ACC income sharing: Discussing the league’s mannequin and leverage for change

Florida State athletic director Michael Alford’s replace to his faculty’s board of trustees Friday was half informative, half performative.

In a chat that generated headlines throughout ACC nation, Alford identified the dire distinction in projected convention income distributions between the ACC and the Big Ten and SEC as soon as these leagues’ new media rights offers start.

“At the end of the day, for Florida State to compete nationally, something has to change moving forward,” Alford informed the board.

The focus was on a $120 million exit price that doesn’t keep in mind the likelihood {that a} faculty attempting to go away the ACC additionally may not have the ability to promote the rights to its house video games till 2036 — an element that might be value tons of of thousands and thousands extra. ACC faculties, even these fairly sad with the state of the league’s revenues, usually are not precisely able to problem the grant of rights that binds every faculty’s media rights to the ACC till the top of the 2035-36 faculty 12 months.

But a few of these faculties are pushing for a change in the best way the league distributes income. Talking exit charges is perhaps sexier, however this was the meatiest factor Alford stated:

“We’re working with the conference right now. We’re talking to them about how to create a revenue distribution model that takes in factors of who you are, how you produce, how you play, what your brand is. We’re working with other athletic directors on that. The president and I have sat in on some meetings on it. We’re working with the conference. Don’t know if we’re going to get there.”

ACC commissioner Jim Phillips informed The Athletic that issues concerning the league’s income technology usually are not new and the ACC has been in search of methods to innovate and discover new income streams to boost its enterprise. He added that he’s had conversations with Disney/ESPN about “charting their course forward” and has sought new sponsorship alternatives, as effectively.

“I completely understand that there’s some frustration among member institutions, and that is why we’re working together to address these concerns,” Phillips stated.

Asked particularly about discussions relating to unequal income sharing, Phillips stated the ACC will proceed to speak about it. The league’s spring conferences are in May.

“We talked a lot about it in the fall and in the winter, and we’ll continue to make that a topic of emphasis,” he stated.

So what do the colleges that fancy themselves as the most important manufacturers need? What do the opposite faculties give it some thought? And what would possibly truly occur?

What’s the genesis of the unequal income sharing proposal? Which faculties are main the cost?

Staples: This stems from a presentation given in early 2022 by Miami AD Dan Radakovich and Clemson athletic director Graham Neff — who labored collectively when Radakovich was Clemson’s AD — during which they laid out a plan that might produce an uneven distribution of income within the league as a substitute of the one which splits revenues equally among the many 14 full members and offers a smaller share to non-football member Notre Dame.

The ADs mentioned the potential of dividing new cash such because the elevated College Football Playoff payout that begins in 2024 a distinct approach. Perhaps, they advised, the colleges that produced extra profitable groups might obtain bonuses. That approach, the colleges that put groups within the CFP, main bowls or the NCAA basketball match is perhaps rewarded for investing of their applications. This would incentivize funding somewhat than handing extra money to sure faculties based mostly on a considerably nebulous idea reminiscent of model worth. A faculty like Wake Forest, for instance, may not have the strongest model however would possibly reap monetary advantages as a result of its funding in soccer (amenities and the retention of coach Dave Clawson) led on to on-field success.

This presentation obtained a fairly tepid response from the ACC’s presidents when it was broached, however since then:

1. The Big Ten has locked down offers that can pay the league greater than $1 billion a 12 months.
2. Oklahoma and Texas have reduce a take care of the Big 12 that can permit them to affix the SEC in 2024.
3. The Big 12 reached a brand new take care of Fox and ESPN that can start in 2025.

The world continues to vary across the ACC, and that has fueled the will of sure faculties to search out methods to slim what can be a reasonably large hole between the ACC’s income distribution and distributions that the Big Ten and SEC — which additionally share revenues equally — will ship to their faculties.

Clemson, Florida State, Miami and North Carolina are probably the most keen a couple of change. This is sensible. If ACC faculties might store themselves on the open market, these doubtless could be probably the most sought-after manufacturers.

How do the others really feel about this problem?

Auerbach: It is perhaps underselling it a bit to say the presidents had a “tepid” response. I’ve been reminded just a few occasions this week by of us on this league that the presidents are those who make this kind of choice, not the ADs. And as lately because the league’s winter conferences just a few weeks in the past, the presidents don’t appear to have any urge for food for this. Even faculties which have ADs supportive of change don’t essentially have presidents with the identical stance.

