Clemson is taking the Atlantic Coast Conference (ACC) to court, and the ramifications of the lawsuit could be massive for not just the conference but all of college football. Last month Clemson followed the lead of Florida State University (FSU) and filed a lawsuit against the ACC. Their goal?: To prove that the contracts binding them to the conference are unenforceable, giving them the right to leave.[2]
ACC member schools, like universities in every conference around the country, must sign deals transferring their media rights to their respective conference for a set period of time in what is known as a “grant of rights” deal. A “grant of rights” deal essentially gives the conference the ability to sell media inventory for the member schools on their behalf. In return for their media rights, member schools receive a share of their conference’s revenue. Schools that wish to move on from their current conferences generally have two options: (1) wait until the “grant of rights” contract expires, or (2) pay the conference the exit fees outlined in the contract.[3] In 2016 in an amended grant of rights deal, each ACC member school agreed to transfer their media rights to the conference “irrevocably and exclusively,” regardless of whether or not they remain in the conference, until the expiration of the deal in 2036.[4]
The arguments that Clemson and FSU are making against the ACC stem from the financial penalties involved with the ACC’s exit fee, and the grant of rights deal. Clemson has claimed that the ACC’s $140 million exit fee, which is currently over three times the ACC’s yearly operating budget, is exorbitant and unreasonable, and that the lengthy grant of rights deal unfairly restricts Clemson’s ability to maximize its brand value.[5] In its lawsuit, Clemson states that the ACC’s exit fee and grant of rights deal “hinders Clemson’s ability to meaningfully explore its options regarding conference membership, to negotiate alternative revenue-sharing proposals among ACC members, and to obtain full value for its future media rights.”[6] FSU has claimed that the total cost of exiting the ACC before the grant of rights deal expires in 2036 would be a whopping $572 million.[7] While neither Clemson nor FSU has announced any intention to leave the ACC currently, their lawsuits against the conference make it clear that if they don’t get a bigger slice of the revenue, they will be looking to explore the market. Given the rapidly changing landscape of college sports at the moment, it should come as no surprise that these hallmark universities don’t want to be tied down for such a long period.
Clemson and FSU are concerned about the growing revenue gap between the ACC and the SEC and Big Ten conferences. According to Clemson’s complaint, there is currently a gap of between $12 million and $17.5 million in what the Big Ten and SEC pays out annually to member schools compared to what the ACC distributes.[8] Clemson is afraid that as the revenue gap widens over the coming years, Clemson will fall behind its peer institutions on and off the field.
Clemson’s lawsuit challenges the notion that the ACC “irrevocably and exclusively” owns member schools’ media rights following the 2016 amended grant of rights deal. Through litigation, Clemson “seeks confirmation of the plain language found in the Grant of Rights agreements and the related media rights agreements between the ACC and ESPN – that these agreements, when read together, plainly state that Clemson controls its media rights for games played if it is no longer a member of the ACC.”[9] Clemson has also claimed that the ACC’s withdrawal penalty is unconscionable: “The [penalty] that the ACC insists a member institution must pay to leave the Conference today has ballooned to a point that was unimaginable in 2012, and is unconscionable, unenforceable, and in violation of public policy.”[10] The ACC’s exit fee stands in stark contrast to those of its contemporaries, as the largest penalty outside of the ACC is the $45 million fee imposed by the SEC for member schools that leave without providing notice.[11]
It is unclear at the moment whether or not additional ACC schools will join in the lawsuits against the conference, as just last summer there were reports that alongside Clemson and FSU, Miami, North Carolina, N.C. State, Virginia, and Virginia Tech were all looking to potentially break free from the ACC’s grant of rights deal early.[12] While Clemson and FSU’s lawsuits against the ACC are unlikely to wrap up any time soon, there is no doubt that the decisions reached in their lawsuits will reshape the landscape of college sports.
[1] Photograph: https://www.postandcourier.com/sports/clemson/clemson-acc-suit-grant-of-rights-florida-state/article_9949088c-e607-11ee-b87d-13e71da8e6a8.html
[2] https://frontofficesports.com/everything-you-need-to-know-about-the-legal-attempts-to-kill-the-acc/
[3] Id.
[4] https://www.courier-journal.com/story/sports/college/louisville/2023/08/10/acc-grant-of-rights-conference-realignment-college-sports-ncaa/70554279007/
[5] https://www.espn.com/college-football/story/_/id/39765566/clemson-vs-acc-exit-fees-grant-rights-lawsuit-explained
[6] Id.
[7] https://www.nbcsports.com/college-football/news/clemson-joins-florida-state-becomes-second-school-to-sue-acc-as-it-seeks-to-exit-conference
[8] Id.
[9] https://www.postandcourier.com/sports/clemson/clemson-acc-suit-grant-of-rights-florida-state/article_9949088c-e607-11ee-b87d-13e71da8e6a8.html
[10] Id.
[11] Id.
[12] https://www.courier-journal.com/story/sports/college/louisville/2023/08/10/acc-grant-of-rights-conference-realignment-college-sports-ncaa/70554279007/
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