'A large paradigm shift' ... ACC changes revenue model, exit fees; FSU, Clemson drop lawsuits

After about 30 minutes in closed session early Tuesday afternoon, the Florida State Board of Trustees agreed to drop the university’s lawsuit against the ACC in exchange for a restructured revenue agreement and an easier path out of the conference.

The FSU decision, coupled with similar actions Tuesday from Clemson University and the ACC’s presidents, clear the way for the conference to stay together in the short term but cast real doubt on its ability to remain intact for the long haul.

In outlining the terms of the new agreement, FSU General Counsel Carolyn Egan described it as, “a large paradigm shift in revenue sharing and conference exit with media rights, from the world that we existed in before.”

It’s a paradigm shift, indeed.

As opposed to all ACC schools sharing television revenue equally, as has been the norm for most athletics conferences, 60 percent of that money now will be divided between the schools according to a “ratings-based model.” So a school like Florida State, for example, will stand to receive substantially more than schools with lower average TV ratings.

According to FSU sources and other media reports, that could mean an additional $15 million to $20 million per year for the Seminoles, while some ACC schools will see an annual reduction of up to $7 million. And these changes will go into effect immediately, for the 2025-26 year.

“This is good for Florida State,” Board of Trustees Chair Peter Collins said. “This is really good for Florida State. … We wouldn’t be here today approving this if it wasn’t a good outcome for Florida State.”

Egan told the Trustees that Florida State’s historical research shows FSU will consistently be at the top of the conference heap when it comes to television ratings.

“Year over year, our viewership is steady for decades,” Egan said. “People watch. People watch us. Maybe they love watch us, maybe they hate watch us. But they watch.”

The other key component of the new agreement is an established exit fee that will decline substantially over the next several years.

If a school leaves the ACC in the coming year, it will owe an exit fee of approximately $165 million (that’s three times the conference’s annual operating budget.) Each year after that, the fee will decrease by $18 million to a flat rate of $75 million in 2030-31.

The schools also would retain their media rights when they leave, essentially rendering moot the previous Grant of Rights, which was believed to bind the ACC together until 2036.

Before this deal was reached, there were estimates that a school might be required to spend close to $600 million to cover the exit fees and buy back their media rights from the conference. That debate was at the heart of FSU’s and Clemson’s lawsuits against the ACC, and why the conference was suing both schools for breach of contract and other claims.

At the conclusion of Tuesday’s meeting, FSU Trustee Drew Weatherford — a former Seminoles quarterback — praised the leadership of Collins and others in leading the university through this saga for the past two years.

“Your passion and your boldness and your vision … we wouldn’t be here without you,” Weatherford said to the BOT chair. “The same is true for President [Richard] McCullough, General Counsel Egan, A.D. [Michael] Alford. I’m personally, as an alumni and ex-athlete, just grateful for your willingness to step in and fight for our best interests. …

“And I’m proud of where we’ve landed. We made some commitments 14 months ago that we would do everything in our power to ensure that we could compete at the highest level. I think we’ve done that here.”

Several Florida State Trustees said they believe the settlement is a positive step for the ACC as a whole, but Collins said the No. 1 objective was to protect FSU.

“We’re way better off than where we were 14 months ago, when we were being told we had no options,” Collins said. “And now we have options. And we have a good fit, I think, for the conference as well. I think this is going to make the conference better. I think it’s going to incentivize people in the conference to really invest and for the conference to grow.

“Yeah, it’s about Florida State for us. But it also is about the entire conference.”

*ALSO SEE: Ira Schoffel: After brutal year, FSU’s settlement with ACC means much brighter days ahead

---

Here is the official press release from the ACC, FSU and Clemson:

The ACC, Clemson University, and Florida State University announce today that they have resolved all ongoing legal disputes.

With this resolution, Clemson and Florida State will remain full members of the ACC, and the parties will dismiss all pending lawsuits in the states of Florida, North Carolina and South Carolina.

