their lease early (and which includes a liquidated damages provision of say $100,000 per year for terminating the lease early) and the commercial tenant then trying to claim that the liquidated damages should be offset because they remodeled the kitchen and are leaving the commercial space in a better condition than they found it.  The average commercial lease directly states that improvements are to become the property of the landlord on lease termination.  There are numerous case examples out there that basically state the liquidated damages is a forecast of lost future rent/occupancy and the improvements made is irrelevant because there is a separate contractual provision directly dealing with improvements and ownership of the improvements upon termination of the relationship.  

[East Coast Aztec]

On 6/21/2023 at 9:15 AM, OrediggerPoke said:

Contract law doesn’t work that way. The tourney credits and liquidated damages are essentially separate contractual provisions related to conference affiliation.  
 

 A simple example comparison I would give is the commercial real estate tenant who exits their lease early (and which includes a liquidated damages provision of say $100,000 per year for terminating the lease early) and the commercial tenant then trying to claim that the liquidated damages should be offset because they remodeled the kitchen and are leaving the commercial space in a better condition than they found it.  The average commercial lease directly states that improvements are to become the property of the landlord on lease termination.  There are numerous case examples out there that basically state the liquidated damages is a forecast of lost future rent/occupancy and the improvements made is irrelevant because there is a separate contractual provision directly dealing with improvements and ownership of the improvements upon termination of the relationship.  

So no tourney credits and strictly the portion of the media deal?  So 3x of distribution, less tournament credits?  That would still come out less than the 17M and obviously less than 34M.  

 

[SalinasSpartan]

On 6/21/2023 at 8:21 AM, Spaztecs said:

OUW would be fine if they go Indy or to the New12

They will always be able to schedule their in State brethren and Boise.

 

Yea but they aren’t going to take that financial hit to be “fine”. Between exit fees, travel costs, and losing out on tourney credits a move to the Big 12 just won’t be profitable, so why would they do it? It’s not like it will make the B1G any more likely to add them.

[AG Blue]

 

[OrediggerPoke]

On 6/21/2023 at 10:21 AM, East Coast Aztec said:

So no tourney credits and strictly the portion of the media deal?  So 3x of distribution, less tournament credits?  That would still come out less than the 17M and obviously less than 34M.  

 

No I don’t think damages would shake out that way.  The damage is a reasonable estimate of loss of future conference revenues (at the time of contracting).   It is irrelevant that SDSU won’t be collecting a check from the conference going forward.  A lot of focus is made on media deals - - sdsu’s provided value to the conference and its members is not limited to media deals (which can be somewhat forecast).
 

I honestly don’t care what sdsu pays other than hoping the conference takes a strong position against sdsu so as to disincentivize other conference members from leaving in the future.  
 

But in reality, contract law isn’t a difficult concept or application.  The difficulty lies in financial modeling.  

[SalinasSpartan]

On 6/21/2023 at 9:21 AM, East Coast Aztec said:

So no tourney credits and strictly the portion of the media deal?  So 3x of distribution, less tournament credits?  That would still come out less than the 17M and obviously less than 34M.  

 

Seems like the exit fees are basically an educated guess of how much the conference loses out moving forward without a member.