Realignment talk not going away

[thunderlounge 7642]

Just unanimously approved to sue the ACC. 
 

[Saint Austin 737]

19 hours ago, n64ra said:

I'd think the Big 10 would love some TV eyeballs in the Sunshine State, and I'd think the SEC would want to keep the Big 10 out.

We must not tolerate this second northern aggression!!!

[The Dog 43491]

https://theacc.com/news/2023/12/22/general-statement-from-acc-commissioner-jim-phillips-ph-d-and-jim-ryan-chair-of-the-acc-board-of-directors-on-todays-florida-states-board-of-trustees-meeting.aspx

Quote

CHARLOTTE, N.C. (theACC.com) - “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.” 

 

[mdmost 42501]

I'm sure they will ultimately prevail but I would most enjoy FSU being shutdown by the courts. You signed the agreement. If you can't negotiate your way out then that's on you. 

[bullet 1596]

16 hours ago, Jabberwocky said:

 

this could have been done before all the lawsuits.  The only big issue was whether future NCAA tourney revenues would be applied against lawsuits.  WSU/OSU got their way.  Those are 100% theirs (except to the extent they have to pay 2/12 of the players' lawsuit.

[bullet 1596]

https://247sports.com/college/florida-state/article/fsu-acc-grant-of-rights-challenge-espn-lawsuit-florida-state-seminoles-223750795/

Well its on.

"...1. Ashburn said the penalty package for exiting the GoR along with "severe" "withdrawal penalty" is estimated at more than $570 million. FSU's complaint will be that it is "a violation of Florida statutes."

2. Belief is that this is an unenforceable penalty: "Both the grant of rights individually and the severe withdrawal penalty are collectively an unenforceable penalty."

3. Breach of contract. FSU believes the ACC diluted television contract rights.

4. Breach of fiduciary duties include duty. Basically, FSU doesn't feel like the ACC took care of its members and maximize its value. "The whole purpose in the relationship with the ACC was for them to appropriately look out for their members, and also to maximize their revenues, and they utterly failed to do that."

5. Fundamental failure of contractual purpose.

6/7. Unconscionability and violation of public policy.

"We are prepared to file this complaint today," Ashburn said. "We are hopeful you will authorize us to do so....""

 

[bullet 1596]

The exit penalty of 3 times revenue is clearly excessive and almost certainly is not enforceable.  The GOR is the sticking point.  FSU signed up with their eyes open.   They've got 12 football seasons left under it.

[statsman 5355]

Does FSU have a landing spot lined up?

Or, is this an Aggie plan?

Edited December 22, 2023 by statsman

[Not a Sock 2308]

2. Belief is that this is an unenforceable penalty: "Both the grant of rights individually and the severe withdrawal penalty are collectively an unenforceable penalty."
 

 

So they have a absolutely nothing and are just lashing out because even I, a non lawyer know this is a crock of shit.

[thunderlounge 7642]

2 minutes ago, statsman said:

Does FSU have a landing spot lined up?

Or, is this an Aggie plan?

 

Not that anyone is aware of, and while the court is in play, nobody is going to risk leaking information (about a landing spot, or talks of one) that could potentially bring them in as a defendant party on a counter-suit.

They very well could end up in the b12.

Now whether or not they have a wink wink type deal, after the legal dust settles, is another matter. They may have that reassurance, but nobody will be giving up that information as noted above. The SEC giving such a quick "not interested" may (or may not) have some hidden meaning. It's going to be a lot of smoke an mirror shit for a good while as this all shakes out. Most likely the ACC tries to drag it out long enough to prevent the use of the current "notify by" date this summer for 25/26, and then who knows from there.

 

['stache 21591]

As a lawyer, I think $570M to get out of a media contract is excessive and possibly an unenforceable liquidated damages clause. I think it's more than lashing out. It's also a predicate to a negotiated exit fee like all the other early exits. This one is tough because of how long they are locked in. With the massive increase in media contracts over the last few years, I have to believe that there was some fuckery going on to convince 15 University Presidents and boards of regents to agree to the terms. Nobody spoke up and noticed that others would get massive increases very soon? I can see some fudging of the numbers. However, it seems to me that ESPN etc. would be the ones to blame, not the conference, of which FSU had a vote in all of the decisions. I'm just riffing at this point as I'm not going to take the time to review the contracts or pleadings. 

[mdmost 42501]

 

['stache 21591]

14 minutes ago, statsman said:

Does FSU have a landing spot lined up?

Or, is this an Aggie plan?

Only way they don't have a spot is if they pissed off ESPN and Fox in the process, and even then, the economics would overcome. They are a blueblood helmet school, they'll land in the BIG or SEC. Even the Big 12 is paying more than the ACC and we'd take them yesterday.

[statsman 5355]

As a close observer, it was pretty tough being one of two blue bloods in a ten team conference. So often, the majority of schools viewed things much differently, had vastly different priorities. 
 
