ESPN has exercised its opt-in clause with the ACC, extending its media rights deal with the league through 2036, the league announced Thursday. The news comes just before a Feb. 1 deadline that could have concluded the partnership in 2027.
The extension is a relief to those inside the ACC looking for stability in turbulent times at the highest ranks of college athletics. The deal was initially agreed upon in 2016, but that contract has been the subject of multiple lawsuits from Florida State and Clemson, making the opt-in deadline a hot-button topic for the league’s future.
With the extension settled, the league can move forward with other business. That includes resolution for those lawsuits and revaluation of the league’s revenue structure.
Big win for most ACC schools
While Florida State and Clemson are engaged in a legal battle with the ACC to determine the actual cost of leaving the conference, they are not the only schools that would be deemed “valuable” on an open market. If the contract had concluded in 2027, there would be a handful of schools that would have opportunities to join other leagues.
When the Pac-12 was unable to secure its future in the summer of 2023, Oregon and Washington found landing spots in the Big Ten. Shortly after, Arizona, Arizona State and Utah joined Colorado in a move to the Big 12. If the ACC were in a similar position, the schools with the strongest brand value would be candidates for further expansion in other conferences.
That would leave a significant number of the league’s 17 full members to the same fate as Washington State and Oregon State. Yes, those schools have preserved the Pac-12 name and intellectual property — along with some lingering financial benefits — and are moving ahead by adding more members. However, the conference’s earning power is a fraction of what it was before the mass defections.
While the growing revenue gap between the ACC and leagues like the Big Ten and SEC is concerning, keeping the conference together is a great deal for a significant portion of the conference. Those schools are the biggest winners here, as they have solidified their financial future for the next decade and remain a part of one of the power conferences in college athletics.
ACC now returns its focus to revenue distribution
With its financial future secure, the ACC can take a serious look at revenue distribution. In 2023, the league approved success initiatives, which would dole out the money generated by new streams of income to schools that made the postseason in revenue sports.
New revenue sources include an expanded College Football Playoff, additional payouts from ESPN and the pool of money created by the additions of SMU, Cal and Stanford. With SMU foregoing media rights payments for nine years and both Cal and Stanford agreeing to a 30% rate, the ACC was able to generate a pool of money for meritocracy-based bonuses for on-field success.
There are also proposed brand initiatives, which would provide weighted revenue payouts for the league’s high-profile schools like North Carolina, Florida State and Clemson. Florida State first proposed this idea nearly two years ago before it began the legal process of freeing itself from the grant of rights, so while those lawsuits remain ongoing the impact of their motivations continue behind the scenes.
What’s next for the lawsuits with Florida State and Clemson
A settlement in the multiple lawsuits between Florida State, Clemson and the ACC could be on the horizon now that the league’s financial future is secure. While there is certainly a lot more that goes into those multi-state legal battles than a media rights opt-in clause, the contract provides some certainty for all parties involved as they continue negotiations.
Florida State and Clemson have largely targeted the league’s grant of rights and exorbitant exit fee in legal battles, but have been less vocal about their desire to find a home elsewhere in recent months. If brand initiatives can offer something closer to what Florida State and Clemson believe they are worth to the ACC, it could bring an end to what’s becoming a costly and drawn-out legal battle.
One note form ESPN’s reporting to keep an eye on is whether any settlement includes an adjustment to the terms of the grant of rights or exit fees. The media rights deal now runs through 2036, but there is reportedly a request for reduced financial penalties if schools were to leave the conference after 2031.
Winners and losers: Everyone (for both)
Great mediators will tell you they have succeeded when everyone is angry. If things play out with ESPN extending the deal, the ACC agreeing to a new revenue distribution and the lawsuits getting settled, then everyone has gained something but with a cost.
The ACC will have bought itself stability for the time being, but would still operate at a financial deficit to the Big Ten and SEC. That means the league will face many of the same questions about the future when we get to the dawn of the 2030s.
Florida State and Clemson would see an increase in revenue from the ACC, somewhat satisfying their desire to be compensated according to their value, but will be closing the door on any hopes of reaching Big Ten or SEC pastures anytime soon.
A large portion of the ACC will remain part of a stable power conference at the top of the college athletics pyramid, but in exchange for that security may have to kick back a percentage of what they were making to the league’s most recognizable brands.
We have still have several steps to reach this somewhat sensible conclusion, but the momentum is there for the ACC to keep things together for the next half-decade or so. That will likely calm any further conference realignment at the power conference level.
Of all the power conferences, the ACC has the biggest brand name disparity from top to bottom. That makes a consensus on issues like this extremely challenging, but if the conference can do so it may avoid the kind of doomsday discussions that have fueled realignment fan fiction for the last two years.
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