Tuesday, November 1st, 2011...5:48 pm

Using the Courts

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By Sam Mann

There are lots of reasons for people and/or organizations to use the court system. Sometimes there is a legitimate dispute that cannot be solved outside. Other times one party is making a frivolous claim against another. Some parties are being forced into court by circumstances against their will. Still other times, the courts are a weapon to achieve settlement. This week in the world of sports, the courts have been an active participant.

First, the Los Angeles Dodgers Bankruptcy. As you might remember, the Dodgers filed for bankruptcy after Major League Baseball rejected its massive, but still questionable television deal with FOX (questionable because of the up-front loans owner Frank McCourt stood to obtain as part of the deal). Last week, the court delayed the trial about a month, with nearly all commentators indicating that this would give the parties an opportunity to settle. The LA Times is now reporting that McCourt is nearing an agreement to sell the Dodgers, for a price that could exceed $1 billion. McCourt seems to have finally recognized that even if he wins in Bankruptcy Court, as both MLB and FOX have filed adversary actions opposing McCourt’s attempt to auction off the Dodgers television media rights, he won’t be able to retain the team much longer. Part of this is because he does not have the capital to invest in the team (hence the bankruptcy) and also because he entered into a divorce settlement with his former wife to the tune of $130 million. Court documents in the LA Times report indicate that even with a new TV deal, McCourt would have liquidity problems as early as 2013.

MLB is extremely motivated to “win” and have McCourt sell for multiple reasons. First, and foremost, this whole ordeal has been a black mark on baseball’s leadership. While the Texas Rangers bankruptcy last year could be chalked up to overspending and the financial collapse that lowered Tom Hicks’s level of wealth (both somewhat legitimate reasons), the Dodgers financial apocalypse is much less explainable. It seems clear that MLB should never have approved McCourt’s bid to buy the Dodgers to begin with. He purchased the team with an absurd amount of debt, somewhere around $420 million, and it was questionable whether he ever had the financial capabilities to effectively run the Dodgers. There was also the Brian Stow incident and pending lawsuit, as well as the contention that McCourt and his family misappropriated Dodger funds for their own personal benefit. MLB recently filed a motion in Bankruptcy Court alleging $190 million worth of misconduct.

Add to all of this that Dodger fans have turned against McCourt, and it seems like there is no way out for a man who can reasonably be called one of the worst owners in sports history. Chalk this one up to a party being forced into court against his will, rather than a legitimate dispute. The next piece of news is more of a dispute between interested parties.

Yesterday, West Virginia University instituted a declaratory action against the Big East Conference in the latest development of the conference realignment saga. You can find the complaint in PDF form here.  It’s an interesting read, as it becomes very clear how West Virginia plans to avoid its obligations to the Big East.

A brief summary of the events leading to the lawsuit. The Big East is slowly dying as a football conference. First Pittsburgh and Syracuse left for the ACC. The Big East responded by saying it would hold the two to the 27 month waiting period for withdrawal in the Big East bylaws, to which all conference members approved. Neither Syracuse of Pitt has formally challenged the waiting period, though officials from both have quietly wondered if it might be altered. Then TCU, which was supposed to join the conference next school year, withdrew for the Big 12 before ever competing as a Big East member. Unlike Pitt and SU, they were not to be held to 27 month waiting period. Then last week, WVU accepted an invitation to join the Big 12. The Mountaineers took a slightly different tact than the previous schools intending to leave and announced that the school is gone as of July 2012, regardless of anything the Big East had to say about it.

Those are the facts that lead to this lawsuit, but before we list West Virginia’s main argument, it is appropriate to impute some commentary here. As a Big East fan (as a result of my strong affinity for Syracuse), I have observed the entire trajectory of the league from its early football days. The Big East is a basketball conference that tried to play football. For a while it did so pretty successfully. In the 90s, Miami, Virginia Tech and even my Orangemen had nationally competitive programs. But then the league started to fracture and it did so for two reasons: structure and leadership. Former Commissioner Mike Tranghese was an effective and well respected leader, but even he could not overcome the structure of the league. It was started as a basketball league, and included several universities that do not even play major college football(currently 8 non-D1A football schools). For anyone who has followed conference realignment, it is all about football. But the Big East has never embraced that. Its leaders have come from Providence College, a tiny basketball-only school. Its 8 basketball-only members have votes over football matters. This “unique” structure was always prone to football catastrophe. As a Syracuse fan, I have worried about its football future for a decade, because the conference is instable by its very nature. When Miami, Virginia Tech and Boston College bolted, the league was weakened but not debilitated. Unfortunately, Tranghese retired and John Marinotto took over. Marinotto may be smart, and he might be the greatest guy in the world, but he is not a good conference commissioner. He and the league have consistently been reactive, clinging to its BCS automatic qualifier status, unwilling to be proactive and strengthen the league. As a result, its more attractive members were always eligible to be stolen by another conference. This was true in 2001 with Miami and true last week with West Virginia. Keep all that in mind, as we go through WVU’s complaint.

WVU’s argument rests on a few key points: first, that the Big East bylaws are no longer applicable to them because of material breach on the part of the conference. As ammo for this argument, the school points to the inactivity of the Big East and its crumbling state as a football conference. With just 5 football playing members still “committed” there is no doubt that the conference is in trouble. Thus, WVU is arguing that its obligations under these by-laws are null and void.  It further states that its performance, namely staying in the conference, is impossible or unreasonably burdensome, and its purpose for entering the contract has been frustrated. This is fancy contract law language for the Big East has screwed up, in WVU’s eyes, so much so that WVU no longer has to do what it agreed to under the bylaws (a contract).

Though they allege other, somewhat creative theories, the second theory is that even if they were wrong on point 1, the 27 month waiting period was waived for TCU and thus the Big East cannnot force WVU to abide by it. The problem with this argument is that TCU was never officially a member of the conference.

Conference and school administrators across the country will be watching closely to see how the court is going to come down, if in fact a ruling is ever given. More than likely this suit was filed to put pressure on the Big East to settle with West Virginia, and then in turn Pitt and Syracuse. In the end, that is the most sensible outcome. It makes very little sense for either side to go through two “lame-duck” years solely because the by-laws say so. The Big East needs to act soon, and apparently it has invited 6 new schools to join, and its future prospects don’t involve any of those 3 school, so why insist on keeping them around when there is no long-term benefit to it?

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