Sources: Florida State, ACC to begin mediation over potential exit

Florida State and the ACC are scheduled to enter mediation next week over their legal dispute, multiple sources tell Yahoo Sports.

While it is a significant step in the proceedings, the mediation phase — an in-person discussion between the two sides in front of a neutral mediator — is an expected one and is not guaranteed to produce a settlement decision. The neutral mediator has been chosen, and the two sides, barring something unforeseen, will convene for the talks next week, those with knowledge of the discussions tell Yahoo Sports.

Officials at the ACC and Florida State both declined comment when reached.

The ACC and one of its most premier brands are locked in a legal fight. The Seminoles are attempting to exit the conference without paying both the exit fee and the cost of buying out its media rights, which it agreed years ago to grant to the conference. The price tag of such an exit is estimated to be at more than $500 million, according to court records.

The case is playing out in two separate lawsuits over two states, FSU’s home in Florida and the ACC’s home in North Carolina, as each side works to hold the proceedings in their own footprint. During a hearing in April in Florida, Leon County Circuit Judge John C. Cooper ordered the school and the conference to attempt “good faith” mediation to resolve the dispute.

Mediation is a conflict-resolution process designed to lead to a mutually beneficial compromise. Unlike a judge or arbitrator, the mediator will not decide the case’s outcome, but will only help the parties by encouraging each side toward a resolution. Mediation can take days, weeks or even months, but normally features a deadline.

ACC officials have shown no willingness to resolve the dispute with a settlement, which, in all likelihood, would involve a compromise in the multimillion-dollar exit fee. In fact, just two weeks ago at the ACC’s annual football media days, commissioner Jim Phillips blistered Florida State, as well as Clemson, for what he described as “disruptive and harmful” attempts to exit by suing their own conference and maintained that the league is committed to fighting the schools in court for “as long as it takes.”

In possibly coincidental timing, next Thursday is an important deadline. Schools in the ACC must give the conference a one-year notice before participating in athletics in another league the following academic year. The annual deadline for such a notice is Aug. 15. It has been long believed that FSU is not planning on giving notice this August.

Clemson is fighting the league as well in two separate lawsuits playing out over two states (South Carolina and North Carolina). Though the cases brought by Clemson and FSU are not identical, their goal is the same. They are seeking an inexpensive exit path from the conference and its grant of rights — an agreement signed by the two schools, as well as others, that binds them to the ACC and grants their television rights to the conference.

The grant of rights is connected to the conference’s television deal with ESPN, a document at the heart of Clemson and FSU’s desire to leave the ACC. The ESPN contract, while celebrated at the time, will pay ACC members a fraction of what those in the SEC and Big Ten are receiving from their television contracts.

By 2027, members of those leagues could be receiving $30 million more annually in conference media distribution than ACC programs — a gap that many administrators and coaches fear will have an adverse impact on the on-field success between the two behemoths and those in the ACC and Big 12.

While ACC schools are projected to earn more in average distribution than those in the Big 12, the two conferences trail the SEC and Big Ten. Finding untapped sources of revenue is a chief priority for both leagues. For instance, the Big 12 is in the midst of negotiations with Allstate regarding a multimillion dollar naming-rights deal.

In the ACC, Phillips led a movement to create a “success initiative” that rewards mostly football success with millions in distribution. The league is using its College Football Playoff distribution and additional ESPN-related monies from expansion ($600 million) to create the system. It pays units to individual schools based on reaching benchmarks, including qualifying for a bowl game, finishing in the top 25, and participating and advancing in the CFP.

An ACC team could earn as much as $25 million, Phillips said. Administrators say the initiative will mitigate the gap, but it will not completely close it, Florida State athletic director Michael Alford told Yahoo Sports in an interview in March.

Because of the new CFP distribution model — 58% of the cash going to the SEC and Big Ten — ACC teams will be more like $40 million per year behind schools in those two conferences, he said.

Over the last year, Florida State officials have rattled their sabers more than those from any other ACC program in terms of publicly criticizing their own conference. Locked in a lawsuit in an effort to get free of a grant-of-rights agreement 12 years before it might expire, the Seminoles are using legal methods to expose ACC contracts normally kept private.

The internal strife lingers over the league as a whole.

“We’ve had six months of disruptions. I think we’ve handled it incredibly well,” Phillips said at the league’s media days event in July. “There isn’t a day that goes by that I don’t spend some time on the [Clemson and FSU lawsuits]. And I don’t think that’s going to change.”

Those at Clemson and FSU feel that, if they are legally unhinged from the ACC’s grant of rights, there will be takers.

However, 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.

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.

Could the ACC appease its two restless members with more money? Perhaps.

There is another avenue for untapped revenues: the ESPN contract itself. Though the standard belief is that the contract extends through 2036, that’s not actually true. The deal ends in 2027.

ESPN must elect by next February to opt in for another nine years. The ACC and ESPN are in active negotiations over the extension, conversations that Phillips has described as “positive and productive.”

Could the network increase the value of the deal?

“We’re talking about that,” Phillips said.