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SEC Quietly Adds Exit Fee to Conference Bylaws

New withdrawal provisions were adopted January 2021

Michael Wade/Icon Sportswire

As other conferences fought over exit fees, and even increased them, over the past decade, the SEC was the lone holdout. After all, who would ever want to leave the SEC?

Imagine my surprise as I was reviewing conference distribution policies to write about the College Football Playoff payouts and stumbled across a new section about withdrawing from the conference complete with a new exit fee. According to the SEC’s 2021-22 Bylaws, the new language was adopted January 14, 2021.

The additions to Section 3 of the conference bylaws begin with a requirement to give at least two years’ notice:

*3.1.4 Withdrawal from Membership. A member may only withdraw from membership in the Conference after providing written notice to the President and the Commissioner of the date of its withdrawal at least two years prior to the date on which the withdrawal will be effective. The withdrawal notice must specify a withdrawal date of July 15 in the year in which the withdrawal will be effective. [Adopted: 1/14/21]

The biggest change of all though is the whopping $30-45 million exit fee the conference will now impose. Here is that section in full:

3.2 WITHDRAWAL FEE

*3.2.1 Obligation to Pay Withdrawal Fee. A member that provides notice of withdrawal from the Conference as required by Section 3.1.4 shall pay a withdrawal fee to the Conference of $30 million on or before the effective date of the withdrawal. [Adopted: 1/14/21]

*3.2.2 Additional Withdrawal Fee. A member that withdraws from the Conference without providing notice of withdrawal as required by Section 3.1.4 shall pay a withdrawal fee of $40 million to the Conference immediately upon providing notice of withdrawal (or if no notice is provided, as of the effective date of such withdrawal). [Adopted: 1/14/21]

*3.2.3 Withdrawal Fee—Member Deemed to Have Withdrawn. A member deemed to have withdrawn from the Conference shall pay a withdrawal fee of $45 million to the Conference immediately upon being informed that the Commissioner has determined that the member is deemed to have withdrawn. [Adopted: 1/14/21]

*3.2.4 Reduction of Distributions to Withdrawing Member. The Commissioner may, at any time (including prior to the effective date of any withdrawal or deemed withdrawal), reduce any distributions otherwise payable to a member that has provided notice of withdrawal or who has been deemed to have withdrawn, including but not limited to distributions otherwise provided for in Bylaw 31, and apply such distributions to the withdrawal fee payable by the member to the Conference. [Adopted: 1/14/21]

These changes came ahead of Texas and Oklahoma being announced as new additions to the SEC in July 2021. However, sources at two SEC schools suggested the changes were made as a result of supplemental distributions the conference made to help cover costs during the pandemic.

The SEC office confirmed the change was made due to the supplemental distributions.

“The adjustments made to SEC Bylaws in January 2021 were related to securing and distributing supplemental income to SEC members to help mitigate the financial impact of the COVID-19 pandemic on SEC athletics programs as announced in May.  SEC presidents and chancellors unanimously approved the bylaw change,” said Herb Vincent, the SEC Associate Commissioner for Communications.

Most interesting to me as I’ve contacted folks I know across the SEC is how few of them seemed to be aware of the change. Indeed, several had to look it up in the bylaws for themselves. So, although the SEC does now have an exit fee, there certainly doesn’t seem to be any concern about it.

You can view the full section below.

Author

  • Kristi A. Dosh is the founder of BusinessofCollegeSports.com and has served as a sports business analyst and contributor for outlets such as Forbes, ESPN, SportsBusiness Journal, Bleacher Report, SB Nation and more. She is also the author of a book on the business of college football, Saturday Millionaires. Kristi is a sought-after consultant and speaker on topics related to the business of college sports and a former practicing attorney. Click to learn more

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