...Plenty of questions linger.
Will any of the ACC schools join this secession effort as they did last spring? What is ESPN’s role in all of this? Where could Clemson and Florida State land?
Why now?
Florida State’s filing in December came a couple weeks after the Seminoles were left out of the College Football Playoff.
Perhaps an event triggered Clemson’s timing too. The
CFP and ESPN recently finalized their agreement on a six-year extension with a new revenue model that puts at a further disadvantage programs not in the Big Ten and SEC.
In the agreement, the Big Ten and SEC will each receive 29% of the $1.3 billion annual payout from the network. Teams in those leagues will see their annual payouts nearly quadruple from the current figure to the tune of $21 million to $23 million.
The ACC and Big 12 will get 17.1% and 14.7% of the distribution, respectively — a striking difference that exacerbates the revenue gap and draws a tangible defining line between the Power Two and the Other Two. ACC schools will receive about $7 million to $10 million less annually than those in the SEC and Big Ten.
“Now,” says one ACC administrator, “combine that with the gap in TV revenue.”
Within three years, projections show Big Ten and SEC schools earning nearly double ($80M-$90M) in annual conference distribution as those in the ACC and Big 12 ($45M-$50M) — a gap attributable mostly to football-related TV revenue.
Interesting enough, the CFP contract is expected to include what’s termed a “look-in” in 2028 to possibly reevaluate the deal — a provision that almost certainly is aimed at the instability in the ACC.
Where do FSU and Clemson land?
This is possibly the most asked question of realignment over the last several months.
Even if the courts don’t grant them a free exit from the ACC, Florida State and Clemson feel destined to leave the league, even if that means paying an exorbitant amount (as much as $500 million each) or striking a settlement (would the ACC give in at some point?).
(3) Joining another league. Ah, yes, the option everyone wants to talk about, but perhaps not the most likely scenario for, specifically, FSU and Clemson.
It is unlikely that any SEC or Big Ten school will agree to accept a reduction in their TV distribution to add any school. For the SEC, that is especially so given its footprint: the league already owns a foothold in South Carolina and in Florida. Also, the SEC programs in those states would likely make a fuss, if they haven’t already, over inviting into the league their arch-rivals (See: Texas A&M’s reaction to the SEC inviting Texas).
In order for the Big Ten and SEC to expand, they’d likely need more money from their television partners — a lot more money (more than $100 million a year). That’s primarily Fox for the Big Ten and ESPN for the SEC. There is one problem with this.
“There isn’t as much money in the market as there once was,” said a conference official with knowledge of the networks’ dealings.
Exhibit A: the Pac-12.
Exhibit B: the decline of linear cable.
Could FSU and Clemson be added on the cheap like SMU, Stanford and Cal? Those teams are only receiving a portion of ACC distribution. The same goes for Washington and Oregon, which joined the Big Ten for half a distribution check for at least seven years.
Sure.
However, there is one current ACC program that many within the industry believe is the most attractive expansion target for the Power Two. And it’s not FSU or Clemson.
“North Carolina,” said an industry source, “is the lynchpin.”
...Several ACC administrators are expected to gather with lawyers over the coming days to review the Clemson lawsuit. The chair of UNC’s Board of Trustees has made no secret about the school’s position.
In an interview with Inside Carolina in January, he described a school that is very seriously evaluating its options around conference affiliation. “If the current financial model of the Atlantic Coast Conference doesn't improve, then it would cause real concern about how Carolina could continue to maintain its excellence in athletics,” said chair John Preyer.
However, in January, a new policy change in the state of North Carolina adds a wrinkle to any realignment. The UNC System Board of Governors voted to give the system president and itself final authority over a school changing conferences. The policy now requires the school chancellor to provide notice and a financial plan for a school’s potential conference exit.
The Board of Governors has authority over both North Carolina and NC State. Does this mean NC State and UNC are a package deal if they are to leave the ACC? Perhaps.
North Carolina Gov. Roy Cooper believes the two should not compete in separate conferences.
“I would hope that would not happen and that would not be good for our state,” he said earlier this year.
The Tar Heels remain the lynchpin to the ACC’s future. They are a charter member of the conference, reside in its geographic center, boast an impressive academic reputation and are arguably the conference’s most valuable brand, from both a football and basketball perspective as well as Olympic sports.
What do ESPN and Fox do?
Whether ESPN likes it or not, it is tied up and tangled in this mess.
Not only is it the sole rights holder for the ACC but it is also the sole rights holder for the SEC and it is the sole rights holder of the College Football Playoff. Meanwhile, the network has plenty of other properties and it is expected to bid soon on those, such as the NBA, for instance.
Fox and ESPN each own a stake in the Big 12, and Fox is the primary rights holder in the Big Ten. The two networks have seemingly been engrossed in a fistfight over college football properties, much of it resulting in the most significant conference realignment wave in the industry’s history.
Will they continue to wage war over the most valuable properties in college athletics? There are only a handful left outside of the Big Ten and SEC.
The networks hold the keys because they hold the money. Football-related TV distribution is the primary revenue driver for most major college athletic departments.
For instance, Big Ten administrators, originally against expanding a second time, eventually approved the addition of Washington and Oregon after Fox provided an extra $60 million-$70 million annually for the two schools. In the SEC, the additions of Oklahoma and Texas significantly increased ESPN’s stock of valuable teams and will, eventually, see the two programs earn a pro-rata share ($60 million-plus each annually).
If Fox and ESPN will foot the bill to add FSU and Clemson — or any others — maybe it happens. But first, the ACC schools must wiggle free of what many believe is a binding agreement.
A second program in three months took a step down that path.
To use a somewhat tired analogy, the FSU and Clemson ships have untethered from the ACC port and shoved off into the ocean. There’s no turning back now.
“But where do they go?” asked one industry source.
“They have to have something,” said another.
Does one untie from a secure place without an agreement to be welcomed into another?
Before leaping to conclusions about the SEC and Big Ten’s interest in the Noles and Tigers, let’s visit several other paths in which the two schools could find a more suitable home.
(1) Complete ACC implosion. For the most part, the league is held together by the deal with ESPN. There are largely two ways that ESPN itself could set fire to the contract: If the league drops below the requisite 15-member threshold; or if ESPN elects next February to decline to opt into the final nine years of a contract that extends through 2036.
If ESPN ends the deal or if FSU and Clemson are successful in setting precedent in exiting the grant of rights, the ACC will be much like the Pac-12, with many of its members left desperate and searching for homes as its more valuable schools either coalesce or join other conferences.
In this scenario, eight to 10 of the programs could reform the ACC into a smaller and more valuable conference — a curing of the league and one of the topics discussed among the seven last spring.
Such a move could, conceivably, leave a handful of basketball powers (Louisville and Duke, specifically) to be poached by the country’s most valuable basketball conference and its aggressive commissioner: the Big 12 and Brett Yormark.
(2) A sweeping college athletics landscape shakeup. College athletics is at a time of unprecedented change, much of it attributed to an athletes rights movement around directly paying major college football and basketball players.
A pay-for-play system is on the horizon and so maybe, too, is a complete separation from those programs that can afford to pay their athletes directly and those schools that cannot or choose not to do so. It’s been no secret: the SEC and Big Ten, as well as the NCAA, are exploring new athlete compensation models in an effort to potentially settle the House antitrust case.
Such a new model could bring an overhaul to the entire conference landscape of the sport. Could such an overhaul impact television contracts and disrupt conferences all together?
