ACC argues FSU shouldn’t have say in league matters: The latest in ongoing legal fight
The ACC on Wednesday argued that Florida State President Richard D. McCullough should resign from the conference’s Board of Directors and that the school, which is seeking to leave the conference, should have no say in league matters amid a legal fight that continues to grow more bitter.
The league made those arguments in its latest legal filing, an amendment to the complaint it filed late last month that sought to stop FSU from invalidating the conference’s grant of media rights agreement. The conference filed its original lawsuit the day before Florida State sued the ACC.
The dueling lawsuits — Florida State’s filed in Leon County, Florida, and the ACC’s in Mecklenburg County, home of the league’s Charlotte headquarters — are likely to decide the future of a conference founded in Greensboro in 1953. Both lawsuits, at their core, are about the ACC’s grant of media rights agreement, which its members first signed in 2013 and reaffirmed in 2016.
Florida State is seeking to escape that agreement, arguing, among other things, that its built-in financial penalty is unenforceable under Florida law. If it’s successful, FSU has also asked the court to rule that the university retroactively provided notice, as of August, 2023, of its intent to withdraw from the ACC.
The ACC, meanwhile, has asked a judge to uphold the grant of rights agreement, which gives the league control of its members’ television broadcast rights to home football and men’s basketball games (as well as in other sports) through 2036. The agreement, and its duration, has become a point of controversy in recent years while the ACC’s rival conferences have negotiated more lucrative media rights agreements.
The Big Ten (with Fox Sports) and the SEC (with ESPN) will earn hundreds of millions of dollars more than the ACC in the coming years in TV revenue. As a result, ACC schools will be faced with a financial deficit that’s expected to grow at least $30 to $40 million wide, compared to their counterparts in the Big Ten and SEC.
Conference television revenue is not the only source of athletic department income. Booster contributions, ticket sales and postseason performance bonuses all factor significantly. The pursuit of TV money in recent years, though, has become as fierce as any competition between the lines in major college athletics.
Florida State, if it could freely leave the ACC, would likely pursue membership in one of the nation’s two wealthiest conferences. FSU, though, has said that it would cost more than $570 million to leave the ACC, given the built-in penalty associated with the grant of rights, as well as the conference’s exit fee, which is three times the amount of the league’s operating budget.
If FSU is successful in nullifying the grant of rights – or in leaving the conference at a reduced financial penalty – other ACC members could take similar legal action in pursuit of more television revenue in other leagues. The ACC, then, is attempting to end Florida State’s case before it can really begin.
The ACC’s amended complaint is the next step in its ongoing fight for long term survival in its current state, as a so-called power conference. In Q-and-A form, here’s what to know about it, and about where things stand between Florida State and the ACC:
Q. What’s new about the ACC’s amended complaint?
A. It’s stronger in tone, for one thing. Consider the difference between the opening sentence (in the summary of claims) in the original complaint compared to the amended version.
The original: “At its core, this case involves the legal promises of Florida State and its obligations to the Conference to which it has belonged and from which it has profited from for more than 30 years.”
And now the amended: “This case involves Florida State’s serial breaches of critical legal promises and obligations which it made over the last 13 years to the ACC.”
“Serial breaches.” Well, so much for diplomacy.
Beyond that, the key difference is this: the ACC’s original complaint included two claims for relief – that the court find the ACC’s grant of rights agreement to be valid and enforceable and that the court agree with the argument that FSU doesn’t have a right to try to challenge the grant of rights, anyway. The amended complaint includes those two claims for relief in addition to four new ones.
Q. And what are those four new ones?
A. They are: that FSU “breached its promises” in the grant of rights; that FSU has “breached its obligation to protect confidential information;” that FSU “has breached and continues to breach its fiduciary obligations to the ACC” according to the conference’s bylaws and constitution, and also according to North Carolina law; and that FSU has “breached its obligation of good faith and fair dealing under the ACC constitution and bylaws.”
Q. That’s a lot of allegations of breaching. What stands out in particular?
A. The fifth claim is especially aggressive, and contentious. That’s the one in which the ACC alleges that FSU “has breached and continues to breach” its financial obligations to the conference.
As a result, the ACC argues, Florida State should be barred “from participating in the management of the affairs of the Conference while it has a direct and material conflict with the purposes and objectives of the Conference.” Or, to put it more simply: FSU should have no say about any ACC matters while this legal fight continues.
