Clemson joins Florida State, sues ACC over ‘exorbitant’ exit fee

Clemson joins Florida State, sues ACC over ‘exorbitant’ exit fee

Tooba Shakir 54 years ago 0 0

Following in the footsteps of fellow ACC power Florida State, Clemson filed a lawsuit Tuesday against the conference that seeks to establish conditions under which the Tigers could minimize the cost of a potential departure.

In a legal document filed in Pickens County, S.C., Clemson argued the ACC’s withdrawal fee was “exorbitant” and too overtly punitive to be enforceable. In addition, the school claimed, a grant of rights provision to which it agreed does not give the ACC control over Clemson’s media-related revenue for many years to come, regardless of whether the Tigers leave the conference.

Asserting the ACC has pushed an “incorrect narrative” about all members granting it their media rights through June 2036, Clemson stated in the lawsuit that this has led to a “public misconception” that interferes with the school’s “pursuit of opportunities with other collegiate conferences and media providers.”

The legal actions taken by Clemson and, in December, Florida State have come after a spate of moves by other schools that did much to enhance the prominence and power of the SEC and Big Ten while diminishing the three other members of the Power Five conferences. While the Pac-12 is in dire straits, with just two member schools that have not defected, the ACC and Big 12 are in better shape, but Clemson and Florida State have focused on a shortfall by their conference in annual payments to their programs.

“The revenues generated by the media agreements between the ACC and ESPN are significantly lower than the revenues generated by media agreements negotiated by the Big Ten and the SEC with their media providers,” Clemson said in its lawsuit, “resulting in a dramatic gap between the revenues paid by those other conferences to their members and the revenues paid by the ACC to its members. In the coming years, this already large revenue gap is only expected to grow.”

Clemson pointed to figures it said were from 2022, asserting that the annual payments to member schools went as follows: Big Ten, $58.8 million; SEC, $49.9 million; and ACC, $37.9 million to $41.3 million. Clemson added that the gap was expected to grow to “an estimated average of $30 million per member institution per year,” causing it to “fall behind its peer institutions.”

In a statement Tuesday responding to Clemson’s lawsuit, the ACC said it “remains confident that its agreements with all its members will be affirmed by the courts.”

“Clemson, along with all ACC members, voluntarily signed and re-signed the 2013 and 2016 Grant of Rights, which is binding through 2036,” the conference said in its statement, which was attributed to ACC Commissioner Jim Phillips and board chair Jim Ryan, who is also the president of the University of Virginia. “In addition, Clemson agreed to the process and procedures for withdrawal. The Conference’s legal counsel will vigorously enforce the agreement and bylaws in the best interests of the ACC’s current and incoming members.”

Clemson’s lawsuit was filed the same day ESPN and the College Football Playoff announced an agreement on a six-year, $7.8 billion contract set to run from 2026 to 2032. The playoff’s expanded format will favor Big Ten and SEC programs, according to ESPN, paying them over $21 million annually as compared to over $13 million for ACC schools.

Clemson and Florida State are the only ACC programs to have been selected for any of the CFP tournaments, which thus far have featured four teams in each field. In the wake of massive realignment in college sports, including a move by Oklahoma and Texas from the Big 12 to the SEC, TCU and Cincinnati are the only other Power Five schools not affiliated with the SEC or Big Ten to have sent a team to the CFP. (Notre Dame, a two-time participant, is an independent in college football but is an ACC member in other sports.)

In its lawsuit, Clemson said the ACC’s grant of rights agreement was “inextricably tied to and qualified by” its contract with ESPN. If a school were to leave the ACC, Clemson argued, its games would not necessarily be aired by ESPN and thus it would not be bound by the agreement anymore.

As to the withdrawal fee, Clemson said it was estimated to be approximately $140 million, an amount described by the school as “unconscionable.” Clemson compared that amount with penalties on departing schools imposed by other conferences, which it said included zero dollars charged by the Big Ten. The SEC’s penalties were said to range from $30 million to $45 million, depending on how much notice a school provides.

The much larger size of the ACC’s fee and its commissioner’s description of the amount as a “nine-figure financial penalty” served as evidence, Clemson said, that it bore little relation to the financial harm the conference expected to suffer in the event of a departure.

“Instead, the Withdrawal Penalty was adopted as a punitive measure,” Clemson argued, “aimed at discouraging and preventing Member Institutions from withdrawing from the ACC.”

Following Florida State’s lawsuit, which alleged “chronic fiduciary mismanagement and bad faith” by the ACC, the conference countersued. The Seminoles breached their contractual obligations to the ACC, it said, by challenging the validity of the grant of rights agreement. In addition, the ACC said, FSU “deliberately released confidential information” regarding the arrangements with ESPN.

The ACC said its legal action sought a declaration that its grant of rights is “valid and enforceable,” as well as a collection of damages from FSU. Clemson said Tuesday that it never authorized the conference to sue the Seminoles. The lawsuits by the ACC and Florida State are still working their way though the courts.

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