When the ACC voted in September to immediately raise its exit fee to three times its annual operating budget – around $50 million – the move was seen as an important step in maintaining the league’s future stability, a way to prove to its schools the strength of the conference and make it more difficult to sever ties.

Maryland, which announced its intention to join the Big Ten this week, could use that very language to mount a challenge if it wants to push back against the ACC’s exit fee.

If the ACC reached its new figure through future forecasts of what losing a member school could cost, the fee is legally sound.

If Maryland can prove the exit fee is meant to be punitive against schools leaving rather than a reflection of projected loss, the school could make some ground in whittling the figure down.

“That language doesn’t help,” said Timothy Davis, a professor of sport and contract law at the Wake Forest School of Law. “That’s the type of language Maryland will likely play to to bolster its case, that the intention was not to try to come up with a reasonable estimate of what the ACC’s losses would be, but merely to try to penalize.

“That is not a function of contract damages.”

Maryland’s Wallace Loh, a former dean of the University of Washington Law School, was one of two ACC presidents to vote against the increased fee in September, telling the Washington Post at the time he disagreed with “punishing people if they simply exit a relationship.”

The school has not ruled out paying the entire exit fee but has also expressed a desire to lower it through negotiations with the league.

An ACC official said the league’s legal counsel was present at the September meeting in which it was passed and are satisfied that the new fee is “legally binding.”

“(Loh’s) going to say Maryland believes they can enter into some type of settlement, because he’s trying to state a strong negotiating position,” Davis said. “The same thing is true of the ACC. I don’t know what is going to happen. The ACC may decide it wants to make some precedent here, may want to take this all the way.

“But if you were to look at what’s happened in the past, if this were to follow the typical pattern, there will be some type of negotiation.”

Davis and UNC School of Law sports law professor Barbara Osborne both said there is no precedent of a conference and a school settling exit fee questions in court.

West Virginia, Syracuse and Pittsburgh all negotiated amounts to pay on top of the Big East’s $5 million fee for an earlier exit than the 27-month notice mandated by the league.

Missouri and Texas A&M were expected to pay an exit fee of nearly $30 million each when they left the Big 12 earlier this year, but each team ended up paying $12.41 million after negotiation.

Davis said there is a bit of history with coaches and schools going to court over “liquidated damages.”

In 2008, Rich Rodriguez and West Virginia settled for the $4 million buyout he owed the school, with his new school – Michigan – picking up $2.5 million of the tab after West Virginia filed a breach of contract motion against the coach.

In 1999, an appellate court upheld a district court finding that coach Gerry DiNardo owed his former university, Vanderbilt, nearly $300,000 after leaving before the end of his contract to take a job at LSU.

In those two cases – and in other cases from the business world – Davis said courts have been inclined to uphold “liquidated damages” provisions.

The key, Osborne said, is for the side seeking the damages to demonstrate the figure it arrived at is not arbitrary.

“You’re looking into a crystal ball. You don’t know the actual cost,” Osborne said. “The whole reason you create something like liquidated damages clauses – or exit fees – is because it’s really, really hard to measure all the intangibles that go along with a member leaving the conference. Maryland, being a long-standing and founding member, there’s goodwill that goes along with that. There’s potential loss of reputation for the conference in that one of its founding members is now leaving.

“How do you measure that in a marketplace? Those are really intangible, difficult things to measure. But do they have an impact on the value of the conference? Absolutely.”

DOTHAN, Ala. – Premium parking was easy to find on a hot, muggy day in late May at Center Stage bingo casino. In a sea of almost a thousand parking spaces, just 52 cars sat in the lot.

Inside, the view was drearier. Electronic bingo games were played on silent computer monitors, giving the casino all the excitement of a doctor’s waiting room. The adjoining restaurant was an empty, out-of-business shell. The places where a high-end bar and a club were originally supposed to be were either locked up or cast in shadows.

Part of the bingo hall was partitioned with an odd black wall featuring flecks of light shimmering through. On closer inspection, the “wall” was actually a bunch of spray-painted plywood sheets patched together.

Customers wore T-shirts and paint-splattered jeans, and the Southern drawl of the man talking over the PA system made the room like a scene from a Jeff Foxworthy routine.

Yet for a group of 35 current and former NFL players, Center Stage is no joke. Raided by Alabama state authorities in July and stripped of its “illegal” bingo computer monitors, the casino is now down to hosting paper bingo – the final shred of economic life in a business that’s part of a bankruptcy filing including $68 million in losses, including as much as $43.6 million from NFL players.

Even with the bingo hall’s adjoining amphitheater, bed-and-breakfast and RV parking lot on the property, the question that plays on a loop is simple: Where did all the money go?

Read more here.

MIAMI – The NFL Players Association is investigating the relationship between agent Drew Rosenhaus and a former financial adviser who persuaded a number of players to invest in a failed Alabama bingo casino, a source with knowledge of the inquiry told Yahoo! Sports.