How would it work out for FSU, who certainly view themselves as a blue blood, as the only one in a 16 team conference? 
 
Is that a good idea for anyone?

[Dnaguy 11599]

16 minutes ago, mdmost said:

 

 

 

Fuck me?

No, fuck you!

[Laxtonto 11879]

 

[Al_4_ISU 12376]

 

This seems like a key point RE breach of fiduciary duty

[Laxtonto 11879]

 

[Dnaguy 11599]

2 minutes ago, Laxtonto said:

 

 

"The whole system is out of order!"

[locodos 5257]

I guess we know what happened to the $1mil of taxpayer money FSU was given to fight for a playoff spot.  FSU lives off Florida tax payers

[Texas Wahoo 3378]

2 hours ago, 'stache said:

Only way they don't have a spot is if they pissed off ESPN and Fox in the process, and even then, the economics would overcome. They are a blueblood helmet school, they'll land in the BIG or SEC. Even the Big 12 is paying more than the ACC and we'd take them yesterday.

I think the question is whether those conferences are going to be willing to take FSU with the risk of potential law suits.  I doubt this all gets settled in the next couple of years.

['stache 21591]

1 minute ago, Texas Wahoo said:

I think the question is whether those conferences are going to be willing to take FSU with the risk of potential law suits.  I doubt this all gets settled in the next couple of years.

Well yeah, it's not happening unless and until FSU is officially and finally out of the ACC either through litigation or settlement. I don't think they're at risk of winning the lawsuit and not being invited or being left worse off than before. They'll join the SEC, I have no doubt, and worst case scenario for them would be Big 12 where they'll at least make as much as fucking UCF and not less.

[Ghost of LL 15255]

1 hour ago, Laxtonto said:

 

I love a good race to the courthouse.

"You thought we were playing down in Tallahassee?  Nah, fuckers--our team's already on the field up here in Charlotte.  Get your asses up here."

['stache 21591]

1 hour ago, Laxtonto said:

 

Don't they play at SMU next year? That'll be fun, lol.

[DFW Horn 6039]

2 hours ago, 'stache said:

Don't they play at SMU next year? That'll be fun, lol.

 

[bullet 1596]

4 hours ago, 'stache said:

As a lawyer, I think $570M to get out of a media contract is excessive and possibly an unenforceable liquidated damages clause. I think it's more than lashing out. It's also a predicate to a negotiated exit fee like all the other early exits. This one is tough because of how long they are locked in. With the massive increase in media contracts over the last few years, I have to believe that there was some fuckery going on to convince 15 University Presidents and boards of regents to agree to the terms. Nobody spoke up and noticed that others would get massive increases very soon? I can see some fudging of the numbers. However, it seems to me that ESPN etc. would be the ones to blame, not the conference, of which FSU had a vote in all of the decisions. I'm just riffing at this point as I'm not going to take the time to review the contracts or pleadings. 

I don't think there is any doubt that the 3 years exit fees, which will be north of $120, million are unenforceable.  It isn't clear how much Texas and Oklahoma paid, if anything (it was a really odd deal), for the exit fee vs. GOR, but nobody else has paid more than Maryland's $31 million.

 

[TKthunder2 4959]

Look mother fuckers, I’m okay with people saying Florida State is a helmet school…but they 100% are NOT a blueblood.

[bullet 1596]

2 hours ago, Texas Wahoo said:

I think the question is whether those conferences are going to be willing to take FSU with the risk of potential law suits.  I doubt this all gets settled in the next couple of years.

Nobody will take them until this is resolved.  But I'm pretty sure they've had discussions with university presidents who have said, "of course you will be invited---after you get out."

[TKthunder2 4959]

2 minutes ago, bullet said:

I don't think there is any doubt that the 3 years exit fees, which will be north of $120, million are unenforceable.  It isn't clear how much Texas and Oklahoma paid, if anything (it was a really odd deal), for the exit fee vs. GOR, but nobody else has paid more than Maryland's $31 million.

 

It’s hard to enforce future action/compliance on a state entity. Very different than enforcing on a private entity like Miami. The NC enforcement agencies have no jurisdiction to do anything against FSU so it’ll have to go to the federal level which historically isn’t thrilled about getting involved in petty shit like this between states.

They won’t be able to enforce on FSU, I’m very confident of that, however getting their future rights distributed on any major network is another story, which is why they are going through this whole charade. FOX won’t touch them without a court confirmation and ESPN won’t either as they’d be diluting their own product. Maybe they get an small direct to consumer PPV for their home schedule as an independent but even that is unlikely.

[thunderlounge 7642]

11 minutes ago, TKthunder2 said:

Maybe they get an small direct to consumer PPV for their home schedule as an independent but even that is unlikely.

ESPN+ for $10M and 3% of new subs. 

[TKthunder2 4959]

1 minute ago, thunderlounge said:

ESPN+ for $10M and 3% of new subs. 

