MHSAA considers bankruptcy

By Jason Wesseldyk
Sports Editor

Allegan Dillon Hileski tossed four shutout innings against Wayland Monday, April 14. (Photo by Jason Wesseldyk)

Michigan High School Athletic Association executive director Jack Roberts knew the possibility existed that his organization would get hit with legal bills stemming from its long-running gender-equity lawsuit.

He just never imagined those bills would total more than $7 million.

In a ruling handed down by U.S. District Judge Richard Enslen, the MHSAA was ordered to pay more than $4.5 million in attorneys’ fees. Throw in more than $3 million in “prejudgment interest” dating back to 1998 when the suit was filed and you have a total bill in excess of $7 million.

Enslen is the same judge who first ruled against the MHSAA in 2001, ordering the organization to modify its scheduling of high school athletic events and setting off a series of appeals.

“The court’s order in our case exceeded even our worst-case scenario preparations,” Roberts said in a statement.

And given the surprisingly high amount of the judgment, the MHSAA, which has until Wednesday, April 30, to appeal the ruling, is currently exploring its options in terms of how to proceed. One possibility is filing Chapter 11 bankruptcy.

“The MHSAA is considering (an) appeal of the district court’s order and is also preparing to file for protection against creditors,” Roberts said in the statement. “These precautions will assure the future of the MHSAA.”

After exhausting its appeals in the original lawsuit and coming out on the losing end, the MHSAA, which has a net worth of nearly $6 million according to the most recent documentation, assumed a petition for reimbursement of legal fees would follow. Based on a pair of previous cases—one involving Title IX and one involving affirmative action—Roberts and his colleagues believed that number could fall anywhere between $1 million and $3 million.

They were particularly taken aback by the award of prejudgment interest.

“The bigger surprise was the award of prejudgment interest paid on that total, starting from the date the complaint was filed in 1998,” Roberts said in the statement. “This issue had not been briefed by the parties. This means that a case that was not about money damages has now become such a case. And it pushes the total well beyond the MHSAA’s assets.”

The reaction among area athletic directors has largely been one of concern for the state’s student-athletes as well as a reaffirmation of their faith in Roberts and the MHSAA as a whole.

“There is never a time when a million-dollar judgment comes in and people think it is not a big deal,” Otsego athletic director Mike Garvey said. “This is a big deal. The money that goes to the attorneys could have been spent on our kids.

“I will tell you that the leadership at the MHSAA will do the right thing. They expected to pay and they had a strategy prepared. Unfortunately the dollar amount in front of them is beyond their worst-case scenario, but they’ll figure it out.”

Plainwell athletic director Bill Andrew echoed those sentiments.

“The MHSAA is a great organization and has a great reputation nationally,” Andrew said. “Jack Roberts and the others there in Lansing are class people, and I feel so bad that they’ve had to go through all this.

“I think it’s too early to know exactly how this thing will play out, but our main concern needs to be with the state’s student-athletes. We all need to do everything we can to help our governing body weather this storm and continue to provide the same quality opportunities for our kids.”

Roberts said the MHSAA, which does not charge membership fees and is funded primarily through the programs it sponsors and conducts, should be able to provide the same services it has in the past.

“It is reasonable to anticipate that member schools will continue to have nearly the MHSAA’s full range of services for students, coaches, administrators and officials, although there may not be the same level of financial support available for some MHSAA programs and events for some length of time,” Roberts said in the statement.

At the same time, Andrew knows changes are likely on the way.

“Some decisions will have to be made,” Andrew said. “There’s a chance some of the MHSAA’s programs could be affected.”

Garvey thinks the MHSAA might have to start taking a bigger cut of the gate when it comes to state tournaments.

“The MHSAA has never charged a membership fee or an entry fee for a tournament,” Garvey said. “They do charge admission for spectators, but teams do not have to pay to participate. I’m sure they will not want to do that even now.

“Still, I wonder if the money allocated to hosts of tournaments for the MHSAA could be restructured. There is a specific amount or a percentage of the gate that a host school is allowed to keep. Perhaps that will decrease.”

Regardless of what lies ahead, Garvey is confident of one thing.

“Michigan high school sports will continue,” Garvey said. “We survived the change of seasons, and we will survive this one too. I have faith in the people at the MHSAA, and I would predict that we will be stronger when this is all resolved.”