Disparate Allocation of Media-Generated Revenue Prompted the Efforts of Florida State and Clemson to Bolt from the ACC

Clemson and Florida State believe freeing themselves of the ACC would open opportunities for them to garner greater revenue, which they deem critical to their efforts to remain competitive with the Big Ten and SEC.

The ACC and Its Member Universities, Including Florida State and Clemson, Are Raking in the Money, Just Not as Much as the Big Ten and the SEC

Federal tax records obtained by USA Today reveal the following revenues generated by the Power Four conferences in their fiscal year 2022:

1. Big Ten — $845.6 million
2. SEC — $802 million
3. ACC — $617 million
4. Big 12 — $480.6 million

As reported by Axios in 2023, “everyone in the Atlantic Coast Conference is anxious about the future” because the ACC “is tens of millions of dollars behind the two leading conferences when it comes to revenue.”

With the Big Ten and SEC Flexing Their Muscle, the Media Revenue Gap Will Likely Widen.

Anxiety within the ACC has continued to grow, because the Big Ten and SEC both have big media deals set to go into effect shortly, while the ACC is contractually bound to a smaller deal with ESPN which runs through 2036. When the new Big Ten and SEC deals go into effect, those two conferences will be pulling in $1 billion per annum and $700 per annum, respectively.

As recently reported by Eric Prisbell of On3:

“It is the Power Two’s world, and everyone else is merely along for the ride, fortunate they are still permitted to play in the same college sports sandbox.

“That snapshot of the fast-evolving college sports ecosystem continues to come into sharper focus, with the two super conferences — the SEC and Big Ten — [maneuvering to] widen the already large financial gap that separates them from all other leagues….

ESPN explains how all nine FBS conferences (the Power 4 plus the Group of 5) and independent Notre Dame agreed to a College Football Playoff contract, which will go into effect in 2026, and which is intertwined with an anticipated media arrangement with ESPN:

Beginning in 2024, “12 teams” will make it into postseason play. Eventual expansion to a 14-team format is contemplated to start in 2026. And, “the Big Ten and SEC will have the bulk of control over” the format of postseason play.

“The [conference] commissioners and Notre Dame agreed that the conference champions from the ACC, Big Ten, SEC and Big 12 and the highest-ranked Group of 5 champion would earn playoff berths, and Notre Dame will have protections that will survive regardless of the ultimate format.

“With those ironclad guarantees, the other commissioners and Notre Dame leadership surrendered the bulk of the control over the format to the SEC and Big Ten as ‘part of the give-and-take,’ according to a source.

“The new CFP contract goes hand-in-hand with its expected new TV contract with ESPN. Starting in 2026, ESPN is poised to spend an average of nearly $1.3 billion on the playoff for six seasons.”

The six-year deal will facilitate “further financial separation” of the Big Ten and SEC “from everyone else in college athletics.”

“On an annual basis, … [individual] Big Ten and SEC schools will each be making more than $21 million, up from the nearly $5.5 million that [the] schools … are currently being paid.

“In the ACC, the [individual] schools will get more than $13 million annually, and Big 12 schools will get more than $12 million each. Notre Dame is expected to get more than $12 million as well….

“Because the Big Ten and SEC will have a combined 34 teams and the most CFP representatives, they … had the most leverage in the [deal-making]….

“The vast disparity in revenue between the top and bottom has already elicited discontent and pushback from schools outside the Big Ten and SEC.”

Despite the discontent of schools outside the Big Ten and SEC, those two conferences are running the show. As explained by On3:

“[The] [t]ruth is, there is little the rest of college sports can do to prevent the Power Two [conferences] from flexing [their] considerable muscle in an overt power play. Call their bluff or stand in their way? They can split from the NCAA, derail CFP negotiations and move to stage their own postseason tournament.

“‘The power and influence they now have is enormous,’ one high-ranking college sports source told On3 last week. ‘They have enough power to use it.'”

Instead of Challenging the Money Grab by the Big Ten and the SEC, Florida State and Clemson Have Set Their Sights on Their Own Conference.

As reported in Sports Illustrated on March 20, 2024:

“An otherwise-quiet college football offseason turned up the volume considerably in the last few weeks as first Florida State and now Clemson have both filed lawsuits against the ACC, likely with designs on breaking out of the conference and kicking off another round of possible realignment.

Florida State’s Lawsuit

Spurred to action by the College Football Playoff snub in December 2023, Florida State sued the ACC. In its lawsuit, filed on December 22, 2023, Florida State alleges mismanagement on the part of the ACC has trapped the school in a deteriorating media rights agreement. In the lawsuit, Florida State seeks to be freed of its contractual obligation to stay in the ACC and to possibly pursue greener pastures elsewhere.

Per FSU’s official website:

“[The lawsuit] details how the ACC’s 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 says, the ACC has 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 accuses 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 is pending in court.

Clemson’s Lawsuit

On March 19, 2024, Clemson followed Florida State’s lead, and filed a lawsuit against the SEC. Like Florida State, Clemson is challenging “the ACC’s exit fee and media rights agreement.”

According to South Carolina Lawyers Weekly:

“Clemson and Florida State are trying to free themselves from the ACC because the schools believe the revenue gap between them and schools in the Big Ten and SEC — which they say will soon grow to between $40 million and $50 million in annual distribution — will leave them at a competitive disadvantage.”

The ACC’s Counter-Suit

In its counter-suit against Florida State and Clemson, the ACC points out:

“Clemson and FSU agreed to be in the conference until 2036 by signing [an agreement concerning media revenue known as a] grant of rights. The league’s lawsuit against Clemson even provides a written statement from university president James Clements after a deal was finalized in 2016 with ESPN to launch the ACC Network.

In that written statement, the university president praised the ACC:

“The ACC is a great conference, and this [media agreement] increases the national exposure, brings in additional revenue and offers greater opportunity for student athletes. … For us and the Florida States and others, it stabilizes the conference long term.”

Using an adversary’s own words against him/her is always an effective legal strategy.

ESPN Enters the Legal Fray, Joining the ACC’s Lawsuit Against Florida State

As reported by WCNC, NBC’s Charlotte affiliate:

“ESPN joined the lawsuit against Florida State, arguing the university’s complaint exposed trade secrets by disclosing media rights deals.”

ESPN has filed papers in court in which it implies Florida State and its lawyers violated the law by disclosing “textbook trade secrets” in their effort to break free of the ACC. Specifically, ESPN criticizes Florida State’s disclosure of provisions of the media deal between the ACC and ESPN. ESPN contends:

“[I]f the specifics of the deal would be made public, it would put the network at a competitive disadvantage in future negotiations against rival broadcasters such as CBS and Fox.”

With all these fireworks and legal claims going back and forth, it looks like the litigation involving Florida State, Clemson, the ACC, and ESPN will be winding through the courts for quite some time to come. Thus, Florida State and Clemson are not going to be exiting the ACC any time soon.

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