On December 22, 2023, Florida State University (“FSU”) took the first steps toward a lengthy process that will ultimately change the landscape of collegiate sports. On that Friday, FSU’s Board of Trustees voted to bring suit, in Florida, against the Atlantic Coastal Conference (“ACC”) over the grant of rights (“GOR”) media deal universities are required to sign within their athletic conferences.[i] FSU brought their suit on the theory that the ACC’s poor conference management entitles FSU to relief from the GOR deal. If successful, FSU would avoid the $572 million cost upon their departure.[ii] FSU’s lawsuit has gained so much media attention that even Florida’s Attorney General has become involved. Sometime after FSU filed its complaint against the ACC, Ashley Moody, Florida’s Attorney General, sent a public records request to the ACC to access documents regarding the GOR.[iii] Pursuant to Florida Statutes, anyone who has custody of a public record must allow any person to inspect and copy that public record.[iv]
FSU alleges: (1) the GOR’s punitive instruments violate Florida law as an unreasonable restraint of trade under Florida Statute § 542.18, since it restricts competition with potential media deals; (2) the penalty to leave under the GOR is too large and therefore unenforceable; (3) the ACC breached the contract; (4) the ACC breached their fiduciary duty to FSU; (5) the ACC committed a fundamental failure of contractual purpose; and (6) the GOR as a whole violates public policy and is unconscionable.[v] To no one’s surprise, the ACC filed their own suit against FSU in North Carolina. In turn, the ACC flipped the script on FSU, alleging that FSU (1) breached the contract; (2) breached their fiduciary duty; (3) waived their right to challenge the GOR; and (4) failed to act in good faith according to their obligations under the GOR.[vi] Given the nature of this lawsuit and the amount of money involved, a court will likely not render a decision for several years. However, it is still important to discuss, at this time, how the court may rule on the legality of the GOR media deal and the impact that the decision will have on the ACC and FSU.
The court will have to answer several questions: whether the $572 million penalty to leave is enforceable, whether either party breached the contract or their duties, and whether the GOR is an enforceable contract. Regarding the first question, the court will likely look into how the $572 million cost to leave is divided. $429 million of the total cost relates to media rights that are under contract until 2036, $13 million refers to broadcast fees that would have to be reimbursed, and the remaining $130 million is an exit fee.[vii] The enforceability of this high cost to leave the ACC will depend on how the court defines these penalties. If a court deems all of the $572 million to be liquidated damages, FSU may be successful in arguing that number is too high, especially considering the ACC generated $617 million in revenue for the 2021-2022 fiscal year.[viii] However, if the court separates the $130 million exit fee and the remaining $442 million, and only categorizes the exit fee as liquidated damages, then FSU will likely be required to pay the full amount.
Regarding the second question, a considerable obstacle will be presented to the court when analyzing the text within the GOR to determine if either party breached because the contract is vague. According to Mark T. Wilhelm, a lot of GORs do not include vital provisions that discuss termination or liquidated damages.[ix] Wilhelm even believes that universities might be better off complying with the GOR, given the uncertainty surrounding the language of these documents.[x] Regarding the third question, FSU’s best argument to prove there is no contract would be a lack of new consideration.[xi] FSU will likely argue that the benefits laid out in the GOR, which serve as its only form of consideration, were already existing in other media rights deals with the ACC. If a court agrees with FSU and determines that there was no new consideration, they cannot enforce the $572 million penalty. On the other hand, if FSU loses on this argument, they will face major issues since they signed the GOR back in 2013 and agreed to its terms.
At this point, both the ACC and FSU have put their futures at the mercy of the courts. It will be a long waiting game to see which side comes out triumphant and which side will face some impactful consequences.
A decision in favor of the ACC will leave FSU with a monumental decision: do they leave the ACC even though the costs total half a billion dollars? If FSU decides to move forward with its departure from the ACC, the student body will be forced to endure some of the costs in the form of hidden fees added on to tuition.[xii]
A decision in favor of FSU could pave the road for other schools to follow in their footsteps. The larger schools in the ACC, like Clemson and North Carolina, may try to leave the ACC as well. This will leave the ACC without the schools that have historically been their largest sources of revenue. Either way, the court’s decision will leave a lasting impact that could change the future of college sports and the future of FSU’s financial stability.
[i] See Dan Rorabaugh, What is the ACC grant of rights, and why is Florida State suing to get out of it?, Tallahassee Democrat (Dec. 22, 2023, 2:09 PM), https://www.tallahassee.com/story/sports/college/2023/12/22/fsu-leaving-acc-grant-rights-what-know-lawsuit-tv-deal/71975648007/ (“The lawsuit was approved at Friday’s special Board of Trustees meeting. FSU’s biggest contention with the conference is over its grant of rights, the media deal that all schools within a conference have to sign.”).
