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Wednesday, August 17, 2005
NCAA and NIT Near Settlement in Federal Antitrust Dispute

The Indianapolis Star's Mark Alesia, who has covered this story with remarkable depth and insight, writes about the NCAA and NIT nearing a settlement in their federal antitrust litigation. (Alesia, "NCAA and NIT Settle," Indianapolis Star, 8/17/2005). Although the settlement terms remain unknown, Alesia speculates that, aside from paying off the NIT, the NCAA might temper their rules that restrict member schools' appearances in "exempt" tournaments like the Maui Invitational and Preseason NIT. Currently, schools can only participate in 2 exempt tournaments in a 4-year period. Exempt tournaments are popular both for economic and player development reasons, since they often involve multiple games for one team, but only count as one game against the maximum in a season.

So why did this settlement emerge? From the NCAA's perspective, a settlement likely made more sense than gambling that a court wouldn't nullify their extraordinarily-lucrative monopoly on premiere college basketball. This risk-averse approach appears sensible, and it illuminates why wealthy businesses and persons often settle when sued, even when they "know" they are in the "right": it's better to hand-over your wallet than risk losing your life. The NIT, in contrast, had a very difficult case to prove, so rather than litigate and lose, it could settle and extract some of the terms that it was seeking and was unlikely to obtain through litigation. Click here for past coverage of NIT v. NCAA on Sports Law Blog.

**Update 8/17/2005 7:25 PM**: The settlement described above proves to be more of a sale agreement: the NCAA has purchased the NIT for $41 million, along with furnishing a $16 million pay-out in order to end the litigation. Thus, any potential rivalry by the NIT is eliminated. This outcome, of course, contradicts everything the NIT had claimed to be fighting for -- namely, becoming a legitimate rival to the monopolistic NCAA (which, with its purchase of the NIT, becomes a true monopoly). Instead, the NIT has sold itself out, and allowed the NCAA to not only continue, but expand the very practices that the NIT had claimed were deleterious to basketball fans.


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