FSU files lawsuit against ACC. Here's what it means and what comes next

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FSU files lawsuit against ACC. Here's what it means and what comes next

Ehsan Kassim, Tallahassee Democrat · Tallahassee Democrat

Sat, Dec 23, 2023 ·

8 min read

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The Florida State Board of Trustees unanimously approved a lawsuit to be filed in Leon County against the Atlantic Coast Conference , challenging the league's Grant of Rights agreement and withdrawal fee in an emergency board meeting Friday.

The board meeting was made public 24 hours before the official meeting, to meet Florida's Sunshine Law requiring meetings of public boards or commissions be "open to the public at all times."

The emergency meeting lasted less than an hour and was also streamed live on YouTube, drawing in thousands of views across the nation.

FSU is represented by a team of attorneys at Greenberg Traurig, LLP, led by David Ashburn, managing shareholder of the firm's Tallahassee office.

Ashburn presented the case for the lawsuit , laying out seven counts against the ACC and why FSU should be able to leave without penalty.

A current withdrawal penalty of at least $572 million would exist for FSU to exit the ACC.

"This is not where I would prefer to have ended up," FSU President Richard McCullough said. "I would prefer a different pathway, but I feel in many ways we've exhausted all other options and you can't wish and hope that somehow they'll get fixed."

"Today (Friday) we've reached a crossroads in our relationship with the ACC. We are faced with the fact that the ACC is locked into a deteriorating media rights contract with revenues far below other conferences. The ACC leadership is also not interested in further negotiations. on unequal revenue sharing or larger success initiatives," FSU Board of Trustees Chairman Peter Collins added.

The ACC immediately fired back Friday, suing FSU in response to the Seminoles' lawsuit. The ACC's civil action suit was actually filed Thursday in Mecklenburg Superior Court in Charlotte, North Carolina.

In response to FSU's lawsuit, a joint statement from ACC Commissioner Jim Phillips and Chair of the ACC Board of Directors Ryan Chair, said in part, "Florida State's decision to file action against the Conference is in direct conflict with their longstanding obligations and is a clear violation of their legal commitments to the other members of the Conference."

Here are our takeaways from the meeting.

Long time coming for FSU, ACC

The lawsuit is not a result of the Seminoles being snubbed from the four-team College Football Playoff field despite an undefeated season and conference championship.

This lawsuit is years in the making, as FSU has long believed it has not been receiving its fair share of value for what the university and specifically the football program bring to the table.

FSU's legal counsel and an outside law firm have been reviewing the grant of rights for well over a year and began working on legal arguments since last summer.

In an August Board of Trustees meeting, McCullough had some strong comments about the Seminoles' future in the ACC. He called t an 'existential crisis' of being $30 million a year behind other major conferences in the SEC and Big Ten in revenue gap.

The gap is now only growing.

"When FSU joined the ACC in 1991, the gap in revenue between teams in some of the 10 power five conferences and the ACC was less than $7 million," Collins said. "Florida State has always been able to overcome any such deficit through internal fundraising to make sure its programs are funded at elite levels. In fact, if you took the value of the various conference TV contracts out of last year's athletic budgets in the NCAA, Florida State's budget was the seventh highest in the nation.

"Unfortunately at the same time, Florida State's annual payout from the ACC is the smallest and percentage of any school's overall athletic budget and the conference next year the funding gap between the ACC and the two other conferences will grow to over $30 million per team per year.

"It's one thing to fundraise and make up $7 million. It's another entirely to make up over $30-to-40 million annually."

The ACC struck its initial media rights agreement with ESPN in 2011 and renegotiated it in 2012 to include a schedule of annual Tier I cash payments for nationally broadcast football games through 2027.

ACC members currently receive roughly $33 million each in Tier I payments and payments for regionally broadcast games.

Rather than wait to negotiate better terms in 2027, however, the ACC granted ESPN a unilateral option to extend the Tier I contract until 2036 without receiving additional compensation.