That’s complicated. They could. ESPN has a deal with the ACC for FSU’s right under the GOR. But if ESPN lowers the payout for the ACC because FSU is gone and then turns around and makes this deal then the ACC would argue that they are complicit and should not be able to decrease their payouts or that FSU’s checks from ESPN should be sent to the ACC since they own the rights…

Not impossible, but not clean either. Something like this could be a bridge to a settlement where ESPN drops the ACC’s cut by only a small share and the ACC agrees that FSU has control of their rights. Still I don’t think ESPN wants to enable a scenario where they go through all of this just for FSU to end up on FOX.

[notre dame joe 171]

39 minutes ago, TKthunder2 said:

Look mother fuckers, I’m okay with people saying Florida State is a helmet school…but they 100% are NOT a blueblood.

Crimson?  That color is hard to describe.  

 

I thought it was FSU who demanded a larger payout around 2011 for which they could only trade a long term contract.  @Hurtlocker am I wrong?

[TrashMaster G 17302]

Question for the Surly legal eagles: How is signing a contract that you are not allowed to keep a copy of not crazy or shady af?

And with multiple public institutions as signatories, would it not still be subject to FOIA requests?

[thunderlounge 7642]

42 minutes ago, TKthunder2 said:

That’s complicated. They could. ESPN has a deal with the ACC for FSU’s right under the GOR.

 

I was kidding. Attempted slap at the apple/Pac plan.

[notre dame joe 171]

2 hours ago, TrashMaster G said:

Question for the Surly legal eagles: How is signing a contract that you are not allowed to keep a copy of not crazy or shady af?

And with multiple public institutions as signatories, would it not still be subject to FOIA requests?

I would guess that the right people can examine it when needed.

Having a private school on the team generally shields from sunshine laws. 

[TrashMaster G 17302]

1 hour ago, notre dame joe said:

I would guess that the right people can examine it when needed.

Having a private school on the team generally shields from sunshine laws. 

From what I heard on TV, yes they can examine it. But my question stands - is that not just shady as hell that you don't get a copy of the contract you signed? 

For something this big and significant, that would seem to be something you want.

[gatormarc 904]

27 minutes ago, TrashMaster G said:

From what I heard on TV, yes they can examine it. But my question stands - is that not just shady as hell that you don't get a copy of the contract you signed? 

For something this big and significant, that would seem to be something you want.

The whole thing is shady.

There are copies of the 2013 agreement and 2016 amendment already out there.

All FSU will say is that those docs may not be 100% accurate.

[bullet 1596]

8 hours ago, TrashMaster G said:

Question for the Surly legal eagles: How is signing a contract that you are not allowed to keep a copy of not crazy or shady af?

And with multiple public institutions as signatories, would it not still be subject to FOIA requests?

Not only that, they can't take a photograph or copy verbatim from the agreement!  Guess the lawyers sent people with good memories.  I remember a few years back the Clemson or GT AD was complaining they didn't even know what the future payouts were going to be.  Not a lawyer, but a CPA.  Its downright bizarre.  Never heard of anything like it where one party was not allowed a copy of a contract.  That's the type of thing that would kill the ACC if it were a jury trial.

[6th Street 6299]

Perhaps it was a gentleman's agreement?

[bullet 1596]

I don't have access to the Athletic, but someone was quoting it quoting the FSU lawsuit.  Apparently ESPN had until 2021 to exercise its option to extend the ACC contract from 2027 to 2036.  ESPN has not guaranteed an extension of the contract.  Commissioner Phillips extended  their option to 2025 without getting the required 2/3 vote of the membership.  So its possible ESPN can't simply extend the current contract at the current rate to 2036.  The contract would be out to market.  That is one of their arguments that the ACC has not acted in the interests of its members.  (note-I'm not getting into all the legal stuff about whether ESPN could rely on Phillips approving it-that's a different issue).  Since there was no guarantee of a contract past 2027, that is another of FSU's arguments.  There was not sufficient consideration for extending the GOR to 2036.

[TKthunder2 4959]

52 minutes ago, bullet said:

I don't have access to the Athletic, but someone was quoting it quoting the FSU lawsuit.  Apparently ESPN had until 2021 to exercise its option to extend the ACC contract from 2027 to 2036.  ESPN has not guaranteed an extension of the contract.  Commissioner Phillips extended  their option to 2025 without getting the required 2/3 vote of the membership.  So its possible ESPN can't simply extend the current contract at the current rate to 2036.  The contract would be out to market.  That is one of their arguments that the ACC has not acted in the interests of its members.  (note-I'm not getting into all the legal stuff about whether ESPN could rely on Phillips approving it-that's a different issue).  Since there was no guarantee of a contract past 2027, that is another of FSU's arguments.  There was not sufficient consideration for extending the GOR to 2036.

