The ACC, Florida State and Clemson ended their ongoing litigation Tuesday after agreeing to a settlement that changes the league’s revenue distribution model and significantly reduces exit penalties for members wanting to leave the conference before 2036.
ACC commissioner Jim Phillips thanked all parties for their “patience and dedication” in getting a deal done, solidifying the conference for the near future.
“Today’s resolution begins the next chapter of this storied league and further solidifies the ACC as a premier conference,” Phillips said in a statement. “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.”
Shortly after the ACC board approved the move, the boards of trustees for Florida State and Clemson approved the settlement terms. Clemson athletic director Graham Neff told his board the settlement is “consistent with the objectives we set out with initially” with its lawsuit against the conference.
“The ACC is an excellent fit for Clemson,” Neff said. “The academic prestige and reputation we so emphasize here at Clemson is a natural fit with other members of the ACC. The historic football success the league has had and that Clemson has had in the ACC and access to the College Football Playoff currently — this is a great home for Clemson.”
Both schools filed lawsuits against the ACC in their home states challenging the grant of rights agreement, that, according to Florida State’s attorneys, could have meant paying as much as $700 million to leave the conference. The ACC sued both schools to preserve the grant of rights agreement through 2036.
As a result of the settlement, the penalty to leave the conference has been significantly reduced. The grant of rights remains in place through 2036, but beginning next year, the exit fee will be $165 million. That fee then declines by $18 million per year, leveling at $75 million in 2030-31. Any team that pays the exit fee can leave with its media rights intact.
Currently, any school that wants to leave before June 2036 must pay three times the operating budget — a figure that would be about $120 million — plus control of that team’s media rights through the conclusion of the grant of rights.
The timing of the exit penalty reduction is significant. Television deals for the Big Ten (2029-30), Big 12 (2030) and the next iteration of the College Football Playoff (2031) come up for renewal just as that fee goes down to $75 million.
The new revenue distribution model, or “brand initiative,” will be based on a five-year rolling average. Sixty percent of total ACC television revenue will go toward this initiative. More weight will be given to more recent viewership. A team’s total viewership will then be divided by the total ACC viewership to equal its percentage of the money available in this pool. The other 40 percent of the television revenue will be distributed evenly among all league schools.
Florida State athletic director Michael Alford brought forward a similar proposal to reward teams that rate well on television to the ACC Board in February 2023 but there was no support for the move at that time.
“We started this path on what was best for not only FSU but for the conference and this really incentivizes everyone in our conference to have the opportunity to go out and choose a path,” Alford said. “That’s all we ever asked for, was for the opportunity for us to compete nationally amongst our peers, and it’s also going to make the league better.”
Clemson began pushing for changes to the revenue distribution model after is six straight CFP appearances, believing teams should be rewarded for athletic success. Florida State pushed for the changes, too, and in 2023 the ACC adopted the first of its revenue distribution changes with “success initiatives,” giving more money to teams that do well in football and men’s and women’s basketball.
With the success initiatives and brand initiative now in place, Neff told his board that Clemson will have an opportunity to earn an additional $120 million over six years. That number does not include potential College Football Playoff money. Every ACC team that makes the playoff earns $4 million for a first-round appearance; $8 million for a second-round appearance; $14 million for a semifinal appearance and $20 million to make the national championship game.
Clemson has had the highest viewership in the ACC over the past six years while Florida State consistently ranks in the Top 4. Those are not the only two schools that stand to earn more money, though. Last season, for example, Georgia Tech led the ACC in viewership thanks in part to a Week 0 game against Florida State and a seven-overtime thriller against Georgia on the final Friday of the regular season.
Basketball ratings will be included in the brand initiative, too, but at a smaller rate than football, which is responsible for about 75% of the league’s TV revenue.
“At the end of the day, this innovative distribution model, which further incentivizes performance and investment, will help strengthen the ACC — and a strong ACC is good for Clemson; and a strong Clemson is good for the ACC — while providing future flexibility to adapt to changes we should anticipate within the collegiate model,” Neff said.
Florida State sued the ACC first, in December 2023, over increasing frustrations over a widening revenue gap between the SEC and Big Ten and its belief the ACC was not doing enough to solve the problem. Clemson then sued the league in March 2024.
Though neither school ever declared their intention to leave the conference, Florida State was far more vocal about the looming issues it saw with a shifting collegiate landscape. President Richard McCullough, board chair Peter Collins and several board members publicly questioned whether staying in the ACC long-term was sustainable without a radical shift in the revenue distribution model.
Now Florida State has that shift it had been wanting, and it believes all league schools stand to benefit.
“We had to do something, and it had to be a positive outcome for Florida State,” Collins said. “We’re way better off than where we were 14 months ago, when we were being told we had no options. Now, we have options and we have a good fit. This is going to make the conference better. I think it’s going to incentivize people in the conference to really invest.”
