The ACC, Florida State, and Clemson have all reportedly reached a settlement that would end four court cases that are headed into their second year of litigation. ESPN’s David Hale and Pete Thamel were the first to report the news Monday afternoon. Terms of the agreement have not been made public, but sources that Last Word reached out to Monday morning gave us some details.
The Agreement and the Votes
The agreement would include a redistribution of the television revenue and would reduce the amount of money owed by a school for leaving the conference prior to the conclusion of the Grant of Rights contract in 2036. It does not resolve the biggest issue in the lawsuits. Still hanging out there is whether or not a school could leave the ACC and take its broadcast rights with it to a new conference.
Florida State has already scheduled a Board of Trustees meeting for Tuesday to vote on the proposed settlement. Clemson is expected to do the same, although there is yet to be a confirmation of the time of the meeting. The ACC is scheduling a conference call of all of its board of directors, (the presidents and chancellors of the member schools), for Tuesday. All three must approve of the settlement terms in order for the agreement to go through.
The Two Major Elements
The exit fees for leaving the conference were described as the easy part of the agreement. The current terms state that a school must pay four times the current operating budget of the conference at the time of the departure. A 2025 departure would put that in the range of $130 million and it would climb over the years.
The more complicated part of the agreement is the television revenue redistribution. The settlement refers to it as the “Brand Initiative.” Instead of even distribution to the participating members of the conference, there would now be more money for those with bigger TV ratings, and a hit taken by those with smaller TV ratings. There are 14 schools factored into the calculation as SMU, CAL, and Stanford currently are not getting any of the TV revenue as part of their agreement in joining the conference beginning in 2024.
Some ACC Schools to Get More Money; Others Will Take a Hit
Under the new plan, 40% of the TV revenue would be split evenly among all 14 schools. The other 60% would go into the “Brand Initiative,” and be added to the totals for the schools with the best ratings for football and basketball. What was not laid out, per our sources, was the number of schools that will qualify for the 60% group. There was no clear definition known as of Monday morning if it was going to be the top two ratings schools, or top three or four.
Based on a model of the top four schools taking part in the 60% of revenue split, those schools could earn as much as an additional $15 million per year. Conversely, that would mean the other 10 schools would each take a revenue loss of about $6 million per year.
The exactitude of the numbers is a critical element as the television revenue is a significant part of the revenue sharing that all schools are doing with their athletes starting this Summer. A net revenue loss of $6 million per year puts a crimp in the $20.3 million revenue sharing cap for schools like Wake Forest, Boston College, Virginia Tech and others. The cap will remain the same. But the source of the money in the cap takes a hit.
The Ratings Game
The motivation for the lesser schools to vote yes on the settlement would be the ability to no longer help finance the ACC portion of the lawsuits, which has already cost each party tens of millions of dollars.
There is extra money this year for Clemson and SMU with both of them having made the College Football Playoff. That is generating $4 million in revenue for each school. But with the proposed playoff expansion starting in 2026, the ACC would also be capped at only two teams ever getting automatic bids.
The specifics of the “Brand Initiative” also get tricky in that the ratings reward money goes to schools who are at the top in a five-year rolling average. The ESPN and network ratings would be the most significant factor. But our sources tell us there is currently little insight as to how to account for the media outlets and subscription channels with little to no ratings.
The Four Lawsuits
There are four lawsuits currently winding their way through various appellate courts.
Florida State v. ACC; The conference filed for the state supreme court to hear its appeal over Judge John C. Cooper’s denial of the motion to dismiss based on jurisdiction issues. Trial work has been ongoing as the judge also denied the motion for a Stay in the case.
Clemson v. ACC; The ACC is in the same process in South Carolina, although the trial work has come to a halt as Judge Perry Gravely issued a Stay pending the appeal.
ACC v. Florida State and ACC v. Clemson; Both of these started in the complex contract court in Mecklenburg County, North Carolina. The conference sued both schools for breach of contract for trying to get out of the Grant of Rights. Both schools filed a motion to dismiss based on jurisdiction and sovereign immunity claims. Each was denied by Judge Louis Bledsoe III, (recently retired). Both were slated for appeal at the North Carolina State Supreme Court for later this Spring.
What Changed?
The claims by the schools were dealt a setback last month when ESPN agreed to stay in its contract with the ACC through the 2036 Grant of Rights. In June of 2016, each ACC school signed an amended Grant of Rights agreement that extended the date of the contract through 2036. The purpose, as stated in the Grant of Rights, was the extension of the agreement with ESPN. “WHEREAS, the Conference has negotiated an Amended and Restated Multi-Media Agreement with ESPN and a Network Agreement with ESPN.”
What the schools were not told at the time of the signing was that ESPN had a February 1, 2025 deadline by which it could opt out of the contract altogether beginning in 2027. Part of the claim by Florida State and Clemson was that the schools signed the deal under the terms of the ESPN extension, when the date commitments were not the same.
But last month, ESPN agreed to fulfill its extension in the contract, thus taking away one 9of the “attack points” in the FSU and Clemson claims against the ACC.
Since the beginning of the legal actions, the ACC has had to contend with the potential that legal victories for Florida State and Clemson would open the door for other schools like North Carolina, Virginia, and Miami to leave as well, thus creating a need for a completely reformulated conference without some of its biggest revenue draws.
Whether a school can leave with its broadcast rights in its back pocket will have to wait for another day to be resolved.
