How Miami Could (and FSU Probably Will) Leave the ACC

The “Conference of Champions” is dead. Raided by the Big Ten and, in a twist of irony, the Big XII, it took just over a year for the Pac 12 to shrivel into the Pac 4. The timing can be attributed to the Pac 12’s media rights deal expiring at the end of this year so that every Pac 12 member could depart without penalty. Those circumstances stand in very stark contrast to the ACC, who’s locked into its media rights deal until 2036. That’s another thirteen years for the gap between the haves (Big Ten/SEC) and the have nots (everyone else) to widen.

FSU is having none of it. Last Wednesday, FSU President Richard McCullough told the FSU Board of Trustees that the Seminoles have to seriously consider leaving the ACC. Drew Weatherford, a FSU trustee and former Seminoles quarterback, predicted that “it’s not a matter of if we leave, but how and when we leave” the ACC.

FSU leadership is on point in the sense that the ACC’s demise seems inevitable. The conference was already way behind the Big Ten and SEC in revenue, and seems destined for fourth place behind the expanding Big XII. This past year Miami and FSU joined with Clemson, UNC, NC State, Virginia, and Virginia Tech as so-called “Magnificent 7” schools and negotiated uneven revenue distribution in the ACC based on each school’s ability to attract viewers. That was a stop-gap at best. The Big XII’s uneven revenue distribution didn’t stop Texas and Oklahoma from joining the SEC.

North Carolina athletic director Bubba Cunningham criticized FSU for its comments, telling a local radio station that “I don’t think it’s good for our league for them to be out there barking like that.” Cunningham then made a very poignant argument about the ACC collectively ‘owning’ each school’s media rights:

“When you have a general counsel and the university president and the board of trustees says I’m a member of this conference and you sign a document that says I’m granting my rights to you and you have my authority to go negotiate my rights to a network and the league does that on your behalf, I’m not sure how you can just say, ‘Just kidding. I didn’t like the deal that was struck and now I want to get out of it.’ Any contract, it obligates you to what you agreed to on the front end. So I’m scratching my head, wondering what are you talking about.”

So that’s the big sticking point. In 2013, a bunch of nervous athletic directors got spooked that other schools might follow Maryland in leaving the ACC, and they all decided to sign over their “media rights” to the conference. Here’s reportedly the actual four page media rights document that was presumably extended in 2016 for twenty years. So now, if any member left the conference they wouldn’t own the right to broadcast their own sporting events until 2037.

But is this ironclad? No, I don’t think it is (and as background, my day job is practicing as an intellectual property litigation attorney, and while I don’t represent any school or person involved, and there’s only limited publicly available facts to review for this op-ed, I have dealt with similar contractual issues over the course of my career).

Here’s a few ways I think that Miami could exit the ACC:

Option 1: Leave the ACC and Fight the Grant of Media Rights

The most obvious is to leave and fight the consequences, and there are two major consequences. In addition to relinquishing its media rights, a school will owe an exit fee amounting to three times its annual revenue (an estimated $120 million). So money solves the later problem, but what about the media rights? There’s some interesting and viable theories as to how to clip that thorn.

The ACC Probably Can’t, and Won’t, Stop Exiting Members From Broadcasting Their Sports Teams

To explain the issues, let’s play out a hypothetical. Say Miami leaves the ACC and joins the SEC. I say the SEC because it’s aligning itself with ESPN, which is also the principal media partner for the ACC (hence the end of the ACC/Big Ten challenge and the dawn of the ACC/SEC challenge for basketball). So ESPN doesn’t care which conference Miami is in because it’s broadcasting Miami games either way. In fact, ESPN might prefer Miami in the SEC because ESPN would rather see SEC teams in Coral Gables than ACC teams.

(On a side note...take a moment to appreciate how much influence the broadcasters hold in all this. I’m confident that Fox, ESPN, CBS, etc. would prefer conference consolidation amongst the top schools. Collect the cream and leave the rest for Apple and the CW)

But anyways, the ACC does care because it owns Miami’s media rights. So the conference sues and asks a court to enjoin ESPN from broadcasting Miami home football games. Awkward and unlikely since ESPN is ACC’s media partner.

