Inside the big-money battle that could decide the ACC's future

Florida State may not be the only ACC school concerned about the league's revenue gap with the Big Ten and SEC, but it is the one making the most noise. Mark Konezny/USA TODAY Sports

Florida State athletic director Michael Alford knew there'd be controversy when he addressed the school's board of trustees last week. He'd already talked with several other athletic directors around the ACC who shared his concerns. There was an elephant in the room, Alford believed, and it was time someone addressed it directly, publicly, bluntly.

"At the end of the day, for Florida State to compete nationally," Alford told the board, "something has to change moving forward."

The numbers, he explained, are stark.

In the next few years, new TV deals for the SEC and Big Ten will kick in that will provide member institutions in those leagues with $30 to $40 million more annually than Florida State will receive from the ACC. The ACC distributed a record $36.1 million per full-time member for the 2020-21 season, a number that should grow slightly now that the league has full distribution of the ACC Network. The SEC's upcoming TV contract, however, is expected to result in more than $70 million per team in payouts, while the Big Ten's new deal is expected to distribute at least $80 million per team annually.

Florida State currently splits league profits evenly with 13 other full-time members of the ACC (and shares a portion with partial member Notre Dame). But Alford told the board the Seminoles are responsible for a far greater percentage of that revenue -- as much as 15%, according to a consulting firm he hired on just his second day on the job -- while earning just 7% of it in league payouts.

Put the two issues together -- the size of the total revenue pie, and how the league chooses to slice it up -- and Alford believes it will soon be nearly impossible for the Seminoles to compete for a national championship in football.

"I know how hard the commissioner and the office are working to provide solutions to the members of the conference to the revenue gap that we are projecting in the upcoming years to the media contracts," Alford told ESPN. "But at the end of the day, in order to compete to the standard we want to compete in, there needs to be a change, and the status quo is not good enough."

While Alford's concerns have been discussed at length behind closed doors over the past two years, his decision to go public with his frustrations served as a clear message to some of his less-motivated colleagues that the timeline for change must be accelerated.

At least for now, Florida State and every ACC school are tied together through the league's grant of rights, which gives the league control over each member's media revenue and runs through 2036. That has largely insulated the league from the realignment turmoil that has roiled the rest of the college football world since Texas and Oklahoma first announced their intention to bolt the Big 12 for the SEC in 2021, but Alford's comments, including speculation on what a potential exit from the league might cost, have brought the ACC's future to the forefront.

"None of the concerns that were shared during that meeting were things that we haven't already been looking at and addressing as a conference," commissioner Jim Phillips told ESPN. "We've been open about our league's discussion on revenue generation and business innovation, and have been exploring all options to enhance overall revenue."

And yet, as Alford addressed his board of trustees, his primary frustration was that so little had changed. He is hardly alone, but according to nearly a dozen ACC administrators who spoke with ESPN, Florida State has been the most aggressive in pursuing a more lucrative financial future, including exploring the possibility of leaving the league altogether.

Asked by the board of trustees about a potential cost for departing the ACC, Florida State's legal counsel suggested as little as $120 million, a figure Alford said "hypothetically" could be offset after just a few years of higher earnings in another league.

Alford's math, however, doesn't account for the grant of rights, which would make leaving the ACC -- for FSU or anyone else -- a difficult task.

The league's agreement with its member schools requires an exit fee equal to three times annual revenue, or about $120 million. But the grant of rights could potentially prevent a team from earning TV revenue -- or possibly even broadcasting its games -- until the agreement expires. Phillips has frequently pointed at the plights of Texas, Oklahoma, USC and UCLA as examples of how difficult it would be for a team to exit its grant of rights. The Longhorns and Sooners were forced to wait three seasons after announcing their intent to join the SEC, and still will pay $100 million to buy out the final year of their deal with the Big 12.

ACC schools have 13 years remaining on their deal.

Over the past two years, a number of schools have sent teams of lawyers to examine the official grant of rights document, either looking for a potential pathway out or assurances that the biggest brands can't leave without a serious fight.