According to multiple sources who talked to Y! Sports on the record and for background, Rosenhaus and Jeff Rubin had an unusually close business relationship that spanned upwards of seven years. That relationship might have resulted in Rosenhaus breaching the fiduciary duties all agents who are certified by the NFLPA owe to their clients. The relationship has been scrutinized in part because of a series of issues surrounding Rubin, who is at the center of a bankruptcy filing for the failed casino that cost the players as much as $43.6 million.

Starting in 2003, Rubin was questioned about financial transactions that could have raised red flags for a financial adviser, a five-month Y! Sports investigation has found. That included allegedly mismanaging a player’s game checks in 2003 and settling an issue related to allegedly falsified insurance documents in 2004.

The NFLPA is looking into whether Rosenhaus should have paid closer attention and kept his clients away from Rubin, founder of Pro Sports Financial. Multiple sources, including free agent NFL wide receiver Terrell Owens, indicate Rosenhaus actively recruited players with Rubin and valued that association because it helped him increase his business. Although Rosenhaus specifically denied any relationship to the casino and there is no evidence to indicate he profited in any way from the project, his client base grew to more than 100 players during the seven years Rosenhaus and Rubin were associated. Rosenhaus currently represents about 140 players, more than any other agent in the NFL.

Read more here.

The National College Athletic Association announced its actions on Monday against Penn State University’s revered football program in response to the recent child sex abuse scandal. The penalties include fines of $60 million and the nullifying of the team’s victories for the past 14 seasons as well as a post-season bowl game ban and a reduction in player scholarships.

Wake Forest Law Professor Timothy Davis is one the country’s best known sports law scholars and a member of the Board of Advisors for the National Sports Law Institute.

Davis says ordinarily in analyzing the fairness of sanctions imposed by the NCAA, a comparison is made to sanctions imposed against institutions that committed similar violations. 

“Here, the nature of the violations was atypical,” he said.  “In previous cases, findings of lack of institutional control and unethical conduct are a consequence of violations of specific rules such as an agent giving money to student-athletes with the complicity of a coach. In this case, the NCAA found that Penn State committed violations of its fundamental principles without the attendant violations of a bylaw relating to matters such as the prohibition against extra benefits or academic fraud.” 

News reports are calling the punishment of Penn State officials who were accused of not taking action after being alerted to child sex abuse by former assistant football coach Jerry Sandusky unprecedented for its swiftness and breadth. The scandal tainted former coach Joe Paterno and led to his firing last year along with other top school officials.

Davis says the NCAA penalties reflect the egregious nature of the actions engaged in by Penn State officials in response to the crimes committed by Sandusky. 

“The sanctions also reflect the primacy of the principles of institutional control (i.e., institutions through their officials are held responsible for the conduct of their intercollegiate athletics programs) and ethical conduct,” Davis explains.  “The impact of the sanctions is likely to be felt by Penn State for some time into the future.  The post-season ban coupled with the ability of football players to freely transfer and the limits on scholarships will significantly erode the competitiveness of the football program over the next several years.  Also, the NCAA’s action is likely to impact how those within and outside of Penn State view the university.”

In a scathing rebuke of Penn State administrators, NCAA President Mark Emmert said the school had put “hero worship and winning at all costs” ahead of integrity, honesty and responsibility, according to Reuters. Until Monday, Paterno had held the record for victories among U.S. college football coaches.

Reuters also reported The Big Ten Conference of college sports announced Penn State would forfeit its share of revenues for bowl games organized by the league, and the estimated $13 million would instead be donated to charities devoted to the protection of children.

Davis said the precedential effect of the NCAA’s actions against Penn State is uncertain. 

“Although Mark Emmert and Edward Ray emphasized the unique nature of the events that led to the action taken by the NCAA, I would not rule out efforts in the future to pressure the NCAA to take action, for example, in cases involving a pattern of criminal or violent conduct perhaps committed by athletes,”  he said.  “Finally, Mark Emmert identified changing the athletic culture at Penn State as a primary goal of the NCAA’s penalties and corrective actions.  Whether the wide-ranging penalties will impact athletic cultures at institutions beyond Penn State is also wrought with uncertainty.”

This spring, the Wake Forest University School of Law will welcome back Gary Way, general counsel to Nike Global Sports Marketing organization, as part of the “Conversation With…” series.

Way, who has worked with star athletes Michael Jordan, Kobe Bryant, LeBron James and Tiger Woods, among others, will speak to the law school community at noon on Tuesday, April 10, in Room 1312 of the Worrell Professional Center.

 “I was certainly flattered to be invited the first time, and I am further flattered that they would invite me back,” said Way, who visited the Winston-Salem campus as part of the “Conversation With” series in 2002.

“I’ve been blessed by my opportunities in life, and I feel this is my way of giving back. I enjoy talking to law students because I love their enthusiasm, and I hope that I will be able to impact them like many of the speakers I have heard in my career.”

