Florida State’s board of trustees meeting sounded like a warning shot to the ACC: Fix the massive revenue gap between the SEC and Big Ten, or else.
“At the end of the day for Florida State to compete nationally, something has to change moving forward,” Seminoles athletic director Michael Alford said.
Something has to change because the status quo is unsustainable for a national-championship program.
The numbers Alford presented are striking. The SEC will soon make $811 million per year with its new ESPN/ABC deal. The Big Ten’s contracts are closer to $1.1 billion. The ACC lags far behind at $240 million. To make matters worse, the ACC’s deal doesn’t expire until 2036, after the Big Ten and SEC get another chance to negotiate an even bigger payday before the ACC.
Factor in everything else that goes into conference payouts, and Alford said FSU faces a $30 million annual gap that might extend more than a decade.
“At the end of the day, if something’s not done, we cannot be $30 million behind every year compared to our peers,” Alford said.
So what can be done?
Alford is pushing the ACC to change the way it gives money to teams. By his numbers, FSU contributes roughly 15% of the ACC’s media-rights value because of its strong TV ratings, football/basketball success and major in-state markets. But the Seminoles get only 7% of the distributions as one of 14 full members of the conference.
Instead of splitting the TV revenue equally, Alford suggested a new model based partly on performance and brand power.
“I know it won’t make that (gap) up,” Alford said, “but what can it make up?”
Alford also said that if the Pac-12 crumbles because the Big Ten/Big 12 expand again, a new window for media-rights discussions could open.
As Alford painted a bleak financial picture to the trustees, the meeting veered toward an implied but unstated question: What if that revenue can’t be made up in the ACC?
One trustee asked if a buyout to leave the ACC was “even feasible.”
“That is an excellent question,” answered Carolyn Egan, FSU’s vice president for legal affairs and general counsel.
Egan said the ACC’s exit fee is three times its annual operating budget. That equals about $120 million.
If FSU could make up $30 million per year, a trustee asked, does that mean the Seminoles would break even in about four years?
“Hypothetically,” Alford said.
The full answer hinges on the grant of rights. ACC schools have granted the TV rights for their home games to the conference until 2036. The ACC then distributes that revenue back to teams. If FSU can’t find a legal escape valve, the Seminoles stand to lose out hundreds of millions of dollars.
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The grant of rights itself was not discussed during the meeting, and it’s unclear how, or if, FSU would challenge it.
It is, however, clear that TV revenue is a major topic of conversation at the highest levels of FSU, including Alford, Egan and president Richard McCullough.
“We have to do something,” board chairperson Peter Collins said.
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