Last month, Florida State filed a historic lawsuit against the ACC, directly challenging its grant of rights and the steep exit fees required of any school hoping to leave the conference for another amid realignment in the sport.
Florida State is suing to leave ACC. This is how it could help Clemson, as well
While the Dec. 22 lawsuit doesn’t exactly deliver on its claim the ACC is violating antitrust law by limiting FSU’s options, it does raise an interesting argument about whether the conference’s massive withdrawal fee, ballparked at $572 million, is enforceable.
And if a court agrees with Florida State on that second claim, it could open the floodgates for other ACC schools — including Clemson, which has one of the league’s most prominent and valuable football brands — to leave the ACC for another conference at a more realistic price.
That’s according to Ashwini Jayaratnam, a New York-based lawyer who specializes in commercial and business litigation and covered the brewing grant of rights drama between Florida State and the ACC in a recent legal analysis piece.
Jayaratnam’s article, “Florida State’s Way Out of ACC? Exit Penalties Could Be Ruled Unenforceable,” is centered around the legitimacy of the conference’s multi-part exit fee — and the possibility of a court determining a large portion of that fee is “disproportionate to the harm actually suffered” by a school such as FSU leaving.
“If they win on that ground, it will be a win not just for FSU,” Jayaratnam told The State in an interview. “It will be a win for every member of the ACC. It’s the same forfeiture provision for all of them. So suddenly, all these members like Clemson could withdraw for far less a price.”
Clemson has made no public actions to indicate it’s on the verge of suing the ACC or taking any other action. The Tigers have been the polar opposite of Florida State when it comes to the topic of realignment, preferring to handle their business privately and rarely commenting on the subject. (As such, a spokesperson told The State that Clemson athletics had no comment on FSU’s lawsuit).
But athletic director Graham Neff has made it clear: Faced with a growing revenue gap between the ACC and other conferences — which, among other concerns, could directly affect Clemson’s nationally prominent football team —he’s committed to doing what’s best for the school.
“Couldn’t be more confident and more proud of how Clemson is viewed nationally,” Neff said in November, adding that university leaders will “continue to do what’s best for Clemson and be incredibly well read on all things landscape, network, contacts at all levels.”
“And we have consultants and support that we look to do that with. It’s my job to continue to position us and be connected and be nimble and strategic as it relates to the changing landscape.”
Clemson, naturally, remains one of the top ACC schools in realignment chatter heading into 2024. So in the wake of Florida State’s lawsuit, The State spoke with Jayaratnam, a partner at the law firm DarrowEverett LLP, to get a better idea how the suit could help or hurt the Tigers.
EXPLAINING THE GRANT OF RIGHTS
Filed three weeks after Florida State’s undefeated football team was left out of the four-team College Football Playoff — the straw that broke the Seminoles’ back — FSU’s 38-page lawsuit lays out seven “counts,” or individual charges, against the ACC.
Florida State’s primary two arguments, according to Jayaratnam, are that the ACC’s grant of rights constitutes an antitrust violation and an “unreasonable restraint of trade,” and that its exit fees are unenforceable because they lack a “reasonable relationship” to the actual monetary damages the conference would incur if FSU were to depart.
Jayaratnam isn’t sold on the first argument.
Back in 2013, FSU, Clemson and the rest of the ACC’s member schools all signed a “grant of rights” intended to keep the conference intact.
The document lays out how member schools “irrevocably and exclusively” grant the ACC their media rights (most importantly, the right to produce/distribute football games) for the entirety of the contract’s term “regardless of whether such Member Institution remains a member of the Conference during the entirety of the Term.”
Jayaratnam wrote: “This meant that were a member to withdraw from the ACC, it would be forfeiting revenue associated with its media rights for the remainder of years before the Grant of Rights terminated.”
In 2016, FSU, Clemson and the rest of the ACC’s member schools signed a 20-year extension of that grant of rights, which now runs another 12 years through 2036.
ACC schools signed that grant of rights extension as the conference inked a 20-year television deal with ESPN, which, at the time, was considered a strong one. As other conferences renegotiated their own TV deals on shorter contracts, though, a revenue gap emerged.
Sports Business Journal lists the ACC’s 20-year deal with ESPN as being valued at $4.8 billion in total, with an average annual value of $240 million. That’s big money … until you compare to the more recent deals struck by the SEC and Big Ten, two of its rival conferences.
Per SBJ, the Big Ten in 2023 began a seven-year, $8.05 billion deal with Fox, NBC and CBS through 2030 with an average annual value of $1.15 billion, and the SEC in 2024 will start a 10-year, $7.1 billion deal with ESPN through 2034 at an average annual value of $710 million.
The majority of that television revenue gets distributed among member schools, and some projections have ACC schools falling up to $40 million behind SEC and Big Ten schools in terms of conference payouts (read: more spending money) each year.
That’s why the SEC (Texas and Oklahoma) and the Big Ten (Southern Cal, UCLA, Oregon and Washington) have landed marquee additions for their conferences.
It’s also why FSU, Clemson and other sports-minded ACC schools are worried about how the growing revenue gap between them and other top programs could affect things like athletics budgets and coaching salaries — and, ultimately, the ability to compete for national championships.
And if FSU’s challenge of the grant of rights is successful, there wouldn’t be a need for other schools looking to leave the ACC to file their own lawsuit, Jayaratnam said. They could initiate their own exit based on the court’s public ruling in the Florida State case.
“They’re all trying for the same thing,” she said. “If it’s ruled unenforceable as to Florida State, it’s a staircase. Then, all of the schools can benefit. They don’t need to go second.”
That would be an intriguing outcome for Clemson, which, according to Neff, is committed to being “great members” of the ACC while privately exploring all of its realignment options, including a potential move to another conference such as the SEC or Big Ten.
Leaving the ACC would be a massive undertaking in itself. As would securing an invitation from one of those two leagues (a recent Yahoo Sports report indicated the SEC’s a “less likely option” for FSU and Clemson since the conference already has schools and established television in their respective
