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February 9, 2012

You don’t mind if I put off any post on the game from last night do you? You don’t? Good.

So when last we left the Expansiopocolypse (and for the record, I can’t tell you how disappointed I am that this word has not caught on with anyone), there were reports of a settlement looming between West Virginia and the Big East. The issue was that the numbers being leaked by each side seemed quite wide.

On the Big East side, the settlement would be in the $20 million range. By contrast the WVU side was leaking a figure of $11 million. That seems like quite a wide gap for an imminent settlement.

However, a parsing of what was actually written based on leaks from both sides suggests that both numbers could be correct. Bear with me, there is some math involved, parsing words and abject speculation. In other words, par for the course when it comes to everything else in the process.

 

Okay, first the WVU side since they have the lower number.

The Mountaineers will pay the conference an $11 million cash settlement to join the Big 12 for the upcoming football season, a source with knowledge of the situation told the Pittsburgh Post-Gazette.

The settlement is expected to bring to an end more than three months of litigation between the school and the conference since the Mountaineers announced in late October that it planned to join the Big 12 in time for the 2012 football season.

The sides are scheduled for an 8:30 a.m. status hearing today on a conference call with Rhode Island Superior Court Judge Michael Silverstein, who ordered the parties into non-binding mediation last month.

The resolution is expected soon, potentially as early as today, sources said, but it remains unclear if the $11 million figure includes a $5 million exit fee called for in the Big East bylaws or if it is in addition to the $5 million. West Virginia already has paid $2.5 million of that fee.

So the first thing that should be noted is that $2.5 to $5 million more could be counted in this. For the moment, I will make the assumption that only $2.5 million could be added to the $11 million figure.

Now more from the WVU side.

Sources familiar with the negotiations told the Daily Mail Wednesday the university is nearly finished with a resolution to pay a “cash settlement” of $11 million to complete its exit from the Big East.

“Cash settlement” is noticeable there because of the quotes. That might suggest that rather than a lump sum, WVU will be paying in some installments that might total more than $11 million but would hold a present value of $11 million — further bumping the number higher.

Now for something that overlaps and might further explain things.

Other conditions could be involved. One source said the Big East is aware the best way to mitigate damages sustained by losing WVU is by adding a future Big East member sooner than previously planned.

Boise State, for example, is set to join the Big East in 2013, but would have to pay a $5 million buyout to leave the Mountain West Conference early. The Big East – and by extension, WVU – could pay that fee and replace WVU with a school that lessens any damages the Big East might incur by losing the Mountaineers.

This gibes with the report from Brett McMurphy of CBS Sports, who has the Big East sources.

The Mountaineers will join the Big 12 for the 2012-13 school year. However, in a bizarre twist, sources told CBSSports.com that West Virginia officials have contacted future Big East members to see if one could join in 2012 instead of 2013.

The reason is that with West Virginia’s departure to the Big 12, the Big East will be left with only seven football members this fall. Without an immediate replacement for West Virginia, the remaining Big East schools will be scrambling to find a 12th opponent. It’s unknown why West Virginia would assist a league that WVU athletic director Oliver Luck compared to “a ship … seriously going down,” except that it could lower West Virginia’s buyout, sources said.

In this respect, it could very well be that West Virginia might give — let’s say Boise St. — the $5 million it needs to buy its way out of the Mountain West a year early. They would not be giving the Big East the money — so it wouldn’t be part of the money they pay to the Big East — but it would be part of the settlement.

The WVU sourced pieces speak of money paid to the Big East conference. The Big East sourced piece, however, says this.

West Virginia and the Big East Conference are nearing agreement on a settlement worth at least $20 million that would resolve all issues between both parties, college football industry sources told CBSSports.com.

Notice that it doesn’t say that WVU would pay that money to the conference. That makes sense.

So, now let’s run these numbers:

Portion of exit fee already paid ($2.5 million) + “cash settlement” with Big East ($11 million) + Boise St. buyout ($5 million) = $18.5 million

If the money paid to the Big East is done over the next 2-3 years, then we can assume that the total paid will be closer to say $12.5 million to get to the $11 million “cash value.” That adds another $1.5 million, and there it is. $20 million settlement.

Alternatively, if WVU is unable to convince Boise or any of the other future football schools to take money from them to come to the Big East a year early, then WVU would need to compensate the other seven Big East football schools for the scheduling gap and lost revenue.

To keep the numbers simple, let’s pretend it is $1 million per school. That would be $7 million in total, again, not paid directly to the Big East but part of the settlement. Which means the WVU sourced story is still accurate at $11 million to the Big East, while the Big East sourced story is also accurate in terms of the total compensation package.

Fun stuff.

Now for those wondering about what this means for Pitt (and Cuse) going to the ACC in 2012. It means that it won’t happen. No way — and I think rightfully so — will Pitt put itself in that deep just to get out of the conference 2 years early.

For 2013, however, things become a little more logical.

The WVU deal would be the baseline. The first key difference, is that Pitt and Cuse would not have to compensate individual schools or help with a buyout to make up a scheduling gap. The 2013 season will have SDSU, Boise, Memphis, Houston, SMU and UCF in the fold.

There’s a$5-7 million savings.

Next Pitt and Cuse are only leaving one year earlier than the by-laws. Not two. Taking $13.5 million as the amount WVU had to pay the conference to leave two years early. And with the knowledge that under normal rules the amount for leaving would be $5 million after the 27 month wait.

We know that it will then be a negotiation to reach a number between the two figures. The middle ground would be $9.25 million.

That would be a number that could work. Pitt  and Cusecould easily make up the additional $4.25 million each with the increased revenue from the ACC. To say nothing of better ticket sales for the improved conference home game slate — because you know the Big East would give Pitt a home conference slate of Memphis, UCF, Cinci and UConn.

Yes, I know what Pederson said as he continues the media rounds about Pitt not paying more than the $5 million exit fee.

But Pitt athletic director Steve Pederson made it clear that while the school is pushing to leave the Big East as soon as possible, it is not going to pay any more than the $5 million exit fee to make it happen.

“No,” Pederson said emphatically when asked Wednesday if Pitt would be willing to increase the amount of money to be able to leave the conference in time for the 2012 season.

But much like Marinatto saying he is holding Pitt, Cuse and WVU until 2014, it is what he has to say publicly for negotiations. You don’t admit how much you are willing to compromise.

There is also another component to Pederson saying Pitt won’t pay more than the $5 million exit fee. It’s about getting donors to help pony up to get Pitt out early. Pederson and Chancellor Nordenberg want Pitt in the ACC at much sooner than later. They won’t be financially reckless, though. The more clamoring by fans — and more importantly the donor base — to get Pitt over to the ACC, the more likely they will start putting their money where there mouth is.

 





I think JP has it about right. You either recruit top talent to play a pro style system or you switch to the spread which doesn’t require as much overall talent. Ignore the Fraud Graham experiment. It has worked for the hoopies and many others.

Comment by Houston Panther 02.10.12 @ 4:57 pm

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