Florida State votes to challenge ACC Grant of Rights deal with lawsuit |
Florida State athletics took a step toward a separation from the Atlantic Coast Conference on Friday in what’s expected to be a lengthy legal process.
FSU’s Board of Trustees met starting after 10 a.m. on Friday to discuss the program’s future within the ACC in relation to what’s been described as an “ironclad” Grant of Rights deal with the ACC and ESPN that holds the home TV rights for each conference program through 2036. The FSU BOT voted to move forward with litigation to challenge the Grant of Rights and the ACC's exit fee as early as Friday in a Tallahassee circuit court, which is reportedly the first move by any program against this type of media rights agreement. FSU legal: We are alleging the penalty package is a violation of Florida statutes (restraint of trade); Is an unenforceable penalty (no relationship to harm caused) which would invalidate entire penalty; breach of contract claims FSU legal suggests it's a huge problem that ACC agreed to a 20-year media deal. No mention that FSU's leadership at the time signed on to that agreement. OK, here are FSU's legal arguments, among others: The college athletics world is watching to see the outcome now, which is not expected to affect the upcoming 2024-25 season but could possibly go into effect by the 2025-26 athletics year. FSU must notify the ACC by August 15, 2024 if it’s leaving for the 2025 football season. Interested observers within the ACC include the so-called ‘Magnificent 7’ that reportedly banded together in the spring with Florida State to closely examine the Grant of Rights, which also included Clemson, Miami, North Carolina, NC State, Virginia and Virginia Tech. Some signs of disagreement in that group showed in the ACC expansion vote late summer, however, where NC State ended up being the deciding vote for the acquisition of SMU, Stanford and Cal starting next year. Only Clemson, North Carolina and Florida State were reportedly aligned on keeping the ACC school count where it was. Yahoo Sports reported that if a school can reach a Grant of Rights settlement with the ACC on the timeline to leave for 2025-26 – it will cost $500 million for the TV rights plus the $120 million exit fee. FSU's BOT estimates that the fee is at $572 million total to leave the ACC deal. Prominent football programs such as Clemson and Florida State are seeking to bridge the upcoming increasing gap in revenue between the ACC and the Southeastern and Big Ten conferences that are expected to give their member schools a sizable amount more than conferences such as regarded fellow ‘Power’ leagues in the ACC or Big 12 and certainly the Group of 5 conferences. FSU's BOT estimates that starting next year there will be a $30-40 million gap in payout versus that of payouts to SEC and Big Ten programs in coming years. This FSU legal step, if it works, would seek to skip such a settlement and declare that the ACC school is not bound to the Grant of Rights any longer and doesn't have to pay a fee at all to leave. Any team looking to leave the ACC will likely need an SEC or Big Ten destination to make it worth their while, and there is no reported offer on the table for any ACC member school. In a college landscape that’s shifting quickly, the upcoming 16-member SEC, which adds Texas and Oklahoma for 2024-25, or the 18-member Big Ten, which adds USC, UCLA, Washington and Oregon next year also, could always have something in the works or respond proactively to one another’s possible action. If they don’t act, though, that could leave a miscalculation worth plenty of money for an ACC-exiting school. Florida State has been the loud public voice of discontent on the ACC’s place in the revenue landscape, holding another BOT meeting in August that had a series of seeming independence declarations, with the school’s president, Richard McCullough, saying FSU “will have to very seriously consider leaving the ACC unless there was a radical change to the revenue distribution.” The league office, led by commissioner Jim Phillips, has repeatedly promised dedication to increasing that revenue and the conference voted to add a success initiative to reward programs momentarily more for athletics success (football revenue being the key component). A possible sign of the ACC’s place in the college football landscape, Florida State went undefeated this past season but was shut out of the lucrative College Football Playoff in favor of two one-loss ‘Power’ league champions, which will both be in the SEC next year (Texas and Alabama). ACC Statement Statement from ACC Commissioner Jim Phillips, Ph.D., and Jim Ryan, Chair of the ACC Board of Directors, on Florida State’s Board of Trustees Meeting “Florida State’s decision to file action against the Conference is in direct conflict with their longstanding obligations and is a clear violation of their legal commitments to the other members of the Conference. All ACC members, including Florida State, willingly and knowingly re-signed the current Grant of Rights in 2016, which is wholly enforceable and binding through 2036. Each university has benefited from this agreement, receiving millions of dollars in revenue and neither Florida State nor any other institution, has ever challenged its legitimacy. “As a league, we are proud of the successes