Officials for Florida State University and Clemson University will vote Tuesday on an agreement that would settle four ongoing lawsuits between the schools and the Atlantic Coast Conference regarding a revenue-sharing plan.
The ACC board of directors also is scheduled to meet Tuesday to go over terms of the settlement. All three boards must agree to the settlement before it can move forward, but those familiar with the negotiations expect a deal to be finalized soon.
The new revenue-distribution plan has been called “brand initiative,” and it is said to solidify the league’s membership for the time being. It would be based on viewership and would include financial penalties for leaving the league before the plan concludes in June 2036. The plan would be based a five-year rolling average of television ratings.
Both Clemson and Florida State filed lawsuits in their home states in 2023 trying to remove themselves from a grant of rights agreement that, according to Florida State's attorneys, could have meant paying $700 million to leave the conference. The ACC countersued both schools to maintain the grant of rights agreement through 2036.
In its original 2023 complaint, the FSU Board of Trustees sued the ACC in response to “years of mismanagement that has left its member schools trapped in a deteriorating multi-media rights agreement while preventing them from joining other conferences because of ‘draconian’ withdrawal penalties.”
The suit was filed in Leon County, and it also said the ACC failed to fulfill its stated obligations to “generate substantial revenues” and “maximize athletic opportunities” for its members. It detailed how the ACC’s alleged mishandling of negotiations with ESPN has deprived members of tens of millions in annual revenues and put them behind other Power Four schools in the competition for educational advancement and to appear in elite athletic championships.
Rather than fix those problems, the lawsuit claimed the ACC tried to prevent its members from leaving the Conference by threatening to impose “draconian” withdrawal penalties of at least $572 million — the most onerous in collegiate sports.
The complaint accused the ACC of restraint of trade, breach of contract and a failure to perform. It also challenges the legality of its withdrawal penalties.
The lawsuit said the College Football Playoff’s decision to exclude the undefeated Seminoles from the 2024 championship “crystalizes” years of ACC failures that threaten the conference’s fiscal viability.
“The ACC has negotiated itself into a self-described ‘existential crisis,’ rendered itself fiscally unstable and substantially undermined its members’ capacity to compete at the elite level,” the complaint states. “In doing so, the ACC violated the contractual, fiduciary and legal duties it owed its members.”
The ACC struck its initial media rights agreement with ESPN in 2011 and renegotiated it in 2012 to include a schedule of annual Tier I cash payments for nationally broadcast football games through 2027. ACC members currently receive roughly $33 million each in Tier I payments and payments for regionally broadcast games. Rather than wait to negotiate better terms in 2027, however, the ACC granted ESPN a unilateral option to extend the Tier I contract until 2036 without receiving additional compensation.
Yet at the same time, ESPN was negotiating shorter, more lucrative contracts with the other conferences. Under those contracts, the rival conferences have opened a revenue gap of tens of millions of dollars a year, putting the ACC at a disadvantage in both fiscal impact and prestige.
Rather than fix those problems, FSU claimed the ACC has taken steps to prevent schools from defecting to conferences with the more lucrative broadcast contracts, the lawsuit says.
It adopted a secretly developed Grant of Rights provision that obligated members to forfeit their media rights through 2036 if they were to leave the Conference. While the provision doesn’t put a value on those, they are currently worth at least $442 million, the lawsuit says. FSU agreed to the extension in 2016, the lawsuit says, based on the ACC’s verbal claim that ESPN had threatened to walk away from the conference without the concession.
FSU claims the ACC also ramped up its “severe withdrawal fees,” to three times its annual operating budget or $130 million. Added to the loss of broadcast rights, a school now faces a cumulative withdrawal penalty of $572 million in fees and forfeited revenues.
The school also alleged the ACC continued to erode its media rights position by rushing to admit three new schools with weak media rights values, dimming the prospect of the ACC winning significant increases in revenue payments when its contract is up for renewal.