Florida State to sue ACC over grant of rights, withdrawal fee
The Florida State board of trustees voted unanimously Friday to file suit against the ACC to challenge the legality of the league's grant of rights and its $130 million withdrawal fee, a necessary first step to plot the school's future and potential exit from the conference.
"I believe this board has been left no choice but to challenge the legitimacy of the ACC grant of rights and its severe withdrawal penalties," board chairman Peter Collins said. "None of us like being in this position. However, I believe that we have exhausted all possible remedies within the conference and we must do what we believe is best for Florida State not only in the short term, but in the long term."
The university alleges the grant of rights and withdrawal fees violate Florida Statutes in restraint of trade and alleges breach of contract and breach of fiduciary duty with respect to the mismanagement of the ACC's longstanding multimedia rights deal with ESPN.
Florida State is now in unprecedented territory. No school has ever challenged a grant of rights in court.
ACC officials have previously used the word "ironclad" to describe the document, and that has been the operating assumption from leagues across the country -- believing the language in the document is so rigid it would prevent schools from leaving. But because no school has ever challenged the document in court, nobody actually knows whether it is, indeed, as ironclad as described.
At issue is what Florida State has described over the past year as not only growing revenue gaps with the SEC and Big Ten, expected to be $30 million annually per school, but disagreements over the way media rights money should be distributed within the ACC. Though the ACC recently adopted success initiatives to reward teams for performance in football and men's and women's basketball, Florida State has pushed for television money to be distributed unevenly based on media value to the conference. The ACC has refused.
"This is not where I would prefer to have ended up," university 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."
What happened Friday did not materialize over the past three weeks. While the College Football Playoff snub earlier this month was seen as a last straw, Florida State'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 the summer -- spurred forward after an August board of trustees meeting in which trustees demanded a plan of action by the following August.
At that meeting, Florida State made it clear it would consider leaving the ACC over its concerns.
"Our actions today are less about the events of the last two weeks and far more about the actions of the ACC leadership over the past 10 years and what confronts FSU in the ACC over the next 13 years," Collins said.
Florida State and all other ACC members signed a grant of rights with the league that runs through 2036, the length of its television contract with ESPN. The grant of rights gives the conference control over its media rights -- including television revenue and home game broadcasts in all sports. In addition, any school that wants to leave the ACC would have to pay an exit fee of three times the league's operating budget, or roughly $130 million.
All told, the university estimates the total exit fee, including the forfeiture of television revenue, would be $572 million.
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