Florida State University on Friday filed a lawsuit against the Atlantic Coast Conference, alleging the conference has “persistently undermined its members’ revenue opportunities” and damaged FSU.
The lawsuit, approved by the school’s Board of Trustees and filed in Leon County circuit court, could ultimately lead to FSU leaving the conference after more than 30 years as a member. The dispute focuses on a media-rights deal that will run for another 13 years and on steep costs for exiting the conference, including what the lawsuit describes as a “withdrawal penalty” of $130 million.
FSU President Richard McCullough said the lawsuit is the only “way to maximize our potential as an athletics department.”
Trustee Drew Weatherford, who played quarterback at FSU, said the media-rights deal isn’t anything “that fans want, alumni want, or frankly even the conferences want, for that matter.”
“All we're looking for is an equitable, competitive environment, where teams that are competing for a championship are waking up and playing by the same rules,” Weatherford said. “And, that's just frankly not the environment that we're currently in.”
ACC Commissioner Jim Phillips and Jim Ryan, chairman of the ACC Board of Directors, quickly issued a statement that said FSU’s decision “is in direct conflict with their long standing obligations and is a clear violation of their legal commitments to the other members of the conference.”
They said lawyers for the conference “will vigorously enforce the agreement in the best interests of the ACC’s current and incoming members.”
The FSU Board of Trustees met Friday, nearly three weeks after the Seminoles became the first undefeated champion of one of the five major football conferences – known as the Power 5 —to be left out of the College Football Playoff.
The playoff decision angered university and state officials, with Gov. Ron DeSantis recommending the state offer $1 million for any legal action about the snub. Attorney General Ashley Moody also has demanded a wide range of information from the College Football Playoff Selection Committee about FSU’s exclusion from the four-team playoff.
FSU Board of Trustees Chairman Peter Collins said the playoff decision was “a travesty,” but not the reason for the lawsuit. Rumors have long swirled that FSU could try to become a member of the Southeastern Conference or the Big Ten Conference, both of which have far-richer television deals.
Collins said the lawsuit is about ACC leadership over the past decade and over the next 13 years, through the length of the existing media deal. Collins said the deal has left FSU drawing $30 million to $40 million a year less than if it were in another Power 5 conference.
“There should be no debate that our brand media value and competitiveness across all sports are among the very best in collegiate athletics,” Collins said.
The lawsuit involves challenging a “grant of rights” that FSU and other schools in the conference are tied to in an ESPN contract, which runs through 2036.
The contract gives the league control over TV revenue and broadcasts and stipulates schools would have to buy out of the deal if they want to leave early. In addition to the $130 million withdrawal penalty, the lawsuit said FSU would face a $429 million forfeiture of future media rights and $13 million in future unreimbursed broadcast fees.
ACC members receive roughly $33 million in annual broadcast payments under a deal renegotiated in 2012. According to FSU, the 2012 deal was expected to be renegotiated in 2027, but the ACC extended the contract without getting additional compensation.
David Ashburn, an attorney with the Greenberg Traurig law firm who represents FSU, said the contract violates restraint of trade under Florida law; imposes an “unenforceable” penalty because the conference’s contract with ESPN would remain unchanged with an FSU exit; and fails to provide FSU with the value of its media rights.
Collins said that when FSU joined the ACC in 1991, the gap in revenue between teams in different Power 5 conferences was far smaller than now.
“It's one thing to fundraise and make up $7 million,” Collins said. “It's another entirely to annually make up over $30 (million) to $40 million. As an institution, you cannot be expected to sit idly by while this gap grows.”
Phillips and Ryan said in their statement that ACC members, including Florida State, “willingly and knowingly” re-signed the current grant of rights in 2016.
“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,” the conference statement said. “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 (NCAA Division 1 Football Bowl Subdivision) conferences, so it is especially disappointing that FSU would choose to pursue this unprecedented and overreaching approach.”
The lawsuit came as college football has faced rapid changes during the past few years, with athletes able to be paid through “name, image and likeness” endorsements and schools shopping themselves to other conferences.
The Power 5 conferences are the ACC, Big Ten, Big 12, Pac-12 and Southeastern Conference. But the Pac-12 has been decimated by the upcoming exits of almost all of its members. As part of the changes, the ACC is adding Stanford, California and Southern Methodist University.
Florida State isn’t the only ACC school to question the grant of rights.
Media reports indicate officials with Clemson, Miami, North Carolina, North Carolina State, Virginia and Virginia Tech have made similar overtures.
This year’s college football playoff teams are Alabama, Michigan, Washington and Texas. Initial reports indicated FSU was left out because it had been weakened by the loss of star quarterback Jordan Travis to a season-ending injury.
But College Football Playoff Executive Director Bill Hancock, in responding to an inquiry from U.S. Sen. Rick Scott, questioned the Seminoles’ schedule and labeled the ACC as a “so-called Power 5 conference.”
