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9/25 Cofield & Co. with legal insider Justin Watkins Part 3
And I want you and I'll be to take the invite and go to the Pac-12. And I think it would be a good move. But it's an interesting move. There's a lot of drama to this. Some of it's leaking out. And who knows if it's verified or not. But what we know now as we led up to this is the conversation about extending the scheduling agreement went from $14 million, which the Pac-12 paid to the Mountain West to play this year, six games, three at home and three away for each team. So a total of 12 games, six home, six away. So they paid a little bit over a million per game, including when the Mountain West team got to play at home, which is-- that never happens. You always play the team to come to you, not the other way around. So they got a great deal on the scheduling agreement. Then in the scheduling agreement said you will have talks about extending, it has been confirmed by both sides that the Mountain West demanded $30 million to do it next year. And so not only were they above market with the $14 million, but they went crazy with the $30 million, I think it's reasonable to read the tea leaves to say. And that pissed off the Pac-12. And the Pac-12 started looking at other options and what they were going to do. Pac-12 alleges that the commissioner for Mountain West, Gloria Naveras, was actively blocking her conference teams from scheduling on their own individually, that they would only do it as a group, and that as the negotiations broke down, the Mountain West tried to break up Oregon State and Washington State, and bring Washington State to the Mountain West. They tried to steal Washington State last week. Yep. Split them up. Split them up. Make up proactive, move, so that they couldn't grab any of the schools because they're not even together anymore. Yep. So then, obviously, everybody knows what happens before, what I would say, the four top teams, historically, from attendance and win percentage and revenue standpoint, get taken and go to the Pac-12. And then they're trying to go to the AAC. They can't get Memphis to lane UTSA and USF like they thought they might. So they come back to the Mountain West, and they start making some offers. UTSA State accepts right after the first four teams left. Laurie Navarro sends a letter to the Pac-12, OK, paying me the $44 million after UTSA State leaves. OK, now you owe me $55 million. And Pac-12 responds and says, we don't think we owe you anything. We think that the exit fees are unenforceable and against the law, and they file a suit, and we can break down a legal argument. We're going to get into the possibility that they are not enforceable. Headed towards a 6 o'clock start of the Barriodum radio show, flamingo 215, parkway tavern, parkway tavern, parkway tavern. Miller Light is on special, and anyone who shows up with a rebel gear on for the show. [MUSIC PLAYING] It's Cofield and Company on ESPN Las Vegas and ESPN Reno. [MUSIC PLAYING] That was brought to buy Battleborn Injury Alert 766-1400 is a number of fall from anywhere in the state of Nevada. Justin Watkins is here. Willie Ramirez back here in just a second, Cofield. We're going through the conference chaos. We spent a lot of the first hour plus on Matthew Sluka and the beef with UNLV and the messages sent out last night and today. That one seems at least settled in terms of where everyone is going to be. The conference stuff is not settled. UNLV is in a very much in a wait and see situation, and that the Mountain West could come unravel pretty quickly here. But before we get to that, let's get to the Pac-12 claim that, hey, we don't owe Mountain West money. We're not paying these fees, and we're going to sue over it. What leg do they have to stand on? What's the explanation, hey, we don't owe this money? Yeah, I'll try to synthesize it in the points that could be made and understood by non-lawyers and everybody out there. But they have a strong lead to stand on, and there's a couple different points. The first point is they are suing under antitrust, which is antitrust laws exist to promote competition and to suppress any anti-competitive behavior. And so they're arguing that this contract of a poaching fee prevents the Pac-12 from competing with the Mountain West in the NCAA governance. And it was only against the Pac-12 and no other conference that they had these poaching fees. And antitrust law is volumes and volumes is deep, but that's the very basis level of it, is this was anti-competitive behavior, this is anti-competitive clause, and the court should invalidate it. The second argument that exists there is that courts do not enforce penalty clauses in contracts, true penalty clauses. Now everybody's going to say, dude, the liquidated damages, hold on, I'll get there. The state of contract law in the United States is this. This is what makes us unique, and some people would say, makes us great. You have the freedom to contract, and you have the freedom to break your contract. And when you break your contract, you are liable for the actual damages that that breach of the contract caused. But if you put in the contract some penalties for breaking the contract, that have nothing to do with how it's damaged you, the court will not enforce those penalty clauses. They'll say that's an invalid penalty clause. Everybody says, but they agreed to it. Yes, they always agree to it, right? Like every time a penalty clause is challenged, the parties agreed to the penalty clause. But that doesn't change the fact that the court will invalidate a clause that's a pure penalty. Now, we've all heard the term liquidated damages. Liquidated damages are different, or they try to be different than a penalty clause, in that they are meant to compensate the non-breaching party for damages that cannot be enumerated. Meaning, we can't put a dollar figure on what these damages are because it's more than just dollars and cents. It's not just economics. There's some other