By: Patrick Paulsen

The world of college sports is constantly changing. With the rise of name, image, and likeness (“NIL”), direct payment of players, and licensing in video games, the world of college athletics is a hotbed of legal activity. In addition, massive TV rights deals have caused seismic shifts in college sports, including the demise of the Pac-12. Much is at stake and even more is in flux, so it is no surprise that a new battle is emerging over another major college sports conference: the Atlantic Coast Conference (“ACC”). 

The Latest Conference Shift in College Football

Two of the ACC’s member schools, Florida State University and Clemson University, have engaged in legal battles to potentially leave the conference. Although Florida State’s snubbing from last season’s College Football Playoff was likely the straw that broke the camel’s back, the true motivating factor, as with the demise of Pac-12, appears to be money. “ACC members make roughly $30 million less per year than schools in the Big-10 and SEC.” As with other conferences, the ACC is held together by its grant of rights, an agreement whereby its member schools transfer their media rights to the conference to negotiate media deals collectively on their behalf. 

The ACC’s grant of rights is at the root of this legal battle and is why this conference’s potential breakup differs considerably from the Pac-12 or Big-12 realignments. The ACC’s grant of rights functions to protect the conference from realignment by providing the conference with each school’s media rights through 2036. In addition, the ACC’s constitution imposes a hefty exit fee, around $130 million for Florida State. Compared to other conferences such as the Pac-12 (whose grant of rights expires in August) or the Big-12 (whose exit fee is approximately $50 million), these hurdles to exit are substantial. Florida State estimates their total exit cost at around  $572 million to leave the ACC, hence the current litigation. 

The ACC and Florida State Litigation

This legal saga began in earnest on December 21^st, 2023 when the ACC preemptively sued Florida State, likely to maintain the action in North Carolina State Court rather than a Florida court. Florida State’s Board of Trustees sued the ACC the following day, before the news of the ACC’s suit became public. The amended complaint filed by the ACC seeks “a declaration that Florida State is equitably estopped from challenging the validity or enforceability of the grant of rights” along with injunctive relief requiring Florida State to uphold its obligations to the conference and their agreements. 

Florida State’s lawsuit argues several legal theories, notably that the grant of rights is unenforceable as an “unreasonable restraint of trade” under Florida Statute 542.18, that the exit fees are unenforceable penalties due to being unconscionable and contrary to public policy, and that the ACC materially breached its fiduciary duties and contracts with Florida State. Florida Statute 542.18 is an antitrust that has recently been utilized to the benefit of Florida based firms outside the realm of sports.

The jurisdiction of these suits is likely as important as the claims. These differing lawsuits filed in differing state courts create hard to resolve issues, such as the battle over trade-secrets, when the controversy is viewed in totum. 

These lawsuits have clear third-party impacts: ESPN filed a motion in the North Carolina litigation supporting the ACC, alleging that Florida State’s attorneys may have “committed a felony by knowingly disclosing ESPN’s trade secrets.” Florida State’s filings contained non-public details from the media agreements between the ACC and ESPN. Meanwhile, in Florida, the Attorney General sued the ACC for refusing to publicly disclose the same agreements, claiming that under Florida law, they constitute public records due to the involvement of a government entity (Florida State University). 

Clemson Joins the Fray

In addition to the two lawsuits battling Florida State, Clemson University brought suit against the ACC. In what has been called a “pincer attack,” the Clemson lawsuit attacks the ACC’s exposed flank by picking up legal theories which fill the gaps left by the Florida State claims. Clemson’s suit embodies two main legal theories. The first is that § 1.4.5 of the ACC’s Constitution, which imposes an exit fee “equal to three times the total operating budget” of the conference (approximately $140 million), is unenforceable as it constitutes a “financial penalty” that is “unconscionable” and “against public policy.” The second theory claims that the conveyance of media rights in the ACC’s grant of rights should be interpreted to encompass only the rights to athletic events which occurred during a member university’s tenure as a member. 

Clemson argues that the exit fee for the conference has “ballooned to a point that was unimaginable in 2012, and is unconscionable, unenforceable, and in violation of public policy . . . .” Clemson is arguing that the common interpretation of the grant of rights is incorrect, and that instead of a blanket grant of media rights, the grant of rights is limited to those rights which are “necessary for the Conference to perform the contractual obligations of the Conference expressly set forth in the ESPN Agreement.” Clemson claims that this phrase makes the grant narrower than commonly believed, by limiting their conveyance of rights only to events which occur while they are members of the ACC, and not for the length of the agreement, regardless of conference affiliation. 

If successful on these points, Clemson’s cost of leaving the ACC would drop from around $572 million to somewhere around the $30-50 million that other conferences require. With so much at stake, the future of the ACC is unclear; however, there are some clues to what may happens next.

Can a Solution Be Found?

With three different lawsuits in as many states, each concerning particular state law claims, the chances of suits being removed and consolidated to federal court are low for the immediate future. Because each party is hoping for a “home court advantage” in their respective jurisdictions, neither side is motivated to consolidate to a neutral forum. In addition, Florida State is invoking sovereign immunity to argue a North Carolina court does not have jurisdiction. This, and other maneuvers, such as appeals and various procedural motions, will likely keep the cases open in each jurisdiction until a final judgment is reached on a  given issue. A favorable ruling to a party would allow one side to argue, based on the “full faith and credit” clause of the Constitution, that other states must accept their ruling. Should each side find favorable rulings in their home state, all bets are off as to how the “full faith and credit” clause will be interpreted to untangle everything, and resolution by the U.S. Supreme Court enters the realm of possibility. 

Due to court cases likely taking years to play out, and with the August 15^th deadline to withdraw from the conference for the 2025-26 season approaching, there is a high incentive to settle or mediate outside of the courts. However, the perfect solution may be hard to determine with hundreds of million dollars at stake. How motivated to leave the ACC are Florida State and/or Clemson? How much are schools such as Florida State willing to pay to escape the ACC? As early as last August, Florida State initiated discussions with JP Morgan regarding raising the necessary exit fees through private investment. Other ACC member schools, such as North Carolina, are rumored to have interest in leaving the conference. There may be as little predictability in a settlement as there would be with these cases proceeding to trial. 

Conclusion

The merits of these cases have yet to be evaluated in each jurisdiction, so the sports and legal worlds will have to wait. Should settlements fail, any court decision will change the landscape of the ACC and the fortunes of its member universities by hundreds of millions of dollars. The docket watching may prove to be as exciting as any ACC athletic event, as all interested parties await even more shock waves through the dynamic world of college athletics.