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FSU vs. ACC: How did we get here? Revenue issues, Grant of Rights and more

A breakdown of everything you need to know about FSU’s potential departure from the ACC, from its issues with the conference to why it hasn’t left

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FSU athletic director Michael Alford looks on as the Florida State Seminoles defeat the LSU Tigers 45-24 at Camping World Stadium in Orlando, Florida.
Charles Mays/Tomahawk Nation

Florida State’s Board of Trustees took the first step of leaving the ACC today, with members voting unanimously to legally challenge the Atlantic Coast Conference’s Grant of Right agreement.

“Today we’ve reached a crossroad in our relationship with the ACC,” FSU Board of Trustees chair Peter Collins said. “I believe this board has been left no choice but to challenge the legitimacy of the ACC grant of rights and its severe withdrawal penalties”

“They’re going to say we’re bitter...but actions today are less about the events of the last two weeks and more about the actions of the leadership of the ACC over the past 10 years and what confronts FSU in the 13 years.”

Speculation began stirring when reports surfaced earlier this week about FSU exploring its future in the ACC. ESPN’s Pete Thamel reported that Florida State will likely partner with Sixth Street Partners to help fund the ACC exit.

Florida State’s relationship with the conference has become increasingly strained over the last year. Florida State Athletic Director Michael Alford gave a presentation to the FSU Board of Trustees last February outlining the growing financial gap ACC schools will be facing compared to those in the Big Ten and SEC. Alford gave a blunt summation of the situation with “Something has to change.

Just prior to the annual ACC meetings in May 2023 news of the “Magnificent Seven” in the ACC sent shock waves across the college football landscape. It became known that Florida State, Clemson, Miami, UNC, NC State, Virginia, and Virginia Tech had explored possible avenues to leave the conference.

The ACC then undertook a controversial western expansion adding Cal, Stanford, and SMU despite objections from Florida State, UNC, and Clemson. This was speculated to be a move to act as a buffer against future defections.

Florida State’s snub from the College Football Playoff was the straw that broke the camel’s back. ACC commissioner Jim Phillips was largely absent while SEC commissioner Greg Sankey was on ESPN constantly lobbying for a spot for his conference. FSU becoming the first undefeated Power 5 conference champion to be left out of the playoffs confirmed the ACC’s spot as a 2nd tier league going forward.

It’s been a busy year with a few months since the last action in the saga, so here’s a breakdown of everything you need to know about FSU’s issues with the ACC, what is keeping it from leaving the conference and more.

What’s the deal with the Grant of Rights — and why did FSU sign it?

The reason why Florida State can’t just straight up leave the ACC is that in 2016, the schools within the conference extended a Grant of Rights agreement binding the rights to all their media content until 2036 — prolonging the life of a horrendously backwards-looking deal with ESPN that has been the source of the conference’s woes to this day.

The Grant of Rights “irrevocably and exclusively grants to the conference during the term all rights necessary for the conference to perform the contractual obligations of the conference expressly set forth in the ESPN agreement,” which basically means any money a school makes from a TV broadcast belongs to the ACC until 2036.

Tomahawk Nation’s Jon Loesche took a major deep dive into how it all went wrong despite the initial deal being on par with other conferences:

While the ACC managed to get comparable money to the SEC & Big Ten for its main TV rights, the league signed away all of its third-tier rights to ESPN as part of the deal for essentially nothing. ESPN then sub-licensed those to Raycom Sports for $50 million a year that it did not have to share with the conference. This was done at the behest of then-ACC Commissioner John Swofford, who wanted to keep Raycom as an ACC TV partner above all else in TV negotiations.

Swofford maintained it was due to Raycom’s long standing relationship as a media partner with the ACC. However, Swofford’s son was a Raycom executive and maintaining the rights to the ACC was a necessary lifeline after Raycom had lost the rights to the SEC the year prior. Whether it was an egregious example of nepotism or terrible lack of foresight to see where college media rights were going the deal has been an albatross around the neck of the league ever since.

Maryland specifically cited the ACC’s lack of future TV revenue in its decision to bolt for the Big Ten a year later. Attempts to renegotiate the deal with ESPN have come with giving up increasingly more for increasingly less. The original ACC Grant of Rights was created in 2013 after the Notre Dame deal as a way to get ESPN to increase media payouts & in 2016 the GOR was extended to 2036 to get ESPN on board with creating the ACC Network.

The decision to put pen to paper to sign the ACC Grant of Rights came down to then-president Eric Barron. Barron was an academic at heart that wasn’t personally invested in Seminole athletics. With more forward thinking athletic leadership in place around the time, perhaps Barron would’ve been convinced leaving the ACC would be in FSU’s long term interests. Instead, Barron publicly shot down any rumors that the Seminoles were seeking to join the SEC or the Big 12. Barron even publicly defended FSU’s membership in the ACC in 2012 when rumors of the Seminoles looking to join the Big 12 were at their loudest. Barron would eventually sign the newly drafted ACC Grant of Rights in 2013 before leaving to become President of Penn State University less than a year later.

