ACC takes key step in resolving lawsuits involving Clemson, Florida State

The ACC took a key step in resolving the lawsuits involving Clemson and Florida State, according to ESPN’s Pete Thamel.

“Sources: The ACC Board of Directors has voted to agree to changes in the financial distribution model/buyout clarity for the league that marks a key step in the lawsuits brought by Clemson and FSU being dropped,” Thamel wrote in a Twitter thread. “This is the first of three expected steps today.

“Clemson and FSU have board meetings later today where they are set to agree to drop the four lawsuits. As ESPN reported yesterday, these are all expected steps to bring near-term stability to the league.”

ESPN’s Andrea Adelson had more details on the settlement:

“Exit fee is expected to drop by $18 million each year through 2029-30,” she wrote on Twitter. “After that, exit fee drops to $75 million and any exiting team will retain is media rights.”

In December 2023, Florida State filed a lawsuit against the ACC, expressing its concerns for the financial implications and potential exit penalties associated with leaving the ACC. Only three months later, Clemson followed suit, filing a lawsuit against the ACC over the terms of the grant-of-rights agreement, which grants the conference control over media rights revenues for its member institutions.

Both schools argued the ACC’s financial model put them at a disadvantage compared to the programs in the Big Ten and the SEC. Specifically, the schools weren’t satisfied with the ACC’s media rights deals, which led to lower revenue shares than some of their competitors across the country.

ACC votes, resolution coming to lawsuits involving Clemson, Florida State

The ACC was reportedly set to propose a new deal that would solve some of these problems. It seems that is now moving forward.

“This new revenue-distribution model — or ‘brand initiative’ — is based on a five-year rolling average of TV ratings, though some logistics of this formula remain tricky, including how to properly average games on the unrated ACC Network or other subscription channels,” according to ESPN. “The brand initiative will be funded through a split in the league’s TV revenue, with 40% distributed evenly among the 14 longstanding members and 60% going toward the brand initiative and distributed based on TV ratings.

“Top earners are expected to net an additional $15 million or more, according to sources, while some schools will see a net deduction in annual payout of up to about $7 million annually, an acceptable loss, according to several administrators at schools likely to be impacted, in exchange for some near-term stability.”

In short, the new model would reward schools generating the most revenue and, thus, increasing the conference’s media appeal. Schools will also be able to reel in additional revenue by making deep runs in the College Football Playoff or NCAA Tournament due to the “success initiatives” approved in 2023.

Grant Grubbs contributed to this report