Here's West Virginia's settlement agreement w/ the Big East

[IthacaMatt]

They are actually paying the $5M exit fee (in 2 installments of $2.5M each), plus $8.5M presumably from the Big 12, plus the Big East retaining WVU's income from the conference, which is an uncertain amount awaiting to be determined (performance of Big East teams in the NCAA tournament, and how much that generates for the conference). The retained earnings could be as much as $9M, but that's not immediately out-of-pocket, that's just money retained by the Big East.

So, to recap - WVU is only out of pocket $5M in direct payments to get out of the conference, with the Big 12 paying $8.5M. Shall we start taking up a collection ?

http://www.usatoday.com/sports/college/2012-02-15-big-east-west-virginia-settlement.pdf

 

[SourShoes]

Thats what I call progressive leadership. Nancy?

 

[44PRIDE]

Those revenues from the postseason tournaments, while not yet realized, are very much out of pocket for WVU.

That's like buying a $10000 car, paying $5000 in cash and the rest on credit. You wouldn't say that you are only paying $5000 out of pocket, would you? Your out of pocket cost is the full amount of $10000

Sorry for the accounting lesson guys. I've spent all day studying for my MBA Accounting midterm @ Whitman.

 

[rrlbees]

so it is costing wvu as much as $14m of their own money.

 

[IthacaMatt]

Those revenues from the postseason tournaments, while not yet realized, are very much out of pocket for WVU.

That's like buying a $10000 car, paying $5000 in cash and the rest on credit. You wouldn't say that you are only paying $5000 out of pocket, would you? Your out of pocket cost is the full amount of $10000

Sorry for the accounting lesson guys. I've spent all day studying for my MBA Accounting midterm @ Whitman.

Here's the REAL point - yes, those retained earnings are real money, but they don't affect current cash flow. Having to come up with $5M in actual cash, versus the $20M exit fee being discussed in the papers, is a huge difference. If we can get out for the $5M fee plus retained money, that's a win, my friend. Having to actually PAY $20M means no football complex. Having to just "work off the debt" is a much different issue, and is more manageable.

 

[IthacaMatt]

so it is costing wvu as much as $14m of their own money.

The Big 12 is lending them the $8.5M. They are only DIRECTLY out of pocket the $5M that they originally signed up for. That's a great deal, if you ask me. Marinatto again shows himself not to be so much of a negotiator.

 

[rrlbees]

The Big 12 is lending them the $8.5M. They are only DIRECTLY out of pocket the $5M that they originally signed up for. That's a great deal, if you ask me. Marinatto again shows himself not to be so much of a negotiator.

i thought you said they won't get up to $9m of what the b.e. would owe them in income. that's like me not getting a paycheck at work. it's still my loss.

 

[IthacaMatt]

i thought you said they won't get up to $9m of what the b.e. would owe them in income. that's like me not getting a paycheck at work. it's still my loss.

Sure, but as soon as they quit, the money from the conference stopped. Same with us. Yes, missing a paycheck sucks. But it is not the same thing as having to actually pay a big hospital bill after you've lost your job. That's what puts people into bankruptcy - and the equivalent would be putting a major hurt on construction of new facilities if there was an IMMEDIATE $15M additional loss to cash flow.

Cash flow is the lifeblood of any business. Debt can be put off into the future or refinanced; other revenue streams will replace the old (i.e. the ACC money, which is +10M a year over what we got in the Big East). Believe me, this is much more manageable than it would appear in the newspapers.