The ACC v. Florida State and Clemson: The courtroom clash on which realignment’s future hangs

The next stage of conference realignment may be determined in a courtroom. Which courtroom that is, nobody knows yet.

Florida State and Clemson have made their intentions clear: They’re looking for the easiest way out of the Atlantic Coast Conference. Both have filed legal challenges against the ACC in hopes of getting out of the grant of rights agreement that binds the schools to the league through their television rights into 2036. A successful attempt to get out of that contract would open the door to pursuing membership in the more lucrative Big Ten or SEC. The ACC has filed its own legal challenges against both schools in North Carolina.

But the Seminoles and Tigers are not actively leaving just yet. Nobody — administrators, legal experts, media rights experts — knows how or when the legal fight will end nor what it will cost. Any resolution in court may be more than a year away.

“This will be a case taught in law schools going forward,” said Kevin Paule, an attorney at Hill Ward Henderson who has worked on sports business cases.

But everyone agrees that if FSU and/or Clemson are successful in court in nullifying a grant of rights, the results could be paradigm-shifting. The fallout could tear apart the ACC, accelerate realignment and possibly bring about a true Super League.

“That creates a jailbreak,” said media consultant Patrick Crakes, a former Fox Sports vice president, “and suddenly everybody can do what they want.”


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What are they arguing in court?

After months of public discussion, Florida State’s board of trustees filed a legal challenge against the ACC in Florida on Dec. 22, saying it cannot compete in a world where Big Ten and SEC schools earn tens of millions more from their television deals. The ACC, expecting this, had filed its own challenge a day prior in North Carolina. Clemson filed its case in South Carolina in March, and the ACC filed against the Tigers the next day, saying that Clemson had indicated it wanted to work with the conference regarding its membership without going to court, only to then file first in South Carolina.

Florida State and Clemson’s lawsuits are a bit different.

The Seminoles’ filing asks a Florida court to determine whether the ACC’s grant of rights and exit fee are legally enforceable at all. It needs an answer to determine whether FSU “can be withdrawn from the ACC before the damage to Florida State becomes even more irreversible,” the initial filing read.

FSU argues that the ACC mishandled and misrepresented its contract extension with ESPN in 2016 and the launch of the ACC Network, saying the ACC told its members that ESPN had issued an ultimatum to extend the grant of rights from 2027 to 2036, or else ESPN would do no further rights agreements with the league. The filing also revealed for the first time that the current ACC-ESPN agreement is actually only guaranteed until 2027 and that ESPN had to decide by 2021 whether or not to extend it into 2036. FSU claims commissioner Jim Phillips extended that deadline for ESPN to February 2025 without approval from two-thirds of the league’s membership. FSU’s argument is that the financial mismanagement of extending a deal that now lags so far behind those of the SEC and Big Ten should be a reason to nullify the grant of rights.

Clemson’s case centers around the idea that the grant of rights should not be enforceable after a school leaves the conference, arguing that it only applies while a member of the league. It also argues that the league’s $140 million exit fee — a cost set at three times the ACC’s annual budget, which has ballooned since the fee was agreed upon in 2012 — is not representative of actual damages.

“The ACC’s actions interfere with Clemson’s free exercise of its rights and are fatally detrimental to Clemson’s efforts to ensure that its athletic programs can continue to compete at the highest level, which is … important to Clemson even beyond athletics,” the school’s filing read.

The ACC’s argument is an obvious one: Both FSU and Clemson knew what they were agreeing to when they signed the grant of rights and agreed to the ESPN deal to 2036 (or 2027). The ACC included as an exhibit in its filing copies of the grant of rights signed by the school presidents that plainly state that acknowledgement. On the front page of its North Carolina filing against Clemson, the ACC even quoted Clemson president Jim Clements praising the ESPN deal in 2016.

“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,” Phillips and ACC board chair Jim Ryan said in a December statement.

Outside attorneys who spoke to The Athletic were careful not to predict any result, but they believe the ACC’s initial argument appears to have a good foundation.

“To say you want to get out of a contract, if you had foresight like that, everybody would be a winner in the stock market, but it doesn’t work like that in commerce and business,” said Irwin Kishner, the Co-Chair of the Sports Law Group at Herrick Feinstein law firm.

What is the status of each case?

There are five ongoing lawsuits in total: FSU against the ACC in Florida, Clemson against the ACC in South Carolina, the ACC against FSU in North Carolina, the ACC against Clemson in North Carolina and an additional lawsuit filed last week by Florida’s attorney general to force the ACC to make its ESPN deal a public record. The Florida AG’s action is not expected to have any effect on FSU’s cases.

As for the lawsuits over the grant of rights, each side would prefer what it perceives as home-court advantage.

The ACC won the first of many battles last month, when FSU’s motions to dismiss or stay the ACC’s case in North Carolina were denied in business court. The judge ruled that North Carolina is the proper venue for the case because the conference and its contracts are based in the state, along with the fact that the ACC filed its case first. The judge also noted that FSU for years expressed no issues with the contracts it signed and accepted ACC payouts from it. FSU has appealed to the North Carolina Supreme Court, which could take months to resolve the motion. The business court also ordered that the ACC’s ESPN contract remain sealed from the public.

A judge last week temporarily granted the ACC’s motion to dismiss FSU’s case in Florida but granted FSU the ability to re-file the complaint to clear up a question of jurisdiction, so the sides will essentially have to re-do the hearing at least a month from now. The judge had previously denied the ACC’s motion to stay that case, indicating it’s likely to move forward in Florida.

The ACC-Clemson lawsuits, meanwhile, haven’t had any notable action yet.

