Conference Exit Fee Question/Scenario/Precedent?

[Pseudo Nym]

I posted this a response in another thread, but it's unrelated to the topic so thought I would make a thread for it:

 

Quote

 

  1 hour ago, TreeFiddy said:

CUSA exit fee = $3M

AAC entrance fee = $2.5M

Not sure about exit fee, but entrance fees can normally be paid out over time if needed.

 

 

Does anyone know the actual language in the contracts that define the exit fee, the terms, and any exceptions?

I'm thinking if I'm UTEP for example, I'm talking to some lawyers about the prospect of being "the last school standing" and holding every other school to account for their exit fee. 

Of course, unless the language in the bylaws allows for a simple majority vote to alter the exit fees and terms, in which case the nine schools who have already announced their intent to leave can vote to change the exit fee?

Even in that situation, if i"m UTEP, I'm having some heavy handed lawyers go through that thing with a fine-tooth comb and throwing around words like collusion and false claims (Texas has its own false claims act, some Fed. Higher Ed. Act language may also be applicable here) - can anyone recall a school suing in previous realignments or when a conference has dissolved? Or even threatening legal action?

Edit: Damn, I just thought, if you are UTEP and you want to do this, it's going to put Adm. McRaven the Chancellor of the UT System and BOR in one helluva position, the Big 12 would be watching very closely.  They may need another non-Texas school to hold on an initiate it with them, which may muddy the waters even more as the UT System would be put in one really tough spot considering the precedent a case like this would make, and the impact it would have on other UT schools now and in the future.  

[Green Otaku]

The departing schools lose their votes on all conference matters as soon as they announce they are departing so it is not possible for them to vote to lower the exit fee. 

The only way we do not pay an exit fee is if the conference dissolves. 

[MrAlien]

There is a minimum number of schools a conference must have (8 I think) in order to have an automatic bid to the NCAA tournament.  So anything less then that must trigger some sort of exception clauses, because the tournament is such a big revenue generator for the smaller conferences.  

[EAGLE83]

Minimum is 6

[Pseudo Nym]

15 minutes ago, Green Otaku said:

The departing schools lose their votes on all conference matters as soon as they announce they are departing so it is not possible for them to vote to lower the exit fee. 

Makes sense!

16 minutes ago, Green Otaku said:

The only way we do not pay an exit fee is if the conference dissolves. 

This is interesting, and the definition of dissolves or legal arguments of what constitutes dissolved, may be the cliffhanger if a school or schools decide to pursue legal options.

I use UTEP as an example because it looks like they're going to get the short end of the stick and if they can recoup $10 mil or more through legal channels, I'd be calling for it if I was a UTEP alum.

[Tom McKrackin]

37 minutes ago, MrAlien said:

There is a minimum number of schools a conference must have (8 I think) in order to have an automatic bid to the NCAA tournament.  So anything less then that must trigger some sort of exception clauses, because the tournament is such a big revenue generator for the smaller conferences.  

Think it mAy be 6 minimim

[Green Otaku]

3 hours ago, Pseudo Nym said:

Makes sense!

This is interesting, and the definition of dissolves or legal arguments of what constitutes dissolved, may be the cliffhanger if a school or schools decide to pursue legal options.

I use UTEP as an example because it looks like they're going to get the short end of the stick and if they can recoup $10 mil or more through legal channels, I'd be calling for it if I was a UTEP alum.

I have no doubt that CUSA will collect every dollar owed to them, dissolve means the conference would not exist in any way, shape, or form. Look at the WAC, while it's no longer an FBS conference it is still around. The only way I can see CUSA dissolving is if every team finds a new home and leaves the conference, and CUSA cannot get a single other team to join. 

Reports say Marshall and ODU would be joining the SBC leaving UTEP, FIU, LA Tech, MTSU, and WKU. If WKU and MTSU do something like join the MAC then maybe I can see the conference disbanding. But for the 3 remaining teams that's 33 million in payouts, so it gives them an incentive to hang around and at least collect a check before they move on. 