issues at play. A great example would be is if somebody is building the house of their dreams, and the contractor leaves in the middle of it, and so you know how much it's gonna cost to finish that. Perfect. Those are finite damages. No liquidated damages clause would come into play there because you'd know exactly what it cost you to finish it. Okay? So, in the situation of Oregon State and Washington State, and they're scheduling agreement with the Mountain West, there was $14 million to play the games, then there was a separate addendum for poaching fees that says you can't take any of our teams for this year and for two years after this year. And what the Pac-12 has said is that is a pure penalty clause. They called it liquidated damages. They called it a poaching fee, and they said it was liquidated damages, but really it's actually just a penalty 'cause it had nothing to do with the actual scheduling of games. In fact, in the scheduling of games, you made out like a bandit. You got paid more for your games than you've ever been paid by any other school at any other time in your history to play those games. And you got paid for home games, which never happens. And on top of it, you acknowledged in public relations statements that playing games with Oregon State and Washington State was actually good for your conference because it boosted ratings, it boosted attendance, and so it was a good deal for you. So all of the terms of the scheduling agreement are included in that 14 million and the actual playing of games. So what Washington State is saying is that poaching fee was a totally separate thing that's thrown in that it is just a penalty for anti-competitive behavior. That's all it is, and the court should throw it out. Yes, we signed it, we signed it under duress, they knew we were under it. It doesn't matter if it's under duress. They could have signed it willingly. People do this all the time, businesses do this all the time. They get a contract and they're like, I hate that term, take it out. They say, no, we're not gonna take it out. And their lawyer says, it's not enforceable anyway, go ahead and sign it. That happens every day, thousands of times a day. Do you think that's what was relayed? 100%. That this means nothing, ignore it, just do this deal and you'll be fine. I think there is reports that both parties acknowledged it may not be enforceable. Wow. So, but yes, the attorney who's representing them in the lawsuit was their attorney representing them in the scheduling agreement negotiations. So, 100%, they were like, we could challenge this. So, you and all of you waiting right now between the two conferences? Yep. Good move, too risky. Well, it could get risky. I mean, the Pac 12 is not gonna wait around forever. There are a lot of things that play though, you know, is the, is UNLV saying, hey, take us and one more Air Force goes to AAC, maybe Air Force can take another one to the AAC and the conference dissolves. Now, everybody's pointing to the bylaws of the Mount West that say, once you say you're exiting, you no longer have a vote. True on the board of governors, but the vote to dissolve the conference is made by the member institutions. All institutions currently are still member institutions. So, they all have a vote on dissolution. So, nine votes is what it would take. That's why, you know, maybe they're considering or trying to lobby and say, take UNLV plus one or more, get Air Force over to the AAC. And then we just dissolve, we dissolve, there's no exit fees, there's no poaching fees. It saves everybody hundreds of millions dollars. Pac 12 has been down this road before with teams, you know, having controversy, ethical issues, whatever it may be. But with everything going on with UNLV, and as you said, the NC2A has to investigate, they have to look into it. Could they be on the hook? With all this going on, if you were, let's say you're on the legal team of that conference, you go, wait a minute. Do we need to bring in a team or is this something like, we've been down this road with plenty of programs in our conference in the past? Is what's going on UNLV cause any kind of issues if they're being looked at by the Pac 12 or Big 12? - So if I'm an attorney for UNLV in this-- - The conference, one of the conferences. No, the Pac 12 or the Big 12, looking at UNLV where, hey, we got coaches that are throwing offers out there. - Oh, right. - Yeah, yeah, I mean, it certainly can't help. It can't help, I mean, and if UNLV and the Pac 12 are in negotiations and all signs point to that's sort of happening, you know, the UNLV seeing what they can get out of the Pac 12, you pay my exit fees or you do this, can you do that? Now, it's just a chip to throw on the table and be like, hey, you guys have got some problems here. You got some real problems if we're willing to accept you, you gotta acknowledge those problems and lower your asks. Is it really a problem? Will it really affect, you know, in the future how viable they are as a program? Probably not, but you use the leverage that you got, right? And so, yeah, I'm sure it's being discussed. - What do you think San Diego State and Boise, especially, are thinking? 