"The underperformance by the ACC has ramped up dramatically in just the last few years," Collins said. "The ACC has also unfairly — and we believe illegally — sought to prevent members from exploring their fundamental right to withdraw by threatening to impose an astounding and pernicious half-billion-dollar penalty. It's simply unconscionable."

Counts FSU is suing on

Before the board approved the lawsuit, Ashburn laid out the counts FSU is seeking to challenge the Grant of Rights.

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

Could this be enough to rule the ACC violated its contract with FSU and get them out of the GoR scot-free?

That remains to be seen.

For its part, the ACC released a statement and believes it did nothing wrong.

"Florida State's decision to file action against the Conference is in direct conflict with their longstanding obligations and is a clear violation of their legal commitments to the other members of the Conference. All ACC members, including Florida State, willingly and knowingly re-signed the current Grant of Rights in 2016, which is wholly enforceable and binding through 2036. Each university has benefited from this agreement, receiving millions of dollars in revenue and neither Florida State nor any other institution, has ever challenged its legitimacy," Friday's ACC press release read.

"As a league, we are proud of the successes of our student-athletes and that the ACC has won the most NCAA National Championships over the past two and half years while also achieving the highest graduation success and academic performance rates among all FBS conferences, so it is especially disappointing that FSU would choose to pursue this unprecedented and overreaching approach.

"We are confident that the Grant of Rights, which has been honored by all other universities who signed similar agreements, will be affirmed by the courts and the Conference's legal counsel will vigorously enforce the agreement in the best interests of the ACC's current and incoming members."

No immediate action was taken. Legal fight could drag on

Ashburn made it clear that FSU was not seeking an immediate response from the courts. Rather, FSU was open for discussions. So don't count the Seminoles out of the ACC, just yet, although that is the likely scenario at the end of the road.

FSU did make it clear it would consider leaving the ACC over its concerns if they are not addressed.

"We have not asked for any immediate relief from the court. In other words, there's not going to be a preliminary injunction hearing or anything of that nature that we request we're simply going to pursue the normal course of litigation," Ashburn said.

Ashburn said the hope is that FSU and the ACC, along with other schools can have "meaningful discussions" about the future of the conference.

Clemson and North Carolina are two other schools that have been vocal about issues with the current set up.

"That sets in motion the litigation process where we have the opportunity to gather additional information, request and obtain actual copies of agreements that we otherwise have to go to the ACC office to idle and then have the opportunity to review those," Ashburn added about the next steps.

"And then it's hopefully I think that we can have some meaningful discussions. I think it's reasonable to expect that other schools are going to read the story and the complaint that some of them may have read before or heard understood before, and some may not."

FSU would need to notifie ACC its intention on leaving league before August 2024. The Seminoles have not done this, yet.

The earliest Seminoles could leave ACC would be June 30, 2025 and then join a new league on July 1, 2025.

FSU is 'looking for an equitable, competitive environment'

FSU being denied a chance at the College Football Playoff is not the reason for the lawsuit, but it might have been the straw that broke the camel's back.

Former FSU quarterback and current board member Drew Weatherford near the end of the meeting expressed what he wanted to see as a former player, after the Seminoles' snub.

"All we're looking for is an equitable, competitive environment where teams competing for a championship are waking up and playing by the same rule, and that's frankly not the environment that we're in," Weatherford said.

"…We're looking for the best interest of our student-athletes and our university, but we're also fighting for just equitable competition, which I think everybody can get behind and be supportive of."

Reach Ehsan Kassim at ekassim@gannett.com or follow him on Twitter at @Ehsan_Kassim. You can also follow our coverage on Facebook (NoleSports), Instagram (tlhnolesports) and YouTube channel (NoleSportsTD).

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This article originally appeared on Tallahassee Democrat: Takeaways from FSU suing ACC over grant of rights deal

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