Tim Crippen, Black Helterline LLP
Disputes in 2023 arising out of ten members’ departure from the Pac-12 illustrated the ways a business attorney can augment a litigation team in complex disputes. In 2023, Oregon State University (OSU) retained my firm, Black Helterline LLP, and me to serve as business counsel, augmenting the team at the OSU Office of General Counsel. OSU also retained special litigation counsel Keker, Van Nest & Peters LLP of San Francisco. I was effectively embedded with OSU’s Office of General Counsel for a number of months, providing a variety of business legal services as these disputes played out.
The background of the case is well-known to college sports fans but may be unfamiliar to others. The Pac-12 is an NCAA Division 1 college athletics conference founded over a hundred years ago. Until August 1, 2024, members had for decades included OSU, Washington State University (WSU), University of Oregon (UO), and University of Washington (UW) among other premier western U.S. athletics programs.
College athletics conferences provide competitive opportunities for college student-athletes in numerous sports by coordinating competition among their members. As businesses, the conferences typically acquire member universities’ media rights and license them to media partners such as Fox, ESPN, CBS, or the CW Network. The premier conferences’ media rights will sell for hundreds of millions of dollars, or more, per year and are usually licensed under multi-year contracts. The conferences also make money from the NCAA based on their members’ performance in men’s and women’s college basketball tournaments in March and from the College Football Playoff (CFP). For the Pac-12, its longstanding relationship with the Rose Bowl is another source of revenue. The conferences’ net revenues are distributed to the member schools, and the schools use those distributions as major sources of funding for their athletic departments.
In exchange for the schools’ grant of media rights, the conferences provide numerous services to member schools, including coordination of competitions and championships for multiple sports as well as support for student-athlete mental and physical health and growth. In the Pac-12’s case, the conference also operated the Pac-12 Networks and produced media content from all of the member schools. (Until 2024, the Pac-12 employed nearly two hundred people.)
The Pac-12 is an unincorporated nonprofit association under California law. The Pac-12 is governed by the terms of the Pac-12 Handbook, which includes its Constitution and Bylaws. The business of the Pac-12 is governed by the Pac-12 Board of Directors, which, prior to the departure announcements, consisted of the president or chancellor of every member institution.
In 2022, UCLA and USC announced they would leave the Pac-12 and join the Big Ten conference in the summer of 2024. After they announced their departure, they were excluded from Pac-12 board meetings and votes. None of the parties exactly went to the mat on figuring out their precise status as members who had announced departure, but they were generally excluded, including from numerous discussions in 2023 concerning the Pac-12’s next media rights deal.
Numerous factors could have driven UCLA and USC to leave the Pac-12 but ultimately, one can infer that they made the decision to leave because they expected to make more money in another conference. And presumably they believed more money would help them stay competitive or improve the strength of their athletic programs, which ultimately should inure to the benefit of their student-athletes and the universities at large.
On July 27, 2023, the University of Colorado announced its intention to depart the Pac-12 for the Big 12. Then, on August 4, 2023, in a bombshell, just as Pac-12 members believed they were about to sign a new multi-year media deal, UO, UW, and three other universities announced they would leave for the Big Ten and Big 12 conferences.
That left the Pac-12 with OSU, WSU, UC Berkeley (Cal), and Stanford University (Stanford). Cal and Stanford elected to join the Atlantic Coast Conference and announced as much on September 1, 2023.
On August 29, 2023, two days before Cal and Stanford announced their departure, the Pac-12 commissioner called a board meeting for September 13, 2023, and intended to include all twelve members—including those who had announced plans to withdraw—to discuss an employee retention plan and go-forward governance approach.
As with many types of business organizations, board control is a major fulcrum on which power is balanced. In the Pac-12’s case, allocation of the hundreds of millions of dollars of revenue the conference would receive, and even the continuation or dissolution of the conference, could have been on the table. Had the conference member institutions voted to dissolve effective August 1, 2024, when the ten members departed, OSU and WSU would have found themselves scrambling to find a conference to join—or would be independently scheduling hundreds of sporting events—for the 2024–2025 academic year, with perhaps none of the revenue usually derived from the Pac-12 to support their athletic programs.