Wow, yes if anyone has a subscription please post that here. That would be huge and would likely be the end of the conference.

[TxEx84 370]

Spoiler

Florida State Board of Trustees files legal challenge to ACC’s exit fee, grant of rights

By Nicole Auerbach and Chris Vannini
Dec 22, 2023

After nearly a year of overtures and not-so-veiled threats, Florida State has finally taken legal action against the Atlantic Coast Conference in what could be the first step toward extracting itself from the league it has called home since 1991.

An exit by FSU could destabilize the college athletics landscape and spark another significant round of realignment, particularly if it paved the way for other disgruntled ACC members to leave the league. But there will be legal challenges to sort through first.

The Florida State Board of Trustees on Friday filed a complaint for declaratory judgment against the ACC, seeking court guidance to determine whether the ACC’s exit fee and/or grant of rights are legally enforceable against Florida State. The Board states in the filing, a copy of which was obtained by The Athletic, that it needs an answer so it knows whether the school “can be withdrawn from the ACC before the damage to Florida State becomes even more irreversible.”

Lawyers for the Seminoles estimate that the current cost of paying the ACC’s exit fee in addition to the forfeiture of media rights revenue would cost the school $572 million, according to a copy of the complaint obtained by The Athletic. They believe that the severity of the penalty to withdraw from the league should be considered “unreasonable restraints of trade” or unenforceable. They also allege in the filing that the ACC materially breached its contracts with Florida State by failing to properly exploit its media rights value, by extending the league’s contract with ESPN in disadvantageous ways without required input from schools and by adding three new members to the ACC (Stanford, Cal and SMU) that do not add value to the conference.

“The ACC … appeared dedicated to self-preservation and self-perpetuation over the fiscal well-being of its members,” the Board alleges in the filing. “A conference so dedicated cannot endure.”

The complaint was filed in the circuit court of the Second Judicial Circuit in Leon County, Fla.

“Today we’ve reached a crossroads in our relationship with the ACC,” Board of Trustees chair Peter Collins said during Friday’s board meeting. “This Board has been left no choice but to challenge the legitimacy of the ACC grant of rights and its severe withdrawal penalties. None of us like being in this position. I know the president and our athletic director don’t like being in this position. I believe we have exhausted all possible remedies within the conference. We must do what’s best for Florida State not only in the short term, but also in the long-term.”

Florida State vs. the ACC: Understanding the Seminoles' conference unrest

The Board of Trustees states in the complaint that it cannot vote for the school to withdraw from the conference without knowing the legality of the exit fee and/or the grant of rights, a legally binding document that controls the publicity rights of a conference’s member schools. The ACC’s grant of rights runs through 2036.

“Through chronic fiduciary mismanagement and bad faith, the ACC has persistently undermined its members’ revenue opportunities including by locking them into a deteriorating media rights agreement that will soon result in a vast annual financial gap between the ACC and other Power Five (soon to be Power Four) conferences,” the Board alleges in the complaint. “Those failures have, by design, coalesced with the ACC’s efforts to effectively deprive ACC members of their fundamental right to withdraw, through the combination of an unconscionable Grant of Rights provision and a prohibitive Withdrawal Penalty that are unparalleled in the history of intercollegiate athletics. …

“The ACC’s incompetence at the bargaining table unfairly impedes the overall institutional advancement of all its members, including Florida State. By depriving its members of the full media value of their football programs the ACC has undermined its members’ ability to fund other vital sports such as women’s and Olympic sports.”

Ahead of FSU’s filing, the ACC on Thursday filed its own complaint against the FSU Board of Trustees, this one in Mecklenburg Superior Court in North Carolina. The complaint argues that FSU is not allowed to challenge the grant of rights due to language in the agreement and because FSU signed it and benefitted from it for 10 years. The ACC also argues that jurisdiction for this decision is in North Carolina, where ACC business is handled. FSU’s complaint argues that Florida is the jurisdiction.

The ACC similarly sued Maryland in 2012 over the size of its exit fee and whether it was around $20 million or around $52 million. Maryland, which was moving to the Big Ten, countersued. The sides eventually settled at $31.3 million two years later through mediation. But that was before the ACC had a grant of rights. This legal fight with FSU revolves around not only an exit fee, but the enforceability of the grant of rights.

Florida State’s filing alleges that the ACC mishandled and misrepresented its contract extension negotiations with ESPN in 2016, stating that “the ACC verbally represented to its members that ESPN had issued an ultimatum: unless each ACC member executed an extension of the ACC (grant of rights), from 2027 to 2036, a full nine years beyond the then-expiration of ESPN’s Tier I agreement, ESPN would enter into no further media rights agreements with the ACC.”

