All Things Notre Dame - The Clashmore Mike Memorial Thread

[iam416]

Damages are rarely impossible to calculate. And the breaching party is always still liable for the actual damages.

Example: A agrees to wholesale corn to B for $2 and B agrees to buy 100 bushels. It costs A $1 to produce the corn and B can resell the corn for $3. A and B agree that if either breaches they will pay the other $10,000. B later finds that C will sell the corn to him for $1.50. B breaches and buys from C.

The actual damage A suffered is $100 -- the profit he would have realized from the contract. B is liable for that amount.

B is not liable to A for $10,000. That is a penalty and thus an unenforceable liquidated damages clause.

With respect to Maryland and the ACC, what is the damage suffered by the ACC? First, remove the mitigation of adding Louisville. Then, look at how Maryland leaving the league will cost each school money. Does it result in fewer revenue home games? Does it lower TV revenues? Does it lower any other revenues? Hire an expert to quantify those numbers, and you have a damages number.

Damages, IMO, are nearly always able to be quantified to some sufficient degree of precisions. IMO, this isn't a case that is the exception to the rule. That said, they could still get homered in NC. BUT, as I also said, the judgment would have to be enforced in Maryland by Maryland courts. Typically, comity/FF&C Clause would make that a non-issue. But what if the ruling is directly contrary to that state's own law and own procedure for suing state entities? I would guess, e.g., that the ACC couldn't sue UNC in state court -- they'd have to go through a special court -- maybe the court of claims (that's the way it is in Ohio).

There are significant issues, IMO. However, IMO, that's missing the forest for the trees. The $50M doesn't really matter to the B10. If they want an ACC team, they'll take them. Actually, WHEN they want an ACC team, they'll take them.

[DookSucks]

You can sue the university in Superior Court here in NC

[iam416]

Heathens.

[DookSucks]

I am proud that our courts are open to and dispense justice to all. The same cannot be said for the state that gave us the likes of the Harding administration and James Trafficant.

[Clashmore Mike]

So, I'm not sure how the dominos will fall, but I feel very certain that the B10 will go to at least 16 and they'll do it with ACC schools. The $50M exit fee issue is a virtual non-issue.

Don't understand how the $50m is considered damages, in-lieu-of a contractual obligation...but I'll defer to you there. But my next question would be that (it seems to me) the above would represent a very serious liability.

Per your scenario, the ACC could not claim substantial damages against Maryland because they picked up Louisville right away...understood.

However, if the Big 10 raided away North Carolina and Georgia Tech, while FSU & Clemson went to the Big 12...the damages would be catastrophic. The ACC could lose it's TV contract, bowl championship game, BCS slot, etc. because there aren't equal members available to replace those four...couldn't the damages run into the hundreds of millions?

In other words, if the $$$ is characterized as "damages" in-lieu-of a contractually specified sum ($50m), then what is to keep that number from going through the roof?

[hack]

I think I understand damages in this context as money that though owed to you the lack of it does not harm the ongoing operations of the entity. But any of the people that acutally know that stuff are welcome to chime in (except of course Stan).

[WM Wolverine]

You pretty much answered your question, Clash...

Maryland is setting the bar for the 'exit fee' of the ACC via lawyers as we speak. Nothing in expansion (in the SEC, B10, Big XII) is going to happen till we find this new 'exit fees' price tag. Once FSU, Clemson, etc. find out this price, they'll do their calculations to find out if they really want to jump to the Big XII. Not sure if those schools have interest from the SEC as I believe the SEC is interested in the same markets as the B10; Virginia & North Carolina.

[UMStan White]

Trying to explain damages to you Hack would be like trying to explain quantum physics to a fifth grader.

[geo weidl]

slow day at the office Stan?

[iam416]

That's probably true re FSU and Clemson b/c the B12 and those schools can't afford to deal with it.

Delaney and the B10, though, can work out something out with the exiting school. It won't stop Delaney from doing whatever the hell he wants to. I would be shocked if the ACC exists anywhere close to its current form in 3 years. Shocked.

But the fact is they're are not a power player. And the only way they could possibly salvage their conference is to convince Swarbrick to give up independence. But we all know ND will cut off its nose to spite its face when it comes to independence/conference affiliation.

I mean, seriously, the ACC added a $50M exit fee, bent over for ND and Maryland still left (and, from what I understand, Maryland initiated the interest). The B10 and Delaney will do what they please.