Barron would be succeeded by former state legislator and FSU alumni John Thrasher. While Thrasher was personally invested in the success of both the university and athletics department, he would need better guidance from FSU’s top athletics officials than what had been offered previously. Randy Spetman’s replacement was former Duke Deputy Athletic Director Stan Wilcox.

In Tomahawk Nation’s article about Wilcox’s hire, it was asked

“How much does he know about multi-media rights, digital rights, third-tier rights, and the economics thereof. The question was asked because one source doesn’t believe people born before 1970 have a great grasp of those things. He wants to know how much Wilcox knows about those issues, and if he has someone helping him with that aspect of the job.”

The answer to those questions still have consequences for FSU to this day. Wilcox was a staunch supporter of FSU’s membership in the ACC and later the ACC Network. Wilcox projected the ACC Network could bring in $15 million a year for Florida State athletics. Thanks to those projections, Thrasher didn’t object to extending the ACC Grant of Rights through 2036 as a prerequisite for ESPN launching the ACC Network. Unfortunately the investments mandated by ESPN would propel Florida State athletics into yearly deficits of almost $4 million before Wilcox resigned to take a position with the NCAA in 2018. While the ACC Network has brought in new revenue, the upfront costs and the length of the contract have made the gains ultimately not worthwhile. In addition, as cord cutting continues the subscriber fees from the conference networks will largely dry up by 2036.

Why is Florida State unhappy?

The easy answer? Money — and there are still layers to that simple of an answer.

While making $36.1 million per school in 2020-21 (as the ACC did) seems like it should be enough, the SEC and Big 10 both outpaced it $54.6 million and t $47.9 million payouts, respectively.

With both conferences adding major names starting next season, the already wide gap is set to extend to a point that would make it, in the eyes of Florida State and other major players in the ACC, unsustainable to remain in the conference.

“We understand, especially at Florida State and a couple of other institutions, really understand the commitment of that gap that’s coming,” athletic director Michael Alford said in an interview with Tomahawk Nation earlier this year. “It’s a freight train. That’s barreling down the tracks... I’m very involved and looking at solutions. Because I can’t sit here. And for five years, it’d be 30 million behind every year. It’s not a one-year thing. And that makes a big difference, especially when you start compounding that year after year after year.”

At first, that led to FSU pounding the table about shifting the conference shifting to a different form of revenue model by highlighting its outsized value to the conference in several public meetings.

Florida State’s failing to receive revenue splits equivalent to its name-brand peers in other conferences sticks out even more when considering numbers previously shared by Alford showing that FSU would rank No. 3 in both the SEC and Big Ten for revenue generated before conference distributions showing that FSU would rank third in the SEC in revenue generated — ahead of schools like the Alabama Crimson Tide, LSU Tigers and Florida Gators.

University officials have also highlighted the program’s TV viewership numbers in comparison to its national and conference peers — with FSU’s brand quite clearly carrying the water for the conference even while the program struggled on the field from 2017-2021.

Since 2012 only 17 ACC regular-season football games have garnered over 5 million viewers. The Seminoles have played in 12 of them. Despite Clemson’s run of unprecedented success the Tigers never truly overtook Florida State as the conference’s primary TV draw. Over half of Clemson’s conference games with more than 5 million viewers have come against FSU with the others coming against Notre Dame in 2020 and Lamar Jackson’s Louisville squads.

Jon Loesche/Tomahawk Nation

During this most recent season, Florida State effectively lapped the rest of the conference in television ratings. All but one of Florida State’s regular season games were watched by at least 1 million television viewers. The lone exception was Southern Miss due to the game airing on ACC Network which isn’t measured by Nielsen. No other school in the conference had more than six games garner at least one million viewers.

Jon Loesche/Tomahawk Nation

For additional insight, here are the top 10 most viewed teams of the 2023 season, as researched by Brett McMurphy of Action Network:

Alabama 7.12 (11)

  1. Ohio State 6.05 (11)
  2. Colorado 6.00 (9)
  3. Georgia 5.90 (11)
  4. Michigan 5.61 (12)
  5. Tennessee 4.57 (7)
  6. Oregon 4.43 (10)
  7. Texas 4.26 (12)
  8. Florida State 4.16 (12)
  9. Notre Dame 4.15 (10)

Average viewers by million (Nielsen rated games)

Power 5 Breakdown (per game)

ACC: Florida State 4.16, Clemson 2.90, Miami 2.65, Duke 2.63, Louisville 2.37, North Carolina 1.93, Georgia Tech 1.83, Boston College 1.48, Pitt 1.37, Syracuse 1.20, NC State 1.13, Virginia Tech 1.02. Others: Virginia, Wake Forest.

Big 12: Texas 4.26, Oklahoma 2.61, Oklahoma State 1.96, TCU 1.70, Kansas 1.48, West Virginia 1.45, Iowa State 1.37, BYU 1.31, Kansas State 1.30, Texas Tech 1.30, Baylor 1.09. Others: Cincinnati, Houston, UCF.

