Is the ACC at risk as the conference realignment progresses, or is it doing well (for now)?

In Thursday's news that the Pac (1)2 is expanding – adding Mountain West members Boise State, Colorado State, Fresno State and San Diego State ahead of the 2026-27 sports calendar – there is an intriguing footnote:

Oregon State and Washington State are reportedly keeping an eye on Stanford and Cal as possible additions to the Pac-12, even though those programs officially joined the ACC this summer.

Such assumptions are something the ACC must expect and contend with as two of its league members, Florida State and Clemson, actively sue to leave the conference. The ACC is mired in four lawsuits in three different states against these two football associations, both of which seek an early (and cheaper) exit from the league's rights deal that runs through 2036.

Unless a legal sting is found — which neither school has yet discovered, as evidenced by their legal actions to date — dissolving the league is unlikely to be so easy or so quick. Instead, it's likely that even as conference realignment moves forward, the ACC will have protections in place to keep it intact. Here's where the league stands now. League sources were granted anonymity in exchange for their candor.

ESPN's “Look-in” period

The biggest vulnerability the ACC must grapple with is its February 2025 “look-in” period with ESPN, which affects the league's television contract. In Florida State's initial 2023 lawsuit against the ACC in Florida, the school disclosed that the media rights deal between ESPN and the ACC actually only runs through 2027 — not 2036 — and that ESPN had until 2021 to decide whether to extend it through 2036. In the same lawsuit, FSU alleged that Commissioner Jim Phillips extended that period from 2021 to February 2025 without the consent of two-thirds of league members. So could ESPN pull out of the deal early next year?

ACC sources claim the “insight” is solely to tweak the league’s media deal on the sidelines and advocate for (among other things):

• Better television broadcast times for important ACC games
• More visibility for ACC teams on ESPN's main networks instead of the ACC Network
• Additional opportunities to maximize revenue under the current ACC-ESPN contract

Furthermore, there is no logical explanation, either within league headquarters or within member athletic departments, for why ESPN would want to exit its current contract with the ACC. In other words, why would ESPN voluntarily give up the ACC's television capacity – especially when it has already tied it up for another decade at below-market value?

About that sentence: The details of the ACC-ESPN deal are relevant to any realignment talks. According to tax returns for 2022-23, the latest year for which information is available, the ACC distributed about $44.8 million to each of its 14 full-time members. (Notre Dame, an affiliate member for football, also receives a partial share.) That ranks it third among the four Power Four conferences, behind the Big Ten — which distributed an average of $60.3 million per school — and the SEC ($51.3 million per school), but just ahead of the Big 12 ($44.2 million per school).

However, those numbers don't take into account recent restructuring measures, many of which went into effect this summer. With Texas and Oklahoma now in the SEC and USC, UCLA, Washington and Oregon now in the Big Ten, those revenue gaps are only likely to get bigger. That's especially true when you consider that the SEC and Big Ten are expected to receive the majority of the expanded College Football Playoff spots — and with them, the revenue generated by participating in the 12-team field.

Therefore, the only hypothetical reason ESPN would choose an abbreviated ACC contract would be a wink-wink agreement with certain ACC schools that they would join the SEC after an abbreviated contract expires in 2027 – which would allow the SEC and ESPN to negotiate an even more lucrative TV contract.

There are critical sticking points with this idea, however. Should the ACC rights deal end in 2027, industry rumors suggest that several current ACC members – most notably North Carolina and Miami – would prefer to join the Big Ten over the SEC. Considering that the Big Ten has its media rights deal with Fox and not ESPN, there are Really no incentive for ESPN to shorten the current ACC-ESPN contract and allow valuable ACC brands to migrate to the benefit of another network.

So when ESPN officially signs its 2036 television deal with the ACC in February, the league and its members will be back to square one: stuck in litigation that could realistically take another decade to resolve.

What is the status of the lawsuits?

The ACC has stated both publicly and privately that it does not intend to reach an agreement with either Florida State or Clemson. At the league's preseason media event in July, Phillips said in his opening remarks, “We will fight as long as it takes to protect the ACC and our members,” adding, “Every member of this conference voluntarily signed the rights transfer and, quite frankly, enthusiastically agreed to this television contract.”