The complaint revealed publicly for the first time that the ACC’s 2016 extension with ESPN did not contain any guarantees of payment beyond the initial contract’s expiration on June 30, 2027, and it included a provision that ESPN has “a unilateral option to extend that Agreement” at the previously agreed-upon rate (negotiated in 2012) an additional nine years, through 2036. The filing alleges that ACC members were required to sign and extend the grant of rights through 2036 even though the media rights contract with ESPN was not guaranteed to extend through the same period.

The launch of the ACC Network in 2019 triggered a requirement that ESPN decide by 2021 whether it would extend the contract from 2027 to 2036. But in August 2021, new ACC commissioner Jim Phillips extended that deadline to February 2025 in a formal amendment that he allegedly signed on his own without approval from two-thirds of his membership, which is required by league bylaws. The complaint concludes there is currently no guarantee of media rights revenue for the conference beyond June 2027.

Florida State alleges that it was duped into signing the longer-term grant of rights in 2016 because of what it calls a feigned “ESPN Ultimatum,” believing the extension of the grant of rights was not a real precondition because ESPN was not guaranteeing revenue for its duration. The school also states that the language of the 2016 ESPN extension requires the ACC have at least 15 members, but that the members could be interchangeable. That, Florida State believes, is why the league added Stanford, Cal and SMU in August — a move that the complaint calls “self-serving and defensive, as opposed to strategic.”

The complaint also alleges that the ACC’s exit penalties are egregious and far more severe than peer conferences, and that they were ramped up in response to Maryland’s departure to the Big Ten in 2012 and then increased exponentially in the years that followed to make it essentially impossible for a league member to leave.

Florida State’s lawyers and media consultants estimate that leaving the ACC now would cost the school $572 million: $429 million for the forfeiture of media rights through 2036 ($33 million for 13 years), $13 million for unreimbursed broadcast fees ($1 million for 13 years); and the exit fee of three times the total operating budget for the ACC, which is approximately $130 million.

If the exit fee and/or the grant of rights are deemed illegal or unenforceable, the Board also asked the court for Florida State “to be deemed to have issued its formal notice of withdrawal from the ACC under Section 1.4.5 of the ACC Constitution effective August 14, 2023.” That would significantly speed up the school’s actual exit from the conference, as it is required to give official notice of withdrawal before Aug. 15 for the following academic year. Otherwise, FSU could give notice by Aug. 15, 2024 to compete in a different league or as an independent beginning with the 2025-26 academic year.

“Florida State is a victim of chronic mismanagement by ACC leadership and finds itself unable to effectively evaluate alternatives while the Severe Withdrawal Penalties and the (grant of rights) hang over Florida State’s head,” the filing alleges. “Therefore, those penalties effectively prevent Florida State from realizing its market worth.”

That language echoes comments made by Florida State leadership over the past year, in prior board meetings but also at ACC meetings and in other public settings. Florida State president Rick McCullough in August cited projections showing that the Seminoles will fall behind their peers in the Big Ten and SEC by as much as $30 million per year by the end of those leagues’ current media deals. Multiple members of the Seminoles’ Board of Trustees openly discussed potentially leaving the ACC altogether because of that in early August.

“After exploring all options, we are left with only this option as a way to maximize our potential as an athletic department, and it’s best for Florida State University,” said FSU president Rick McCullough during Friday’s board meeting.

Last year, the Big Ten finalized a new set of broadcast rights agreements worth a total of more than $1 billion per year, which are widely expected to push its annual revenue distributions per school toward $70 million per year; the SEC is poised to raise its revenue payouts to a similar level when Oklahoma and Texas join the league in 2024. Meanwhile, the ACC distributed an average of $39.4 million per school for the 2021-22 school year, a number that has steadily increased but still already lags well behind those of the Big Ten ($58.8 million in ’21-22) and SEC ($49.9 million in ’21-22).

“We need to do whatever it takes to get there,” McCullough told The Athletic last month. “We’re behind.”

Florida State athletic director Michael Alford told The Athletic last month that he did not think it made sense for the school to go independent. There are also no assurances from the 16-team SEC or the 18-team Big Ten that invitations are waiting at this point. But officials at Florida State feel hamstrung by the lack of clarity surrounding potential ACC exit fees and exit procedures and are using the complaint to get answers they believe are necessary as they chart their course forward.

Phillips and Jim Ryan, Chair of the ACC Board of Directors, issued the following statement late Friday morning:

“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.”

 

Edited December 23, 2023 by TxEx84

[TKthunder2 4959]

5 hours ago, TxEx84 said:

  Hide contents

Florida State Board of Trustees files legal challenge to ACC’s exit fee, grant of rights

By Nicole Auerbach and Chris Vannini
Dec 22, 2023

After nearly a year of overtures and not-so-veiled threats, Florida State has finally taken legal action against the Atlantic Coast Conference in what could be the first step toward extracting itself from the league it has called home since 1991.

An exit by FSU could destabilize the college athletics landscape and spark another significant round of realignment, particularly if it paved the way for other disgruntled ACC members to leave the league. But there will be legal challenges to sort through first.

