Over the last two years, we've seen massive moves in conference realignment. The latest round of realignment started in the summer of 2021, when Texas and Oklahoma left the Big 12 for the SEC. That ignited a domino effect for several schools and leagues, including the American Athletic, Sun Belt, and Conference USA. However, one year later, an even bigger bombshell dropped: USC and UCLA departed the Pac-12 for the Big Ten. Eventually, Oregon and Washington followed the Trojans and Bruins and the Pac-12 as we knew it effectively "died."
Nonetheless, it appears that realignment is far from over as Florida State took the first step to get out of the ACC. Last week, The Florida State board of trustees voted to sue the ACC to challenge the legality of the league's grant of rights and its $130 million withdrawal fee.
Unlike the aforementioned schools above who left for greener pastures in the SEC and Big ten respectively, Florida State's situation presents more challenges in terms of leaving the ACC. FSU and its conference foes are tethered to the ACC via a lengthy grant of rights that runs until 2036. The grant of rights is a legal document signed by each current member of the ACC that transfers ownership of media rights from the school to the conference. What this means is that the ACC, not FSU -- or any other member school -- owns the rights to broadcasts of games. Schools signed this in 2013 as a reaction to the departure of Maryland to the Big Ten, under the rationale that the grant of rights acts as an insurance policy that would prevent anyone from leaving the league during the duration of the agreement, which in this case is through 2036, because a school without TV revenue would have little value to any other conference or enough revenue to stand as an independent.
In other realignment scenarios, schools either waited out the grant of rights (the Pac-12's agreement ends in summer 2024) or paid a hefty buyout to leave early (Texas and Oklahoma paid $50 million each to the Big 12 to leave that agreement just one year early). Therefore, FSU is opting to challenge the validity of the grant of rights with legal action.
FSU filed a 38-page lawsuit in Leon County Circuit Court in Tallahassee that seeks a declaratory judgment against the ACC to void the grant of rights and withdrawal fee as "unreasonable restraints of trade in the state of Florida and not enforceable in their entirety against Florida State." FSU is represented by a team of attorneys at Greenberg Traurig, LLP, led by David Ashburn, managing shareholder of the firm’s Tallahassee office.
The suit included seven-counts, which are listed below.
First count: The penalty package for exiting the GoR along with a "severe" "withdrawal penalty" is estimated at more than $570 million. FSU complains that it violates Florida law.
Second count: Unenforceable penalty on the grant of rights penalty. Ashburn said the court can invalidate the fee or set a new, smaller fee for an exit.
Third count: Breach of contract. "So first and foremost, the ACC has failed to appropriately give FSU the value of its athletic program media rights back being diluted those agreements those rights going forward," Ashburn said.
Fourth count: Breach of fiduciary duty. "It tracks in many respects the contractual obligations and the ACC does have fiduciary duties to its members."
Fifth count: Fundamental failure of contractual purpose
Sixth/seventh count: Unconscionability and violation of public policy
Some notable takeaways from the board meeting that was made public via Florida law was that ESPN gave the ACC an "ultimatum" during the negotiation of the current deal in 2016 that there would be no further negations until the deal expires. Additionally, FSU has sought unequal revenue distributions based on success in the revenue generating sports, but the ACC has refused.
In response, The ACC preemptively filed a lawsuit against against Florida State in Mecklenburg County, North Carolina, on Thursday claiming the school is prohibited from challenging the grant of rights deal. "In light of Florida State's clear intention to take action, the ACC proactively filed a declaratory action yesterday in defense of the Grant of Rights, the Conference and each of its members," an ACC spokesperson said of the conference's filing.
The root of the issue is FSU's concerns over the growing revenue gap between the "Power 2" (Big Ten and SEC) and the rest of college sports. FSU estimated that the annual discrepancy could be approximately $30 million. FSU fears this gap will prevent them from competing at the highest level, and they aren't unreasonable in that belief.
Every lawsuit that involves the NCAA or a conference like the ACC is a must-follow for those passionate about the intersection of sports and the law, but this one involves an unprecedented issue that could shape the future of the college athletics landscape. A grant of rights document has never been challenged in this fashion, so it will be extremely interesting to see how the courts handle this suit.
If FSU is successful, other schools including Clemson, Miami, and North Carolina will likely follow FSU's lead. The ACC will likely stand strong and attempt to fight this to the bitter end, knowing that if FSU prevails, the league's outlook is extremely bleak. Venue will be a factor here, as obviously each side wants the case being heard in their respective state. Either way, every detail that comes out of this case is must-see news. FSU versus the ACC is just the latest lawsuit that will define the future of college athletics.
Brendan Bell is a 1L at the Sandra Day O'Connor College of Law at Arizona State University. You can follow him @_bbell5 on Twitter
