Clemson files lawsuit against ACC over ‘exorbitant’ exit fees

In a significant move that could continue to alter the rapidly shifting landscape of college sports, Clemson filed a lawsuit against the ACC on Tuesday that portends its exit from the league.

In a filing in the court of common pleas in Pickens County, South Carolina, Clemson calls into question both the ACC’s grant of rights and exit fees, calling the withdrawal penalty “unconscionable” and “unenforceable.”

It also calls the ACC’s view that the league’s grant of media rights would allow the league to own Clemson’s media rights after it left the league a “nonsensical reading,” “wrong” and “inconsistent with the plain language of that agreement.”

Clemson asks in the suit for a declaration that the ACC would not own the rights to Clemson’s games “after Clemson ceases to be a member of the ACC.” Clemson also wants the ACC exit fee — three times the ACC operating budget, an estimated $140 million — ruled as “an unenforceable penalty in violation of public policy.” (The total cost of the exit with the rights and the fee was cast as $572 million in Florida State’s lawsuit.)

The lawsuit is the second one filed against the ACC in recent months, as Florida State filed in late December. The Clemson suit is significant because it indicates that the league’s two clear-cut football powers — and only College Football Playoff participants who play annually — both want to leave the league.

The ACC preemptively filed against FSU in Mecklenburg County, and the sides are haggling over the venue.

In a statement later Tuesday, ACC commissioner Jim Phillips and board of directors chair Jim Ryan maintained their belief that the courts will uphold the agreement between the conference and its members.

“Clemson, along with all ACC members, voluntarily signed and re-signed the 2013 and 2016 Grant of Rights, which is binding through 2036,” the statement read. “In addition, Clemson agreed to the process and procedures for withdrawal. The Conference’s legal counsel will vigorously enforce the agreement and bylaws in the best interests of the ACC’s current and incoming members.”

Tuesday’s lawsuit comes on the same day that the College Football Playoff and ESPN announced a new six-year, $7.8 billion contract that further amplifies the financial gap between the Big Ten and the SEC and the rest of college sports. Annually, each Big Ten and SEC team will earn more than $21 million under the new agreement, which starts in 2026. ACC teams will earn more than $13 million.

Clemson makes clear that the current ACC television contract, which lags well behind the upcoming SEC and Big Ten deal, looms as an inhibitor to Clemson competing at the highest level. Clemson took part in six College Football Playoffs and won national titles in 2016 and 2018.

“The ACC’s actions interfere with Clemson’s free exercise of its rights and are fatally detrimental to Clemson’s efforts to ensure that its athletic programs can continue to compete at the highest level,” the suit claims, “which is critically important to Clemson even beyond athletics.”

The arrival of Clemson’s suit came more subtly than Florida State’s did because of Florida’s sunshine laws and the way FSU’s animated officials forecast their lawsuit and attempt to depart as an inevitability. But Clemson has been working just as diligently about the possibility of finding a future home since Oklahoma and Texas decided to leave the Big 12 for the SEC in 2021, including multiple trips to ACC headquarters to view ACC documents.

Clemson’s lawsuit could also put into focus some type of settlement for the schools to exit. That will be up to commissioner Phillips and the league’s presidents, as the decisions regarding FSU and Clemson could ultimately define his tenure.

If Clemson and FSU left the ACC for either the SEC or Big Ten, it would mean that the only participant from the CFP in the past 10 years that isn’t in the Big Ten or SEC is TCU and Cincinnati. (Technically, Notre Dame made the CFP as an ACC team during the COVID-19 season of 2020, but it is steadfast in its football independence.)

Nowhere in the suit does Clemson declare that it’s leaving the ACC, and neither it nor FSU has been invited anywhere. That process is tricky, as neither is expected to receive an invitation to another league — presumably the SEC or Big Ten — until they’ve shed themselves of any legal liability.

The interest level of the Big Ten and SEC in those schools is also unknown. The SEC’s perceived interest in teams like FSU and Clemson has often been based on geographic defensive tactics, as its interest would presumably run parallel to any interest the Big Ten shows. This Clemson lawsuit comes more than a month after the SEC and Big Ten announced a formal partnership.

The focus in the ACC will shift next to North Carolina, which is widely believed to be the most coveted of the ACC’s current schools because of its brand, location and the state’s robust population. (Virginia also looms among the most coveted for similar reasons.)

Clemson’s case makes clear that the school seeks a higher income level, which in theory would be available in another conference. It claims that the perception of the ACC’s grant of rights — how ACC officials have discussed it and the media has reported it — is incorrect.

Clemson parses the language of the ACC agreement with ESPN — much of which is redacted in the suit — and says essentially that Clemson’s grant of its rights should pertain only to when Clemson is in the league. The conference will be expected to push back hard on this point, as grants of rights have long been the bond of college sports leagues.

There has been no known legal test of a grant of rights for a college conference until these two lawsuits.

The heart of the suit is the terms of exit, which Clemson says is holding back both the athletic department and the school.

Along with claiming the ACC’s grant of rights should not include Clemson’s game inventory if it left the ACC, Clemson amplifies that argument by saying that the perception of that notion has held the school back in shopping for a new home.

How far behind is the ACC? The SEC generated $852.5 million of revenue during the 2023 fiscal year and said it would distribute about $741 million to its 14 schools — an average of about $51.3 million per school after excluding bowl expenses.

The Big Ten’s most recent available data reported $846 million in revenue for the fiscal year ending in June 2022 (the league files its tax returns in May). After reaching a seven-year media rights agreement with Fox, CBS and NBC in August 2022 that is set to bring in more than $7 billion, the league was projected to eventually distribute $80 million to $100 million per year to each of its 16 members.

The ACC’s average distribution to its 14 full members increased 9.7% to $39.4 million in 2021-22, its most recent data. (Those don’t include the new CFP numbers, which were noted above.) The lawsuit projects a revenue gap of $30 million per institution per year, which Clemson sums up this way, striking at the heart of the lawsuit: “As the revenue gap widens over the coming year, Clemson will fall behind its peer institutions.”

ESPN’s Mark Schlabach contributed to this report.

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