Wilner Hotline – Pac-12 legal affairs: What the court victory for OSU and WSU means for the future of the conference and the outbound schools

The most anticipated showdown of the Pac-12 season gained significant clarity Tuesday evening when Washington State and Oregon State were given legal control of the conference by a superior court judge.

But overtime looms.

The defendants, with Washington running point for the other nine outgoing schools, plan to appeal Whitman County (Wash.) Superior Court Judge Gary Libey’s decision to grant a preliminary injunction that left WSU and OSU as the sole voting members of the Pac-12’s governing board.

As such, the two schools left behind in the realignment game can determine the fate of hundreds of millions of dollars in revenue and assets.

However, Libey agreed to stay his ruling through the remainder of the week to allow Washington to pursue an appeal.

It’s not over.

It could drag on for weeks, if not months.

Six thoughts on the latest developments:

1. The defendants announced immediately after the ruling that they would appeal to the Washington Supreme Court in Olympia, where UW hopes to receive a more favorable audience.

Libey’s courtroom is 15 miles from Pullman.

Olympia is an hour from Husky Stadium.

However, there’s no guarantee the request for an appeal will be granted — or that the state’s highest court will accept the case. It could be passed to an appellate court in Spokane, according to a person familiar with the Evergreen State’s legal system.

The Hotline won’t begin to guess how the appeal process might unfold. But we know this: Just as it’s better to have the call on the field in your favor before it goes to the replay booth, so would you rather be the plaintiffs than the defendants at this point.

2. The Hotline watched every second of the two-and-a-half-hour hearing (on the livestream) with an eye on the performance of the attorneys — and there were a lot of attorneys:

— Each of the two plaintiffs had its own representation, with Eric MacMichael, from Keker, Van Nest and Peters, taking the lead.

— The Pac-12 and commissioner George Kliavkoff, the named defendants in the case, were represented primarily by Mark Lambert.

— Washington’s lead attorney, Dan Levin, also represented the nine departing, out-of-state schools.

How did they fare?

MacMichael steamrollered his opponents with a clear, concise argument. And admittedly, he had the best material. The plaintiffs based their case on actual events — specifically, the Pac-12’s decision to remove USC and UCLA from the governing board starting in July 2022, after their departures to the Big Ten were announced.

(OSU and WSU have argued all along that the precedent set 16 months ago applies whether two schools are leaving or 10.)

Meanwhile, UW’s case relied on nuanced, nearly inscrutable reading of the bylaws that attempted to show the schools hadn’t abdicated their board seats.

One side leaned into real-world events; the other spent the afternoon talking about the meaning of the phrase “notice of withdrawal.”

In his folksy tone, Libey captured the arguments perfectly when he said: “I grew up where conduct spoke louder than words.”

Meanwhile, the Pac-12’s attorney flopped and flailed with poor material. At one point, he argued that WSU and OSU would be better off with the status quo, with no board control — we burst out laughing at the suggestion.

His performance perfectly reflected a conference office that’s caught in the middle of this internecine fight and a commissioner who, having overseen the collapse of a century-old college sports institution, has no authority or credibility.

3. Not all 10 outbound schools have taken the same approach to the lawsuit. According to a source, there are hardliners within the group that prevented the two sides from reaching a settlement through mediation.

As the proceedings began Tuesday afternoon, Libey expressed disappointment that the factions could not agree on a division of the 2023-24 revenue and assets that satisfied both sides.

Perhaps his ruling will prompt the hardliners to accept, for example, $25 million or $30 million per campus in revenue distributions. (Full revenue shares would be $35 million, according to financial data cited in court documents.)

That would ensure the plaintiffs have cash to fortify their futures and give the defendants support for operations during their final year in the conference.

A settlement makes the most sense, by far. As one source noted: “This is basically a divorce hearing. It will come down to what the alimony payment is.”

And it’s worth noting: The conference isn’t currently in possession of the full $420 million in 2023-24 revenue. The cash is paid by media partners on a schedule throughout the year.

4. For all the focus on the revenue due the conference in 2023-24 and another $100 million (or more) in assets that await WSU and OSU starting next summer, the schools are equally concerned about the size and nature of the liabilities.

Between Kliavkoff’s contract, the rent on the Pac-12 production studio in San Ramon and potential damages in a series of lawsuits — the Pac-12 is the sole defendant in some and one of several defendants in others — the conference could be on the hook for tens of millions.

When will the bills come due?

What’s the grand total?

How will the costs be divided?

Libey’s ruling should expedite the process of sorting through the details and responsibilities.

5. Perhaps the most significant result of Libey’s ruling (assuming, for a moment, that it holds through the appeal process) is what it means for next year:

It pushes the ‘Pac-2’ much closer to reality.

The Cougars and Beavers are contemplating whether to operate as a two-team conference for the 2024-25 sports season — and possibly the 2025-26 season, as well. It’s permitted under NCAA rules, but the practicality is complicated. And costly.

Atop the list of challenges: Formulating schedules for their sports teams.

In that regard, the Mountain West schools could provide a life raft if the price is right.

We don’t know the specifics of the negotiations between the ‘Pac-2’ and the Mountain West. But control of the Pac-12 board would give the Cougars and Beavers access to the resources needed to align for what a source termed “bridge” seasons.

Starting in the fall of 2026, WSU and OSU must be members of a conference with at least eight schools. That conference could be a rebuilt Pac-12, the Mountain West or a league not yet formed.

6. Our last point addresses one of the first questions to surface following Libey’s ruling:

Will WSU and OSU hoard the entirety of the $420 million in revenue due to the Pac-12 in 2023-24? Or will they adopt a magnanimous approach and share the cash with the outbound schools?

We aren’t sure they have a choice.

“The bylaws dictate reasonable treatment,” a source noted.

Defining “reasonable” will assuredly require more billable hours, but Libey made his opinion clear.

“The (preliminary injunction) is going to be modified to make sure the other 10 are still treated in a fair manner,” he said. “Nobody’s going to take advantage of somebody else.”

If WSU and OSU attempt to bulldoze their way to every last dime, the two sides will wind up right back where they started: in court.

“The notion that (WSU and OSU) would take all the money and divide it between the two — that would put everyone right back in gridlock,” the source said.

“And the hope is to get out of this gridlock.”

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