UCLA vs. the University of California: Can the University of California Find the Defense to Stop UCLA’s Run to the Big Ten?

by Thomas Kemmet, Associate Member, University of Cincinnati Law Review Vol. 91

I. Introduction

“Breaking News” flashed across the phone and television screens of sports fans across the world with news that would shake the college athletics landscape for years to come. On June 30, 2022, two powerhouses in college athletics––University of Southern California (“USC”) and the University of California Los Angeles (“UCLA”)––announced they were leaving the well-renowned Pacific Twelve Conference (“Pac-12”) for rival conference, the Big Ten.¹ USC and UCLA have been members of the Pac-12 for nearly a century dating back to the 1920s where they have developed a rich history and tradition in the region.² Both universities have dominated academically, athletically, and financially. USC and UCLA are currently ranked among the top twenty-five universities in the nation³ and alone have accounted for roughly 44% of the Pac-12’s 544 national championships, which leads all other Power Five conferences.⁴ Additionally, it is estimated that the markets of the two Los Angeles teams represent approximately 40% of the media value for the Pac-12––worth around $13 million in revenue annually.⁵ Therefore, the sudden move of these two schools to the Big Ten was not only a shock but a gut-wrenching blow to the Pac-12, the State of California, and the University of California (“UC”). Unfortunately, there is not much any of these parties can do to prevent USC from leaving, as it is a private university. However, the State of California and the University of California might not be without recourse regarding the departure of UCLA because it is a public institution.

This article begins by discussing the background of why USC and UCLA left for the Big Ten, and presents dual arguments as to why or why not the Board of Regents could thwart UCLA’s efforts to join the Big Ten. Then, Section III evaluates the powers vested in the University of California from the California State Constitution, state codes, and the UC Board of Regents bylaws. Finally, Section IV analyzes the different courses of action the University of California can take against UCLA and what the best option might be.

II. Background

The first seismic powershift in college sports occurred just a year prior in the summer of 2021 when the two behemoths of the Big 12 Conference (“Big 12”), the University of Texas at Austin and the University of Oklahoma, accepted a bid to join the Southeastern Conference (“SEC”).⁶ Shortly after, the Big 12 assumed four additional schools: the University of Cincinnati, the University of Houston, Brigham Young University, and the University of Central Florida––all who athletically dominated their smaller Division I Conferences.⁷ The sole reason for the musical chairs of schools was the payout from the lucrative media deals each conference was signing. Moreover, at the time USC and UCLA were considering joining the Big Ten, the Big Ten was allegedly negotiating a record-breaking television deal that would pay out close to $1 billion annually.⁸ Thus, USC and UCLA were no different than the schools before them. The dividends from the Big Ten media deal would prove to be unparalleled, making it inevitable that they would leave the Pac-12 and join the Big Ten.

Despite the easy decision and the potential benefits of this strategic financial move, UCLA may be precluded from switching conferences to the Big Ten. When the decision was announced, it came as a complete surprise to both UC and California Governor Gavin Newsome.⁹ The Chancellor of UCLA, Gene Block, supposedly negotiated and approved this major deal not only without approval from UC’s Board of Regents, but without even consulting them on the matter.¹⁰ However, the Chancellor contends that he was acting within the scope of his apparent authority vested to him by the Board.¹¹ The Chancellor relied on a policy implemented by the President’s office in 1991 that granted the Chancellor the power to execute specific contracts, including athletics agreements and the determination of membership in athletic conferences.¹² Alternatively, the Board of Regents believes that this power was not unlimited and it is within their conferred authority to prohibit such contracts from being entered, especially when it may impact other universities like University of California Berkeley.¹³ Thus, in order to determine whether or not the Board of Regents has the power to prevent UCLA from joining the Big Ten, the structure of the university system and the derivation of its powers must be analyzed.