Even if the ACC files a lawsuit, keeping Miami games off the air would be difficult. The ACC would have to get an injunction, which is a court order that forces someone to do something (or not do something). This is different than monetary damages as compensation for some harm caused (like money to fix your car after getting hit in an accident). Injunctions are hard to get. We value our freedom in America, so if the government is going to force you to do something against your will it better be for a good reason. Court’s have found that good reasons arise when an “irreparable harm” would occur that money damages cannot compensate. An example of “irreparable harm” might be reputational damage caused by defaming someone or selling shoddy counterfeit product, so a court could enjoin you from further defaming someone or selling any more counterfeit product.

In this situation I don’t see the irreparable harm - the ACC could be compensated with money it might otherwise expected had Miami stayed in the ACC (this form of damages is akin to “lost profits” or possibly a “reasonable royalty” anticipated for licensing media rights). So, I don’t think the ACC could sue to keep a departed Miami from broadcasting their teams despite “owning” the school’s media rights. Plus in the case of the SEC, as stated before I don't think the ACC would sue to block ESPN from showing Hurricanes games. That's tantamount to biting the hand that feeds you.

But the ACC will Expect Nine Figures of Money, and There’s Options for Raising that Money

Even if the ACC can’t force a departing Miami to not air its football games, Miami will still owe the estimated $120 million exit fee plus some sort of damages for breaking the media rights deal. That could reasonably be Miami’s expected revenue share had it stayed, or about $30 million annually. My handy-dandy calculator informs me that’s a $390 million dollar penalty for exiting 13 years early. All together, the fair price tag to leave the ACC thirteen years early could be half a billion dollars. Yikes.

Some might argue that the price tag is even higher. For example, in debating the situation, Dan Wetzel of Yahoo Sports argued that FSU “could sign a $100 million a game deal, and all $100 million would go to the ACC. They don’t own their rights.”

That legal outcome is a risk, but I don’t think it’s likely. For starters, the remedy Wetzel is referencing is either “disgorgement of profits” or “specific performance,” either of which are equitable remedies (in the same category as an injunction) that are not automatic and subject to equitable defenses like unclean hands. Allow me to translate that last sentence to English - if the ACC sued for Miami’s media revenue in the SEC, Miami could argue that the ACC is undeserving of all its revenue because the conference was woefully inept in how it was handling Miami’s media rights in the ACC. Sounds at least plausible to me.

Also, in reading the Media Rights Agreement, the rights granted were “all rights necessary for the Conference to perform the contractual obligations of the Conference expressly set forth in the ESPN Agreement.” Everything about the Agreement is tied to the ACC’s ability to hold up its end of the bargain with ESPN. Naturally, I would expect the ACC’s damages would be the effect that Miami leaving the conference has on the ACC and its agreement with ESPN. That could be $30-40 million a year in lost revenue for the ACC. Or, it's arguably zero dollars if ESPN doesn’t change its agreement and the remaining schools actually make more money by splitting the same pot between fewer members. Either way, the damages are probably not whatever Miami or FSU is making in another league.

So, Miami probably would not owe all its revenue from a new league, but it might owe tens of millions of dollars annually. It’s a steep price tag, but one that at least FSU thinks is worth it. ACC schools are presently $30-50 million a year behind their Big Ten and SEC colleagues. That gap is likely going to increase as the Big Ten and SEC continue to add schools and their media rights are due to be renewed in 2030 and 2034, respectively. By 2036 Miami could easily be over $100 million a year behind those conferences' members. So it makes sense that FSU is working with JPMorgan Chase to raise capital for an ACC exit.

Another major key holder here is the broadcast partners. If ESPN really wants Miami in the SEC, it could agree to indemnify Miami and/or tell the ACC that it will keep paying the same amount to the ACC despite Miami’s absence. Similar story for Fox and the Big Ten. If the ACC gets the same amount of money despite the school’s departure, then what’s the harm? Everything is negotiable!

Point being is that this is a money problem and there are solutions. Not necessarily easy solutions, but solutions exist.

Option 2: Wait for Public Schools to Wreck the ACC, and Then Leave

This doesn’t apply to Miami because it’s a private university, but state universities (like FSU) could rely on sovereign immunity to bat away a lawsuit from the ACC. Public universities are considered part of the state government, and there’s significant challenges in suing the government for something like breach of contract. Ask Mike Leach, who was allegedly owed millions by Texas Tech following his dismissal, but state sovereignty laws blocked Leach’s lawsuit.

