Years before Florida State and the ACC filed dueling lawsuits over the Seminoles’ future in the conference, Mark T. Wilhelm studied a version of the secretive document at the core of this half-a-billion-dollar dispute.
It’s called a grant of rights, and he examined its enforceability in the Harvard Law School Journal of Sports and Entertainment Law.
Wilhelm, a partner who handles mergers and acquisitions at the Philadelphia law firm Troutman Pepper, spoke with the Tampa Bay Times recently to share his insight and personal thoughts on the case (still in its infancy). Here are some takeaways:
If you’re wondering how FSU can escape deals it signed, you’re not alone
“That’s a great question,” Wilhelm said, “and I don’t have a particularly good answer.”
Wilhelm explained a few options to try to escape contracts like a grant of rights — where FSU and the other schools granted their TV rights to the ACC, which sold them to ESPN and distributed the money back to the schools.
One is that the deal is, essentially, unfair. FSU said it would lose out on $572 million as part of a “draconian” process to leave the ACC. But Florida State previously agreed to those figures, which could hurt its argument.
Another is that the ACC broke the deal’s terms. FSU brings up this one, too, arguing the conference failed to live up to its financial and competitive promises. But if those promises were made elsewhere — like the conference’s mission statement — does that apply to a financial contract?
A third option: what looks like a contract isn’t a contract after all.
Remember this word: considerations
Valid contracts must have three parts: an offer, an acceptance and a consideration. Suppose you offer to buy a neighbor’s old bike for $10. He accepts, and you give him the consideration ($10). That satisfies all three requirements.
But Wilhelm said a consideration must be new. It doesn’t work if you borrowed $10 from your neighbor last week, then give him $10 for the bike; your neighbor isn’t getting a new consideration.
FSU argues in its complaint that it “received no new consideration” by signing the grant of rights. If a court accepts that argument, then there’s no contract. And if there’s no contract, then Florida State could save hundreds of million of dollars on its way out.
It matters how you slice (and characterize) $572 million
One of the two major chunks, according to FSU, is a $130 million fee to leave the ACC. The other is $429 million in TV money the conference will withhold until 2036.
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“I think that when this goes to get litigated, the characterization of these different components is going to be important,” Wilhelm said.
Why? Because if a court thinks they’re both part of one connected withdrawal fee, FSU can argue that half a billion dollars is unreasonable compared to the harm its exit will cause the ACC. Translation: It’s too big. But if a court views the exit fee and TV money separately, FSU could be on the hook for both.
A key question: What was the goal of the grant of rights?
If the answer is to make the most money possible, then the ACC failed; it’s getting lapped by the SEC and Big Ten. But Wilhelm said that might be a 2024 way to read a document from 2016.
At the time, the industry was reeling from a conference realignment wave that sent Maryland from the ACC to the Big Ten and Missouri and Texas A&M from the Big 12 to the SEC. There was value in stability (a word the ACC uses half a dozen times in its complaint). If that stability was the major intent, you can argue it’s a success; it’s not a coincidence that the Pac-12 crumbled as its media rights deals were expiring.
“I think there’s something to be said for the fact that these arguments did keep conferences together — or seem to have kept conferences together,” Wilhelm said.
A legal homecourt advantage will be discussed
For now, there are two separate cases in two separate courts: one filed by the ACC in Mecklenburg (N.C.) Superior Court and one filed by FSU in Leon County Circuit Court.
“I imagine that Florida State and the ACC will litigate about where they’re going to litigate,” Wilhelm said.
Though the ACC filed its complaint first, Wilhelm doesn’t see it as an easy win for the conference to keep the case in Charlotte (where the league is based). That’s because the difference was only 19 hours, so there are no real efforts that would be wasted if it moved to Florida.
The venue will matter because Florida and North Carolina have different laws. There’s also the perception that a Florida judge might be more inclined to favor FSU, just as a North Carolina judge might lean toward the ACC.
Wilhelm doesn’t have a read on how it will play out, but he said the two sides’ attorneys “must have identified something that they think would be beneficial.”
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