The Florida State-ACC negotiation will set the terms for more college football realignment

As we wait for the commissioners who run the College Football Playoff to vote this week on the precise format for the first edition of the 12-team tournament, remember that this version might also be a short-term fix. The commissioners seek to reduce by one the number of automatic bids because the Pac-12 imploded, but they do this keenly aware of the possibility that this solution might only work for the 2024 season.

Why?

Because the ACC opened the door Friday afternoon for the next potential round of realignment. On page 20 of a 40-page filing that asks for a dismissal or a stay of Florida State’s lawsuit against the conference in Florida’s Leon County, the ACC’s attorneys signaled a path to a logical endpoint in a case being litigated in two different states. The next move after that endpoint is probably yet another reshuffling that will once again alter our perception of which conferences hold how much power.

The ACC, whether intentionally or not, indicated a willingness to negotiate with Florida State. It raised the possibility that there is a yet-to-be-agreed-upon dollar amount that would allow the Seminoles to leave the conference. It’s highly doubtful anyone in the conference office would admit this publicly now, but the inclusion of this language in a public court filing feels like proof enough that the divorce is going to happen. Now it’s just a matter of how much alimony gets paid.

How much will Florida State have to pay to get out of the ACC? Or, perhaps more appropriately, what is Florida State willing to pay to get out of the ACC? Is it $250 million? Is it $300 million? Is it more?

Here is what the ACC attorneys wrote in the document filed Friday in Leon County court: 

“…Florida State alleges that the Grant of Rights, as extended, is also a ‘punitive penalty’ upon a withdrawing member (referring to the ‘additional, crippling penalties’ in the Grant of Rights). But there is no provision in the Grant of Rights that could possibly serve as a penalty and, indeed, there is no reference to a monetary payment at all if a Conference member elects to withdraw from a Conference. Rather, the Grant of Rights simply provides that the media rights of all members will remain with the Conference through the term of the agreement. Florida State imagines that this means it has forfeited future revenue as a ‘penalty.’ It posits that the fact that it may choose to repurchase its rights before the end of the term of the Grant of Rights (if it someday withdraws), somehow constitutes a penalty. But in so arguing Florida State misunderstands the nature of this transaction. Florida State (twice) assigned its media rights for a specific term to the Conference for the purpose of entering into agreements with ESPN. The Conference thus controls those rights for that term. If Florida State wishes to regain control of the rights before the end of the term, it could attempt to repurchase them. But having to buy back a right which was assigned is not a penalty; it is simply a commercial possibility. Paying a fair price for rights that were previously transferred cannot be a “penalty” under any reasonable definition of the term.” 

This passage refers to the grant of rights agreed upon by Florida State and other ACC members that gives the conference control of each school’s television rights for home sporting events for a predetermined term. In this case, that runs until June 2036, when the ACC’s current media rights deal with ESPN expires. The actual grant of rights is deliberately vague, and the ACC’s attorneys correctly point out that it does not stipulate any financial penalties should a school try to break the agreement.

But by saying “it is simply a commercial possibility” that a school could buy back its rights, the ACC’s legal team seems to invite a negotiation. No one to this point had admitted publicly that the GOR could be bought out, even though everyone suspected it could be. This moves the parties closer to the brass-tacks discussion of what it might actually cost.

Florida State’s attorneys estimated the combined cost of paying the ACC’s exit fee and buying out the GOR would cost $572 million. That’s the ceiling. The lawsuit Florida State filed contends that the withdrawal fee and any penalty requiring the buyback of rights would be unenforceable. Total victory in court would mean Florida State would have to pay $0 to get out of the ACC. That’s the floor. But while it is the floor in the ACC’s worst-case scenario, it’s not really the floor in a negotiation. That number likely is somewhere around $150 million. If the ACC threw out that number in the morning, Florida State would be out of the league by lunchtime.

Make no mistake, a negotiation is going to happen. The potential outcomes at trial are disasters for Florida State or the ACC. Should Florida State lose, it could be stuck in the ACC no matter how much it’s willing to pay. Should the ACC lose, Florida State, Clemson, North Carolina, Miami and any other school that wants to leave could walk away scot-free. 

The number likely will land somewhere near the middle of that $150 million floor and that $572 ceiling. Then Florida State will pay. And while neither the Big Ten nor the SEC have expressed any public interest in the Seminoles, it seems highly likely one or both leagues would then try to scoop up Florida State as well as the other desirable properties that choose to buy their way out once Florida State breaks the seal. 

Given the seeming inevitability of a negotiation, it almost doesn’t matter if the Big Ten or SEC are interested now. If several potentially additive programs buy their way into free agency at once, the competitiveness of the true Power 2 could take over. The Big Ten would see an opportunity to plant its flag in the South. The SEC might feel a need to defend its borders or expand its footprint.

Even if the cost to exit is $300 million or $350 million and Florida State (and/or the others) exits prior to the 2025 football season, it’s not a bad deal for the schools. A school in the Big Ten or SEC is going to make at least $35 million more from its conference than a school in the ACC as currently constituted. With 11 years remaining on the ACC deal at that point, it’s nearly a break-even proposition with a brighter future on the back end. 

So before we get too wrapped up in the CFP format beyond this season or the number of future conference games in the SEC, let’s wait to see how the impending negotiation between Florida State and the ACC goes. Because the terms of the divorce will set the stage for everything else that comes next.