The Vested Powers in the Board of Regents of the University of California

UCLA is just one of several campuses under the purview of the public entity, the University of California.¹⁴ Other schools include UC Berkeley, UC Irvine, and UC Davis.¹⁵ As a public institution, it is governed by the State of California’s Constitution.¹⁶ Article IX of the Constitution speaks to California’s education system and Section 9 of Article IX pertains specifically to the University of California.¹⁷ Article IX Section 9(a) states that the school constitutes a public trust that is to be administered by the corporation, The Regents of the University of California (the “Corporation”).¹⁸ The Corporation is to be managed by a board that consists of seven ex-officio members including the Governor and President of the university, as well as eighteen appointed members selected by the Governor and approved by the State Senate (the “Board of Regents” or “Board”).¹⁹

The Regents of the University of California established corporate governance documents, including Bylaws and Standing Orders, which in turn govern the University of California system. UC Bylaw 22 reiterates that, pursuant to Article IX Section 9 of the California Constitution, all authority lies with the Board of Regents.²⁰ The bylaw also provides that all such powers, with a few exceptions, are delegated to the President of the university to oversee the operations of the university and enforce the policies of the Board.²¹ However, according to Bylaw 22.1, the Board of Regents can also revoke any delegated powers.²² One of the privileges vested in the President is the ability to recommend Chancellors of the campuses upon board approval.²³ Chancellors work in consultation with the President and help to manage the day-to-day operations of their respective institutions.

Pursuant to UC Bylaw 30, the President is authorized to delegate any duties of their office, excluding their duties as an ex officio Regent.²⁴ Many of the powers bestowed upon the President are further delegated to the Chancellors for efficiency of operation.²⁵ One power that may be delegated to the Chancellors is expressed in Standing Order 100.4(dd),²⁶ authorizing the President to effectuate any contracts on behalf of the Corporation necessary to fulfill his duties, except as otherwise provided in the Bylaws or Standing Orders.²⁷ The ability to delegate this power is further explicated in the Office of the President’s Contract and Grant Manual. According to Section 13-710 of this Manual, the President has authorized the Chancellors to create, accept, and enforce extramural contracts.²⁸

Regardless of who holds power at the time of signing a contract, all members of the Board of Regents, including the President and those delegated therefrom, have a fiduciary duty to serve in the best interest of the university.²⁹ This provision is not only stipulated in Bylaw 21.2,³⁰ but is also backed by California’s Corporations Code Section 309(a), which states that “A director shall perform the duties of a director, including duties as a member of any committee of the board upon which the director may serve, in good faith, in a manner such director believes to be in the best interests of the corporation.”³¹ In other words, all directors and officers of UC are mandated to consider the impact on the entire university before making a decision.³²

III. Discussion

At first glance, in conjunction with the Contract and Grant Manual, it appears that the Chancellor of UCLA acted within the scope of his authority when he decided to leave the Pac-12 for the Big Ten. Standing Order 100.4(dd) granted the President of UC the power to sign contracts on behalf of the university.³³ However, as specified in the Contract and Grant Manual, the Chancellor was permitted to enter into and enforce contracts regarding extracurricular matters.³⁴ It would be difficult for UC to argue that university athletics, and more specifically UCLA’s athletics, do not fall within this provision. Moreover, it was further conceded by the Board of Regents in a recent report that since 1991, the Office of the President has allotted power to the Chancellors of their respective campuses to enter into athletics agreements, which also included entering into conference agreements.³⁵

Despite the Chancellor acting within his granted authority delegated from the President, the Board believes that they can thwart UCLA’s move because they have the ability to rescind the delegation of power.³⁶ In other words, the Board of Regents believes that since they extended the authority, they did not lose it.³⁷ The Board believes that they can assume the power back and demand the Chancellor to abdicate his authority.³⁸

Although the Board of Regents does have the power to rescind delegation, acting on this power would be futile. UCLA already entered into the agreement with the Big Ten. Based on California corporate law, any contract entered into on behalf of the corporation that is done within the scope of an officer’s actual or apparent authority is binding against the corporation.³⁹ Chancellor Gene Block was clearly acting within the scope of his authority when he entered into the agreement with the Big Ten. Therefore, the agreement should be binding on behalf of the university.

