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Sunday, May 23, 2004

Suit Accuses NCAA of Antitrust Violations: A former walk-on at the University of Washington has filed a lawsuit against the NCAA, claiming that the organization's scholarship limitations violate antitrust laws. The suit is a proposed class action on behalf of all Division I-A football players in the past four years that were not granted scholarships. The named plaintiff played football at Washington from 1997 to 2000.

This lawsuit seems doomed on a number of levels. For one, the roster sizes in all sports are capped. An NBA team can only have so many players and the same goes for all other professional sports teams. And the fact that the suit was brought in the context of football only adds to the problems. Currently football teams are limited to 85 scholarships per season, which is approximately 6 times higher than the number awarded in any other sport. In fact, teams are only allowed to dress 60 players for a game, meaning that 25 full scholarship players watch from the stands every week. Moreover, due to Title IX limitations, increasing the number of football scholarships would mean decreasing other male athletic opportunities, a practice that has garnered significant criticism in recent years. So, on a policy level, the plaintiff seems to have a tough climb.

In addition, much of the existing legal precedent goes against the lawsuit. The plaintiff relies on Law v. National Collegiate Athletic Ass'n, 134 F.3d 1010 (1998), a 10th Circuit case which overruled an NCAA limitation on the compensation of college coaches. However, much of the language in that opinion actually goes against the plaintiff's case. While the court agreed that NCAA rules could be subject to antitrust violations, it held that because the NCAA's product required certain horizontal restraints on trade to survive, then its rules would be subject to a "rule of reason" test rather than holding the restriction illegal per se.

    Rather, what is critical is that this case involves an industry in which horizontal restraints on competition are essential if the product is to be available at all. The "product" made available by the NCAA in this case is college basketball; the horizontal restraints necessary for the product to exist include rules such as those forbidding payments to athletes and those requiring that athletes attend class, etc. See NCAA v. Board of Regents, 104 S.Ct. 2948 (1984) (what a sports league and its members "market ... is competition itself.... Of course, this would be completely ineffective if there were no rules ... to create and define the competition to be marketed.").

The court held that, since the restriction on coaches' salaries had not been proven to have any impact on the competitive balance, the limitation failed the "rule of reason" test and thus violated antitrust laws.

In contrast, the regulation at issue here seems to have a direct correlation with leveling the playing field and protecting the NCAA's product. Without restrictions on scholarships, the powerhouse football academies could grab a significant portion of the talent, which would both improve their team and harm their opponents. Many players are lured to the big name schools, often believing that they will star, no matter the competition. In fact, the plaintiff in this lawsuit admits that while he could have gone to a smaller school on a scholarship and started, he stayed at Washington because he "wanted to be a Husky."

Courts in a number of other cases have applied NCAA v. Board of Regents in upholding NCAA rules against antitrust violations. In McCormack v. National Collegiate Athletic Ass'n, 845 F.2d 1338 (1988), the 5th Circuit upheld the "death penalty" violations against the SMU football team for numerous violations.

    The essential inquiry under the rule-of-reason analysis is whether the challenged restraint enhances competition. Applying this test, we have little difficulty in concluding that the challenged restrictions are reasonable. The Supreme Court indicated strongly in Board of Regents that such was the case. In a paragraph mentioning the eligibility rules expressly, the majority stated:

      It is reasonable to assume that most of the regulatory controls of the NCAA are justifiable means of fostering competition among amateur athletic teams and therefore procompetitive because they enhance public interest in intercollegiate athletics.


      Thus, the NCAA plays a vital role in enabling college football to preserve its character, and as a result enables a product to be marketed which might otherwise be unavailable. In performing this role, its actions widen consumer choice--not only the choices available to sports fans but also those available to athletes--and hence can be viewed as procompetitive.

    The eligibility rules create the product and allow its survival in the face of commercializing pressures.

Thus, it appears the plaintiff has a difficult road to winning the case. He must prove that the rule (1) violates the "rule of reason" and (2) is not necessary to promote the competitive balance in the NCAA, and the weight of precedent is against him on both.


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