Florida State moves ahead with lawsuit against ACC in first step to leave conference

Florida State attorneys filed Friday a legal complaint against the ACC in a first step to exit the conference.

FSU’s Board of Trustees voted unanimously Friday to take legal action against the conference, with a specific aim at the grant of rights document that binds the Seminoles and all other ACC programs to the league and media partner ESPN through the 2035-36 academic year.

During a 50-minute virtual board meeting, FSU outside counsel David C. Ashburn laid out the school’s case against the conference, describing the ACC’s withdrawal penalty structure ($572 million) and grant of rights as a violation of Florida statutes and “unenforceable.”

Later Friday, the school filed the suit in Leon County Circuit Court against the ACC, accusing the league “of restraint of trade, breach of contract and a failure to perform.” The suit also challenges the legality of the ACC’s withdrawal penalties.

“I feel we are left with only this option as a way to maximize our potential as an athletic department,” said FSU president Richard D. McCullough, who was at the virtual meeting along with athletic director Mike Alford and 4,000 others watching the live stream.

The ACC plans to “vigorously” fight Florida State’s legal action, calling the filing a “direct conflict” and “clear violation” of their obligations and commitments to the conference.

“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,” the league said in a statement.

The conference proactively filed a declaratory action Thursday in defense of the grant of rights, the conference and each of its members in light of Florida State’s clear intention to take action, a league spokesperson told Yahoo Sports. The filing was made in Mecklenburg County in North Carolina.

FSU’s legal action sets up a somewhat historic showdown between a school and a conference over what is usually considered an ironclad document. An FSU victory in court could open the floodgates for other ACC programs to follow suit, causing a wide-reaching impact on the college athletics landscape.

The action Friday was no surprise, as Yahoo Sports reported the expected news Thursday. School officials have for months publicly threatened to leave the conference over the growing revenue gap between the ACC and two of its power league brethren, the Big Ten and SEC. The grant of rights, an agreement binding ACC members and its TV partner ESPN, stretches another 13 years, handcuffing the conference to an annual revenue distribution amount surpassed — by double — by those other leagues.

At the board meeting Friday, McCullough said the school has been working on exit solutions and legal actions for a year and made multiple trips to ACC headquarters in Greensboro to examine the physical copy of the grant of rights, which is one of the gripes from FSU officials.

League administrators do not permit schools from holding electronic or physical copies of the grant of rights, and school attorneys who make the trip to North Carolina to review the document are “heavily monitored” by conference personnel. Attorneys are not permitted to take photographs or copy the grant of rights verbatim, FSU’s counsel told board members Friday.

In fact, FSU attorneys say they do not possess a fully executed copy of the grant of rights. The school has unexecuted copies of the 2013 and 2016 grant of rights that it obtained “from the internet.”

The legal filing sets in motion a litigation process by which the school will have the opportunity to gather information and “actual copies” of agreements, Ashburn told board members. The action, he hopes, will bring “meaningful discussion” with the conference.

How FSU got to this historic point is a tale that began years ago, attorneys said Friday. Ashburn walked board members through an elaborate presentation of how the ACC’s withdrawal penalty structure has so rapidly increased over the past decade, going from zero in 2010 to a whopping $572 million in 2023.

At the center of the argument is the ACC’s agreeing to extend the grant of rights with ESPN in 2016 for another 20 years, locking the league into a deal that pays schools a fraction of what those in the SEC and Big Ten will get in future years. FSU board chairman Peter Collins explained that the “funding gap” between the ACC and the other two will grow to $30 million per team as soon as next year.

ACC teams earn around $35 million from their television deal with ESPN. Big Ten and SEC teams are due to make more than $60 million soon.

“Today we’ve reached a crossroad in our relationship with the ACC,” Collins said. “We are faced with the fact that the ACC is locked into a deteriorating media rights contract with revenue that is far below other conferences.”

Why the conference agreed to such a lengthy extension with ESPN emerged in the board meeting. In 2016, ESPN offered the conference an “ultimatum,” FSU officials said: Either extend the grant of rights through 2036, or there will be no further media agreements made with the league, including creating its own network.

The ACC voted to extend the agreement, and the ACC Network was born.

However, ESPN could end the contract short of 2036, FSU lawyers say. The network has a “unilateral right” in 2027 to pick up a nine-year option to extend the deal.

Most of the ire at the board meeting was directed at three fronts: the ACC’s lack of transparency around the grant of rights document; FSU’s being left out of the CFP, which board members say did not spur this action but might have accelerated it; and the “mismanagement” by the ACC’s previous administration around its television contract, Alford said.

“This isn’t a relationship issue,” Alford said in the meeting. “It’s a math problem.”

FSU’s legal maneuver comes less than a month after the Seminoles became the first undefeated major conference champion to be left out of the College Football Playoff, a decision that rocked those in Tallahassee and appears to have expedited the school’s planned exit strategy.

The legal move is not expected to serve as a notice of departure to the ACC. Any departure from the ACC would be more than a year away. FSU is guaranteed to compete in the ACC in the next academic year and would have to notify the conference by Aug. 15, 2024, if it wanted to leave in time to compete elsewhere in the 2025 football season.

FSU’s CFP snub isn’t the only factor to have expedited the school’s charted course toward an ACC exit.

In the latest realignment wave, the ACC gained Cal, Stanford and SMU, despite aggressive pushback within the conference. FSU, North Carolina and Clemson voted against the additions. The league added that trio of programs while its power conference-mates made additions of Oregon and Washington (Big Ten) and Utah, Colorado, Arizona and Arizona State (Big 12). The SEC will add Oklahoma and Texas next year as well.

The ACC’s expansion campaign further divided a league of private and public programs that hold vastly disparate missions and resources. The league, in part, pushed through the expansion as a way to preserve the conference long-term, considering the potential departures of a handful of programs.

In the spring, officials from seven ACC schools met multiple times to examine a way to potentially exit the conference, even studying dissolving the league entirely. Those discussions mostly died after they emerged publicly in May. However, FSU’s desire — and some others as well — to break free of the league has been a constant for many months.

FSU lawyers, as well as those from Clemson, have spent the past several months exploring ways to realistically break the grant of rights. While many consider the grant of rights unbreakable, some believe the schools will try nonetheless to find an exit path.

In signing a grant of rights, schools acquiesce the rights to televise their home games to the league and partner ESPN. Florida State’s home competitions are owned not by the school but by the league over the next 13 years — if they don’t find a way out of it.

There is precedent for a settlement. This very year, the Big 12 and its TV partners agreed to a settlement for Oklahoma and Texas to leave its grant of rights a year early for what was announced as a $50 million penalty for each school.

The ACC grant of rights includes similar language to that document. However, FSU would be leaving with more than 10 years remaining on the contract.

There is, too, this question: Where would Florida State and any other departing ACC school land?

The SEC and Big Ten, their most attractive options, have signaled their hesitance to add any more members, but such statements have been made before. Big Ten school leaders publicly pushed back on another round of expansion before adding Oregon and Washington.

The changing environment in college athletics makes for an unpredictable landscape moving forward, creating possible avenues for exiting ACC programs. A new governance structure is likely on the way, for instance. NCAA president Charlie Baker proposed the creation of a new FBS subdivision geared around providing athletes with direct school compensation.