The Board may be able to obtain a court injunction on the agreement by UCLA for breach of fiduciary duty. Pursuant to Bylaw 21.2, all members of the university in signing agreements have to do so with the best interest of the entire university system in mind.⁴⁰

The Board of Regents has two major arguments that the UCLA Chancellor did not act within the best interest of the university as a whole. The first argument would be in regard to the student athletes of UCLA in particular. A majority of Big Ten teams reside in the Midwest all the way to the East Coast. Thus, the travel away from school will be longer and more exhausting for students, as they would cross numerous times zones.⁴¹ This could have detrimental impacts on their academic success. It would also be more expensive for the university itself, transporting equipment and personnel hundreds of miles.

The second argument pertains to sister school UC Berkeley. UC Berkeley is the only other school of the University of California campuses that is a member of the Pac-12.⁴² Therefore, UCLA leaving the Pac-12 would adversely impact UC Berkeley financially. As mentioned above, the two Los Angeles schools are estimated to bring in 40% of the Pac-12’s media revenue.⁴³ Of that 40% it is estimated that UCLA comprises 10% of the media value.⁴⁴ UCLA’s exit from the Pac-12 in turn results in an economic loss of roughly $3 million a year for the entire conference and more specifically a $250,000 annual loss for UC Berkeley.⁴⁵ Additionally, the Pac-12’s media contract expires in two years.⁴⁶ With UCLA now gone, the Pac-12 will inevitably get a lower media deal which will directly affect the amount of revenue that sister campus UC Berkeley can receive.⁴⁷ It is also important to note that UC Berkeley and UCLA have a long standing tradition and historic athletic rivalry. They have played each other every year since 1933.⁴⁸ Consequently, with UCLA joining the Big Ten, the historic rivals will no longer face each other, causing both teams to miss out on ticket and merchandise revenue. Therefore, UCLA’s actions did not take into account the economic harm it will place on the entire university when it comes to UC Berkeley.

IV. Conclusion

One potential course of action for UCLA would be to claim a breach of fiduciary duty to get a legal injunction and prevent UCLA from entering the Big Ten. However, an injunction award would most likely prove detrimental to the university. In light of UCLA and USC joining the Big Ten, the Big Ten solidified and signed a historic television deal worth upwards of $7 billion.⁴⁹ If the Board of Regents were to get an injunction against UCLA or even demand that the Chancellor stand down and re-delegate the power back to the Board, UC could face legal action by the Big Ten. If UCLA were to leave, it could jeopardize the historic Big Ten media deal. Thus, the Big Ten could bring a claim for breach of contract against UCLA and the Board of Regents and potentially request substantial damages.

The best course of action is one currently being contemplated by the Board. The Board of Regents should avoid legal attempts to prevent UCLA from entering the Big Ten and rather permit them to do so. However, upon entering the Big Ten and being a beneficiary of the lucrative media deal that was signed, UCLA should be forced to subsidize their sister school UC Berkeley.⁵⁰ In other words, the Board of Regents should create some mechanism in which the revenue generated from UCLA’s illustrious Big Ten media payout will be shared with UC Berkeley. Finally, the Board of Regents, should amend their bylaws⁵¹ to require board approval before a campus can switch conferences in the future.

Cover Photo by Bband11th on Wikimedia Commons and licensed under CC BY-SA 3.0.

Thomas Kemmet

Thomas Kemmet is originally from Long Island, New York. He graduated from The Ohio State University with a B.S in Political Science and a minor in both Italian and Economics. Prior to law school, Thomas worked in the corporate insurance industry for two years. In his free time, Thomas enjoys being active playing sports, hiking, or traveling the world. He is especially interested in legal issues pertaining to sports and entertainment, the protection of the environment, as well as business enterprises.

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39
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