ACC expansion discussions are intensifying as conference leaders continue to consider the acquisition of Stanford, Cal and SMU, multiple sources tell Yahoo Sports.
Believed to be a long shot just days ago, expansion remains a legitimate possibility as new financial models have been socialized with league administrators. The models show a financial boon of roughly $72 million in annual additional revenue for the conference, sources tell Yahoo Sports.
Two of the three expansion targets, Stanford, the bell-cow of the group, and Cal, are proposing to take a significantly reduced revenue distribution for multiple years, starting at about 30%. SMU is proposing to take no distribution for as many as seven years, something Yahoo Sports reported more than a week ago. Options range from adding all three, adding only Stanford and Cal, adding only SMU or adding none of them.
The additional revenue that the new expansion targets would forego is new money to current ACC members — an important note for a league that has been searching for additional revenue to appease restless members. Over the next 72 hours, administrators are expected to discuss what is the key issue in the expansion debate: How the additional revenue will be distributed.
More meetings among ACC administrators are planned for this week, including a call with presidents Thursday as well as a separate meeting with athletic directors. The timeline is murky, but a final decision is expected as early as next week. Several sources expressed confidence in a reversal of a straw poll taken two weeks ago.
In a straw poll of presidents on Aug. 9, an expansion vote fell at least one vote short of passing. In needing 12 of 15 votes for approval (Notre Dame receives a vote) there were four dissenters: Florida State, Clemson, North Carolina and NC State.
Money — and how that money is distributed — is the factor in changing minds.
The ACC’s television contract with ESPN includes a pro-rata clause requiring the network to increase the value of the deal by one Tier 1 share for every new member — believed to be about $24 million a share, or about 70% of a full ACC share, which includes Tiers 1-3.
The ACC would stand to earn about $72 million in new money with the three expansion shares. Cal and Stanford have agreed to each take about 30% of the $24 million share, or roughly $7-10 million. After Cal and Stanford’s share and travel costs are offset (roughly $1-2 million per school), the ACC stands to earn at least $30 million in revenue to redistribute, likely through an incentive pool based on athletic success.
The incentives are expected to be heavily weighted toward football success, including such things as winning championships, final top-25 rankings and bowl assignments.
However, negotiations are ongoing regarding a distribution method for the additional revenue. The extra $30 million or so annually distributed evenly to all schools is a fraction of a Power Five athletic budget (about $2.2 million per school) and is not thought to be healthy enough to incentivize any of the dissenters to change their minds.
The conference’s biggest brands, most notably Florida State and Clemson, have for months publicly and privately encouraged a revenue-distribution model based on athletic success as well as TV viewership. In May, the league approved a new distribution model for its College Football Playoff and NCAA tournament cash pool. Once split evenly among the group, that revenue will now be doled out based on a school’s athletic success in those events.
But that is one small portion of conference revenue. The largest portion — that from the television deal — will continue to be spread evenly among schools.
How the additional expansion revenue is distributed remains a discussion point: evenly or through an incentive-based system? The ACC’s decision on this could impact the entire expansion agreement.
“We will be ironing that out over the next 72 hours,” said one league administrator.
“The league has done a good job of finding a solution,” said another official. “I think this is going to eventually pass.”
All three new members would join in all sports, would sign the ACC’s grant-of-rights agreement and would see their annual revenue distribution slowly rise to become full share members by the end of the contract.
ACC schools are handcuffed for another 13 years as part of a binding agreement tied to an ESPN contract that pays league members roughly $30-35 million annually, only a portion of Big Ten and SEC TV cash — a growing gap that has sparked unrest among the conference’s biggest brands. Seven ACC schools were involved this spring in an organized effort to explore an exit path from the conference, such as dissolving the league entirely.
The expansion vote two weeks ago is yet another concept dividing a conference that is fracturing under the weight of money — itself a microcosm of college sports, where the biggest football (and basketball) brands are consolidating to increase their own value and keep their own profits.
The ACC’s decision with regards to Stanford and Cal is impacting two schools out West. Oregon State and Washington State, the other two schools remaining in a Pac-12 that only has four teams in place after the 2023 season, are delaying any decisions of their own. The duo wishes to rebuild the Pac-12 — already a tall hurdle that will be made more difficult without a brand like Stanford.
Without Stanford, OSU and WSU’s options are limited. Joining either the Mountain West or the American Athletic Conference are the most likely scenarios. A denial from the ACC could leave Stanford in a position of choosing independence, at least in football. Cal’s situation is more murky.