Florida State and the ACC are suing each other: Here’s everything to know

Long a discontented member of the ACC, Florida State University acted on its grievances on Friday and filed a lawsuit against the conference in hopes of invalidating its grant of media agreement that has held the league together in recent years amid the change and uncertainty that have come to define major college athletics.

Not long after the university filed that lawsuit, in Leon County, Florida, came the revelation of a twist: the ACC actually sued Florida State first, a day earlier. The conference on Thursday in Mecklenburg County filed a complaint for declaratory judgment against FSU’s Board of Trustees, in which the league sought, essentially, to nullify Florida State’s lawsuit before it could really begin.

What’s at stake? Only the very existence and future of the ACC as it has been known.

Among the other key questions:

Could FSU’s lawsuit work, if it were to proceed?

Will the university actually leave the conference anytime soon?

Will the ACC’s grant of rights, thought to be ironclad, withstand its toughest test yet?

Is this the first domino of many that will lead to the demise of the ACC as we know it?

All worthy questions. And too early to answer.

Clearly, though, these are monumental days for the ACC. Never before, in the conference’s 70-year history, has a member sued the league in an attempt to withdraw from it. And never before has the conference launched a legal counter-offensive against that same school, seeking to stop it from starting a courtroom fight for which Florida State has spent more than a year preparing.

So begins what’s likely to be a long, winding legal saga, one that will determine the future of the ACC. After the filing of dueling lawsuits whose success or failure will have tremendous implications throughout college athletics, here’s a briefing of what to know, in Q-and-A form:

Q. What are the main things to know about Florida State’s lawsuit?

A. OK, here’s the rundown: the lawsuit is against the ACC. It was filed Friday in Tallahassee, in Circuit Court of the Second Judicial Circuit in Leon County. It’s an attempt, essentially, for FSU to escape the ACC’s grant of media rights agreement and pursue membership in another conference (or, in a much less likely scenario, to pursue independence in football).

Q. And what are the main things to know about the ACC’s lawsuit?

A. It was filed Thursday -- the day before FSU filed its lawsuit -- in the Superior Court of Mecklenburg County, which has been the ACC’s home county since the league in August moved its headquarters to Charlotte. The conference’s lawsuit accuses FSU of intending to “breach its contractual obligations not to challenge the validity or enforceability of the Grant of Rights.”

Further, the conference is asking the court for a declaration of judgment that the grant of rights “is valid and enforceable,” and that FSU is prohibited “from challenging the validity or enforceability of the Grant of Rights ... or has waived the right to do so, by knowingly executing the Grant of Rights and then accepting hundreds millions of dollars in benefits under the Grant of Rights for more than a decade.”

Q. Can you describe what’s going on in even fewer words and sentences?

A. Sure can. The easiest way to put it: Florida State is trying to sue its way out of the ACC and avoid paying a massive financial penalty to leave. The ACC is trying to stop FSU’s lawsuit from even proceeding while, in the process, establishing a legal precedent that would further bolster the strength of the grant of the rights.

Q. About this “grant of rights.” How’s that all work again?

A. The grant of rights is an agreement that has bound ACC members together since 2013. Member schools agreed to a version of it then, about a decade ago, and then signed onto an extension of it in 2016, while the league worked with ESPN to secure the eventual launch of the ACC Network.

First, a bit of background: College athletics conferences make the majority of their money from selling the broadcast rights to their members’ sporting events. In the ACC, football now accounts for about 80 percent of the value of its deal with ESPN. Conferences don’t own the rights for all of their members’ games -- but they do for their home games and conference tournaments.

With that out of the way, the easiest way to explain the grant of rights is this: it’s an agreement that gives the conference control and ownership over a member’s television broadcast rights, which these days in major college athletics are worth a lot of money. Essentially, a grant of rights agreement binds a school to a conference, because if a school were to leave, its rights would remain with the league.

Here’s a real-world example: Let’s say ACC schools each receive about $40 million annually from the conference’s deal with ESPN (and that number is close to accurate). If a school were to leave the ACC, that $40 million annual payment would stay with the conference, to be distributed among other remaining members. The departing school would receive nothing.

Extrapolate that out a while, and it quickly adds up. There’s still more than 12 years remaining on the ACC’s deal with ESPN. If a school were to depart today, it’d be forfeiting roughly $480 million in television money.

Q. And ACC members agreed to such a binding agreement?

A. They did. Twice. The first time, in 2013, was in direct response to Maryland leaving the ACC for the Big Ten. A grant of rights agreement was seen as a way for the ACC to stabilize itself and to guard against further defections. Every member of the conference agreed to it. Schools reaffirmed its commitment to the grant of rights in 2016, in part as a condition for ESPN to pursue the launch of the ACC Network, which came on the air in 2019.

Q. So how did we reach such a point, with Florida State desperately wanting out?

A. It’s a long story, but FSU leaders, from university president Richard McCullough to Michael Alford, the athletics director, have been outspoken for a while now about their dissatisfaction with the ACC. At the heart of the discontent is the frustration at FSU surrounding the growing revenue disparity among the ACC and the Big Ten and SEC, the two wealthiest leagues in college athletics.

