FSU, Clemson expected to settle ACC lawsuits, conference to implement ratings-based payments

Some near-term stability is making its way to the ACC.

After the conference’s media rights option was picked up by ESPN, which will now officially broadcast the ACC through 2036, it now seems like another piece of the puzzle is falling into place. According to a report by ESPN’s Andrea Adelson, David Hale, and Pete Thamel on Monday, FSU and Clemson are expected to settle ongoing lawsuits against the ACC after securing a new revenue distribution strategy that rewards the conference’s biggest brands.

Per the ESPN report, the ACC’s new revenue distribution model will be based on a “five-year rolling average of TV ratings,” rewarding teams that attract more viewers with a larger share of the conference’s television revenues. Under the new model, 40% of the ACC’s television revenues will be split evenly between its 14 longstanding members (which excludes SMU, Stanford, and Cal), while 60% will be distributed based on viewership.

The model is an imperfect solution but will generally reward the schools that draw the most attention to the conference. One such imperfection centers around how games played on ACC Network, which is not measured by Nielsen, will be counted towards the revenue split.

There’s also the reality that television viewership is often a function of what time slots on what networks games are played in. Obviously, teams that are featured on ABC or ESPN more often will draw more viewers. But more often than not, those decisions have just as much to do with who the opponent is, and what other games are being played that day, as they have to do with one single team’s presence.

For example, last season, Georgia Tech was the most-watched team in the ACC. Few would argue that the Yellow Jackets are the conference’s most-popular brand (they finished 7-6 last season), but they have the benefit of playing one of the most-popular teams in the country during the last week of the regular season each year: a rivalry game against Georgia. That game is bound to draw a substantial audience, regardless of if Georgia Tech is good or bad.

But while imprecise, conference members seem to be accepting of the new system. Per ESPN, schools at the high end of the model’s new revenue distribution will earn as much as $15 million per year more than the current payouts. Schools at the bottom will see a net reduction of about $7 million per year, which is reportedly seen as “an acceptable loss…in exchange for some near-term stability.”

When combined with the conference’s “success initiative,” which rewards teams that make runs in the College Football Playoff and NCAA basketball tournament, schools that both rate highly and make a deep postseason run can earn around $30 million per year in additional revenue.

Football will, predictably, be the main driver of the conference’s new revenue distribution model. Gridiron ratings will account for 75% of the new formula, while basketball ratings make up the other 25%.

As part of settling the litigation, the ACC will reportedly reduce the financial penalties teams will face should they decide to leave the conference prior to the 2036 expiration of its grant of rights. Those penalties will reduce substantially in 2030, right around the time when media rights come up for the Big Ten, Big 12, and College Football Playoff.