Behind closed doors, the conference has reinforced this view, believing that if the ACC were to reach an agreement with Clemson and Florida State, even in a scenario that would net the league hundreds of millions of dollars, the resulting precedent – that withdrawal would be possible – would be so damaging that it would threaten the league's existence.

To retain its status as a power conference, the ACC must reach a threshold of 15 teams — which was part of the league's original motivation for adding Cal, Stanford and SMU. Even with Thursday's expansion news, it's uncertain whether the newly formed Pac-(1)2 will receive power conference status, further disincentivizing Stanford and Cal from returning even if they could.

With a settlement off the table, both the league and the schools suing to opt out are stuck in a legal battle. In early September, the ACC argued in a legal response to FSU and Clemson's respective lawsuits that the schools had missed their chances to fight back against the league's media rights deals because they approved them and accepted millions of dollars from them over several years. The ACC claimed that the schools had missed their statute of limitations by three or four years, depending on the state.

As a second argument in its defense, the ACC also pointed to Maryland's withdrawal from the league in 2013. In 2012, the league voted 10-2 to increase the penalty for withdrawing schools to three times the ACC's operating budget; FSU and Maryland voted against it, but Clemson supported the move. Aside from Maryland, all ACC schools voted to sue the Terps for the withdrawal fee and then accepted payment from them. The ACC therefore argues that Clemson and FSU cannot object to the same withdrawal process – and penalty – this time around.

The current penalty for leaving the league is about $140 million. Attorneys for the state of Florida estimate that leaving the league, assuming the ACC's transfer of rights is not invalidated in court, would cost about $542 million.

And while the ongoing lawsuits confirm both schools' desire to leave the conference, their other actions confirm they likely won't, at least not anytime soon. Neither school notified the ACC by the Aug. 15 deadline this summer that it intended to leave the league before the 2025-26 athletic year, which would keep both schools in the conference for at least two more full seasons. This is regardless of any future legal decisions.

How are ACC schools responding to the litigation?

The ACC schools have shifted their focus and now place priority on generating additional revenue.

North Carolina has at least had discussions with private equity firms, according to public records, as did Florida State when it publicly raised concerns about the growing divide between the ACC and SEC/Big Ten before filing suit. Neither school has progressed beyond initial talks.

When asked directly whether the ACC had discussed partnerships with private equity firms, Phillips said he would not be doing his job properly if he did not explore all available options.

Elsewhere, the ACC has already taken steps to generate revenue. While the league officially admitted Cal, Stanford and SMU into the league this summer, the terms of their admission were that Cal and Stanford would receive reduced (but increasing) TV distributions over the course of 12 years – starting at about 30 percent of the standard distribution per school – until they achieved full membership. SMU will receive no distributions for the first seven years of its membership. Those terms created a pool of about $50 million that the league can distribute to its existing members to narrow its growing revenue gap compared to the SEC and Big Ten.

Also, this sports year, the ACC launched a “Success Initiative” — for the first time in the power conference's history — designed to give more money to schools with the most athletic success, particularly in football and men's basketball. In successful years, schools can earn between $20 million and $25 million, mostly through the CFP. According to the Associated Press, ACC schools that make the 12-team field automatically receive $4 million, plus another $4 million for advancing to the next round, $6 million for reaching the semifinals and another $6 million for playing in the national championship game — for a total maximum of $20 million. Schools can also earn additional “Success Initiative” revenue by finishing in the top 25 in football and qualifying for a postseason bowl game.

Add to that the system already in place that rewards success in men's basketball, particularly reaching and advancing in the NCAA Tournament; currently, the league earns “units” – paid to conferences through the NCAA – for each win by a member school in March Madness through the Final Four.

The NCAA is also working on distributing “units” for the women’s NCAA Tournament, and once that is official, those revenues will also be included in the ACC’s “Success Initiative” pool.

“It will reward the most successful teams,” Phillips said in July. “There is no absolute correlation, but those who invest more have a higher chance of success.”

(Photo: Eakin Howard/Getty Images)