As for the potential damages if the ACC falls apart, first, a number of schools won't be damaged -- they'll actually get more money. If Delaney says fuck it, you're up Virginia -- and that sets off a shitstorm and FSU and Clemson end up in the B12, those schools haven't been damaged. The schools with a claim will be Wake, certainly, and possibly Pitt, Syracuse and BC -- the schools that get left out.

[Hannibal]

Damages are rarely impossible to calculate. And the breaching party is always still liable for the actual damages.

Example: A agrees to wholesale corn to B for $2 and B agrees to buy 100 bushels. It costs A $1 to produce the corn and B can resell the corn for $3. A and B agree that if either breaches they will pay the other $10,000. B later finds that C will sell the corn to him for $1.50. B breaches and buys from C.

While I understand the corn analogy, it's got some flaws. In the corn case, there is one easily verifiable number, which is why both parties would probably agree to a generic "liability for liquidated damages" clause. To do otherwise doesn't make much sense, because the risk is symmetric.

With conference expansion though, it's a lot more complicated, and whatever should be included in the damages number is highly subject to question. Here is but a tiny sampling of damages that could reasonably be included...

1. The cost of taking down all of the little Maryland flags around each stadium and putting up the Louisville ones.

2. The cost of printing new T shirts

3. The cost of printing new media guides, etc

4. The loss of goodwill and brand recognition that occurs during Maryland's lame duck period in the ACC.

5. Reduced attendance in any tournament conference championship by Maryland during the lame duck period.

6. The permanent downgrade in brand recognition and conference loyalty that comes from replacing Maryland with Louisville. Try and put a dollar figure on that. $1 million? $15 million?

7. Increased conference instability -- resulting in the inability to negotiate TV contracts, retain other members of the conference, or invite new quality members. This has significant value, but it's impossible to calculate. The addition of Louisville mitigates a lot of this. But if the exit penalty is based off of actual damages, then that means that the ACC has a strong disincentive not to mitigate.

8. All of the paperwork costs associated with exiting Maryland and bringing in Louisville. Given the beauracracy present in academia, I'm guessing this isn't a small number.

9. The costs of rescheduling football games. This wouldn't be small. The costs of juggling a schedule on short notice could be a complete bitch. Everyone has to suddenly fill a hole that used to be filled by Maryland. For a lot of programs, that could mean scheduling James Madison or Delaware State in the middle of October. This number would include the loss in hot dog sales or soft drinks that occurs when you host a shitty last minute filler instead of a conference opponent. This is another number that is impossible to pin down in a reasonable period of time with a degree of certainty.

9. The portion of every salaried employee's time that they devote to a transitional activity.

The actual verifiable numbers would need mounds of paperwork and would have to be verified by an army of lawyers costing massive amounts of money. The SWAG types would have no documentation supporting them and would be a guess, which would have to be argued over by armies of lawyers. Is it really that unfair to just default to a pre agreed-to number that Maryland volutarily said was OK? It certainly is cheaper to society that way. If this number wasn't previously agreed to by Maryland, I'd feel different.

[Clashmore Mike]

You pretty much answered your question, Clash...

Maryland is setting the bar for the 'exit fee' of the ACC via lawyers as we speak. Nothing in expansion (in the SEC, B10, Big XII) is going to happen till we find this new 'exit fees' price tag. Once FSU, Clemson, etc. find out this price, they'll do their calculations to find out if they really want to jump to the Big XII. Not sure if those schools have interest from the SEC as I believe the SEC is interested in the same markets as the B10; Virginia & North Carolina.

This was pretty much my original point...but it doesn't answer my subsequent question. If we are to follow Talent's model as I understand it, and the "exit fees" aren't specified by the designated amount ($50m) agreed upon by the membership, then whatever the Maryland lawyers come up with will not necessarily dictate the exposure of the other schools should they jump.

[Clashmore Mike]

...the schools with a claim will be Wake, certainly, and possibly Pitt, Syracuse and BC -- the schools that get left out.

This is the crux of what I was getting at. If their claim is based on damages as you say, not the specified amount ($50m)...then the damages could be hundreds of millions of dollars in revenue (split up among Clemson / FSU / Virginia / etc.).

[Clashmore Mike]

I think I understand damages in this context as money that though owed to you the lack of it does not harm the ongoing operations of the entity. But any of the people that acutally know that stuff are welcome to chime in (except of course Stan).

But if this is the case, then there would be a greater liability for a desirable school with some clout...say Florida State in-lieu-of Maryland.

[WM Wolverine]

"then whatever the Maryland lawyers come up with will not necessarily dictate the exposure of the other schools should they jump."
-

True in theory but it works from previous expansion the first team that leaves more or less 'sets' the exit fee.