The Florida State Board of Trustees voted unanimously Friday to sue the ACC, the league’s rights and its $130 million refund fee, a necessary first step in planning the school’s future and possible exit from the conference.
The 38-page lawsuit, filed in Leon County Circuit Court in Tallahassee, Florida, seeks a declaratory judgment against ACC to void the issuance of liens and withdrawal fees as “unfair restraints of trade in the State of Florida and wholly unenforceable.” against Florida State.”
The university alleges “chronic fiduciary mismanagement and bad faith” in the way the ACC handled its multimedia rights contracts and undermined its members’ revenue opportunities. Florida State accuses ACC of breach of contract and failure to perform.
“I believe this board has no choice but to challenge the legality of ACC grant rights and its severe withdrawal penalties,” said board president Peter Collins. “None of us likes being in this position. However, I believe we have exhausted all possible solutions within the conference and we have to do what we believe is best for the state of Florida, not just in the short term, but in the long term.”
Florida State is now in unprecedented territory. Neither school contested the grant of rights in court.
ACC officials have previously used the term “iron envelope” to describe the document, and that’s the operating assumption of leagues across the country — believing the language in the document is too tough to keep schools from leaving. But since no school has challenged the document in court, no one knows if it really is Iron Fist as described.
ACC Commissioner Jim Phillips and Virginia President Jim Ryan, chairman of the ACC Board of Directors, lamented Florida State’s “unprecedented and overreaching approach” in a statement.
“The State of Florida’s decision to take action against the convention is in direct conflict with their longstanding obligations and is a clear violation of their legal obligations to other members of the convention,” the statement said. “All ACC members, including Florida State, willingly and knowingly re-signed the current rights grant in 2016, which is fully enforceable and binding through 2036. Each university has benefited from the agreement, receiving millions of dollars in revenue. Nor can any other institution challenge its legality.” Didn’t.”
Florida State last year described growing revenue gaps with the SEC and Big Ten, expected to be about $30 million a year per school, but disagreements over how media rights money should be distributed within the ACC. While the ACC has recently adopted successful efforts to reward teams for performance in football and men’s and women’s basketball, Florida State has offered to distribute television money equally based on the conference’s media value. ACC refused.
“I don’t want to end up here,” said University President Richard McCullough. “I would have preferred another way, but in many ways I feel like we’ve exhausted all other options, and you can’t wish and hope that somehow they’re going to be fixed.”
What happened on Friday has not worked for the past three weeks. Although the College Football Playoff snub earlier this month appeared to be the last straw, Florida State’s legal counsel and an outside law firm spent more than a year reviewing the rights grant and began working on legal arguments this summer. At the August board of trustees meeting, trustees requested an action plan by the following August.
At that meeting, Florida State made it clear that it was considering leaving the ACC over its concerns.
“Our actions today are less about the events of the past two weeks and more about the actions of ACC leadership over the past 10 years and what FSU faces in the ACC over the next 13 years,” Collins said.
Florida State and all other ACC members signed a rights deal with the league that runs through 2036, the length of the television deal with ESPN. Granting rights gives the conference control over media rights — including television revenue and home game broadcasts — on all sports. Additionally, any school that wants to leave the ACC must pay an exit fee that is three times the league’s operating budget, or about $130 million.
All told, the university estimates the total exit fee, including the forfeiture of television revenue, will be $572 million.