As one administrator told ESPN, those reviews have established several potentially compelling arguments for breaking the agreement but have uncovered no obvious loophole that would provide a pathway out without engaging in protracted litigation.

"Is it worth the paper it's written on?" one AD said. "If one school starts to leave, then another, how strong is it? It would involve a major legal battle."

And as one athletic director pointed out, it would also require another conference to extend an invitation to join before knowing whether it would have rights to broadcast that team's games. It's a legal Catch-22.

But for all the bluster -- and at least one ACC athletic director considered Alford's comments little more than playing to his fan base -- the public statements were intended more as a warning than a threat.

A month earlier, ACC presidents and athletic directors met in Charlotte, where one of the primary topics on the agenda was revenue distribution. For years, bigger schools such as Clemson and Florida State have argued that dividing all revenue equally handcuffs schools hoping to contend at the highest levels in football, while a contingent of schools happily cashes the same checks without putting a serious focus the sport that drives the overwhelming majority of revenue.

Several other administrators who spoke to ESPN quibbled with Alford's exact numbers, but mostly agreed with his larger point: The teams serious about football deserve more because they're bringing in more.

"I think the schools who are helping create the revenue should have an opportunity to participate in the revenue more than they are right now, rather than just slicing the pie the way it is in equal shares." Miami athletic director Dan Radakovich said. "Rewarding success is a great motivator."

That lack of motivation has been a point of contention for years, dating back to former commissioner John Swofford's time at the helm. When Phillips took over in 2021, one of his primary objectives was to convince member schools to prioritize football and commit more resources to the sport. In the past year, for example, Phillips has urged schools to stop scheduling road games against Group of Five foes in order to save money. In 2022, the ACC played 10 such games, including three losses that damaged the league's image, while the rest of the Power 5 combined played just 12.

The point is that winning at football requires a hefty financial investment, and even prior to Alford's comments to the board of trustees, Clemson athletic director Graham Neff said the need for more revenue was "urgent" if the big brands wanted to compete with the SEC and Big Ten.

"In all candor, I put it as a need," Neff told The [Charleston) Post and Courier. "We certainly recognize the investment that we've continued to make as an institution, in our community, in athletics, namely in football, which certainly drives a lot of value that is important from a television and revenue-generation standpoint. Is it time revenue distribution within conferences, or at least the ACC, is done differently? Yeah, I've been very active in those conversations within the league and continue to expect to take a leadership role in our desire for that to be a changed circumstance."

Yet, after lengthy discussions at the ACC's winter meetings, ADs emerged without anything approaching consensus on a new distribution plan, something that would require a two-thirds majority vote. Indeed, they can't even agree on what to call the plan -- "weighted distribution," as one AD said, "alternative revenue," as the league called it or "unequal" as most administrators opposing the plan have said.

For his part, however, Phillips believes there's genuine energy behind finding a solution.

"I truly believe we have made progress," Phillips said. "It's a primary discussion point every time we get together. Not everybody liked all of the discussion or agreed with everything said, but we left there agreeing to continue to put together options to consider as a league. We went from never discussing it to having subcommittees to help drive the conversation."

During conversations about revising the revenue distribution plan, the league has run the numbers on a number of potential options, according to multiple sources involved in the talks, most of which involve a complicated formula that includes items like total scholarships offered, brand power, academic success and on-field success.

As one administrator at a smaller ACC school noted, however, revenue is a problem everywhere.

"I go to sleep thinking about revenue," the administrator said, "and I wake up thinking about revenue."

Even the most seismic shifts in distribution don't exactly paint the picture of a financial windfall for power programs like Clemson and Florida State, however. Estimates shared by sources with knowledge of the discussions suggest a net shift of between $250,000 and $3 million annually -- "pocket change," as one AD called it -- leading some administrators to wonder if it's worth all the trouble.

