Amid financial gap, ACC moves toward unequal revenue distribution model

By Brian Murphy, WRAL sports reporter

The Atlantic Coast Conference's athletic leaders moved closer this week to a revenue distribution system that would allow more successful programs to earn more money from the conference.

The league held its annual spring meetings this week in Amelia Island, Florida, with the conference's future uncertain amid a growing revenue disparity with the Big Ten and Southeastern Conference, a contract that tethers members to the ACC for another decade-plus and a report of a group of schools potentially seeking a way out.

North Carolina and NC State were among a group of seven ACC schools meeting together with lawyers to study the league's Grant of Rights contract for potential ways out, according to Sports Illustrated. Clemson, Florida State, Miami, Virginia and Virginia Tech were also part of the subgroup, the existence of which fueled speculation about the future of the league.

Virginia Tech athletic director Whit Babcock confirmed the meetings and participants to the Richmond Times-Dispatch.

"It can kind of fester with certain schools, cause some major disagreements," ACC commissioner Jim Phillips said on the ACC Network on Wednesday. "This is a healthy process that we're going through. It really is. In the end, this is no different than the last, necessarily, 50 to 60 years in college sports (with) conference affiliation. What's best for my school? We love the conference. Is this the right conference for us to be in? People have the right to do those kinds of self-evaluations."

Phillips deferred questions about the substance and scope of the conversations between the seven schools to those institutions.

"I welcome them whenever they come to Greensboro to kind of look at the media rights deal," he said. "Because, at times, it can be a session where they're looking at ways that maybe we haven't looked at that could create some additional revenue. So I don't take that personally. It's part of just, I think, overall people getting to a place and understanding what's best for you individually. And how does that affect the ACC?"

Florida State athletic director Michael Alford, one of the primary agitators for unequal revenue distribution and a critic of the ACC's rights agreements, said on ACC Network that the league's athletic directors held their "most open, transparent conversations" during the meetings.

"The revenue gap is there and we need to address it," he said, adding that he is confident in Phillips. "I love the direction the conference is going, love some of the solutions they've provided and I'm hopeful and very optimistic."

No vote was held on a revenue distribution model this week, but Phillips said league presidents will be presented the conference's "success initiative" next week. The league could change how it distributes revenue from the soon-to-expand College Football Playoff and other postseasons, but not the television contract.

"How do you reward those that are having success and so everybody has a chance to have success," Phillips said. "But those that compete at the highest level, those that can be national championships and get into the College Football Playoff or the NCAA Tournament, they should be rewarded at a higher rate than maybe those that aren't."

Phillips said the league is still considering specific details about the theoretical plan.

North Carolina athletic director Bubba Cunningham has previously called for unequal revenue distribution. He was also a member of a working group studying the issue.

"How are we going to shorten that gap with our other peer conferences?" Alford said on ACC Network. "We have the third-best multimedia rights deal and TV contract out there. We're going to continue to have that."

The ACC generated a record $578 million in revenue in 2020-21, the last year for which conference revenue data is available. But the SEC ($833 million) and the Big Ten ($679 million) were well ahead. The Big 12 ($343 million) and Pac-12 ($356 million) were behind, though leagues have different numbers of member schools and rights agreements.

And that's before the SEC adds Texas and Oklahoma and sees a giant increase from moving its CBS game of the week to ABC/ESPN. The Big Ten, which is adding USC and UCLA, cashed in enormous television deals with FOX, NBC and CBS. Distributions from both leagues will soon be $30 to $40 million larger than the ACC's distribution, Alford said.

The newly reconfigured Big 12 also agreed to a new TV rights deal.

The ACC's agreement with ESPN runs through 2036.

"Let's try to come up with something that makes sense for the entire conference," Phillips said. "And that no one goes backwards financially. That they continue to grow, but maybe they don't grow at the same rate. And those that have greater success get more of a share of some of those revenues that are coming in."

The league distributed between $38.1 million (Clemson) and $34.8 million (Notre Dame) to its 15 members in 2020-21, a year in which Notre Dame played football in the league due to the COVID-19 pandemic. In 2019-20, the league distributed between $36.9 million (Clemson) and $30.8 million (Georgia Tech) to its 14 football-playing members with Notre Dame receiving $10.8 million. Those figures are from the league's tax forms filed with the IRS.

Some ACC schools could be expansion targets for the SEC and Big Ten in the future if those leagues opt to grow beyond 16 teams each. The Grant of Rights makes that impossible at the moment, one reason schools have sent legal representatives to the ACC's Greensboro office to examine it.

The conferences have been in near-constant flux since the early 1990s when the ACC added Florida State. The ACC itself was formed when seven schools, including four North Carolina schools, left the Southern Conference in 1953.

"Alignment and television rights and revenue sharing, this has been every day for 13 years as an athletics director," Wake Forest athletic director John Currie said on ACC Network. "It's really not any different."

The issues aren't going away anytime soon.

"There's no magic bullet that closes that gap, so we're going to have to be creative," Phillips said.