Florida State University and the Atlantic Coast Conference have resolved their dueling lawsuits in a settlement announced on Tuesday that increases revenue sharing for the schools with the highest viewership of athletic events and lowers the ACC’s exit fees.
Both FSU and Clemson University in South Carolina had sought to exit the conference, arguing that the conference’s “grant of rights” contract was unclear and places some schools at a financial disadvantage. FSU’s lawsuit, which was filed in Florida courts, argued that the ACC had mismanaged media revenues earned through televised football games.
“With this resolution, Clemson and Florida State will remain full members of the ACC, and the parties will dismiss all pending lawsuits in the states of Florida, North Carolina and South Carolina,” the ACC’s news release states.
The ACC had filed a lawsuit in its home state, North Carolina, in a bid to legitimize the “grant of rights” contract signed with FSU through 2036.
ACC members have agreed to create a new revenue distribution model that is based on viewership, the conference reported. The effort will support all conference members, but it will also put in place a new revenue stream that deals solely with annual football and men’s basketball viewership, according to the ACC.
“... This new structure demonstrates the ACC embracing innovation and further incentivizing our membership based on competition and viewership results,” ACC Commissioner Jim Phillips said in a prepared statement. “The settlements, coupled with the ACC’s continued partnership with ESPN, allow us to focus on our collective future – including Clemson and Florida State – united in an 18-member conference demonstrating the best in intercollegiate athletics.”
The resolution of the lawsuits comes in the wake of the Florida Supreme Court’s Feb. 27 denial of the ACC’s motion to pause litigation filed by the FSU Board of Trustees and the court’s characterization of the request as “moot.”
Kevin Paule, a Tampa attorney who specializes in business disputes, called the settlement a victory not just for FSU and Clemson but for some of the schools in the conference that were not parties to the litigation.
“They will receive increased revenue moving forward and, if they choose to leave the conference in a few years, will now have a more manageable exit fee to pay upon leaving,” Paule told the Florida Record in an email.
He stressed that the two main components of the settlement – higher revenues for schools with the top viewership numbers and a substantially lower exit fee – provide some needed glue to hold the conference together.
“Naturally, this means that some schools in the ACC will see a decrease in revenue payouts,” Paule said. “In the short term, this provides some clarity, and the ACC is able to keep everyone together. But, this increases the odds that a school will leave the conference in the next few years.”
Clemson reported that the new fee schedule for ACC members starts at around the current exit fee but will decline by $18 million annually until reaching $75 million in 2030-2031.
Football television revenue from media deals has driven conference realignments for the past several years, according to Paule.
“This deal recognizes that reality, in part, by providing increased revenue streams to the big brands in the ACC,” he said. “But, the ACC will continue to have a fragile existence over the next several years if it’s unable to incentivize its marquee programs to stay instead of chasing greener pastures.”