On September 8, 2023, OSU and WSU filed a Complaint and Motion for Temporary Restraining Order (TRO) in Whitman County Superior Court in Washington, the home of WSU. The TRO requested, in effect, that the Court prohibit the Pac-12 from holding a board meeting that included, or permitted the votes of, the departing ten member schools’ presidents and chancellors. The Bylaws provided that if a member delivers a notice of withdrawal prior to August 1, 2024, “the member’s representative to the Pac-12 Board of Directors automatically shall cease to be a member of the Pac-12 Board of Directors and shall cease to have the right to vote on any matter.” (Complaint for Breach of Bylaws, Declaratory Judgment, and Injunctive Relief.)
The departing ten members had arguments against the plain interpretation of this language espoused by OSU and WSU, but the Bylaws plus the precedent that UCLA and USC had been excluded since their announcement, allowed OSU and WSU to prevail. The matter was appealed to the Washington Supreme Court, which denied review, letting the trial court’s grant of a preliminary injunction stand. The matter was settled in principle in December 2023 and a final settlement agreement was inked in March 2024. Among other things, the departing members left the conference intact with OSU and WSU as its sole members and left funds in the conference (including future expected revenues) for OSU and WSU to use to rebuild and support their athletics programs as they set the course for their futures.
As a business lawyer embedded in a project like this, skills from other types of business work become useful. This was a membership dispute over control of a business; it resolved, as they often do, in a deal that resembled a buyout. In any buyout transaction, the value of the target needs to be ascertained, which involves legal due diligence.
In the case of the Pac-12, many key contracts are significant sources of value for the conference and its members. For example, the Pac-12’s relationships with the Rose Bowl and the CFP provide significant revenue. Because the member universities were mostly public bodies, however, and therefore subject to public records laws, many of these highly sensitive and confidential contracts were never previously put into the possession of the member universities out of reasonable concern that providing them to the universities would make them subject to public disclosure, which could undermine the conference’s negotiation positioning in the future and potentially violate confidentiality provisions in these agreements. Said another way, the members had never seen the Rose Bowl or CFP contracts, which is a customary practice amongst conferences in college sports. As part of informal discovery in the dispute, we reviewed a number of these contracts to verify our understanding of the obligations of the parties and the benefits that the conference could expect from them.
The control dispute related to a unique business type: the California unincorporated association. Case law on fiduciary duties for these types of organizations is limited. Whether members owe each other fiduciary duties and the extent of any such duties, of course, were on the parties’ minds. Being able to draw analogies from and research other fiduciary duties in closely held business entities helped analyze these issues.
Likewise, the economics of the conference are somewhat like a cooperative or even more so like a law firm or other professional services firm. Familiarity with these types of business helped client and counsel understand the business model quickly, which helped with valuation, among other issues.
Broad dealmaking experience also came into play in numerous ways. The Settlement Agreement among the Pac-12, the ten departing members, OSU, and WSU involved control of the organization but also a compromise where OSU and WSU would allow the departing members to have a vote on certain matters. Additionally, allocation of future revenue, responsibility for conference liabilities, and responsibility for allocation of intellectual property assets were decided. These types of issues are constantly at play in business break-up, buyout, and merger and acquisition deals, and the experience of a business lawyer can help expedite negotiations.
Likewise, there were ancillary deals to be made while OSU and WSU were in control of the Pac-12, including scheduling competitions for the two conference members for the 2024–2025 and 2025–2026 seasons. Because these needed to be negotiated while in active litigation against the Pac-12 and departing schools, OSU and WSU counsel took the lead in negotiating these deals with third parties but obtained conference support and buy-in when needed.
Not every case will call for a multi-attorney team and other experts, but even a smaller case involving business interests could benefit from the experiences of a business transactions lawyer familiar with legal due diligence, business entities and fiduciary duties, and contract drafting and negotiation.
The Pac-12 has recently announced that, effective July 1, 2026—at the expiration of a two-year NCAA grace period allowing OSU and WSU to operate a conference with only two members—San Diego State University, Colorado State University, Boise State University, Fresno State University, Utah State University, and Gonzaga University have agreed to join the conference. A new era for OSU, WSU, and the Pac-12 begins. ♦
