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New Mexico State University

New Mexico State University

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McCarthy lawsuit settled

New Mexico State University President William B. Conroy announced today that the lawsuit against the University by former head men's basketball coach Neil McCarthy has been settled. NMSU will pay McCarthy a lump sum of $800,000. In addition, about $35,000 in an escrow account will be transferred to McCarthy. President Conroy said:


"It is sometimes difficult and expensive to do the right thing. The removal of Neil McCarthy as head coach was the right thing to do. When we did so in October of 1997, we stated that NMSU would not tolerate the perception that winning games outweighs the educational mission of this University. Academics, sportsmanship, civil behavior, citizenship, and compliance with the NCAA rules are of paramount importance to NMSU. Although NMSU was confident of winning McCarthy's lawsuit, putting an end to this litigation was also the right thing to do. Numerous efforts were made by NMSU to resolve this dispute, both before and after the lawsuit was filed, but McCarthy's demands made it impossible to settle these matters until now. This settlement is about one-fourth of what McCarthy had originally demanded."

NMSU's disputes with McCarthy consisted of two separate issues: first and foremost, his job performance; and second, his contract. Based on job performance issues, NMSU concluded it had to remove McCarthy as head coach and later concluded it had to terminate his employment. Representatives of NMSU met with McCarthy on five separate occasions in August and September of 1997. McCarthy refused to acknowledge or discuss the job performance issues or to cooperate with the Athletics Director. NMSU exercised its contractual right under both the 1996 contract and the earlier contract to remove McCarthy as head coach. He was reassigned to another position in the Athletics Department but never came back to work. The 1996 contract and the earlier contract had similar provisions allowing for termination. For numerous reasons, McCarthy was terminated effective August 1998.

The second issue in the disputes with McCarthy concerned the 1996 contract. That contract clearly specified that the contract was not valid unless it was ratified by the Regents. Former President J. Michael Orenduff and former Athletics Director Al Gonzales never presented the 1996 contract to the Regents and it was never discussed or voted on by the Regents in any open or closed meeting. However, Orenduff and Gonzales instructed the Business Office, without the Regents' knowledge, that McCarthy be paid under the new contract. The Regents did not know about the contract until May of 1997 when it was discovered during the University's review of Orenduff. The Regents never ratified the 1996 contract.

NMSU attempted repeatedly to negotiate the contract dispute. McCarthy refused and sued NMSU and later sued President Conroy and Athletics Director Jim Paul personally. McCarthy asserted nine separate counts for relief, one with 18 claims, including a demand for reinstatement as head coach through an injunction.

The most important part of the dispute with Neil McCarthy was decided in NMSU's favor at a Court hearing in which the Court denied McCarthy's demand that he be reinstated. In December 1998 the Court ruled also that McCarthy had no valid claims that NMSU acted in bad faith or treated him unfairly. The Court has now ruled against McCarthy on eight of the nine counts he filed.

On January 26, 1998, McCarthy's attorneys filed a document in open court indicating McCarthy was demanding approximately $3 million in settlement. McCarthy's earlier refusals to negotiate and this unreasonable demand left NMSU no choice but to vigorously defend itself. In sworn answers provided to NMSU in December 1998, McCarthy claimed that the value of his contract and the loss of other income totaled approximately $1,766,000, plus additional undisclosed amounts. The Regents continued to feel that these demands were unreasonable. Only after the Court ruled against all of McCarthy's claims for reinstatement, and eight of his nine claims for damages, was NMSU able to settle this case.

NMSU is committed to the academic achievement of its student-athletes, to ethical recruitment of student-athletes, and to compliance with NCAA rules. This year's men's basketball team has been successful both on and off the court. This past fall semester the 12 scholarship players on the men's basketball team earned a 2.89 GPA and the cumulative GPA for all NMSU student-athletes is 2.96. Morale in the Athletics Department and among the student-athletes is at an all time high. NMSU is ready to close this chapter and looks forward to a bright future in the Athletics Department.