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ACC and Maryland Settle Exit Fee Dispute

In late 2012, the University of Maryland (“Maryland”) announced that it would exit the Atlantic Coast Conference (“ACC”) to join the Big 10 Conference (“Big 10”). Shortly thereafter, on November 26, 2012, the ACC filed suit against Maryland seeking to enforce the exit fee of the termination procedures as set forth in Section IV-5 of the ACC Bylaws. According to Section IV-5 of the ACC Bylaws, a withdrawing member shall be subject to a withdrawal payment in an amount “equal to three (3) times the total operating budget of the Conference (including any contingency included therein), approved in accordance with Section V-1 of the Conference Bylaws, which is in effect as of the date of the official notice of withdrawal.” In 2012-13, the ACC’s operating budget was $17,422,114.00. According to Section IV-5, Maryland would owe the ACC the total amount of $52,266,342.00.

After the ACC withheld Maryland’s television and bowl revenue, Maryland filed a countersuit against the ACC claiming the exit fee and associated ACC Bylaws are anticompetitive and “lack any legitimate economic justification.” Accordingly, Maryland sought recovery of the $16 million withheld by the ACC, $156,799,026.00 (i.e., three times the $52.3 million buyout—trebled under antitrust laws), and punitive damages.

On August 8, 2014, the parties announced they agreed to resolve the disputes pending against one another. Instead of paying the $52.3 million buyout, Maryland agreed the ACC is permitted to retain the $31.4 million that had been previously withheld from Maryland by the ACC. Maryland will not owe any additional funds. Maryland officially joined the Big 10 on July 1, 2014 and will compete in the Big 10 this season.

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