I don’t suppose anybody needs to absorb much less cash than they’re making now simply as a result of. The query, actually, is considered one of leverage. Do Florida State, Clemson and others have precise leverage proper now? They’re locked right into a take care of the ACC by way of 2036 that would value greater than $300 million (!) to get out of between the exit charges and the grant of rights. If these faculties should not have provides in hand to affix the Big Ten or the SEC, can they actually drive the remainder of the convention to acquiesce on this?

For what it’s value, I’m undecided shuffling round just a few million {dollars} per 12 months truly closes the income gaps Alford was speaking about along with his board. If FSU will get, say, $5 million extra per 12 months than it does now, does that really shut the hole it’s staring down with Florida or Georgia? Or is that this extra of a philosophical dialog?

If left unresolved, might member faculties find yourself leaving the ACC?

Staples: Based on conversations with folks within the league, it feels as if the gesture is taken into account extra vital than the precise cash. There is an attention-grabbing little bit of historical past right here that traces again to the spherical of realignment that swept school sports activities a decade in the past, mixed with some far more moderen penalties.

The Pac-10 had an uneven revenue-sharing association based mostly on tv appearances that ended when Colorado and Utah joined and the league turned the Pac-12. The launch of the Pac-12 Network additionally ushered in an age of even income sharing. This didn’t sit effectively with USC, which had benefited from the earlier association. USC leaders and donors agitated behind the scenes for a extra useful deal and warned that persevering with down the identical path could lead on the varsity to look elsewhere, however these warnings weren’t heeded. In June 2022, USC and UCLA introduced they’d go away the Pac-12 for the Big Ten when the Pac-12 grant of rights expires in June 2024.

Texas and Oklahoma additionally as soon as benefitted from an uneven revenue-sharing settlement within the Big 12. That league agreed on an equal sharing settlement as leaders fended off a raid from the Pac-10 and then-commissioner Larry Scott. Texas and Oklahoma didn’t start to noticeably think about leaping conferences till after Fox and ESPN declined to reopen negotiations for the Big 12 media rights deal in early 2021 (4 years early). By July 2021, these faculties had determined they’d go away for the SEC when the Big 12’s grant of rights expired. (After making a deal, they’ll be leaving a 12 months early.)

Auerbach: Well, that’s an attention-grabbing and well timed instance! This period of school sports activities may be very a lot centered on self-preservation, whether or not that’s leaping from one convention to a different beneath the quilt of darkness or asking for extra money the place you’re. I get why it’s occurring — everybody wants cash to take care of the flexibility to compete on the highest degree and likewise, dare I say it, they’ll want cash to pay athletes straight if the enterprise mannequin adjustments. But it undoubtedly results in choices made about what’s finest for a person faculty, not the larger image of what’s finest for that faculty’s convention or school sports activities nationally as a complete.

Staples: The level of all this, within the minds of these on the faculties pushing for a much bigger share, is that if one thing isn’t performed to accommodate them, they may go away for one more convention. That might not be till 10 or 13 years from now, however they are going to level out that 2023 felt an eternity away from 2012. And in the event that they have been to go away, the opposite faculties wouldn’t take pleasure in the identical degree of status and earnings they do now.

It needs to be famous: An concept that originated with a former chair of Florida State’s board of trustees straight contributed to the grant of rights that has the Seminoles and the opposite sad applications locked in with the ACC till 2036.

In May 2012, then-Florida State board chair Andy Haggard informed Warchant.com that the varsity ought to think about becoming a member of the Big 12.

“How do you not look into that option?” Haggard informed the location. “On behalf of the board of trustees, I can say that unanimously we would be in favor of seeing what the Big 12 might have to offer. We have to do what is in Florida State’s best interest.”

Those feedback sounded alarm bells all through the league. In September 2012, Notre Dame agreed to affix the ACC in its non-football sports activities and schedule 5 soccer video games a 12 months towards ACC groups. In November 2012, ACC constitution member Maryland determined to go away for the Big Ten. That pushed the state of affairs to DEFCON 1. Louisville was chosen shortly after to exchange Maryland. At that time, the overwhelming majority of members needed to make sure the ACC stayed collectively so long as potential. Then all 15 members agreed to a grant of rights that might run concurrent to the ACC’s media rights deal. That grant of rights was later prolonged to the top of the 2035-36 tutorial 12 months within the take care of Disney/ESPN that created the ACC Network.

