Maryland says ACC has created budget 'hole' by withholding shared revenues

An attorney representing the University of Maryland argued Thursday that the Atlantic Coast Conference has left the college's athletic department with a vast budget "hole" by improperly withholding millions of dollars in shared conference revenues after the school decided to join the Big Ten.

"They're taking it out of our pocket, and we don't have it," Maryland Assistant Attorney General John Kuchno said during a nearly three-hour hearing in Prince George's County Circuit Court.

He said the ACC is "trying to punish Maryland and send a message to Maryland" and also to "send a message to all of its other institutions" who might have been considering jumping conferences.

Attorneys for the ACC countered that by withholding funds the conference is merely trying to ensure that Maryland pays the conference's $52 million exit fee. In December, the ACC withheld a distribution of about $3 million owed to Maryland as what it called an "offset" against the $52 million fee.

"The bottom line is, they don't want to pay the $52 million," James D. Smeallie, an attorney for the ACC, told the court.

The hearing came in Maryland's lawsuit against the ACC alleging that the exit fee is anti-competitive and should not be enforced. The ACC has moved to dismiss the complaint, and Judge John Paul Davey ended Thursday's hearing by saying he would consider the arguments and issue a written opinion "as soon as possible."

Maryland President Wallace D. Loh, athletic director Kevin Anderson and University System of Maryland Chancellor William E. Kirwan attended the hearing, sitting side by side in the wood-paneled courtroom's front row.

Maryland's suit is part of a two-state legal tangle that ensued after the school — one of the ACC's original members — announced in November 2012 that it was departing for the Big Ten, effective in July 2014.

Maryland, which says it has been excluded from ACC meetings and decisions, has not provided the ACC official notice of its departure.

"Maryland has not yet filed an official notice and need not do so before Aug. 15, 2013, in order to join the Big Ten Conference in 2014," Kuchno said in a motion filed recently with the court. "Maryland is not presently subject to the Withdrawal Penalty (regardless of its enforceability) and remains an ACC member with full rights and privileges," the motion said.

After Maryland announced at a news conference that it was leaving, the ACC filed suit asking a North Carolina court to declare that Maryland is subject to the full exit fee — $52,266,342. That suit is ongoing.

Smeallie said Thursday that Loh had approved of a withdrawal fee — albeit a smaller one of about $20 million — in a September 2011 meeting of ACC presidents. But Kuchno said that meeting didn't prove that Maryland considered "that it was a satisfactory penalty. We will contest those facts."

The exit fee was raised last year to $52 million. Maryland and Florida State voted against the increase.

Smeallie also argued that Maryland later consented to an even more "onerous" arrangement by agreeing — as all Big Ten members do — to grant the conference their media rights. The ACC announced similar arrangements with its present and future members — but not Maryland — last month.

Kuchno, a Maryland graduate and Terps sports fan, told the judge the exit fee was not enforceable. He said the ACC violated its constitutional provisions by not submitting the fee as an amendment in writing to its Constitution and Bylaws Committee for review, and not circulating the plan to members at least 15 days before the meeting.

Kuchno said the ACC, by its actions, kept other schools from leaving the conference. Besides Maryland, "no team has moved. That's an effect on competition," he said.

jeff.barker@baltsun.com

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