The NCAA In Court
The LA Times has an excellent article about two antitrust lawsuits that the NCAA is facing. According to the article:
One of the lawsuits, filed by former walk-on football players in a federal court in Washington state, challenges an NCAA cap on the number of grants-in-aid that big-time college football programs can offer to athletes. The other suit, filed in Los Angeles by former football and basketball players, argues that the grants awarded to athletes fail to cover the full cost of attending college. … The NCAA argues that the contested rules are needed to “maintain a clear line of demarcation between intercollegiate athletics and professional sports.” But the lawsuits underscore the fact that collegiate sports have turned into a big business. “What it comes down to is that the coach is making money, the schools are making money but the players are severely restricted,” said Daniel E. Lazaroff, director of Loyola University’s Sports Law Institute. “What the plaintiffs are arguing is that caps aren’t reasonably necessary, that they’re really an artificial attempt at cost-containment.” … Should the grant-in-aid rules be found in violation of antitrust law, some observers suspect that public pressure would force Washington, D.C., to move to protect the status quo. Brad Humphries, an economist at the University of Illinois, says that irate fans would lobby legislators to “step in and do for collegiate sports what it did for baseball” by granting the NCAA an antitrust exemption.
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March 29th, 2006 at 1:13 pm
I agree with Gary Roberts that the plaintiffs are going to have a very tough time. Given the Bd. of Regents of Univ. of Oklahoma v. NCAA case, no court is going to apply a per se rule to the NCAA rules that are being challenged. Under a rule of reason analysis the NCAA is going to have a couple of strong procompetitive justifications for those rules. First, if there were no limits on compensation, major college sports would turn into minor league sports thereby destroying the very nature of the product being offered. While tens of millions will probably watch the Final Four, not even tens of thousands will watch the championship of the Continental Basketball Association (assuming it still exists). It is true that while no limits on compensation might destroy the product of college sports, the current limits may be set needlessly low and go well beyond those necessary to preserve the “brand identity” (no pun intended) of college athletics. While I’m somewhat sympathetic to that argument, I just can’t see an antitrust court wishing to insert itself into the business of second guessing the NCAA on the how much aid should be given through athletic scholarships.
The NCAA’s second argument will be that limits on “compensation” are necessary to maintain competitive balance and keep up interest in the college game. The NCAA tried to make the same argument to defend their limits on assistant basketball coaches salaries and got shot down. The difference is that it is really a strech to say that assistant coaches salaries affect the competitiveness of a college basketball team. A claim that the competitiveness of a college football or basketball team is strongly influenced by the number and amount of athletic scholarships is a heck of a lot more credible. In fact, if memory serves me correctly, in a case challenging the NBA’s salary cap, a judge in the Southern District of New York opined that the limits on compensation by that professional league would pass antitrust muster, even outside the collective bargaining antitrust exemption because of the need to maintain competitive balance(I believe the 2d Circuit affirmed on the basis of the labor exemption and never ruled on the district court’s alternative basis). A de facto cap imposed by the NCAA has an even stronger rationale because, unlike a professional sports franchise, a college or university usually doesn’t have the option of moving to a different location to increase its revenues and enhance its competitive position.