The departing members of the Pac-12 will leave behind $65 million to the conference based on the terms of a negotiated settlement ratified late last month.
But over time, their financial obligations could stretch far beyond that figure, based on insight into the settlement from the lead courtroom attorney for the two remaining schools.
Eric MacMichael, who represented Washington State and Oregon State in their lawsuit against the departing 10, told the Hotline that exposure to potential liabilities shaped the legal strategy — not only in a Whitman County (Wash.) courthouse but also in the private discussions with a mediator.
“We were very mindful of the liabilities facing the conference,” MacMichael said. “Making sure the liabilities were addressed was a guiding principle in our approach to a fair settlement.”
What are the specific liabilities facing the conference?
A section of the negotiated agreement reads as follows:
“Liability Release. Except as otherwise set forth in Section 2.b, the Departing Members are released from all liability arising from the decisions made by the Board of Directors that do not require ratification.”
Section 2.b includes almost four pages of redactions — a move designed, in part, to protect the schools against unresolved legal challenges. They don’t want opposing attorneys to see their playbook, in other words.
A confidentiality agreement prevents MacMichael from discussing certain details, including the liabilities under redaction.
However, MacMichael was able to address, in general terms, the chief legal threat to the Pac-12 and its power conference peers:
The House v NCAA case, which he described as “existential” for the NCAA.
Filed in 2020 by former ASU swimmer Grant House, the antitrust lawsuit aims to compensate thousands of former athletes for the use of their name, image and likeness (NIL) over a multi-year stretch before the summer of 2021, when NIL became the law of the land in college athletics.
The plaintiffs sought $1.4 billion in damages from the NCAA and its universities, according to court documents reported by USA Today. But the price tag soared in November when U.S. District Judge Claudia Wilken granted the case class-action status.
It’s armageddon for the NCAA and the Power Five leagues, which are named defendants: Because damages treble in class-action cases, the bill could exceed $4 billion.
The case is scheduled for trial in January. But multiple industry experts interviewed by the Hotline in recent months believe it will be settled.
“There’s no way it’s going to court,” one source said. “But there’s a lot to be sorted out.”
That sorting includes the means by which the NCAA and the Power Five conferences would pay the damages.
After all, the schools are the conferences, and nobody has $4 billion in the bank.
(One option: Using future revenue from media contracts and spreading the payments over time.)
The last thing Washington State and Oregon State want as a two-team conference in 2025-26 is sole responsibility for the entirety of the Pac-12’s share of the damages, whether it’s $1 million, $100 million or a half-billion.
“The House case was front and center in our thinking,” MacMichael said.
“We had to address that. It’s an existential case for the NCAA and all the (named) conferences.
“And I don’t think it’s going to get resolved in the immediate future.”
The departing schools will have a portion of their distributions withheld this spring as part of the settlement.
Their last day of membership is Aug. 1.
But their financial obligations to Washington State and Oregon State might not be resolved for years. And based on MacMichael’s comments, the cost is likely to zoom past $65 million.
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