Florida State University is seeking to exit the Atlantic Coast Conference (ACC), potentially jeopardizing the league’s future if their legal challenge proves successful. The university is contesting a $572 million penalty tied to breaking their TV contract with ESPN, which included transferring their ‘grant of rights’ (GoR) to the network.
An emergency meeting of the FSU board of trustees unanimously resulted in a decision to file a complaint against the ACC in Leon County Circuit Court, Florida. The challenge questions the legal enforceability of the conference’s exit fee and grant of rights against the university. The board emphasized that the move is unrelated to the recent College Football Playoff snub.
According to ESPN, any ACC school wishing to leave would face an exit fee three times the league’s operating budget, approximately $130 million. In addition to this penalty, Florida State claims that the total exit fee, including forfeiting TV revenue, would amount to $572 million.
FSU’s board chair, Peter Collins, stated, ‘This board has been left with no choice but to challenge the legitimacy of the ACC grant of rights and its severe withdrawal penalties.’
The legal dispute revolves around a 20-year television rights deal signed in 2016 between the ACC and ESPN, paying the conference $240 million annually. A ‘grant of rights’ grants exclusive media rights to conferences, enabling them to negotiate broadcast deals on behalf of member schools.
Florida State alleges that ACC schools were compelled to extend their grant of rights until 2036, with no revenue guarantees beyond 2027. The lawsuit asserts that the ACC breached its contract by extending the ESPN deal and adding three new members without proper input. These new members are the University of California at Berkeley (Cal), Stanford University, and Southern Methodist University (SMU).
The legal complaint argues that the ACC’s penalties violate Florida law, labeling both the penalty and grant of rights as unenforceable. It accuses the conference of breaching its contract and fiduciary duties to Florida State and claims the ACC’s ‘draconian’ grant of rights obstructs free trade.
The financial landscape is crucial, with the ACC’s contract now the smallest among the ‘Power Four’ conferences. A favorable ruling for Florida State could have widespread consequences for the ACC, potentially leading to multiple schools departing, including Clemson University, the University of Miami, and others.
In response, the ACC released a statement asserting that Florida State’s legal action violates its obligations and expressing confidence in the enforceability of the grant of rights. Subsequently, the ACC filed a lawsuit against Florida State’s board of trustees in North Carolina, arguing that matters concerning the ACC fall under the jurisdiction of North Carolina, where the conference is headquartered.