Then-commissioner John Swofford was requested in 2013 to make a deal that supplied long-term safety, and boy did he ship. But the long-term penalties have been that the ACC can’t put its rights on the open market whereas different leagues get a number of bites on the apple. And that’s the main supply of frustration for the colleges that need an uneven share.

How ought to the colleges that need change pitch income distribution to the convention?

Auerbach: I do suppose income distribution tied to the upcoming expanded CFP is totally different and maybe a better battle to battle. It’s a brand new income supply, so that you aren’t asking the Boston Colleges of the world to take much less cash than they make proper now. And it incentivizes these applications that put money into soccer on the highest degree. It jogs my memory of the association the Gonzaga males’s basketball program has had with the West Coast Conference since 2018. Basically, the Zags get to eat what they kill; they maintain extra of the income they earn for the deep runs within the NCAA Tournament versus evenly splitting tourney cash with all WCC members. You might definitely do one thing related with the ACC and the CFP, however once more I’m undecided it solves the underlying problem of a $30 million annual income distinction between ACC faculties and people within the leagues we’re already calling the Power 2. That’s going to pile up 12 months over 12 months.

If you’re simply telling others to confess that they’re much less beneficial than you’re and settle for a smaller slice of the pie, it’s not going to work. You’d be asking college presidents and athletic administrators to come back again to their campuses and admit they agreed to take much less cash, which places their faculty in a worse place within the current and future. They received’t do this, particularly if it’s simply to maintain just a few friends glad. I’m additionally probably not positive that acquiescing to the calls for of FSU and Clemson would cease them from leaving you a decade-plus from now anyway.

So … how do the colleges that need extra incentivize the others to go together with their plan? Or, I suppose extra precisely, considered one of their plans?

Staples: This is the place I wrestle. A risk to go away in 2034, or some 12 months near the top of the grant of rights, ought to really feel like an actual consequence. There is a possible future the place the Big Ten or SEC needs so as to add extra high quality manufacturers, and Clemson, Florida State, Miami and North Carolina could be candidates for one or each. (So would possibly NC State, Virginia Tech, Georgia Tech, Louisville and Virginia, for that matter.)

For faculties reminiscent of Boston College, Duke and Syracuse, that is thought of a battle for survival at this degree of school sports activities. But will probably be the folks at these faculties who make these choices. What is the typical size of an athletic director’s tenure? Of a college president’s tenure? Should any of those folks fairly count on to be of their positions in 2034? And if not, how incentivized would they be to care concerning the long-term well being of the league? Also, what if the colleges pushing for uneven distribution get what they need now and simply go away anyway when the time comes? Then, in case you are nonetheless in that position, you’re an AD or college president who gave away cash for nothing.

Phillips, who did nothing to trigger this however is getting paid to handle it, in all probability worries deeply concerning the long-term well being of the league. He definitely wouldn’t need to be the commissioner who presided over the league’s breakup. Nor does he need to need to deal for the subsequent decade with dug-in factions who essentially disagree on a significant problem.

What is the top recreation?

Auerbach: I’m not solely positive. Maybe it’s simply protecting this problem prime of thoughts — in order that it continues to be mentioned in ACC assembly rooms and out of doors of ’em? I can perceive the stress that an AD at FSU or Clemson could really feel from their board or from distinguished boosters to get this kind of message on the market publicly.

We deserve extra! We are extra beneficial than others!

Andy, you and I see the nervousness and listen to the chatter from fan bases throughout the nation on daily basis. Everyone’s apprehensive about income, stratification and falling behind. So it could assist followers to listen to your leaders preventing for extra. But I’m additionally undecided there’s going to be sufficient of an impetus right here to drive change.

Of course, one other potential end result is that somebody truly decides to problem the grant of rights in courtroom.

Staples: If that occurs, issues might get very messy. But I don’t suppose anybody is able to take that leap fairly but.

(Top picture: Jim Dedmon / USA Today)