[El Paso Eagle]

I think some of the fees may end up going to help the schools joining the league. Have a hard time thinking they're going to ask these schools to pay an entrance fee

[Pseudo Nym]

Posted this in another thread in a response to the potential of no exit fees and the tongue-and-cheek comment about Ms. Judy keeping the $$$, more relevant here (sorry I'll get it together):

Exit Fees, 501(c)3's, and the Possibilities  (Dropping bars on a Sunday 🤣🤣)

So, MLB restructured Minor League baseball when the professional baseball agreement expired in 2020.  Prior to that all the minor league, leagues (i.e. Texas League) were non-profits which oversaw the operations of the leagues, renaming them Low-A, Double-A, Triple-A etc. and getting rid of the "Texas League" and "Pacific Coast League" for example, but this was not a marketing move, this was done for legal reasons.

When a non-profit dissolves, part of the process (which they are guided through and must report back to the IRS) is dissemination of funds (the money left in the coffers).  To do this, they must simply identify a similar non-profit, clear it through the IRS, and those funds would be transferred to another non-profit organization.  It is illegal for a for-profit organization to take control of a non-profits funds and intellectual property (The Texas League name and logo are examples of intellectual property), which is why MLB, functioning clearly as for-profit in this circumstance, can lay no claim to the names of The Texas League, Pacific Coast League or remaining funds (end of year balance for the Texas League has usually always been less than $500k).

MLB also has an anti-trust exemption (since 1922) which has allowed them to take control of the entire professional baseball market in the United States, without legal recourse for competitors, it can legally be a monopoly.  Being the monster that they are, they did try to commandeer two league names which has been contested by a new group, Summer League Baseball Inc., which is a 501 nonprofit, which I briefly advised when this all went down and am an ex-officio member.  This is where I learned about this stuff, I'm not a lawyer but learned pretty quickly that non-profit law is big business!

Anyway, I digress (as usual), with regards the exit fee, these will need to be account for in the final audit, short of a vote to change the exit fee and bylaw, prior to the proposed dissolution date of the 501.  This is to say, while there may very well be no exit fee when the time comes, it would need to be done officially, per the bylaws that govern it. 

I'm really curious to see how this goes down, I think about UTEP Athletics and what they're facing in the years ahead, and they have every incentive to say "screw all of you, pay your fee, leave, then it's just us in CUSA, and we would then control all assets."  I'm not saying this will happen, but I do think it's on the table.

Judy's $$$ 

Aresco, the AAC Commissioner, may be the most competent commissioner in all of college sports, he's forward thinking, incredibly and unapologetically bold, and could care less what other people think, he's proven time and time again he's going to get things done and do it in a big way that benefits everyone in the conference - dude is the real (emphasis word) deal.

He has probably already played out every scenario, including UTEP holding up the CUSA Coffers, and has made moves to ensure the AAC reaps the most reward from the dissolution of the CUSA.  

There are five people in the CUSA which make six-figure salaries, and with the dissolution of the 501, will be looking for new jobs.  Transferring the assets and $$$ of CUSA could be at the discretion of the Executive Officers, or the Commissioner, or some combination thereof, depending on how the bylaws are written.  If you've ever set up a 501(c)3 you'll remember that this seemingly routine process required more than one individual to be named in the organization, and you could always add more and remove later, but when a 501(c)3 is first set up, this lays ground of the framework for an eventual dissolution. 

What I'm getting at here is this, Aresco will have all of this laid out (he probably already does) and it could be that when the CUSA dissolution process begins, all assets (including exit fees as they must be account for, see above) could be transferred to the AAC.  

The modicum of truth: Whatever role Judy and co. may play or not play in this, may prove worthy of a job or position in the AAC front office.

I've attached the full 990 from 2019 as well for anyone interested.

TL;DR:

• CUSA MONEY HAS TO GO TO ANOTHER SIMILAR NON-PROFIT 
• THE AAC COULD CLAIM IT OR HAVE IT GIVEN TO THEM BY THE CUSA COMMISSIONER
• INCLUDING ALL EXIT FEE DOLLARS WHICH THE IRS REQUIRES TO BE ACCOUNTED FOR BY THE CUSA BYLAWS
• UNLESS THE BYLAWS ARE OFFICIALLY CHANGED PRIOR TO THE DATE THE NOTICE OF DISSOLUTION OF THE CUSA 501 IS SUBMITTED

Below is from 2019, BUT some of you might find it interesting that Ms. Judy got a $140,000 raise to her annual salary from 2019 to 2020 (it would be patronizing to everyone for me to point out that this was a six-figure raised during the COVID pandemic but I just realized this for the first time and it kind of pisses me off so I'm adding it to the record should an accident befall me on my drive into the city).