Big Ten: Ohio State 6.05, Michigan 5.61, Penn State 3.66, Iowa 2.68, Nebraska 2.63, Michigan State 1.65, Wisconsin 1.61, Maryland 1.55, Minnesota 1.44, Indiana 1.26, Rutgers 1.14. Others: Illinois, Northwestern, Purdue.

Pac-12: Colorado 6.00, Oregon 4.43, Washington 4.14, USC 3.77, Utah 2.61, Oregon State 2.44, Washington State 2.15, UCLA 1.67, Stanford 1.64, Arizona 1.30, Arizona State 1.20, Cal 1.08.

SEC: Alabama 7.12, Georgia 5.90, Tennessee 4.57, LSU 3.79, Auburn 3.55, Missouri 3.25, Florida 3.17, Ole Miss 2.93, Texas A&M 2.74, South Carolina 2.69, Vanderbilt 2.46, Kentucky 2.07, Mississippi State 2.01, Arkansas 1.93.

Independent: Notre Dame 4.15.

What has the ACC done to try and fix the financial issues in the conference?

Two things: bringing in SMU, Cal and Stanford and “endorsing” a success-based revenue distribution model starting in 2024.

SMU will not receive any TV distributions from the ACC for seven years while Cal and Stanford will receive partial shares for several years. The expansion will add roughly $4 million a year per school for the rest of the ACC.

McMurphy reported in August that ESPN could renegotiate the ACC’s contract if the conference dropped below 15 members. After months of public infighting that saw Florida State all but declare it was doing everything it could to leave the conference, it isn’t a shock other ACC schools staunchly supported expansion as North Carolina, FSU and Clemson (the only schools that voted no) leaving the conference would cause the ACC’s TV contract to be massively devalued.

The major movement in finally admitting the new members was NC State flipping from a “no” to a “yes” — a decision never fully explained but the breadcrumbs were laid out in a piece by the News-Observer:

Less than two weeks after acknowledging that a West Coast expansion would be “a real stretch,” Randy Woodson voted in favor of it, pushing expansion past the finish line but just barely. He has declined to speak in depth about why he supported it — deferring questions to the league office — but Woodson did say recently, after a Centennial Authority meeting, that the deal surrounding expansion changed, and thus so did N.C. State’s outlook on it.

As late in the month as Aug. 19, Woodson expressed doubt that expansion was the right move for the ACC, or N.C. State. He shared his skepticism in an email exchange with Lou Bissette, an Asheville lawyer who earned his undergraduate degree from Wake Forest, his law degree from UNC and an MBA from Virginia. Bissette, a former Asheville mayor who also served as the chairman of the UNC System Board of Governors, contacted Woodson several times, at one point urging him to “please save the ACC.”

As for revenue sharing, no exact details on how it will be determined have been shared outside of it being “success” based rather than including TV ratings as advocated by FSU.

Per the ACC:

The specifics of the plan are in progress and will be solidified in the coming months. Under this initiative, the implementation of the success incentives will come solely from the performance of teams in revenue-generating postseason competition. All other revenues will continue to be equally shared as currently outlined.

According to ESPN, in the first year of the new system, what Florida State would have earned is estimated to be about $6 million in additional funds.

How would Florida State fund the exit?

To leave the ACC fully, Florida State would have to pay a $120 million exit fee and be able to effectively challenge and break the Grant of Rights in court.

After reporting on Tuesday night that FSU had once again begun discussing its future in the ACC, ESPN dropped another piece (this time from Pete Thamel) on what steps may lie ahead for Florida State — namely that private equity funding by way of Sixth Street Partners might be key to enabling an exit from the conference:

According to sources, Florida State officials and lawyers have gone to the ACC’s office at least a half-dozen times to dissect and analyze the legal language in the league’s grant of rights. They are one of many ACC programs that have done so, as copies are not permitted outside league offices.

Ultimately, there have been some breadcrumbs left that private equity money would be used to fill in any financial gaps for FSU.

The exit fee would cost FSU in the neighborhood of $120 million, but the important aspect is that amount doesn’t factor in the cost of unwinding from the grant of rights.

Florida State is well down the road in securing private equity, if needed, for any financial implications from a move. Sources told ESPN that Sixth Street Partners would be a likely partner for the Seminoles in private equity.

FSU, obviously, isn’t the only program that has explored leaving. But they are expected to be first to declare they’re legally challenging the grant of rights, per sources.

From there, Clemson and North Carolina are viewed as schools that could potentially follow. Neff said as recently as November that Clemson is “very active” in monitoring the realignment landscape.

Reports earlier this year had pinned Clemson and Florida State in lockstep, but that doesn’t appear to be how this would unfold. Clemson and North Carolina have been in close touch on this, per sources, and they’d likely observe and then follow FSU at some point. The timing of that might depend on both the legal read of what FSU’s doing and a snapshot of how difficult the path looks to follow them.