As part of the settlement, the members of the ACC have agreed to build upon the previously announced success initiatives by creating an additional revenue distribution model that is based on viewership. The new and innovative model will continue to support the entire membership while adding a component directly focused on annual football and men’s basketball viewership. As with success initiatives, ACC member schools will have the opportunity to earn increased viewership distributions from the ACC’s media revenues and will be incentivized to take actions that enhance viewership across the ACC’s 18 member schools.

“Today’s resolution begins the next chapter of this storied league and further solidifies the ACC as a premier conference,” said ACC Commissioner Jim Phillips, Ph.D. “As we look ahead to our collective long-term future, I want to express my deepest appreciation to the ACC Board of Directors for its ongoing leadership, patience and dedication throughout this process. The league has competed at the highest level for more than 70 years and this new structure demonstrates the ACC embracing innovation and further incentivizing our membership based on competition and viewership results. The settlements, coupled with the ACC’s continued partnership with ESPN, allow us to focus on our collective future – including Clemson and Florida State – united in an 18-member conference demonstrating the best in intercollegiate athletics.”

“This settlement allows Clemson to remain nationally competitive at the highest levels and also makes our conference stronger,” said Clemson University President Jim Clements, Ph.D. “I appreciate the efforts of the ACC members and Commissioner Phillips in the creation of this innovative conference model. We remain proud members of the ACC, one of the strongest conferences in the country and where our students, the other 17 ACC schools, and the league are committed to accomplishing greatness both on the field and in the classroom.”

“We’re very pleased to have reached a settlement that benefits not only Florida State, but the Atlantic Coast Conference as a whole,” said Florida State University President Richard McCullough, Ph.D. “From the start, we’ve held firm to the belief that the best solution would be one that enables FSU and every ACC institution to earn enhanced revenue through performance. I want to thank Commissioner Jim Phillips and my colleagues on the ACC Board of Directors for their leadership, and we look forward to continuing our membership in the ACC.”

—–

12:45 p.m. Update from FSU Board of Trustees meeting:

Florida State, Clemson and the ACC have all signed off on the new settlement agreement and have agreed to drop their lawsuits. This is effective immediately.

Stay connected to Warchant.com for more on this story.

—————

FIRST REPORT

If all goes according to plan, the FSU Board of Trustees will vote this afternoon on a proposal that would end its legal battle with the ACC in exchange for a new revenue structure and a firmly established exit fee for leaving the conference.

***LIVE UPDATES FROM THE BOARD MEETING***

The Atlantic Coast Conference’s presidents signed off on the agreement Tuesday morning, according to ESPN’s Pete Thamel. Now the only thing left is for FSU and Clemson to sign off on the settlement at their respective board meetings.

Officials from both schools are scheduled to meet virtually at noon.

Here is the webcast for the Florida State meeting:

Florida State, Clemson and the ACC have been embroiled in a legal battle since December 2023 — with FSU suing the conference in Leon County, Clemson suing in South Carolina, and the conference suing both schools in North Carolina.

As part of the new deal, Florida State, Clemson and a few select schools will receive a larger portion of the annual payouts based on media metrics. FSU specifically will receive more than $15 million additionally each year.

There also will be a reduction in the cost of exiting the conference before the Grant of Rights expires in 2036. According to an FSU source, it will start out around $165 million if a school leaves this year, and it will drop to $75 million by 2029-30.

*ALSO SEE: Ira Schoffel: After brutal year, FSU’s settlement with ACC means much brighter days ahead

Join Warchant for Market-Leading FSU Football coverage!

Warchant.com provides just what passionate FSU fans expect: Market-leading coverage of Seminole athletics and recruiting.

Join the largest Florida State fan community and receive all the benefits that come with it:

• Elite team and recruiting coverage of the program you love.
• Exclusive video and board Q&A’s with Warchant staff.
• Interaction with the most passionate Seminole fans across multiple board forums.
• 10% off all Garnet & Gold purchases while holding an active membership. Member exclusive discounts once a month at even higher savings.
• Access to Warchant member benefits and giveaways at site events.
• So much more!

SIGN UP: Join Warchant’s FSU Community for $1 today

Talk about this story with other die-hard Florida State football fans on the Tribal Council.