The ACC and its two restless members — Clemson and Florida State — are inching closer to finalizing a settlement that could allow for league schools to buy back years of their media grant of rights and allow for defections from the conference earlier than the current 2036 timeframe.
The agreement would see Clemson and Florida State end their litigation in exchange for a change to the conference's revenue distribution structure and clarity around the grant of rights, sources tell Yahoo Sports. The agreement — originally reported in September — is expected to be finalized as soon as Tuesday.
ACC presidents are expected to meet Tuesday morning, sources say. Any agreement is subject to a vote from ACC presidents. The board of trustees at both Clemson and Florida State are expected to meet later on Tuesday to discuss any settlement, a separate source told Yahoo Sports.
The schools, each having filed suit against the conference over the last 15 months, have been engrossed in negotiations with the ACC in an effort to increase the revenue that the league distributes to them as well as see the grant of rights shortened, amended or clarified in some way. The settlement is expected to define the penalty fee that any school would owe for breaking the grant of rights — an agreement that binds ACC schools together through 2036 and is tethered to the league’s ESPN television contract.
The change to the revenue distribution structure is, perhaps, the most interesting piece of this settlement puzzle and could pave the way for other leagues to distribute revenue unevenly.
Under the proposal, the conference would create a new revenue concept that awards significant dollars to programs achieving higher television ratings and viewership in football and basketball, among other factors. The revenue formula would be based on a five-year rolling average of Nielsen ratings generated by each league school, a source said. The media value initiative is expected to distribute millions to members in decreasing payments — from most watched to least.
Though the new initiative is available to all programs, Florida State and Clemson routinely draw the most viewership among their conference peers and stand to earn eight-figure payouts.
The media value initiative is not a wholly new idea. In 2023, FSU athletic director Michael Alford told board members during a presentation that the conference distribution formula should reflect viewership and other media value metrics.
An additional component would reward more league revenue to schools who invest more into athletics — another metric that would likely favor Florida State and Clemson.
The proposal comes after the conference approved last year what it describes as a “success initiative,” a system that distributes more revenue to teams that excel in football and basketball. That initiative rewards high-performing football programs as much as $25 million if all success benchmarks are met, such as qualifying for a bowl game, finishing inside the top 25 and advancing through the College Football Playoff.
The initiative — as well as this new media value bonus pool — is an attempt for commissioner Jim Phillips and league administrators to reward winning in a way that helps close the financial gap between the ACC and the two richest conferences: the SEC and Big Ten. The difference in payout for the school that ranks first in the ACC and 18th could be up to $20 million annually, a source projected.
The ACC’s television contract, struck years ago, is a point of contention for many of its members. The deal with ESPN pays the conference a fraction of what the SEC and Big Ten earn from their television partners. The gaps in television distribution — at the heart of the FSU and Clemson litigation — could soar to more than $30 million per school within the next two years.
Television contracts provide schools their main source of revenue, at some places responsible for one-third of an athletic department’s budget. It is the driving force for the most recent wave of conference realignment, as schools eschew historic rivalries and geographic footprints to shift to leagues with TV deals that pay out more money.
The settlement with the ACC is expected to provide a defined penalty fee to FSU, Clemson and all other members that wish to, at some point, exit the conference and break the grant of rights. The ACC’s grant of rights quite literally grants the television rights of member schools to the league. There is no established financial penalty for leaving, but any exiting member would risk the conference enforcing the agreement and remaining in control of its television rights.
The settlement is believed to establish financial penalties for leaving before the grant of rights expires after the 2035-36 academic year, presumably a penalty structure that decreases with each year closer to the end of the agreement.
However, there is a separate exit fee that is more defined in league bylaws, requiring an exiting member to pay two year’s worth of per-school distribution. Stakeholders believe that the next major shift within the industry will come between the years 2030-32, when a litany of events could trigger sweeping changes in a college sports landscape already made unstable as it shifts into a more professionalized model.
During those years, the Big 12 and Big Ten television contracts end. The NCAA men’s basketball tournament and College Football Playoff television deals end as well. The sport will also be five years into the athlete revenue-sharing concept in college sports that many expect to more formally divide the richest schools from all of the rest — a long-discussed splintering among the Football Bowl Subdivision’s 134 schools.
Also a part of any long-term agreement, the league’s biggest brands — Florida State, Miami and Clemson — are expected to play more football games regularly with Notre Dame. The Irish are expected to play, at the very least, two of the three each season in a rotation. Those games are almost certain to be among the most watched ACC contests each year.
Clemson and Florida’s State’s willingness to remain in the conference is, for some, a shocking revelation and an about-face from their previous actions.
School officials have felt that, if they are legally unhinged from the ACC’s grant of rights, there will be takers. But it is unlikely that any SEC or Big Ten school will agree to accept a reduction in their TV distribution to add any school — something Yahoo Sports reported last spring. For the SEC, that is especially so given its footprint: the league already owns a foothold in South Carolina and in Florida.
In order for the Big Ten and SEC to expand, they’d likely need more money from their television partners — a lot more money (more than $100 million a year). That’s primarily Fox for the Big Ten and ESPN for the SEC.
The settlement is seen as a solution — perhaps maybe temporarily — to avoid any court decision over the validity of the grant of rights. Just last week, the Florida Supreme Court declined to take up a request from the ACC to delay a lawsuit by FSU scheduled to be heard this spring in Tallahassee. A potential loss in court that immediately opens the grant of rights could have a catastrophic impact not only on the ACC but other conferences, setting a precedent for all schools to break what were at first thought to be binding agreements.
