Analysis: The ACC is trapped in an unfavorable TV deal. What can they do about it?

Editor's note: This is a part of the realignment series. Read part one and part two here.

Realignment in the ACC isn’t coming anytime soon. But that isn’t stopping schools from starting preliminary discussions on what their next move should be.

According to reporting from CBS Sports' Dennis Dodd, Florida State presented the discrepancies of television contracts between the ACC and other large conferences such as the Big Ten and SEC to its board of trustees last month.

While the ACC is stuck in its media rights deal with ESPN until 2036, the Big Ten and SEC will have new TV contracts beginning in 2023 and 2024, where each school in the respective conferences will earn $67 and $51 million per year. According to the conference's 2019 tax returns, each ACC school is only making $23.3 million, which has left the ACC searching for potential solutions to close the wide gap.

One potential solution that's been floated is unequal revenue distribution. With this method in place, the 15 member schools of the ACC would no longer receive the same amount of revenue. Instead, higher-earning schools would get a larger piece of the television contract.

While unequal revenue distribution would help to close the gap between the conferences, the practice still wouldn't get a higher-earning ACC school close to the $51 million number that SEC schools make. Even with taking a share of another school’s money, they’d still be nearly $20 million short of what all 16 SEC member schools will receive from their new contract with ESPN.

The goal of unequal revenue distribution hinges on the idea that smaller ACC schools will be more than happy to share some of their money with the big schools in the hope of “saving” the conference. However, with the finances — and politics — involved in college sports, this solution is unlikely.

Also, given that the ACC contract runs through 2036 and the Big Ten contract runs through 2030, the Big Ten will get the chance to cash out big once again while the ACC schools are still fighting to find a way to increase their revenue. With each Big Ten school possibly making upwards of $67 million per year, that number could potentially increase to around $100 million per school per year, which would further expand the gap in TV revenue between conferences.

Ultimately, ACC schools won’t be able to withstand the gap that will be created and will have to make a move of some sort.

One option is to convince ESPN to restructure the contract so that ACC members would make revenue comparable to that from the SEC and Big Ten. This strategy could make sense for the sports network, given that ESPN holds a stake in the ACC staying together because of the money it makes from broadcasting the conference’s games. If the ACC fails, then the investment that ESPN made goes down with it.

However, ESPN holds leverage over the conference and would want some sort of return from the ACC. And what could the conference potentially have to offer ESPN? That question will need to be explored by athletic directors if they want to salvage the conference.

The ACC is unlikely to fall apart in the short term, as the grant of rights lasts until 2036 and is holding the schools together until one member is brave enough to challenge it. The reason why the issue is being brought up 13 years before the document even expires is that a long legal battle could ensue once a school tries to leave the ACC. Such a legal battle may not be decided before the Big Ten’s new TV contract expires in 2030. 

Also, the amount of money that schools would have to pay to buy out of the conference wouldn't be worth it if they left in 2023 with nowhere to go. Leaving in seven years to go to the Big Ten when the conference could get an even more lucrative TV contract would, in part, help make up for the money that ACC schools would be missing out on by having left the conference.

All in all, the ACC finds itself in a predicament with few immediate solutions. However, schools like Florida State are starting to try to figure out what they need to do in order to keep themselves competitive with schools in the Big Ten and SEC.

Buckle up, folks — it could be a long ride.

@thenoahmonroe

@dthsports | sports@dailytarheel.com