Way manages the sports marketing law practice group based at Nike’s World Headquarters in Beaverton, Ore. He is responsible for covering all aspects of sports marketing-related legal affairs, but usually focuses on contract negotiations with the National Football League, the Brazil National Soccer Team and the National Basketball Association as well as BCS and NCAA championship teams. He has spent the past 10 years drafting and negotiating many of the most lucrative and cutting-edge contracts in sports marketing, which is a dream come true for the former Rutgers University football player.

“It’s like getting paid to eat ice cream,” Way said. “I’ve always had an interest in sports in my personal life, but to be involved in many of today’s sports and front-page news stories in my professional life is exciting. I love the diversity and the challenges that come with working with so many different athletes.”

Prior to joining Nike in 1996, Way spent 10 years in the NBA legal department while concurrently serving as a U.S. Army Reserve officer. He also worked as a litigation associate at Haight, Gardner, Poor and Havens in New York City. He earned his law degree from New York University after receiving his bachelor’s degree from Rutgers, where he was a Distinguished Military Graduate. He is a member of the board of the National Sports Law Institute at Marquette Universityand a frequent speaker and writer on sports marketing legal topics.

“Gary has had a very varied career, and I think our students will enjoy meeting someone who has really excelled in their career,” said Professor Timothy Davis, who also serves on the board of directors for the National Sports Law Institute. “He is a very gracious and kind person who has many interesting stories to tell. Our students can learn a lot from him because the skills he uses for contract negotiations can be transferred to all areas of the law.”

Journalists and sports pundits alike have criticized, analyzed and hypothesized about why the system of college sports is breaking down at length in the past week. But we’ve been ignoring a big black elephant in the room.

High profile football players caught in the center of booster controversies are disproportionately African American.

USC’s Reggie Bush, Oklahoma State’s Dez Bryant, Georgia’s A.J. Green, Alabama’s Marcell Dareus, Auburn’s Cam Newton and the latest poster child of “amorality” in sports, Terrelle Pryor of Ohio State, have all become infamous for proven — or sometimes unproven — cases of having friends with benefits.

We’ve seen public disgust directed at these athletes and now even NFL commissioner Roger Goodell is exposing his frustration with NCAA rule-breaking by punishing Pryor with a five-game suspension.

Read the full story here.

A $17,000 scholarship that the University of Hawaii refused to grant football player Daniel Smith three years ago has so far cost the school nearly $200,000.

Smith, a defensive back from Boise, Idaho, said he committed to the Warriors, who offered him a scholarship, told him to refuse other offers and then reneged on their promise, leaving him without a scholarship on national letter of intent day in 2008.

A lawsuit was filed soon after and the parties reached a settlement agreement in 2010, nearly 2 1⁄2 years after the case began, in which UH paid Smith $41,500 “in order to avoid further controversy and the time, expense, risks and costs inherent in litigation,” according to documents released by the school under the state’s open records law. According to the settlement, “this agreement shall not be construed as an admission of liability.”

Read the full story here.

“Losing to Win: Discussions of Race and Intercollegiate Sports,” a two-day conference hosted by Wake Forest University in April, was billed as the largest summit of its kind.

But the discussion ranged into several non-race-specific areas — from student-athlete exploitation to head injuries. Wake sociology professor Earl Smith and law professor Timothy Davis spent more than a year assembling leading authorities to examine, as Davis puts it, “the world of college sports that we don’t like to think about and oftentimes don’t like to talk about.”

Papers authored by conference presenters will appear in Wake Forest’s Journal of Law & Policy, to be published early next year. Paul Steinbach asked Davis, a member of the board of advisors for the National Sports Law Institute and co-author of The Business of Sports Agents, to talk about three issues facing the NCAA.

Read the full story here.

This week’s “Losing to Win” symposium, co-sponsored by the law school and the Provost’s Office, was previewed by DiverseEducation.com. 

The newest law journal at Wake Forest, the Journal of Law & Policy, has adopted the “Losing to Win: Discussions of Race and Intercollegiate Sports”¹ conference, which was held April 13-14, as its Spring 2011 symposium.

Expert panelists speaking during the opening sessions of a two-day academic conference on college sports and race detailed how lucrative sports competition — men’s basketball and football — have led many to ask whether student-athletes in those sports are exploited for their talent while others profit immeasurably.

Read the full story here.

At the height of March Madness, U.S. Secretary of Education Arne Duncan highlighted the true madness of the NCAA men’s basketball tournament: 10 of the 68 teams that competed are not on track to graduate half their players. Is it fair, he asked, to reward teams with millions of dollars for their athletic feats when their players lag so far behind academically?

While I agree wholeheartedly with Duncan’s call for raising the academic bar for post-season play, I think it is important to add another element to his call for action. We also need to take into account the growing disparity between black and white athletes, which is big and getting bigger.

According to a newly released study, 91 percent of white basketball players on 2011 NCAA Division I Men’s Basketball Tournament Teams graduated last year, while only 59 percent of their black counterparts earned their college degree — a 32 percent gap. Furthermore, this is the third straight year the disparity has increased.

Read the full story here.