As if 2023 wasn’t wild enough for college realignment, Florida State has set the stage for more chaos to continue in 2024 and beyond by filing a legal complaint against the ACC to challenge the conference’s Grant of Rights agreement. There will be no legal analysis here because one semester of business law does not make you a lawyer. Also, that’s why the college football subreddit exists so one can make authoritative comments on the legalities involved despite having no legal background. For legal analysis from an actual lawyer, here’s a link to Michael McCann’s thoughts at Sportico.
How Florida State and the ACC Reached This Point
People in tune with realignment are well aware of how this situation escalated. We even wrote a dedicated article in May 2023 when 8 members appeared preparing a challenge to the Grant of Rights. Let’s provide a quick recap for those who don’t follow realignment happenings as closely:
In 2013, the ACC, its member schools, and ESPN agreed to a 15-year Grant of Rights agreement that was designed to prevent another Big East Conference-style dissolution. This was later amended to become a 20-year agreement in 2016 that lasts until June 30, 2036. Given that some of the current ACC members were previously in the Big East, the trade-off for long-term stability in the form of the GoR was to cede some TV revenues down the road. The lower revenue is one of the major sticking points for Florida State with other conferences such as the Big Ten and SEC having revenue distributions far exceeding the ACC.
In May 2023, 8 schools were seemingly ready to challenge the ACC’s Grant of Rights agreement established in 2016 with Florida State being the loudest voice of unhappiness with numerous public statements echoing that sentiment. Things calmed down a bit until the Pac-12 fell apart with only Oregon State and Washington State remaining in the 2PAC with the ACC eventually inviting California, SMU, and Stanford to join the conference in 2024-25. Florida State was already unhappy with the lower revenues and the addition of three more schools angered them further as noted in its legal complaint. Then December 3, 2023, happened when Florida State was left out of the College Football Playoff, which brings us to current events.
All Schools and the ACC are to Blame
It’s baffling that no one at any of the schools or within the ACC offices questioned the long-term implications of a 20-year Grant of Rights agreement. Perhaps there were internal discussions on this point but those discussions clearly didn’t prevent an agreement from happening. The agreement continues to look worse as more time passes especially for a conference with four schools ranked in the top 25 law programs.
How is it possible that one of the primary responsibilities of a conference – TV contracts/media rights negotiations – could be sold at such a low rate for decades? Surely, someone had to have noticed that college football TV rights deals were continuing to increase, right? If a website as primitive as this one can research and document a majority of college football contracts for a single article to reach that conclusion, why couldn’t the schools or a conference with millions of dollars at stake do the same?
Perhaps the most ridiculous part is that the ACC and its schools didn’t consider who the agreement was with. The agreement was made with a subsidiary (ESPN) of a publicly traded company (Disney) whose sole purpose is to maximize profits. What were the ACC and its schools thinking? It would be easy to blame ESPN for being greedy here but ESPN was under no obligation to tell the ACC that they were getting fleeced. ESPN was not the party that signed over two decades’ worth of TV rights for a bargain price without performing much due diligence or thinking about how much college athletics could change in 20 years.
From the conference’s standpoint, potentially locking in your current members for 20 years isn’t necessarily bad. Conferences want that stability to avoid a Big East: Part II scenario but they erred by making the deal for 20 years at a low price with few opportunities to increase the rights fees. It’s not a surprise that the schools are upset seeing other conferences’ TV rights continue to grow while the ACC’s revenues remain flat. However, despite the ridiculous length of the agreement, the schools still agreed to the terms of the GoR, which makes them as much to blame as the ACC front office.
What’s Next for the ACC and Florida State?
In our May 2023 article, we highlighted a possible scenario:
“One possible solution going against the grain of doom and gloom: the ACC, ESPN, and current schools come to a new agreement that makes everyone happy. This one won’t be easy with ESPN going into cost-cutting mode but the network hasn’t shied away from dropping big bucks on new TV rights deals. It’s still a massively important part of its business (i.e. milking advertisers for every penny). Another version of this “everyone working together” is that all parties agree to end the Grant of Rights early with the schools that leave the ACC paying an exit fee to compensate the conference and the remaining schools.”
The latter part of the quote about agreeing to end the GoR early might be the most viable outcome right now because FSU’s goal is to lower the exit fee as much as possible. Of course, this assumes that the GoR has some sort of legal flaw that would make sense for the ACC to negotiate FSU’s exit. Then that would lead to more schools following the same path and off we go to more realignment fun… The ACC is standing firm behind the GoR but money has a funny way of making people change their minds.
As for FSU specifically, if they manage to leave the ACC where they move to is uncertain. Would the SEC or Big Ten even want them? Would adding FSU increase future TV rights deals for those two conferences? It’s hard to say given the recent realignment changes that have taken place. On top of that, most conferences have recently agreed to new TV contracts, which makes estimating the next one in 5 – 10 years even more difficult. Yet, somehow, the ACC and its members were comfortable with a 20-year agreement despite all the uncertainty back then.
The Big 12 makes sense to give UCF a travel partner and the Big 12 members have higher revenues than the ACC. We jokingly said Florida State to the Pac-12 back in August when that conference was imploding but given the $250 million controlled by Oregon State and Washington State, the idea doesn’t seem as farfetched anymore since FSU viewed OSU as a better fit for the ACC in its complaint (sarcasm). There’s an argument to be made for Florida State to join any of the other Power 4 conferences not named the ACC.
Will the Newly Proposed Division 1 Subdivision Play a Role?
The NCAA proposed a new subdivision for Division 1 college athletics based on a specific set of criteria in early December. Schools can decide whether to meet those requirements or not but it brings up an interesting possibility: what happens if a team doesn’t meet those requirements but is still part of the ACC? This could also apply to other conferences as well. The Grant of Rights probably includes something about meeting the conference obligations or the conference’s minimum requirements but it may not include a specific section on wholesale changes made by the NCAA (at least not back in 2016). Not being a lawyer (if that wasn’t obvious already), we don’t know if that’s even a feasible path to pursue should a new subdivision become a reality. However, a possible new subdivision does bring up some interesting realignment scenarios.
Florida State and the ACC ending up in court over the Grant of Rights is not surprising. FSU has repeatedly expressed its discontent for many months and not being picked for the College Football Playoff is what pushed them over the edge. Given the ACC’s statement rigorously defending the Grant of Rights, this will be a long, protracted legal battle between the two parties. In the end, the only real winner will be billable hours. While nothing is imminent for realignment changes involving FSU or the ACC, that can change rapidly if the two sides come to an agreement or another outside force imposes itself on the NCAA (the new subdivision, legal battles, Congress, you name it…). Realignment always has something up its sleeve.
Photo courtesy of Florida State Athletics