The ACC Lawsuits Won鈥檛 Ruin College Sports

<好色先生TV>Florida State and Clemson are merely riding an existing deregulatory wave.

Not that long ago, college sports were relatively predictable. Like the U.S. passenger airlines, trucking fleets, and freight railroads regulated by government entities before President Jimmy Carter鈥檚 deregulation efforts in the late 1970s, college athletics were strictly bound by rules enforced by the National Collegiate Athletics Association (NCAA). These rules set boundaries ostensibly to keep competition level on the playing fields and in the arenas.

The recent filed by Clemson University and Florida State University against the Atlantic Coast Conference (ACC) are indicative of a new era in college sports, one that would have been unthinkable not long ago. To better understand the current situation, one must first grasp how college sports were governed before the huge changes that have come about in the past five years.

The Clemson and Florida State lawsuits are indicative of a new era in college sports.Despite claims that NCAA regulations were often irrational, they existed to keep college and university presidents in charge of their athletic departments and, more importantly, to make sure that donor and booster contributions were directed toward educational institutions, not athletes.

Conferences like the ACC, the Southeastern Conference (SEC), and the Big Ten also were regulated entities that operated under predictable sets of rules. In football, the conferences were tied to bowls at the end of the season, such as the venerable Rose Bowl, which matched the winners of the Big Ten and the Pacific-8 (later the PAC-12) conferences. The SEC winner would play in the Sugar Bowl, while the Big Eight (later the Big 12) winner took a spot in the Orange Bowl.

Like regulated industries in transportation and telecommunications, college sports had limited areas of competition. But that led to competition in unexpected places. Just as airlines, forbidden to compete on routes and prices, emphasized luxurious flights and beautiful flight attendants, colleges and universities competed on a couple of fronts: building new athletic facilities and cheating.

The NCAA鈥檚 rules allowed athletic programs to provide scholarships to cover tuition, fees, room and board, and books. Anything else was considered a rules violation, and colleges whose athletes received money or gifts from outside contributors could be punished by the NCAA, all the way to having their offending programs suspended. The NCAA also tightly controlled the purse strings that came with television money, and, until the early 1980s, the NCAA permitted only one collegiate football game to be broadcast on fall Saturdays.

As with transportation and telecommunications before 1980, this highly regulated landscape made college sports predictable, with revenues easily controllable by college presidents. While programs did 鈥渃heat鈥 (and, face it, they did so on a regular basis), the amounts of money involved were minuscule compared to what flows in and out of college sports today.

Clearly, the landscape has changed and changed rapidly. While much attention has been directed toward the development of 鈥淣ame, Image, and Likeness鈥 (NIL) deals, the real evolution in college sports has been the rise of the megaconference, with the Big Ten and SEC leading the way. Indeed, the main complaint of both Clemson and Florida State of late has been that the Atlantic Coast Conference is being overshadowed to the point of irrelevance. With membership in a megaconference comes not only extraordinary TV-deal riches but a strong benefit of the doubt where playoff selection is concerned. The ACC grants its schools neither of those blessings.

With membership in a megaconference comes not only TV-deal riches but the benefit of the doubt where playoff selection is concerned.Perhaps the pivotal event occurred last December, when Florida State鈥檚 football team, despite being the unbeaten ACC champion and the fourth-ranked team in the nation according to the Associated Press, was shut out of the four-team College Football Playoff, shunted aside for one-loss teams Alabama and Texas. The backstory is that FSU鈥檚 starting quarterback had been badly injured late in the season, and playoff officials obviously questioned the team鈥檚 ability to be competitive without him.

However, it also was clear that the SEC wanted Alabama in the playoffs. Since Texas had beaten Alabama early in the season and had only one loss, the committee could not include Alabama and not bring in Texas, as well. Since the University of Washington and the University of Michigan (which ultimately won the national championship) were ranked above FSU, bringing in Alabama and Texas put FSU on the outs. While the pundits focused on team strength, the real strength was the influence of the SEC over the ACC. And with the SEC bringing in Texas and Oklahoma for the 2024-25 school year, the SEC鈥檚 advantage over the ACC can only increase.

Clemson and FSU are the two most successful football programs in the ACC. Once it became obvious that their own fortunes would be only as strong as their conference leadership, they looked to get out and jump to a stronger conference, presumably the SEC or Big Ten. However, the ACC quite reasonably looks to levy 鈥渆xit fees鈥 on these universities, which are contractually bound to their current conference through 2036. Hence the lawsuits that FSU and Clemson have filed. This explains the situation thusly:

Clemson is essentially making the same argument as Florida State, which boils down to claiming the financial penalties involved with the ACC鈥檚 exit fee (three times the ACC鈥檚 operating budget) are exorbitant and unreasonable, and the grant of rights (which gives the ACC ownership of each member鈥檚 TV media rights through 2036) unfairly restricts Clemson鈥檚 right to maximize its brand value.

It continues:

In short, Clemson is suggesting that a grant of rights is unenforceable and illegal, a claim that could potentially have massive ripple effects throughout the college sports landscape if a judge agreed. But given the rapidly changing landscape of college sports, Clemson argues prohibiting free movement among schools could be a potential death sentence for its program.

Clemson and Florida State are asserting that their football successes are a major factor in whatever TV contracts the conference can negotiate. They want to be able to claim their share and take that share with them should they move to other conferences. The ACC, understandably, wants to keep as much revenue as it can.

While college sports fans might not like all the alterations that are coming, the emerging product will be even more popular.Because the College Football Playoff is expanding to 12 teams this year, the financial benefits going to football programs will be even more concentrated, and programs that are on the outs are likely to sink into irrelevance. Because football is a major source of funding for other college sports programs (except for men鈥檚 basketball), the success of a football team will have a major impact upon the fortunes of the universities they represent.

For example, Alabama鈥檚 football success under the recently retired Nick Saban led directly to massive increases in revenue for the university鈥檚 academic programs, as enrollment not only grew but came largely from out-of-state students paying higher tuition. The 鈥淪aban Effect鈥 is not unnoticed by Alabama鈥檚 rivals.

As college sports are being 鈥渄eregulated,鈥 we will see more movement like this. The major industries that had regulatory shackles removed reinvented themselves and became stronger and more economical, not to mention richer. The Clemson and FSU lawsuits are part of that changing process, and while college sports fans might not like all the alterations that are coming, the emerging product will be even more popular than ever.

William L. Anderson is professor emeritus of economics at Frostburg State University and a senior editor for the Mises Institute. He has published in Public Choice, American Journal of Economics and Sociology, The Independent Review, Quarterly Journal of Austrian Economics, and many other journals.