Although couched in fiery rhetoric, the three-state, four-lawsuit litigation centering on the ACC, two dissatisfied member schools—Florida State and Clemson—and media rights contracts is fundamentally about one thing: money.
It’s no surprise, then, that the parties agreed on Tuesday to settle their litigations through a reworked financial arrangement for media rights. The settlement must be approved by the judges who are presiding over the litigations in order to go into effect, though approval is very likely to occur.
The settlement features an agreement on a new revenue-distribution model based on viewership. The model eschews equal sharing of TV revenue by member schools to allocate 60% of it based on viewership of a school’s football and men’s basketball games.
The settlement also revises the penalty structure for a school that exits the ACC’s grant of rights, a term of art that refers to a school permitting its intellectual property and media rights to be used by the conference and its business partners. In addition, according to ESPN, the settlement resets the exit fee arrangement so that as of next year, it is $165 million and drops by $18 million each year until reaching and leveling at $75 million in 2030-31.
The litigation began in 2023 with the ACC suing the FSU Board of Trustees in a North Carolina case accusing the school of failing to meet contractual obligations to the conference. FSU, eyeing a possible exit from the ACC, responded with its own lawsuit against the league in Florida. The Seminoles objected to what they termed an excessive and unauthorized withdrawal penalty that was part of a “penalty package” of $572 million to leave the conference. FSU also accused the ACC of mishandling its media rights negotiations with ESPN, especially by (allegedly) leaving money on the table for member schools and “diluting the value” of university IP rights.
Last year, Clemson and the ACC sued each other in South Carolina and North Carolina, respectively. Their litigations essentially mirrored the same set of issues: Whether the ACC misused media rights, the appropriate penalty or fee (or both) a school should face for exiting the ACC and compliance requirements for member schools. The filing of complaints in specific states reflected forum shopping, which refers to attorneys seeking to try their cases in jurisdictions that are likely to be favorable due to local judges and juries—such as FSU suing in Florida, Clemson suing in South Carolina and the North Carolina-based ACC suing in N.C.
In a statement, the ACC, Clemson and FSU announced they “have resolved all ongoing legal disputes” and that Clemson and FSU will remain full members of the ACC. ACC member schools, the statement goes on to say, will have the chance to “earn increased viewership distributions” and will also “be incentivized” to take steps that enhance viewership for the conference.
The ACC will continue its partnership with ESPN, a point stressed by ACC commissioner Jim Phillips. Phillips predicts the new structure “demonstrates the ACC embracing innovation and further incentivizing our membership based on competition and viewership results.” Meanwhile, Clemson president Jim Clements and FSU president Richard McCullough underscored that they “remain proud members of the ACC” and welcome a new model that will permit schools to earn increased revenue.
The settlement arrives at a crucial point in the business and law of college sports for power conferences. The NCAA’s settlement to resolve the House, Carter and Hubbard antitrust litigations could be approved by U.S. District Judge Claudia Wilken as soon as next month. The House settlement will allow participating colleges to share up to 22% of the average power conference athletic media, ticket and sponsorship revenue to their athletes, with around $21 million as the initial annual cap. Although it does not resolve ongoing and prospective controversies concerning college athletes as employees and Title IX ramifications, the House settlement will provide a structure that—proponents hope—stabilizes college sports after years of disruption.
Conference realignment, spurred by fast-moving changes to the compensation of college athletes and changes in TV viewership, has been a key element of disruption. The ACC settlement, like the House settlement, could lend more predictably and order.
Eben Novy-Williams contributed to this story.