What are the possible results?

What happens if the cases continue to move forward in two (or three) different states?

“It’s sort of uncertain territory,” Paule said.

One scenario could be that one court decides not to issue a ruling and lets the similar case in another state resolve itself first. That happened in 2013 when the ACC and Maryland sued each other over the Terps’ departure and a Maryland court let the case play out in North Carolina. Thus far, the judges in North Carolina and Florida haven’t indicated they’ll do that.

There’s also the possibility that one court rules before the other court, which could create a ruling across states if a judge in the other state accepts it. FSU’s recent filing misstep in Florida court could be a timing setback for the Seminoles’ hopes of securing a speedy ruling close to home.

“If North Carolina or Florida is first to make a ruling, then it could be binding on the other court. It will certainly be persuasive,” Paule said. “But the other court could still decide to move forward. For example, the Florida court could decide that the North Carolina ruling does not impact how Florida law would decide the same issues. The Florida court could also disagree with the North Carolina judge and decide differently. On a similar note, if there is a ruling in the Florida/North Carolina cases, the South Carolina court in the Clemson matter could still come to a different conclusion.

“The legal strategy for each side is to move forward in the preferred jurisdiction as soon as possible and hope to obtain the first ruling.”

But what happens if both cases advance through all the motions, proceedings and appeals and the states still have different rulings? That’s unclear, the lawyers said. It often falls to the U.S. Supreme Court to settle a dispute between states, though nobody expects this battle to go that far.

The last scenario is a settlement, in which the ACC and Florida State (or Clemson) agree on some dollar figure that would allow schools to leave the conference and take their TV rights with them. In contract disputes, settlement is often the preferred resolution, especially when advancing the case involves going to discovery and airing dirty laundry in public courtrooms. The Florida judge last week ordered the ACC and FSU to go into mediation, which is normal practice.

The ACC and Maryland in 2014 settled on an exit fee that was less than what the ACC initially wanted, but the sides didn’t have a contractual grant of rights back then. FSU and Clemson’s technical exit from the ACC would only cost the withdrawal fee, but their value to other conferences lies in their TV rights, and buying those back from the ACC is estimated to be worth hundreds of millions of dollars in contractual damages. FSU initially estimated the total cost to leave the league and take its TV rights at $572 million, but an attorney for FSU said in court that it could be closer to $700 million. (FSU’s annual athletics budget is around $170 million.)

These cases are existential for the ACC. Letting one member leave with its TV rights would open the door for North Carolina, Miami and others to leave at a price that will have been determined.

“If I’m the ACC, I have no incentive to do that,” Crakes said of a lower settlement.

Meanwhile, Florida State has held talks with private equity firms about a cash infusion, though it is unclear exactly what a private equity partnership with a single athletic department would mean and where that additional money would be directed. Any school considering paying steep league exit fees also must prepare for an impending era of paying its athletes brought on by potential settlements in cases like House v. NCAA.

“The biggest problem with doing all this now is that the next three to five years look very complicated and disruptive,” Crakes said.

What happens if FSU and Clemson get out?

While a legal battle raises the intensity, some legal experts reason that if FSU and Clemson want to leave, why pay hundreds of millions of dollars to depart when you might be able to get out for less?

“My grandmother used to say, what you don’t ask for, you don’t get,” Kishner said. “It’s worth a try. You hire creative lawyers and you try to do it.”

The ACC might dispute that argument, and the legal fees are beginning to pile up. Still, FSU and Clemson seem likely to leave at some point, based on their legal actions, even if it costs an exorbitant amount. Schools that express their desire to get out of a conference usually follow through.

That February 2025 ESPN option deadline is also coming up. Does that mean FSU and Clemson must move more quickly? Networks want stability, and Crakes wonders whether ESPN and the ACC could come up with some sort of TV deal tweak to keep FSU and Clemson happy.

The Big Ten and SEC have avoided comment on FSU and Clemson’s futures, so as not to be perceived as tampering. But how interested would they be? Media industry experts are skeptical of their value at this point. Some believe North Carolina could draw more interest from the Big Ten or SEC because of its academic reputation and its position in a state where neither conference has a member. (A recent UNC system governance change could make a conference move more difficult for the Tar Heels.) New Big Ten members Oregon and Washington will only get 50 percent shares on arrival. One reason the SEC hasn’t moved to nine conference games is that ESPN hasn’t indicated it will pay for more games. Simply put, the broadcasters are running out of financial space, especially with the NBA and other media rights now up for grabs in an unstable market.

“The Big Ten and the SEC don’t need anybody,” Crakes said. “It comes back to, what does the pay TV distributor view as additive or not additive?”

But FSU and Clemson believe they have to try. They’re the only national championship-contending football programs in the league, each winning at least one title since 2013. They feel they cannot fall so far behind financially compared to the SEC and Big Ten and still hope to contend at that level, especially in a potential future where schools pay players television money.

Last week, FBS conference commissioners met in person in Dallas for the first time since agreeing to a new uneven College Football Playoff revenue split. Speaking to reporters in a Ritz-Carlton hotel hallway, Phillips stayed positive, noting that Clemson had won two CFP championships and that undefeated Florida State won’t be left out of a 12-team model as it was this winter in the four-team Playoff’s final season. He declined to comment on the conference’s legal fights. While standing next to SEC commissioner Greg Sankey, Phillips was asked his confidence level on the ACC’s position in college sports moving forward. Weeks away from the conference’s 71st birthday, he remained the optimist.

“I’m very excited and bullish about the ACC,” Phillips said, “now and into the future.”

(Photo: David Yeazell / USA Today)

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