[ii] See Andrea Adelson & David Hale, Florida State vs. ACC grant of rights lawsuit: What you need to know, ESPN (Dec. 22 2023, 11:30 AM), https://www.espn.com/college-football/story/_/id/39161391/florida-state-vs-acc-grant-rights-lawsuit-questions-answered (“In the lawsuit, Florida State estimates it would cost $572 million to leave the ACC without a legal victory or settlement.”).
[iii] See Tommy Mire, Florida AG Joins Legal Fight Between FSU and ACC, Seeks ESPN Contracts, NoleGameday FN (Jan. 4, 2024, 4:53 PM), https://www.si.com/college/fsu/football/florida-ag-submits-public-records-request-to-espns-acc-amid-fsu-lawsuit (“On Thursday, Moody sent a public records request to the ACC regarding the conference’s ‘“ESPN Agreement” and several other agreements, amendments, and documents crucial to FSU’s legal battle to leave the ACC.’”).
[iv] See Fla. Stat. § 119.07(1)(a) (2023) (“Every person who has custody of a public record shall permit the record to be inspected and copied by any person desiring to do so, at any reasonable time, under reasonable conditions, and under supervision by the custodian of the public records.”).
[v] See Rorabaugh, supra note i (listing out the counts included in FSU’s complaint: violation of Florida law, unenforceable penalty, breach of contract, breach of fiduciary duty, fundamental failure of contract purpose, and unconscionability and violation of public policy); see also Fla. Stat. §542.18 (2023) (“Every contract, combination, or conspiracy in restraint of trade or commerce in this state is unlawful.”).
[vi] See Jon Loesche, ACC amends complaint against Florida State to seek damages for FSU challenging the Grant of Rights, Tomahawk Nation (Jan. 17, 2024, 5:59 PM), https://www.tomahawknation.com/2024/1/17/24042210/acc-fsu-lawsuit-espn-sec-big-ten-fox (laying out the counts alleged by the ACC: declaratory judgement the GOR is valid, FSU waived its right to challenge, FSU breached their promises in the GOR, FSU breached its fiduciary duties, and FSU failed its obligation to act in good faith).
[vii] See Adelson & Hale, supra note ii (“It would forfeit $429 million in media rights through 2036, when the ACC contract with ESPN expires; $13 million in unreimbursed broadcast fees; and an exit fee of $130 million.”).
[viii] See Mark T. Wilhelm, Irrevocable but Unenforceable? Collegiate Athletic Conferences’ Grant of Rights, Harv. J.S.E.L. 63, 111 (2017) (“Schools attempting to indirectly challenge the grant of rights may attempt to persuade a court that the grant of rights is an unreasonably large measure of liquidated damages. Such a finding would render the grant of rights unenforceable against a school.”); see also Brian Murphy, ACC sets record for revenue again, distributes more than $40M to members, WRAL Sports Fan (May 19, 2023, 8:07 PM) (“The North Carolina-headquartered league set new high marks for conference revenue and distribution to its member institutions in the 2021-22 fiscal year . . . . But the ACC’s $617 million in conference revenue still leaves the league well behind the SEC and Big Ten . . .”).
[ix] See Wilhelm, supra note viii, at 114 (“The entire texts of the agreements are only several pages long, with the Big 12’s being the longest at a mere five pages. None of the agreements have termination provisions. None have any mention of liquidated damages. None have any process for how the agreement will be enforced.”).
[x] See Wilhelm, supra note viii, at 115 (“A simple cost-benefit analysis likely leads schools to comply with the grant of rights. The chances of success in litigation are uncertain, and the relative value of prevailing is not particularly high.”).
[xi] See Matt Baker, 5 legal thoughts on the Florida State vs. ACC lawsuits, grant of rights, Tampa Bay Times (Jan. 29, 2024), https://www.tampabay.com/sports/2024/01/29/florida-state-acc-lawsuit-grant-of-rights-conference-realignment-fsu-football/ (“FSU argues in its complaint that it “received no new consideration” by signing the grant of rights. If a court accepts that argument, then there’s no contract.”).
[xii] See generally Rochelle Sharpe, Those Hidden College Fees, N.Y. Times (Nov. 3, 2016), https://www.nytimes.com/2016/11/06/education/edlife/those-hidden-college-fees.html (“Then there are all the mandatory charges rolled into the published “tuition and fees,” including a slew of euphemistically named fees for costs that used to be covered by tuition . . .”).