'Cause they've been wanting to get away from the Mountain West schools, most of them, for 10 plus years? - Well, the cool thing about what Oregon State, Washington State did when they brought in the four is they had an immediate vote for expansion. So, no offers being extended without their consent and consideration. So, I mean, I'm sure they don't wanna end up in Mountain West 2.0. I'm sure that they wanted to, you know, get those AAC teams and be, I would say, a power conference, you know, higher rated on most Saturday ratings than the ACC. They would be kind of the fourth in power if they had gotten Memphis to lane USF and UTSA. So, but I think there is room for taking a hit in order to make something work. And what I mean by that is, can we take UNLV and another one? I know it sounds like Mountain West 2, but if we get the votes to dissolve, we save all those hundreds of millions of dollars on the exit fees and poaching fees and litigation. We don't have to worry about any of that. Then we can go back to Memphis to lane, UTSA and USF and say, we'll pay your $20 million exit fee. In full, come on over. Now you've got the conference with, yeah, you've got some maybe lower level teams, one or two, but every power conference has that and you've got all the best of the rest. Like, you will be that fifth automatic bid. You will be it on, you know, nine out of 10 years, I would have to believe. - I'm sorry to catch up. Last minute, Justin Watkins, Willie, Cofield. If you were looking at the financials, and especially of the past, and you weren't gonna use projections and upside, you're an Oregon State guy, so you want this to work? - Yep. - If you're the Pac-12, do you want UNLV? - I would have preferred that if we would have gotten the AAC teams and called it a day, right there. I think that that would have been a very strong 10 team conference. - What's the problem with the UNLV metrics? - Attendance, revenue. You know, over the course of the last 20 years, when you talk about basketball tournament revenue and bowl game revenue, they are second from the bottom and the mountain west. San Jose State's the bottom. And so when you look at the actual revenue generated, and you look at the attendance at games, there is no doubt that they took the top five teams right now. That's one through five, top five in those categories. - Reminder, coming up Friday, we'll be at Treasure Island, Golden Circle Sportsbook and bar. We're out there every Friday from three to six. - On Saturday, throw the flag is back with Danny and Jared and they'll preview the college football game day and look ahead to pro football and there is breakfast available, great breakfast items. It's Golden Circle Sportsbook and bar inside Treasure Island. (upbeat music) - It's Cofield in company on ESPN Las Vegas and ESPN Reno. (upbeat music) - Put more on the conference chaos. - Good follows today, last couple of days, Pete Thamel, ESPN, Rose Bellinger, Tyler Sports. Pete Thamel. Today, age 52 AMR time, sources. UNLV officials are still analyzing the school's conference future, as they are expected to make a choice between the mountain west and the Pac-12 and the upcoming days. A change of conference requires about a system of higher education board approval. Deja vu. - Yeah. - Deja vu, but not really, 'cause the regions have been neutered a bit after the disaster with beard into a lesser extent, menses. - Well, I think there's some quality regions that we have now too. - Let's change up a lot. - Yeah, is there some good-- - A lot of UNLV influence on the board. - Way more than UNR. And then there's, I think three or four who didn't go to either school and are not affiliated with either school, meaning they don't teach there, even if they didn't go there. And I think there's some quality regions there. I wouldn't expect that that would be a hindrance if UNLV chooses the Pac-12. I think it'd be crazy if UNLV did not, I know Adam Hill differs from me here. I think they'd be crazy not to accept the bid from the Pac-12 and stay in a conference in which they're gonna have to backfill with some very small schools with very small attendance at football games. And maybe you get somebody like North Dakota State, South Dakota State, they attend well, but they have no viewership or media market. - Are you basing this on the fact that you really believe there is not gonna be much of a penalty or exit fee? 'Cause right now UNLV could be facing, you know, 18 to $30 million to move conferences. - Well, it'd be 17 and a half million, right? And so what's the difference in the TV deal, right? Somewhere people speculate, somewhere between 10 and 15 million is what comes in the TV deal for the Pac-12. The Mountain West is currently at 6 million. And that's with Boise State, San Diego State, Colorado State, Utah State, and Fresno State. All of the top earners on TV ratings. So what's their next deal gonna look like after 2026? Two to three, three to four. - So even if you were a conservative on the Pac-12 side and said 12, let's go 12, right? Somewhere in the middle and then, but the Mountain West can slide back to three, that's nine million a year. - Yeah, that'd be made up in three years. - Two years, right? - Are they getting 100% of the outlay? Or are they getting 80%? - Oh, they gotta get, I mean, if they're gonna, if they're gonna accept this move, they gotta get a full share. They gotta get a full share. I mean, but a full share plus paying all the exit fees? I think I would, I think if on the Pac-12 say, okay, you get one or the other, if we're paying your exit fees, then you're at a half share until we recoup that money back that we'll do something like that. But we don't pay your exit fees and you come in at full share. Especially because you don't have any of the metrics to say that you're gonna help our TV deal. In fact, you have the metrics to say that you're gonna hurt our TV deal. So, but again, I think it'd be crazy for UNLV not to accept it. You know, I know there's whispers of UNLV's hoping for a Big 12 invite. Yeah, so is everybody else in the Pac-12? They're all in the same boat together. - Okay, will there be, in these deals, will there be some sort of out, or is there gonna be another exorbitant exit fee to go to the Big 12? - Yeah, I think they're all gonna be in the same boat. - Either, all gonna be in the same boat. - So, what Oregon say in Washington said it'd be like, no, no, no, and be buying the scenes. They're like, we want to get the hell out of here too. - Yeah, exactly. They're all gonna be in the same boat and they don't have a TV contract yet. So, there's no way there's like exit fees right now. That's what I think is crazy about and why I do think each of the Mountain West teams at least the conference should absolutely legally challenge the exit fees is because it's not tied to the timeline of the TV contract. (laughing)