GMG!

CUSA 990 - 6.2019.pdf

Edited October 24, 2021 by Pseudo Nym
There is no "claims process" that sentence is misleading which is why I crossed it out - the thought behind "claiming" is more of a justification if after the fact another conference realizes they were late to the table, bad look for that commish though!

[El Paso Eagle]

$547K a year for her leadership? Time for a refund

[Udomann]

2 hours ago, El Paso Eagle said:

$547K a year for her leadership? Time for a refund

Was going to comment that I'd be happy to get paid that much to do such a poor job, but remembered how much coach Mumbles makes and had to increase my expectations on failing for money

Edited October 24, 2021 by Udomann

[shaft]

17 hours ago, Pseudo Nym said:

 

What I'm getting at here is this, Aresco will have all of this laid out (he probably already does) and it could be that when the CUSA dissolution process begins, all assets (including exit fees as they must be account for, see above) could be transferred to the AAC.  

 

This is a complete crackpot theory.  There is no reason CUSA would name AAC it's successor or any way the ACC could claim CUSA's assets.

The minimum 6 teams is to stay an FBS conference.   CUSA as an organization can continue to exist and still collect the exit fees.  The only way CUSA is going to agree to mutually dissolve and not collect exit fees is if everyone finds a home.  And right now UTEP, LA Tech, and FIU are going to take the exit fees as they face Independent status or an FCS downgrade.

[Tom McKrackin]

17 hours ago, El Paso Eagle said:

$547K a year for her leadership? Time for a refund

That’s outrageous!

[Pseudo Nym]

1 hour ago, shaft said:

This is a complete crackpot theory.  There is no reason CUSA would name AAC it's successor or any way the ACC could claim CUSA's assets.

"That which can be asserted without evidence, can be dismissed without evidence."

I can accept the point of view that this is unlikely to happen, you could even put it at a less than one percent chance of happening but for the sake of discussion, at least add to the conversation by citing a source or example to the counter claim or other idea.   My argument is substantiated, supported with evidence and examples, which can be verified.  If I made a mistake, misinterpreted something, came up short or missed something, I invite that criticism and clarification.  Also, I never said successor and clarified the "claim" sentence yesterday almost immediately after posting it.

Your position is that the minimum is 6 teams is to stay as an FBS conference and CUSA can continue to exist and still collect the exit fees [as long as there are 6 teams].  The only way CUSA is going to agree to mutually dissolve and not collect exit fees is if everyone finds a home and [as it stands right now] UTEP, LA Tech, and FIU are going to [stay until the end and] take the exit fees.

I agree with your position and said as much, albeit with one team as an example versus three:

19 hours ago, Pseudo Nym said:

I'm really curious to see how this goes down, I think about UTEP Athletics and what they're facing in the years ahead, and they have every incentive to say "screw all of you, pay your fee, leave, then it's just us in CUSA, and we would then control all assets."  I'm not saying this will happen, but I do think it's on the table.

I would assume there would be a CUSA bylaw pertaining to something you mention, the dissolution, maybe there's specific circumstances laid out that would trigger an automatic dissolution and what that would look like?  Has this been a thing in the past with other conferences?  We've come a long way since the SWC but I wasn't around then, maybe someone recalls a similar situation that may provide a precedent or perspective?  That's really all I'm trying t get it, what's the sphere of possibilities, and how can that be leveraged for our benefit (UNT) and our new conference partners?

 

[Hookset]

On 10/24/2021 at 11:00 AM, MrAlien said:

There is a minimum number of schools a conference must have (8 I think) in order to have an automatic bid to the NCAA tournament.  So anything less then that must trigger some sort of exception clauses, because the tournament is such a big revenue generator for the smaller conferences.  

Minimum of 6 schools needed for an automatic bid as a conference champion to the tournament.