In March of 2024, Clemson joined Florida State in a lawsuit against the Atlantic Coast Conference (ACC) over their desire to exit the conference.[1] Both schools, who are powerhouses in the ACC, alleged that the conferences’ “exorbitant $140 million” exit penalty and the grant of rights used to bind schools to a conference through their media rights should be shut down. The schools also argued that these high-priced penalties and assertion of media rights limited their ability to explore their options surrounding conference membership, negotiate alternative revenue sharing proposals among other ACC members, and obtain full value for their future media rights.[2] The concern amongst teams in the ACC grew when schools in the Big 10 and the SEC singed a new revenue sharing deal that could allow them to bring in between $40 and $50 million annually, allowing them to gain a competitive advantage over teams like Clemson and Florida State.
While the ACC seemed reluctant to re-vamp its revenue distribution model, it finally came to the table this past month. Last week, the parties agreed to settle the years long dispute which changed the revenue-distribution model throughout the ACC. Additionally, the deal outlines the long-terms costs to leave the conference if a school decides to do so.
The revised revenue-sharing model could lead to bigger schools such as Clemson and Florida State putting millions more in their pockets each year. This new model will now include TV viewership as a way for the league’s top programs to generate more revenue.[3] As a result, 60% of the leagues TV revenues will go into a pot for distribution based on a rolling five-year formula that is tied to viewership ratings, with the remaining 40% being distributed equally among the member schools.[4] Top earners like Clemson and Florida State could see an increase of $15 million, while those schools on the lower end of the spectrum could lose about $7 million in revenue.[5]
The growing revenue gap among the different colleges not only lead to outrage, but schools like Clemson and FSU wanting out of the ACC. However, the ACC’s control of their media rights and the massive exit fees they would impose on any school who tried to leave held them back. The uncertainty surrounding how to exit the conference was also clarified in the settlement reached last week.
According to the presentation given to Clemson officials, the exit fee for the 2026 fiscal year would be $165 million and descend by $18 million per year until the 2030-2031 season, where it would level off at $75 million.[6] Further, any school that did pay the fee would be granted their media rights. Finally, schools in the ACC also have the added incentive to stay in the conference due to the creation of the “success initiative” that could amount to an additional $25 million a year for a school, depending on how well they do in the expanded college football playoff.[7] While this money is not guaranteed, it urges schools to competitively build programs that viewers want to watch.
Image Credit: https://www.pressdemocrat.com/article/sports/acc-clemson-florida-state-approve-settlement-to-end-legal-fight-change-r/
[1] https://apnews.com/article/clemson-sues-acc-ec231745cfe4690ec282050c33c144ed
[2] Id.
[3] https://apnews.com/article/acc-clemson-florida-state-settlementff0e963f64e06664c9dc7db18958f1e6
[4] Id.
[5] Id.
[6] Id.
[7] Id.