The Florida State Board of Trustees on Friday filed a complaint for declaratory judgment against the ACC, seeking court guidance to determine whether the ACC’s exit fee and/or grant of rights are legally enforceable against Florida State. The Board states in the filing, a copy of which was obtained by The Athletic, that it needs an answer so it knows whether the school “can be withdrawn from the ACC before the damage to Florida State becomes even more irreversible.”

Lawyers for the Seminoles estimate that the current cost of paying the ACC’s exit fee in addition to the forfeiture of media rights revenue would cost the school $572 million, according to a copy of the complaint obtained by The Athletic. They believe that the severity of the penalty to withdraw from the league should be considered “unreasonable restraints of trade” or unenforceable. They also allege in the filing that the ACC materially breached its contracts with Florida State by failing to properly exploit its media rights value, by extending the league’s contract with ESPN in disadvantageous ways without required input from schools and by adding three new members to the ACC (Stanford, Cal and SMU) that do not add value to the conference.

“The ACC … appeared dedicated to self-preservation and self-perpetuation over the fiscal well-being of its members,” the Board alleges in the filing. “A conference so dedicated cannot endure.”

The complaint was filed in the circuit court of the Second Judicial Circuit in Leon County, Fla.

“Today we’ve reached a crossroads in our relationship with the ACC,” Board of Trustees chair Peter Collins said during Friday’s board meeting. “This Board has been left no choice but to challenge the legitimacy of the ACC grant of rights and its severe withdrawal penalties. None of us like being in this position. I know the president and our athletic director don’t like being in this position. I believe we have exhausted all possible remedies within the conference. We must do what’s best for Florida State not only in the short term, but also in the long-term.”

Florida State vs. the ACC: Understanding the Seminoles' conference unrest

The Board of Trustees states in the complaint that it cannot vote for the school to withdraw from the conference without knowing the legality of the exit fee and/or the grant of rights, a legally binding document that controls the publicity rights of a conference’s member schools. The ACC’s grant of rights runs through 2036.

“Through chronic fiduciary mismanagement and bad faith, the ACC has persistently undermined its members’ revenue opportunities including by locking them into a deteriorating media rights agreement that will soon result in a vast annual financial gap between the ACC and other Power Five (soon to be Power Four) conferences,” the Board alleges in the complaint. “Those failures have, by design, coalesced with the ACC’s efforts to effectively deprive ACC members of their fundamental right to withdraw, through the combination of an unconscionable Grant of Rights provision and a prohibitive Withdrawal Penalty that are unparalleled in the history of intercollegiate athletics. …

“The ACC’s incompetence at the bargaining table unfairly impedes the overall institutional advancement of all its members, including Florida State. By depriving its members of the full media value of their football programs the ACC has undermined its members’ ability to fund other vital sports such as women’s and Olympic sports.”

Ahead of FSU’s filing, the ACC on Thursday filed its own complaint against the FSU Board of Trustees, this one in Mecklenburg Superior Court in North Carolina. The complaint argues that FSU is not allowed to challenge the grant of rights due to language in the agreement and because FSU signed it and benefitted from it for 10 years. The ACC also argues that jurisdiction for this decision is in North Carolina, where ACC business is handled. FSU’s complaint argues that Florida is the jurisdiction.

The ACC similarly sued Maryland in 2012 over the size of its exit fee and whether it was around $20 million or around $52 million. Maryland, which was moving to the Big Ten, countersued. The sides eventually settled at $31.3 million two years later through mediation. But that was before the ACC had a grant of rights. This legal fight with FSU revolves around not only an exit fee, but the enforceability of the grant of rights.

Florida State’s filing alleges that the ACC mishandled and misrepresented its contract extension negotiations with ESPN in 2016, stating that “the ACC verbally represented to its members that ESPN had issued an ultimatum: unless each ACC member executed an extension of the ACC (grant of rights), from 2027 to 2036, a full nine years beyond the then-expiration of ESPN’s Tier I agreement, ESPN would enter into no further media rights agreements with the ACC.”

The complaint revealed publicly for the first time that the ACC’s 2016 extension with ESPN did not contain any guarantees of payment beyond the initial contract’s expiration on June 30, 2027, and it included a provision that ESPN has “a unilateral option to extend that Agreement” at the previously agreed-upon rate (negotiated in 2012) an additional nine years, through 2036. The filing alleges that ACC members were required to sign and extend the grant of rights through 2036 even though the media rights contract with ESPN was not guaranteed to extend through the same period.

The launch of the ACC Network in 2019 triggered a requirement that ESPN decide by 2021 whether it would extend the contract from 2027 to 2036. But in August 2021, new ACC commissioner Jim Phillips extended that deadline to February 2025 in a formal amendment that he allegedly signed on his own without approval from two-thirds of his membership, which is required by league bylaws. The complaint concludes there is currently no guarantee of media rights revenue for the conference beyond June 2027.

