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Thursday, March 05, 2009
 
BCS and Antitrust

USA Today's Steve Wieberg reports this morning that the Mountain West Conference yesterday "unveiled a plan that would recast the BCS' four current bowls — FedEx Orange, Allstate Sugar, Tostitos Fiesta and Rose — as quarterfinals in an eight-team playoff, quadrupling the number of teams that get a shot at the national title." [The complete proposal (pdf) is linked in the article.] Wieberg notes that the proposal would alter the way teams are placed for the BCS bowls, setting up a 12-member selection committee that would rank the top 25 at the end of the regular season and slot eight teams into a playoff format, and those slots would still take into account automatically qualifying conference champions.

I raised the question whether the BCS system constitutes an illegal restraint on trade under Section 1 in a post back in 2005 (which, ironically, was one year after Utah's 2004 undefeated season). Here is what I wrote four years ago: "So in other words ladies and gentlemen of the jury: The six largest athletic conferences got together and agreed that the teams in their conferences have the toughest schedules and should, therefore, have a greater opportunity to compete for a national title to the exclusion of an undefeated team that simply does not compete at their level according to them (such as a Tulane in 1998 or a Utah in 2004), and they devised a system to accomplish those ends." And now you can add, "a Utah in 2008".

In antitrust speak, Mountain West's proposal could be viewed under a rule of reason analysis as "a less restrictive alternative" that serves the same procompetitive justifications as the current BCS system in crowning a legitimate college football champion, but which does so in a manner that does not produce the same anticompetitive effects.





5 Comments:

Rick:

Great post. You know, it's funny: I am probably in the ultra-minority here, but I believe that every time the BCS is tweaked, the BCS becomes more anti-competitive (rather than less so). If there were only six conferences eligible to compete in BCS Bowl Games, it would be more challenging for a plaintiff to define a bona fide market in which the BCS clubs have market power. (Remember, the issue is competition for consumers, not competition to call oneself a champion).

Each time additional conferences and at-large bids are added to the BCS, however, it actually becomes more difficult for schools to compete outside the system because the number of premier college football programs with which to schedules games outside the system
declines.

In addition, lets not lose sight of that in the context of schools like Utah, the problem might just be their own darned fault. (I'm serious). All NCAA schools are part of a different conspiracy to restrain student-athlete "wage" rate at $0. Lets face it, if one of the smaller conferences broke away from the NCAA and started paying their student-athletes fair market wage, they might develop the level of talent where both consumers and the media recognize them as the national champs. However, the State of Utah only seems concerned about restraint of trade when the result of that restraint works against their interests.

How about applying an unclean hands doctrine against an antitrust challenge? Has it ever been done?

Blogger Marc Edelman -- 3/05/2009 9:28 AM  


Marc,

I completely disagree with you that not paying wages to college players has a bearing on whether the BCS system violates Section 1. So I don't even view it as unclean hands, but in any event, I can't recall its prior application in an antitrust case.

Blogger Rick Karcher -- 3/05/2009 10:14 AM  


Rick:

I didn't expect you would agree with me about the point of the NCAA conspiracy in restraining student-athlete wages serving to weaken Utah's claims of anticompetitive effects with respect to the BCS. Few do on that point. And frankly, I'm still trying to fine tune my own argument, and am only about 50% sold on it at the moment.

However, my argument mainly reverts back to cases where prospective sports team owners seek entry into an existing league, such as the cases Mid-South Grizzlies v. NFL, 720 F.2d 772 (3d. Cir. 1983) and Seattle Totems Hockey Club v. NHL, 783 F.2d 1347 (9th Cir. 1986). In those line of cases, courts have found pro sports leagues' entry restrictions were pro-competitive because they encouraged the restricted teams to go out and form a competitive league (for example, a league that could compete against NHL and NBA teams).

If you accept the economic analysis of those cases (albeit, I am not sure that we should), the oldest version of the BCS, which did not have any at large bids, may have actually been pro-competitive under the Rule of Reason, because it induced those football teams excluded from the BCS to create alternative tournaments that might be more desirable to consumers. In addition, I am not sure the six BCS conference schools even have market power (if it is in the market for ticket sales, just look at ticket prices and attendance at second tier Bowl Games. It's not bad).

In fact, without having the economic data at this point to support it, it seems the no. 1 thing that schools like Utah or Toledo could do to create an alternative Bowl System that would be more enticing to consumers would be to get better players than BCS teams. The best way to do that is by agreeing to pay student-athletes. However, these schools have chosen (through a separate conspiracy which they are apart of) not to compete on those terms, and not meet consumer demand.

Hence, schools like Utah and Toledo may need the BCS in a way that they would not if they broke away entirely from the NCAA and its imposed restraints of trade.

I'm curious to hear your counter. If this argument is such a clear dead fish, why is it sure to sink?

Blogger Marc Edelman -- 3/05/2009 12:30 PM  


Marc,

The wage issue involves a completely different product market, and a completely different antitrust injury to a completely different party. So, honestly, I'm struggling with why the wage issue should even be a factor in the analysis.

It seems like you're arguing that there is no injury to competition in a relevant product market because Utah is seeking to join the BCS rather than compete with it (similar to the line of reasoning in the Grizzlies case, which is of dubious validity as it relates to the BCS).

I'm not suggesting that the BCS violates Section 1. I do think there is a very good chance it would survive summary judgment though.

Blogger Rick Karcher -- 3/05/2009 2:22 PM  


Rick,

Totally agreed on the surviving summary judgment point.

I look forward to seeing you, Mike, and the rest at Harvard next weekend.

All the best.
Marc

Blogger Marc Edelman -- 3/05/2009 4:00 PM  


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