According to its most recent publicly-available tax filing (from the 2021-22 fiscal year), the ACC distributed between about $38.5 to $42 million to each of its 14 full-time members. The same year, the SEC distributed an average of about $50 million to its schools, while the Big Ten distributed between $54.5 to $59 million to each of its members.

It’s one thing to have a gap of $10 to $15 million in conference revenue distribution per school. But the disparity is only going to grow. Both the Big Ten and SEC are about to enter into new television deals that will make those leagues even wealthier. The ACC’s media rights deal with ESPN, meanwhile, stretches on into 2036, without the opportunity to renegotiate.

The ACC will face a reality, and soon, in which its schools will receive $20 to $30 million less, per year, than their counterparts in the Big Ten and SEC. Conference television money is not the only source of revenue for athletics departments, which are also funded by booster contributions and ticket sales, among other sources. But TV money is a significant source of income.

The financial gap between the ACC and the richest leagues will only grow wider. Several ACC schools, including Florida State, believe they’ll be at a competitive disadvantage the longer they remain in the league. That’s the crux of FSU’s discontent.

Q. Does the school have a case?

A. It’s open for interpretation and, now, up to courts and judges that might have vastly differing views of the law.

Q. But what, exactly, is Florida State attempting to argue, in a legal sense?

A. FSU is basing its lawsuit on five arguments. And they are:

That the ACC’s grant of rights and its built-in financial penalty are unenforceable under Florida law, in an antitrust sense; that the league’s financial punishments are unenforceable, by law; that the ACC “materially breached its contracts with Florida State;” that the ACC “breached its fiduciary duties” to FSU; and that there has been a “fundamental failure” by the ACC, one that has placed the league in “an existential crisis due to poor fiscal management and administration.”

The first of those arguments is perhaps the most important. In it, FSU cites part of the state’s antitrust law, which says, “restraint of trade or commerce in this state is unlawful.” The university then argues that the financial penalties for leaving the ACC – including the league’s exit fee and the cost associated with the grant of rights – are “grossly excessive” and that they prevent FSU “from competing in the marketplace to obtain the best economic terms for its athletic media rights.”

There’s a lot more but that’s a recurring theme of FSU’s lawsuit: that the cost of getting out of the ACC is “draconian,” and that the financial penalty of the grant of rights, in particular, should not be enforceable, in a legal sense.

Q. Is there an exact dollar amount of how much it would actually cost FSU to leave the ACC?

A. There is. According to a presentation the school’s trustees heard on Friday, it would cost Florida State $572 million to leave the ACC. That estimate includes the conference’s exit fee as well as the revenue the school would forfeit as part of the grant of rights agreement.

Q. And what about the ACC’s lawsuit? What’s the conference arguing and seeking?

A. First and most important, that the league’s grant of rights and amended grant of rights are “valid and enforceable contracts,” given that FSU entered into them willingly. Second, that Florida State has waived its ability to the challenge the grant of rights, in part, as the ACC’s lawsuit notes, because “Florida State knowingly and voluntarily agreed in the Grant of Rights and Amended Grant of Rights to transfer ownership of its Media Rights to the ACC through June 30, 2036.”

The ACC is asking the court to issue a judgment that bars FSU “from challenging the validity of the Grant of Rights and amended Grant of Rights and has waived its right to do so.”

Q. What are the potential ramifications of these dueling lawsuits?

A. It’s impossible to overstate their significance. If the ACC is successful in upholding the grant of rights, it will make it especially difficult (and perhaps impossible, in the relative short term) for schools to leave the conference. The conference’s short term stability, at least, would appear secure.

If Florida State is successful, meanwhile, it’d signal disaster for the ACC, and would likely lead to the destruction of the conference. Everyone in college athletics will be following this case but, undoubtedly, the interest will be highest among leadership at those schools who have also expressed interest in pursuing a way out of the ACC.

At the least, that group includes Clemson and North Carolina. Miami, N.C. State, Virginia and Virginia Tech are the other remaining members of a group of seven ACC schools that met informally last summer to discuss the future of the conference and the strength of the grant of the rights. If it holds up in court, the ACC could be safe, for now.

If not, it’s not hyperbole to say the conference is doomed. It may be, anyway.

Q. Either way, though, this is the beginning of the end for FSU as an ACC member, right?

A. That point came and went a while ago. But yes, FSU’s lawsuit is a bombshell.

At the least, it likely represents a no-turning-back, no-mending-fences kind of moment for the university, which isn’t merely burning a bridge with the ACC but completely torching it and dousing the flames with gasoline. To carry the cliche forward, the university is then hoping, amid the smoldering ruins of that bridge, to build a new one that will lead right out of the ACC and somewhere (yet unspecified) more financially lucrative.

Q. Well then. So it’s time to buckle up?

A. Yes. Get ready. This is likely to be a long and wild ride, one that will decide the ACC’s future.