The league’s underlying argument, essentially, is that FSU is attempting to “undermine or destroy ‘‘ the grant of the rights agreement. That agreement is what allows the ACC “to create a viable collegiate athletic conference,” according to the league’s complaint. To put it another way, as the ACC describes it, “Florida State’s actions ... have been for its own benefit, with no regard for the best interests of the Conference.”
The ACC also cites state law, as well as the conference’s bylaws, in arguing that McCullough, the FSU President, “has an obligation to resign” from the conference’s board of directors (which is composed of member schools’ presidents and chancellors). McCullough shouldn’t have a place on the board, the ACC argues, because he authorized FSU’s lawsuit.
Q. The ACC filed its lawsuit less than a month ago — why has it already been amended?
A. The conference filed its first complaint, remember, the day before FSU held an “emergency” board of trustees meeting on Dec. 22. For the ACC it was, in essence, a preliminary act of precaution; a kind of preventative measure. The conference anticipated that Florida State was about to take legal action, and the ACC wanted to get out in front of it.
At the time, though, the league’s lawyers did not have the benefit of reviewing FSU’s lawsuit or knowing the specifics of its arguments. The ACC could, and did, anticipate some of them. Overall, though, the league’s original lawsuit stuck to the basics — that the court should find the grant of rights valid; that FSU shouldn’t even be allowed to challenge it.
The ACC’s amended complaint is still built around those central arguments. It also includes several others in response both to Florida State’s lawsuit and the conduct of its leaders in pursuing that legal action.
Q. What else stands out about the ACC’s amended complaint?
A. If it wasn’t clear already (and, it was) it’s especially clear now that the conference is quite angry with Florida State. Which is understandable, given the stakes. Among the causes of the ACC’s discontent: that FSU has shared television contract information and details the league deems confidential.
That’s what the fourth claim in the ACC’s amended complaint is about – that FSU “breached its obligation to protect confidential information.” The conference is not happy that Florida State shared details of the ACC’s agreement with ESPN. FSU shared some of those details during a late December board of trustees meeting that was streamed online; additional details came out in the lawsuit FSU filed later the same day.
One of the revelations FSU shared was especially curious: that the ACC’s agreement with ESPN, which was believed to extend through 2036, actually expires in 2027, and comes with the option for ESPN to extend it for nine years. According to FSU’s lawsuit, ESPN has not yet agreed to that extension, which means ACC members are not guaranteed a TV deal beyond 2027.
(The grant of rights agreement extends through 2036, no matter what.)
FSU also detailed the backstory of the ACC Network. FSU alleged it (along with other league members) was forced in 2016 to agree to an extension of the grant of rights, in exchange for ESPN’s assurance that it would launch the ACC Network, which began airing in 2019.
Finally, FSU’s lawsuit included financial details of the ACC’s deal with ESPN, which the ACC argued were meant to remain confidential. (Some of those details, the ACC alleges in its updated lawsuit, were “cherry picked” to make the league look especially bad.)
The ACC is seeking to permanently bar Florida State from sharing details of the league’s contract with ESPN. The league argued in its amended complaint that it has already “been damaged” by what FSU has already shared, and that in financial terms that damage was “substantial.”
Q. So what happens now?
A. The waiting continues.
The ACC has hired lawyers in Tallahassee, Florida, to represent the conference in the case FSU started there. Florida State, meanwhile, has hired lawyers in Charlotte to represent the university in the case the ACC started there.
The ACC’s lawsuit, it should be noted, has been designated a “complex business” case. The North Carolina Business Court, and Judge Louis A. Bledsoe, is now presiding over it.
And while it’s never easy to project timelines in legal proceedings, the expectation here is that both cases are going to take a long time to work their way through the courts. It would not be surprising if part of FSU’s strategy is to compel the ACC to agree to some kind of settlement, as opposed to engaging in a prolonged legal fight, but there’s nothing to indicate the conference would consider such a thing.
(And, given the stakes, why would it?)
Q. And what if these cases result in conflicting outcomes? For instance: What if a North Carolina court rules in favor of the ACC, and upholds the validity of the grant of rights, while a Florida court rules in favor of Florida State, and says the grant of rights is unenforceable under state law?
A. It’s a great question. And ultimately, one whose answer could (will?) provide the final word, whenever it comes.
This story was originally published January 18, 2024 at 3:54 PM.