of our student-athletes and that the ACC has won the most NCAA National Championships over the past two and half years while also achieving the highest graduation success and academic performance rates among all FBS conferences, so it is especially disappointing that FSU would choose to pursue this unprecedented and overreaching approach. “We are confident that the Grant of Rights, which has been honored by all other universities who signed similar agreements, will be affirmed by the courts and the Conference’s legal counsel will vigorously enforce the agreement in the best interests of the ACC’s current and incoming members.” Florida State has filed its suit in Leon County Circuit Court against the ACC, accusing the league "of restraint of trade, breach of contract and a failure to perform. It also challenges the legality of its withdrawal penalties," the school says. pic.twitter.com/krcgGpE82b Here is a full copy publicly available of FSU's lawsuit against the ACC https://t.co/xqtRVqXbm8 The ACC has decided to sue Florida State. More on that here and more coming: https://t.co/zUwujA2aby pic.twitter.com/eIzEv6464d FSU Board Chair Peter Collins: “Today we’ve reached a crossroads in our relationship with he ACC. ... I believe this board is left with no choice but to challenge the Grant of Rights." Collins: "I believe this board has been left no choice but to challenge the ACC's grant of rights and its severe withdraw penalties. ... I believe we've exhausted all possible remedies within the conference and we have to do what's best in the short and longterm." From the FSU Board of Trustees' presentation -- Florida State believes it would cost $572M to get out of the ACC right now: pic.twitter.com/3bymUfi4ub FSU attorney explaining in detail what was widely believed in the industry, if not formally announced. @TheACC got its network in return for an extended media rights deal that gave ESPN more cost certainty. This is a big deal: ESPN has the "unilateral" right to extend or decline a 9-year option from 2027-2036 with the ACC. This would basically be either a walk away or to maintain current agreement. "We don't believe that holds water," David Ashburn, lawyer representing FSU, says of ACC's grant of rights. Argues FSU (and other members) were forced into signing it, or that ESPN wouldn't have gone ahead with launch of ACC Network. As we've discussed: ESPN agreement with ACC requires 15 members. This was a big reason why Cal, Stanford and SMU were added. Insurance against departures like this. FSU president Richard D. McCullough on challenging the Grant of Rights: "I feel we are left with only this option to maximize our potential as an athletics department." McCullough: "It's time for us to try to do something about it. This is not a reaction [to CFP] but something we've done a lot of due diligence on." Says FSU is bound by an onerous penalty created "superfluously by the ACC" (though, again, it should be noted was SIGNED by FSU. FSU AD Michael Alford: “This isn’t a relationship issue. It’s a math problem.” FSU plans to file this today in circuit court in Tallahassee. ACC then would be required to file a response to the complaint. That sets in motion the litigation process (including obtaining documents, like the GOR and contract with ESPN). https://t.co/b96613n3IM FSU will file its complaint in circuit court in Tallahassee. "We’ve not asked for any immediate relief. Not a preliminary injection. We simply are going to pursue the normal course of litigation." Florida State’s Board of Trustees approves unanimously to take legal action against the ACC and its Grant of Rights - the first step in what would be a long process of exiting the league. As long as Florida State notifies ACC it is leaving league before this August - it has not done this yet - the earliest Seminoles could leave ACC would be June 30, 2025 & join a new league on July 1, 2025 A couple of key reminders: I'm told Clemson won't have an official position on this...... Right now... A few takeaways, quickly: - The legal groundwork appears to not be about finding a cheaper way out, but about nullifying the GoR completely... which would have MASSIVE repercussions for all of college sports. - That FSU is not asking for an immediate injunction is not a shocker, but it does suggest this is as much saber-rattling to push negotiations further -- either for an exit or new media deal -- is the preferred outcome. Two other key points that came up:
- restraint of trade
- unenforceable withdrawal penalties
- breach of contract
- violation of public policy
(will have more on this in a full story later today)
- FSU is a member of the ACC conference and signed the grant of rights and its extension.
- This will be a lengthy process, but this is the first step for FSU to try to get out of the ACC.
- The bulk of FSU's criticism was aimed squarely at Swofford-era decision makers, NOT Jim Phillips.
- Reps repeatedly said this wasn't about the CFP, then brought up the CFP repeatedly, too.
- The only real nod to the fact that FSU agreed to all these "inexplicably" bad deals was that…
Technically, due to additions of the 3 new teams, ACC does not stand to lose TV revenue by FSU's departure.
BUT, ESPN holds a unilateral option to end or extend its agreement with the ACC in spring 2025.
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