“Something has to change:” FSU AD Michael Alford talks ACC financial outlook

“We cannot be $30 million behind every year compared to our peers.”

At a Florida State University Board of Trustees meeting on Friday, athletic director Michael Alford didn’t mince words when discussing the school’s potential outlook in the coming new world of college athletics.

“We have to do something because we are a brand — a very important brand — and we drive the media value in this conference. We’re consistently talking to the conference,...making sure that they understand our value to this conference.

“But at the end of the day, for Florida State to compete nationally something has to change moving forward.”

With the Oklahoma Sooners and Texas Longhorns paying $50 million to leave the Big 12 and join the SEC in 2024, the same season that the Big Ten is set to welcome USC and UCLA, the impetus for Florida State to position itself for future success has elevated that much more.

The key issue for FSU, as a reminder, has been the ironclad Grant of Rights (GOR) that all ACC teams re-signed in 2016. The agreement “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.

“Right now, when you throw everything in, we receive about $42 million — $30 million behind our competitors and peers across the country, and that’s $30 million every year,” Alford said, noting that the gap could continue to grow as conferences exercise their flexibility around media rights.

“Each conference gets to go to the open market before our deal is even up...some of them a couple of times — so that [deficit]number is even going to get larger.”

At one point, a Florida State Board of Trustee member asked about the possible cost for leaving the conference — just the conference, not the GOR — with Carolyn Egan, FSU’s vice president for legal affairs and general counsel, saying that the exit fee would be roughly three times the conference’s annual operating budget and estimating the cost to be around $120 million.

Alford, after being asked by a board member, said “hypothetically” it was possible that FSU would break even within four years with the increased revenue from leaving the ACC.

That number would appear to only be the exit fee from the ACC. Acquiring FSU’s media rights back from the ACC would be another matter. Based on what Texas & Oklahoma paid to the Big 12 that number could be another $400 million the school would need to come up with to regain its television rights from the conference.

FSU has devoted more resources to understanding the GOR than any other school in the conference. The “hypothetically” in Alford’s answer could imply FSU feels it has a strategy to deal with the GOR outside of cutting a half-a-billion dollar check to the conference.

Compiled before the Big Ten agreed to a new media rights deal that is set to eventually pay members $100 million dollars per year, data analysis firm Navigate put together future potential conference distribution projections which have the ACC dead last:

Navigate

Some numbers from Alford (partially obscured by technical difficulties on webstream):

Florida State 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:

“It speaks volumes to what we’re able to do with sponsorships and licensing, the contracts we’re able to negotiate, our donor support,” he said, also sharing numbers of how FSU stacks up against the average school in each conference.

According to numbers he shared, if conference distributions were removed (TV contracts, postseason payouts, etc.), FSU would rank third in the SEC in revenue generated — ahead of schools like the Alabama Crimson Tide, LSU Tigers and Florida Gators.

When comparing against Big 10 schools, Florida State ranks third, behind the Ohio State Buckeyes and Michigan Wolverines but ahead of the Penn State Nittany Lions, Iowa Hawkeyes, Wisconsin Badgers, and others.

A topic that received plenty of attention was the concept of unequal revenue splitting — a change in finances that could at the very least soften the blow for FSU as the conference falls behind.

It’s been a model that’s already been discussed within the ACC, and one that Tomahawk Nation has taken a look at already to analyze both the impact on Florida State and why the rest of the conference would even go for it:

So why would the rest of the ACC essentially take a pay cut to keep FSU happy? Let’s take a look at the league’s west coast counterpart.

ACC schools that don’t have a chance of landing a spot in the SEC or Big 10, are watching their future playout with the PAC-12 leftovers. The PAC-12 sent out the corporate press release equivalent of a “this is fine” meme just in time for reports to surface that CBS, Turner, and FOX had backed out of TV negotiations. Amazon appears to only be interested in carrying the league’s top football game each week and ESPN reportedly lowballed the league by $200 million a year. Keep in mind, the league still has two programs that have made the playoffs in Washington and Oregon — teams that offer more than anything the ACC could offer without FSU and Clemson. The relative pay cut the rest of the ACC would take now is probably less than when the ACC will eventually have to renegotiate without its premier programs.

Alford shared numbers on Friday that re-emphasized how crucial Florida State is to the ACC brand, saying the school makes up an estimated 15 percent of the ACC’s TV rights value but only receives around 7 percent of the distribution. According to FSU, the Seminoles are the most-watched team in the ACC since 2014 and earn 70% more viewers than the ACC average.

From our aforementioned “How could unequal revenue sharing impact Florida State and the ACC?” piece:

Florida State and Clemson were the only ACC teams to play in multiple games that drew over 4 million TV viewers. In fact, only one of the 18 games involving ACC teams that drew 3+ million viewers last year was a conference game that didn’t feature Clemson or FSU. One 2022 study looked at how potential conference realignment moves would impact conference TV ratings and it wasn’t pretty for the ACC. If Miami, FSU, and Clemson left the ACC, the conference would rank dead last amongst the power conferences and it would fall below even The American.

An estimated look at what an uneven distribution model could look like in the ACC came via @ricobert11, with FSU leading the conference at $61.6 million and Duke bringing up the rear at $19.8 million.

As the new reality of college athletics continues to set in, the need for Florida State to find financial solutions to prevent the gap between major names continues to increase.

And while those answers are still months (or more likely, years) away, Alford and FSU officials are aware of how important finding them is to ensure that the school can keep up with the Joneses.

“We’re in the weeds on everything that will impact the future of FSU revenues,” Alford said, noting that every hypothetical from sponsorships to ticket sales to another round of conference expansion has been considered and analyzed, all the way out to 2042.

“If the Big 12 was to get some teams from the Pac, that is going to open up some windows. If the Big Ten goes and gets some other teams from the Pac that are left out, you are going to open up other media windows.”

“We’re working every day. The president and I are talking daily about our future.”