Florida State University will attempt to leave the Atlantic Coast Conference (ACC) in a manner that could lead to the eventual demise of the university's athletic competition if their lawsuit is successful.
The school is challenging the estimated $572 million fine they would face if they broke the TV contract they signed that transferred their grant of rights (GoR) to ESPN.
An emergency meeting of the FSU Board of Directors resulted in a unanimous decision to file a declaratory judgment complaint against the ACC in Leon County Circuit Court (Florida), challenging whether the conference's exit fee and the grant of rights legally enforceable against the school.
The board of trustees emphasized that this decision was not based on their recent snub during the College Football Playoff, which left their undefeated ACC champion Seminoles team in favor of a one-loss SEC champion Alabama squad.
According to ESPN, any school that wants to leave the ACC would have to pay a severance package worth three times the league's operating budget — about $130 million. The state of Florida says that, in addition to the aforementioned fine, the total exit fee – including the loss of TV revenue – would total $572 million.
Florida State's board of trustees is suing to leave the ACC, days after winning the league title
“This board has no choice but to question the legitimacy of the grant of privileges to the ACC and the severe penalties for its revocation,” FSU board chairman Peter Collins said at the meeting.
In 2016, the ACC and ESPN began a 20-year television rights deal, with the conference paying a total of $240 million per year. The deal was considered unbreakable at the time due to the heavy financial penalties a school would have to pay if they wanted to leave.
A “grant of rights” is a contract that provides exclusive media rights to television broadcasts from schools to their respective conferences. These conferences in turn negotiate with media companies on behalf of their institutions to reach a deal to broadcast their games.
According to lawyers for the state of Florida, ACC schools were forced to extend their grant of rights until 2036, but are not guaranteed any revenue after 2027.
The lawsuit alleges that the ACC breached its contract by “failing to properly exploit the value of its media rights by adversely renewing its contract with ESPN without required input from schools and by adding three new members to the ACC that do not add value to the ACC. conference.'
These three members are the University of California at Berkeley (Cal), Stanford University and Southern Methodist University (SMU) – all of which agreed to join the ACC this summer.
The legal complaint also states that the ACC's penalties violate Florida law, that both the penalty and the RvR itself are unenforceable, that the conference breached its contract and fiduciary duties to the state of Florida, and that the 'draconian' granting of rights by the ACC would block free trade. by barricading the school before leaving.
“Florida State has been the victim of chronic mismanagement by ACC leadership and is unable to effectively evaluate alternatives, with severe withdrawal penalties and entitlements hanging over Florida State's head,” the filing alleges. “Therefore, these fines effectively prevent the state of Florida from realizing its market value.”
Florida State became the first school to go undefeated and win their conference championship but not be selected for one of the four spots in the College Football Playoff
At the time of signing, the ACC's contract was one of the largest in college football. Now, with the death of the Pac-12, it is the smallest among the “Power Four” conferences.
Major per year.
By comparison, the ACC takes home a measly $17 million per school.
The fallout from this ruling could have a long-lasting effect on the future of the ACC in an era of widespread conference realignment – especially if courts rule in favor of the state of Florida.
If they rule in favor of the ACC, it's likely that no school would pay for the buyout if it is really as big as FSU makes it out to be.
But if Florida State wins this case, the results could be catastrophic for the conference and lead to the departure of several schools.
Reports in May indicated that Florida State as well as Clemson University, the University of Miami, the University of North Carolina, the University of Virginia, Virginia Tech and North Carolina State University had all met with legal teams to investigate the GOR.
If FSU wins, all of those schools could consider leaving, which would likely set off a chain reaction of departures among those institutions and possibly the ACC's other members: Duke University, Wake Forest University, Georgia Tech, Boston College, the University of Louisville, the University of Pittsburgh, Syracuse University and the University of Notre Dame (which competes in the ACC for all sports except football).
Commissioner Jim Phillips: The lawsuit is 'in direct conflict with FSU's long-standing obligations'
After the lawsuit was filed Friday, the ACC released a statement on behalf of its commissioner, Jim Phillips, and its board of directors, Jim Ryan.
“Florida State's decision to take action against the Conference is in direct conflict with their long-standing obligations and is a clear violation of their legal obligations to the other members of the Conference,” the statement said.
“All members of the ACC, including Florida State, knowingly re-signed the current Grant of Rights in 2016, which is fully enforceable and binding through 2036. Every university has benefited from this agreement and has generated millions of dollars in revenue received, and neither state in Florida has benefited from this agreement. nor any other institution has ever questioned its legitimacy.
The statement concluded: “We are confident that the Grant of Rights, which has been honored by all other universities that have signed similar agreements, will be upheld by the courts and that the Conference's legal counsel will vigorously enforce the agreement in the best interest of the ACCs. current and new members.'
Subsequent reports indicated that the ACC filed a lawsuit yesterday against the Florida State Board of Governors in Mecklenburg County, North Carolina.
The conference argues that the school's affairs “relating to the ACC are subject to the jurisdiction of the State of North Carolina,” where the conference is headquartered, unlike in Florida, where the school's suit was filed.