I'd like to hear the opinion of an actual lawyer, but here's mine. Learfield - like Under Armour - asking for cancellation or restructuring tells me that there is a Force Majeure clause in their contract - otherwise, they have no leverage apart from operating under common law. If I'm Cal, the only incentive for me to cancel the contract would be them paying me a lump sum payout in consideration for the cancellation. Restructuring could be done so that payments shift out later. But Learfield IMG can offer me very little in terms versus of negotiating downward because it is a Prisoner's Dilemma. If I accept less, how do I know that other debtors are accepting similar terms? If Learfield defaults when it is not in Chapter 11, that's a slam dunk in Cal's favor in collections. For $100m, I'm hiring outside counsel and seeing them in court. If Learfield goes Chapter 11, then so be it.
The university and donors are going to need to prop up Cal Athletics for the time being with no revenue coming in. If things continue Cal will need to consider creative financing avenues such as selling a piece of the real estate under Memorial Stadium or other assets to generate cash. The remaining debt service on the stadium retrofit complicates matters as well.
I'd like to hear the opinion of an actual lawyer, but here's mine. Learfield - like Under Armour - asking for cancellation or restructuring tells me that there is a Force Majeure clause in their contract - otherwise, they have no leverage apart from operating under common law. If I'm Cal, the only incentive for me to cancel the contract would be them paying me a lump sum payout in consideration for the cancellation. Restructuring could be done so that payments shift out later. But Learfield IMG can offer me very little in terms versus of negotiating downward because it is a Prisoner's Dilemma. If I accept less, how do I know that other debtors are accepting similar terms? If Learfield defaults when it is not in Chapter 11, that's a slam dunk in Cal's favor in collections. For $100m, I'm hiring outside counsel and seeing them in court. If Learfield goes Chapter 11, then so be it.
The university and donors are going to need to prop up Cal Athletics for the time being with no revenue coming in. If things continue Cal will need to consider creative financing avenues such as selling a piece of the real estate under Memorial Stadium or other assets to generate cash. The remaining debt service on the stadium retrofit complicates matters as well.