In 2021, The University of Southern Mississippi, Marshall University, and Old Dominion University announced that they accepted invitations to join the Sun Belt Conference (SBC), leaving Conference USA (CUSA) no later than July 1, 2023. In February, the departing schools moved up the date to join the SBC to July 1, 2022, which CUSA opposed due to the conference’s by-laws requiring 14 months’ notice prior to exiting.
After multiple court filings and arbitration filings, the conference and departing schools reached a resolution in March, allowing the schools to join the SBC in 2022. Initially kept confidential, the settlement agreement has been released to the public, detailing the costs of exiting CUSA and showcasing that any conference exit can occur—for the right amount of money.
According to CUSA by-laws, the exit fees for teams leaving the conference equals two years’ worth of revenue distribution, equaling about $1.5 million per year or $3 million total. The settlement agreement dictates each school must pay $1.75 million to CUSA for an early exit.
In turn, CUSA agreed to pay the universities certain amounts from the NCAA for the 2021-2022 academic year, including amounts received from the academic enhancement fund, academic performance fund, student assistance fund, sports sponsorships, and grants-in-aid. Additionally, the departing schools would receive any bowl expense reimbursements. Except as enumerated in the agreement, CUSA withheld all other distributions (although the settlement agreement did not specify what distributions CUSA withheld).
Not only did the departing schools pay $1.75 million to CUSA and lose out on approximately $1.5 million in media distribution money from the conference for the 2021-2022 academic year, but the schools also will not receive any television revenue from the SBC during the current academic year, which is around $1.2 million per year.
Paying $1.75 million to exit the conference and missing out on $1.5 million in revenue for over $3 million in losses is a costly amount to pay for athletic departments that earn total revenues between $27 million (Southern Miss) and $41 million (Old Dominion).
For the schools, help should be on the way in future years. The SBC and ESPN announced an expanded media rights agreement shortly after the schools joined the conference. Additionally, the geographic benefits of the SBC should save on travel costs and other expenses.
For CUSA, six more schools are exiting at the end of the current academic year to join the American Athletic Conference (AAC). Each school is expected to pay roughly $3 million in exit fees, putting the conference in a solid financial position as it adds four schools.
As for everyone else, as conferences continue to realign, this settlement agreement lets us know that anything can happen for the right price.
Landis Barber is an attorney at Safran Law Offices in Raleigh, North Carolina. You can connect with him via LinkedIn or via his blog offthecourtdocket.com. He can be reached on Twitter @Landisbarber.
