NCAA v. Board of Regents of the University of Oklahoma, 468 U.S. 85 (1984).
Illini v Michigan by Tom Magliery
It’s tough to imagine in these days of the Big Ten Network, ESPN, and the like, but the NCAA used to limit the number of college football games shown on TV, the number of times any team could appear on TV (with some Byzantine exceptions), and negotiate for a set price. A group of football powerhouses formed their own organization and negotiated their own TV contract with NBC. They wound up suing the NCAA for antitrust violations after the organization announced sanctions against any school that complied with the rogue television contract.
The case went all the way to the Supreme Court and the NCAA lost. First, the court held that even though the NCAA controls constituted a horizontal restraint on trade, that was okay because the NCAA and its member institutions market college football competition. In order to have that competition, there need to be restrictions on the game itself, like the rules of play, and restrictions to maintain the character of college football as a collegiate sport, like academic requirements.
Second, despite agreeing that college football needs restraints, the Court went on to hold that the NCAA’s television controls had significant anticompetitive effects without justification and were, therefore, a violation of the Sherman Act. The court noted that for contracts to televise college football, the “[p]rice is higher and output lower than they would otherwise be, and both are unresponsive to consumer preference.” In a footnote, the Court quotes an economist who illustrated this point by explaining that people in Indiana are intensely interested in seeing the Ball State-Indiana State football game, even though that game lacks national interest.
The case is interesting to think about in light of big money controversies like conference realignment. Under the old rules, a team couldn’t make any more television revenue by switching conferences because it would still be limited in the number of times it could appear on TV. So was the dissent correct to say that the NCAA needed to limit TV coverage of college football in order to preserve amateurism in college sports? Or is this a simple case of restricting the output of something consumers want?
Bonus: You’ll learn about “illegal per se” horizontal price fixing and output limitation, the Rule of Reason, and other basics of antitrust law.