Florida State alleges that it was duped into signing the longer-term grant of rights in 2016 because of what it calls a feigned “ESPN Ultimatum,” believing the extension of the grant of rights was not a real precondition because ESPN was not guaranteeing revenue for its duration. The school also states that the language of the 2016 ESPN extension requires the ACC have at least 15 members, but that the members could be interchangeable. That, Florida State believes, is why the league added Stanford, Cal and SMU in August — a move that the complaint calls “self-serving and defensive, as opposed to strategic.”

The complaint also alleges that the ACC’s exit penalties are egregious and far more severe than peer conferences, and that they were ramped up in response to Maryland’s departure to the Big Ten in 2012 and then increased exponentially in the years that followed to make it essentially impossible for a league member to leave.

Florida State’s lawyers and media consultants estimate that leaving the ACC now would cost the school $572 million: $429 million for the forfeiture of media rights through 2036 ($33 million for 13 years), $13 million for unreimbursed broadcast fees ($1 million for 13 years); and the exit fee of three times the total operating budget for the ACC, which is approximately $130 million.

If the exit fee and/or the grant of rights are deemed illegal or unenforceable, the Board also asked the court for Florida State “to be deemed to have issued its formal notice of withdrawal from the ACC under Section 1.4.5 of the ACC Constitution effective August 14, 2023.” That would significantly speed up the school’s actual exit from the conference, as it is required to give official notice of withdrawal before Aug. 15 for the following academic year. Otherwise, FSU could give notice by Aug. 15, 2024 to compete in a different league or as an independent beginning with the 2025-26 academic year.

“Florida State is a victim of chronic mismanagement by ACC leadership and finds itself unable to effectively evaluate alternatives while the Severe Withdrawal Penalties and the (grant of rights) hang over Florida State’s head,” the filing alleges. “Therefore, those penalties effectively prevent Florida State from realizing its market worth.”

That language echoes comments made by Florida State leadership over the past year, in prior board meetings but also at ACC meetings and in other public settings. Florida State president Rick McCullough in August cited projections showing that the Seminoles will fall behind their peers in the Big Ten and SEC by as much as $30 million per year by the end of those leagues’ current media deals. Multiple members of the Seminoles’ Board of Trustees openly discussed potentially leaving the ACC altogether because of that in early August.

“After exploring all options, we are left with only this option as a way to maximize our potential as an athletic department, and it’s best for Florida State University,” said FSU president Rick McCullough during Friday’s board meeting.

Last year, the Big Ten finalized a new set of broadcast rights agreements worth a total of more than $1 billion per year, which are widely expected to push its annual revenue distributions per school toward $70 million per year; the SEC is poised to raise its revenue payouts to a similar level when Oklahoma and Texas join the league in 2024. Meanwhile, the ACC distributed an average of $39.4 million per school for the 2021-22 school year, a number that has steadily increased but still already lags well behind those of the Big Ten ($58.8 million in ’21-22) and SEC ($49.9 million in ’21-22).

“We need to do whatever it takes to get there,” McCullough told The Athletic last month. “We’re behind.”

Florida State athletic director Michael Alford told The Athletic last month that he did not think it made sense for the school to go independent. There are also no assurances from the 16-team SEC or the 18-team Big Ten that invitations are waiting at this point. But officials at Florida State feel hamstrung by the lack of clarity surrounding potential ACC exit fees and exit procedures and are using the complaint to get answers they believe are necessary as they chart their course forward.

Phillips and Jim Ryan, Chair of the ACC Board of Directors, issued the following statement late Friday morning:

“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.”

 

Damn. I know lawyers are good at bullshiting and making dumb things sound logical, but this is WAY better than I could have imagined. The below is the only part I figured they go after along with trying to understand the enforcement logistics of non compliance:

”They believe that the severity of the penalty to withdraw from the league should be considered “unreasonable restraints of trade” or unenforceable.”

But if there is any truth to the rest (and discovery here should be fun, if it’s ever publicly released) and the media rights really don’t go past 2027, that may be FSU’s exit timeline…along with Clemson, Miami, UNC, UVA and others which would fuck the ACC hard.

Who would sign a GOR past their TV contract when you literally have no idea what value you would be getting in return? If true, and the ACC lied to pull a fast one on them then that’s huge.

If it all starts breaking apart, and you’re Pitt or Louisville, why hang around and wait and see when you could just join the Big 12?

For those that may have some fringe possibilities for getting into the SEC/B1G (VT, GT, NCSU, Duke) I could see waiting but you don’t want to be the last semi-serious fb school left in a zombie of a conference with Wake, Syracuse, BC, Cal, Stanford, and SMU where you’re best adds are UConn and the American Athletic Conference schools not good enough to get invited to the Big 12 (Temple, Tulane, Memphis, USF, East Carolina, Rice).