"Philosophically, I believe that what's good for one should be good for everyone," one athletic director said. "Otherwise, you get a lot of disparity. The big thing is, if you're making an extra $2 million because you went to the College Football Playoff, if you get asked to be in another league, like UCLA and USC did, it doesn't matter. That's not going to change your decision. They're gone. So it's not preventing what people are kind of concerned about, which is, if there was continued super expansion, people are gone.

"If you start creating those types of models within your own conference, are you really looking out for what's best for the Big Ten or the ACC or fill in the blank? Or are you looking out for what's best for you?"

So solving the thorny issue of whether Boston College should earn the same amount from the ACC that Clemson does wouldn't do anything to address the larger issue that Indiana and Vanderbilt could earn twice as much from their respective leagues as anyone in the ACC gets in a TV contract that runs for another 13 years. Indeed, the SEC and Big Ten will negotiate yet another new TV contract before the ACC's existing deal is set to expire.

And yet, as another AD noted, a change to revenue distribution is less about solving the big-picture problem and more about the principle -- about getting every school on board with the idea that the status quo isn't sustainable. As it stands, the ACC is holding steady -- the No. 3 league in the Power 5, as Phillips has noted routinely -- and too many of the league's members seem content with that.

"In the last two years, we've seen two of our neighbors' houses catch fire," the AD lamented, "and we keep thinking ours won't be next."

Last year, the ACC hired a consulting firm, FishBait Solutions, to address the bigger-picture revenue concerns, but several ACC power brokers who spoke with ESPN lamented the incremental steps forward -- hosting concerts or other events at school-owned venues or working to activate new multimedia content options -- might provide tens of thousands, when the gap with the SEC and Big Ten is tens of millions.

The revenue distribution changes could open the door to expansion, too -- allowing the ACC to potentially pay newer members a smaller share of the total -- but those talks have largely fallen flat, according to multiple sources. While the league has run numbers on what several potential expansion options might add to the pie, none looked like a financial bonanza, and several ADs were reluctant to see the league grow amidst so much turmoil both inside and outside the ACC.

"We continually evaluate all options that can further strengthen our conference, including adding new members," Phillips said. "We've always looked at opportunities to expand when it's made sense."

But step away from the accounting ledgers, Phillips said, and there's ample reason for optimism.

"We're having enormous success," he said. "When you think about where the ACC is now -- winning more championships than any conference last year, the Learfield Directors Cup fall standings, the academic success -- the financial aspect of this is very important but we have a tremendous league that has been prospering."

And Phillips argued that the financials have improved, too. Last year, the ACC Network reached full distribution and is now available in the same number of homes as the Big Ten Network and the SEC Network. And the commissioner touts other new sponsorship opportunities he says will help the bottom line.

Phillips said he believes the ACC is a "prominent, dominant" league and he's "confident that membership will stay together, now and into the future."

"I don't know that there's a magic bullet on this thing. I'm not sure there's one thing you can do to address the gap," Phillips said. "I think you have to address it in several ways and I'm confident we'll do that. I'm confident in the health of this league and that we'll continue to work together."

To Alford's mind, however, the longer term picture remains bleak compared with the immense growth of the SEC and Big Ten. When the ACC signed its 20-year TV deal with ESPN in 2016 -- a deal approved by several of the current athletic directors and school presidents, it should be noted -- the payout wasn't entirely out of step with the rest of the country, and it opened the door for the league to launch its own TV network. But six years later, the landscape has changed markedly, the frustrations have grown exponentially, and the financial constraints, which several ADs noted are already being felt, will soon become an existential threat.

Alford's comments were a warning to his colleagues that time is running out to change those fortunes, and several administrators privately offered a similar lament to Alford's public statements. Change isn't about appeasement. It's about survival.

"At the end of the day, we need to try. And if, if we can't get things done, then, at least we can look around and say, 'All right, we attempted to get something done, we weren't able to do it,'" Radakovich said. "And then, if down the road, schools do choose to leave, it should not be a surprise."