Even though state sovereignty doesn’t apply to Miami, if public institutions like FSU and Clemson take the plunge using state sovereignty as a legal shield, those departures could cripple the ACC enough to allow a private school like Miami to depart relatively unscathed as the ACC begins to crumble and everyone is fleeing.

Personally, I think this route would be shortsighted. Even if a public school prevailed, the result could jeopardize their (and their conference's) ability to negotiate future media rights deals because they've essentially told their world you can't sue us and we can break agreements without consequence.

Option 3: Collect Votes to Dissolve the ACC

Another easier in some ways, and harder in some ways, option is to simply dissolve the ACC. From what I've read, dissolution of the conference can occur by ³⁄₄ majority vote. There are 15 members (including Notre Dame), so 12 votes would be needed to dissolve the conference. The dissatisfied “Magnificent 7” puts you more than halfway there, but where would the other five votes come from? Probably from whomever would have a home ready outside the ACC. Normally I’d be skeptical that 12 schools would agree to dissolve a conference, but then again the world just witnessed 8 schools effectively dissolve the Pac 12. Anything is possible.

Let’s play a game. Can we hypothetically find a home for 12 teams? How about...

• SEC - Clemson, FSU, Virginia, Virginia Tech
• Big Ten - Miami, Boston College, Syracuse
• Big XII - Duke, UNC, Pittsburgh, Louisville
• Football Independence + Big East - Notre Dame

The SEC gets the southern, football blue bloods plus the Virginia schools. The Big Ten gets AAU member Miami, not to mention a conference foothold in Florida, while locking down its dominance of the Northeast market with BC and Syracuse. The Big XII continues to collect basketball blue bloods plus Pitt, a recent conference champion and arguably the greatest rival to Big XII member West Virginia. Last, but not least, Notre Dame keeps it football independence and joins the Big East in all other sports. This leaves NC State (who the Big XII might actually prefer over Louisville or Pitt), Georgia Tech, and Wake Forest without a home. By the way, as I argued last year, Miami going independent wouldn’t be the worst thing in the world.

What’s the Prediction?

You can’t have a blog post without taking a crack at reading the tea leaves, right?

For starters, if any member is leaving in time to play elsewhere in 2024, the ACC bylaws require the member to declare its departure by August 15th. If a member gives notice on August 16th, then they’re stuck in the ACC until 2025 (unless you want to needlessly add that to the pile of issues to litigate). So we may know a lot more in the next week.

It seems unlikely that Miami will make the first move. Publicly, Miami AD Dan Radakovich told ESPN on Friday that he still supports the ACC:

“Florida State is doing what Florida State feels like it needs to do. Each of our schools have to make their own decisions. But on top of all of it, we need to continue to try to make the ACC as strong as we can make it. We’ve got our grant of rights, we have all those other pieces that are associated with keeping ourselves together. Right now, we feel really strongly that our best course of action is to keep the ACC together and try to make it as strong as it can be.”

I think the SEC will react to the Big Ten’s expansion and agree to admit FSU and Clemson. I know there are reports of the Big Ten’s interest in FSU, but we need to wait and see how the Oregon and Washington addition plays out. The SEC, on the other hand, will not want to fall behind the Big Ten in this arms race. ESPN might also step in to facilitate the switch in order to boost its more valuable contract with the SEC.

Once FSU and Clemson take the plunge, it will give the ACC and the other schools at least a year to assess the situation and, possibly, file lawsuits. For many of the reasons discussed above, I believe those two will chart a successful, but likely expensive, path away from the ACC.

These events would be analogous to the year long journey the Pac 12 took between USC and UCLA leaving and this summer’s eventual collapse. The ACC would likewise weigh sticking together or abandoning ship, and like the Pac 12 I think the majority choice will be to abandon ship. Miami is a strong enough brand and competitor not to be left in the dark, and while the SEC is plausible I think the Big Ten makes more sense.

Put another way, I think the ACC is the Pac 12 about 1 to 2 years behind, and I think Miami is playing the role of either Oregon or Washington. Everything will be ok for Miami, but this may take time to play out.