The ACC is exploring a new revenue structure aimed at ending litigation with its two restive members.
Conference presidents recently considered a proposal that would distribute revenue differently among league members in a move to provide stability and preserve the membership of Florida State and Clemson. Nothing is imminent and the details of the deal remain private, but the ultimate goal of the structure is to settle a dispute with the Tigers and Seminoles, both of whom are suing the conference in an attempt to leave the league.
Those with knowledge of the discussions spoke to Yahoo Sports on condition of anonymity.
Discussions between the league presidents are ongoing and are expected to continue.
Details around the new revenue structure remain murky, but leaders have revised a plan to create a separate pot of revenue that will be split based on media value metrics. This separate distribution would be specifically tied to a school’s television ratings for football and potentially basketball.
Any new distribution would be available to all schools.
Along with the new revenue structure, leaders are looking at changing the length of the league’s franchise, the binding agreement at the center of the Seminoles’ and Tigers’ demands. The ACC franchise, which links the schools through 2036, would presumably be shortened.
It is unclear whether there is enough support to pass such drastic moves. The belief is that at least a two-thirds majority is required.
ACC presidents gathered for their annual face-to-face meeting last week in Charlotte, where the potential deal was discussed. They met on a call Tuesday, also regularly scheduled, to discuss the issue further.
For several months now, the league has been embroiled in legal challenges with two of its most prominent members. FSU and Clemson, unhappy with the conference’s finances, are seeking an exit from the franchise as well as the league’s ESPN television contract.
The schools’ potential willingness to remain in the conference is, for some, a shocking revelation and a turnaround from their previous actions. The unequal income structure is not an entirely new idea. Last year, FSU officials and board members suggested that the conference distribution formula for its now evenly distributed television dollars be tied to audience and other media value data.
The proposal is seen as a temporary solution to keep them at the conference before any court decision on the validity of the rights grant.
A possible court loss that immediately opens the franchise could have a catastrophic impact not only on the ACC but on other conferences, setting a precedent for all schools to break what were initially thought to be binding agreements.
The proposal comes after the conference earlier this year approved what it describes as a “success initiative,” a system that distributes more revenue to teams that excel in football and basketball. The initiative would reward high-performing football programs with up to $25 million if all benchmarks of success are met, including qualifying for a bowl game, finishing in the top 25 and advancing through of the College Football Playoff.
The initiative, as well as this new revenue structure, is an attempt by commissioner Jim Phillips and league administrators to reward winning in a way that helps close the financial gap between the ACC and the two richest conferences : the SEC and Big Ten. Gaps in television distribution, a major reason for FSU and Clemson’s exit attempts, could rise to $30 million per school over the next two years.
Television contracts provide schools with their largest source of revenue, in some places accounting for a third of an athletic department’s budget. It’s the driving force behind the most recent wave of conference realignment, as schools eschew historic rivalries and geographic footprints to move to leagues with higher-paying television deals.
While more money doesn’t always lead to more success, there is a correlation between success and resources, administrators say. It’s one reason FSU and Clemson officials are pursuing exit plans, something Phillips described over the summer as “disruptive and damaging” to the conference.
The league has been “working to” keep the two schools in the league, he told Yahoo Sports in July, and has been focused on court-ordered mediation for weeks. Clemson and FSU have figured that if they legally opt out of the ACC’s grant of rights, there will be takers.
It is unlikely that any SEC or Big Ten school would agree to accept a reduction in their television distribution to add either school. For the SEC, that’s especially so given its footprint: The league already has a location in South Carolina and Florida.
For the Big Ten and the SEC to expand, they would likely need more money from their TV partners — a lot more money (more than $100 million a year). That’s mostly Fox for the Big Ten and ESPN for the SEC.
ESPN is in the middle of the situation.
While the standard belief is that the contract runs through 2036, that’s not actually true. The deal ends in 2027. ESPN must choose next February to opt for nine more years. The ACC and ESPN have been in active negotiations about the extension, talks that Phillips has described as “positive and productive.”