[Texas Wahoo 3378]

16 hours ago, TKthunder2 said:

 

Who would sign a GOR past their TV contract when you literally have no idea what value you would be getting in return? If true, and the ACC lied to pull a fast one on them then that’s huge.

I can see how ESPN would have demanded a GOR through 2036 even if the deal from 2027 to 2036 is just an option. That option is way more valuable (and more likely to be exercised) with the grant of rights in place. 
 

As to why the ACC and its schools would agree to it, it’s exactly the same reason they would agree to it without the option, because ESPN wouldn’t agree to give them as much if they didn’t. 
 

Obviously if somehow the ACC negotiated a the ESPN deal and lied to the schools about the deal in order to get them to sign until now, that would be a different story, but I am very skeptical of such a claim. 

[billfromlaketravis 11291]

Bud Elliott goes full legal regard because he still thinks a lawyer. 

To summarize: Bud thinks the GOR is no big deal because Florida State has “private equity” connections to finance the whole thing. I think the Florida Legislature will have something to say about a state school taking $550 million dollar loan from Saudi Arabia. 
 

He also thinks FSU has leverage because they’re the last big domino and the Big Ten and SEC would welcome them. 
 

Sort of, kind of, maybe acknowledges a pissed off ESPN could be a problem. “Well, maybe FSU might have to go independent for a year to create some separation from the ACC and appease ESPN.” Uh, WTF?! ESPN is going to still be pissed off after a year. 
 

Another 10 minutes of Bud and Danny Kanell wishcasting FSU into the SEC. “We already play Florida!”

[notre dame joe 171]

20 hours ago, TKthunder2 said:

Damn. I know lawyers are good at bullshiting and making dumb things sound logical, but this is WAY better than I could have imagined. The below is the only part I figured they go after along with trying to understand the enforcement logistics of non compliance:

”They believe that the severity of the penalty to withdraw from the league should be considered “unreasonable restraints of trade” or unenforceable.”

But if there is any truth to the rest (and discovery here should be fun, if it’s ever publicly released) and the media rights really don’t go past 2027, that may be FSU’s exit timeline…along with Clemson, Miami, UNC, UVA and others which would fuck the ACC hard.

Who would sign a GOR past their TV contract when you literally have no idea what value you would be getting in return? If true, and the ACC lied to pull a fast one on them then that’s huge.

If it all starts breaking apart, and you’re Pitt or Louisville, why hang around and wait and see when you could just join the Big 12?

For those that may have some fringe possibilities for getting into the SEC/B1G (VT, GT, NCSU, Duke) I could see waiting but you don’t want to be the last semi-serious fb school left in a zombie of a conference with Wake, Syracuse, BC, Cal, Stanford, and SMU where you’re best adds are UConn and the American Athletic Conference schools not good enough to get invited to the Big 12 (Temple, Tulane, Memphis, USF, East Carolina, Rice).

I am hearing some legal arguments in favor of FSU they just are not very strong.  The commish's giving ESPNore decision time is probably the best but I doubt it knocks out a GOR.

[Sandbagging Steve 982]

4 hours ago, Texas Wahoo said:

I can see how ESPN would have demanded a GOR through 2036 even if the deal from 2027 to 2036 is just an option. That option is way more valuable (and more likely to be exercised) with the grant of rights in place. 
 

As to why the ACC and its schools would agree to it, it’s exactly the same reason they would agree to it without the option, because ESPN wouldn’t agree to give them as much if they didn’t. 
 

Obviously if somehow the ACC negotiated a the ESPN deal and lied to the schools about the deal in order to get them to sign until now, that would be a different story, but I am very skeptical of such a claim. 

Did the commissioner extend the option 4 more years after ESPN missed the 2021 deadline? If he did so without the consent of the members, I think FSU has a case for dismissal of the GOR beyond 2027. This means ESPN missed the contractual deadline to accept the option. But I'm not a lawyer.

Regardless, the ACC front office is shady AF.

[TKthunder2 4959]

57 minutes ago, notre dame joe said:

I am hearing some legal arguments in favor of FSU they just are not very strong.  The commish's giving ESPNore decision time is probably the best but I doubt it knocks out a GOR.

I’m not saying it’s a slam dunk by any means, just that it’s more than FSU saying life is not fair and we are a state institution in a different state. May not be effective but it’s more than what was originally thought.

[billfromlaketravis 11291]

The ESPN bribe will be interesting. FSU, Clemson, and UNC obviously have their hands out. Allocating more money to the Big 3 via Tier 3 rights/ACCN feels like the easiest fix. 

[JFKFC 4875]

2 hours ago, Sandbagging Steve said:

Did the commissioner extend the option 4 more years after ESPN missed the 2021 deadline? If he did so without the consent of the members, I think FSU has a case for dismissal of the GOR beyond 2027. 

I think it is a safe assumption that the commissioner of the ACC had the authority to extend the agreement granted to him by the member institutions in advance.