Clemson’s Lawsuit Against ACC Raises Concerns for Conference

Last Updated on March 21, 2024

Clemson has become the second university to sue the ACC with the intention of escaping costly exit fees and a grant of rights agreement that extends for another 12 years. The lawsuit, filed in Pickens County, South Carolina, on Tuesday, follows a similar approach to Florida State’s filing in Tallahassee in December.  

Clemson’s complaint seeks declaratory judgement on three issues, arguing that (1) the ACC’s Grant of Rights should only apply to member schools while they are part of the conference; (2) the league’s withdrawal fee is unenforceable; and (3) Clemson does not owe the ACC a fiduciary duty and therefore is not violating any such duty by initiating legal proceedings against the conference. 

ACC Grant of Rights 

Under the ACC’s Grant of Rights, each ACC member transferred ownership of media rights from the individual university to the conference. 

Under this agreement, Clemson argues that it provided the ACC only with the media rights necessary for the conference to fulfill its contractual obligations. “The media rights to games played while Clemson is a member of the ACC are the only rights necessary for the ACC to perform the Conference’s obligations under the ACC’s media agreements with ESPN,” the filing states.  

From Clemson’s perspective, this interpretation excludes schools that opt to leave the conference.

ACC Withdrawal Fee

Clemson further argues that it shouldn’t be obligated to pay an exit fee if it decides to leave the conference, citing a penalty exceeding $140 million. 

“The Withdrawal Penalty has no relationship to, and is in fact plainly disproportionate to, the actual damages, if any, that would flow from Clemson’s leaving the ACC,” the complaint alleges. Clemson goes on to describe the penalty as “unconscionable, unenforceable, and in violation of public policy,” citing that the fee lacks connection to any economic harm that can be suffered by the ACC. Clemson also contends that the fee is “significantly larger” than other power conferences’. 

Similarly, Florida State characterizes the exit fee at around $130 million, but asserts that the total penalty inflates to $572 million when factoring in unreimbursed broadcast fees and forfeited media rights.

Fiduciary Duty to the ACC

Lastly, Clemson maintains that ACC members do not owe fiduciary duties to the conference and asserts that it has not violated any other legal duties or obligations by initiating this lawsuit against the ACC.

“Neither the ACC Constitution nor the ACC Bylaws expressly or impliedly create any fiduciary duties that Conference members, including Clemson, owe to the ACC or other members,” the lawsuit states. 

ACC Lags Behind Big Ten and SEC in Media Revenue

The ACC confronts not only legal challenges from member schools, but also glaring revenue gaps compared to other powerhouse conferences. 

In 2016, the ACC secured a 20-year media rights contract with ESPN – the lengthiest among major conferences. Nevertheless, the ACC’s revenue distribution has trailed notably behind the Big Ten and SEC, causing concern among some ACC schools. 

“[T]he revenues generated by the media agreements between the ACC and ESPN are significantly lower than the revenues generated by media agreements negotiated by the Big Ten and the SEC with their media providers, resulting in a dramatic gap between the revenues paid by those other conferences to their members and the revenues paid by the ACC to its members,” the complaint states. “In the coming years, this already large revenue gap is only expected to grow.” 

Meanwhile, in the College Football Playoff’s latest $1.3 billion deal with ESPN, the SEC and Big Ten secured equal 29% shares of broadcast revenues, while the ACC is slated to receive 17.1% (and the Big 12 to receive14.7%).

Clemson’s lawsuit marks the third different state where there is ongoing litigation regarding the ACC’s Grant of Rights. In response to Florida State’s lawsuit, the ACC filed its own complaint in North Carolina in December seeking to enforce the agreement. A ruling against the ACC in any of these cases could potentially make it easier for other power-conference schools to leave their conference while avoiding their grant of rights. 

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Author

  • Nick Messineo

    Nick graduated from West Virginia University in 2020 and Michigan State University College of Law in 2023. Since graduating, Nick has written extensively on NIL and the rapidly evolving college athletics industry.

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