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Utah vs. The BCS: A Primer

Posted by Michael Collins on May 4th, 2011 under Football


Football, money and lawsuits seem to occupy our sports headlines today.  The NFL lockout continues, the NBA negotiations stall and the Dodgers are under league management with their owner threatening to sue.  The lines between professional and big-time college athletics appear to be blurring with the influx of media money and growing fan support.  As Utah Attorney General, Mark Shurtleff, prepares to file an antitrust lawsuit against the BCS this summer, here is a brief summary of the issues and arguments  for each side.

Scott Cowen, President of Tulane University, succinctly articulated the basis for the non-BCS conferences’ objections to the BCS in testimony before the House Judiciary Committee in 2003:  “Our country is based on the idea of equal opportunity for all, and our educational institutions are dedicated today to the principles of access, inclusiveness, fairness, and consistency.  It goes against everything we hold dear to allow – even encourage – a system that showers financial and reputational rewards on one member while unnecessarily denying or limiting the opportunity for another member to earn the same rewards.

“Everything we hold dear” as Americans includes fairness and an equal opportunity for all, as  well as rooting for the little guy.  Yet, in this case, Irish fans must realize that Notre Dame is not the little guy.  The implication of Utah’s antitrust case is that the administration of Notre Dame has colluded with the BCS conferences to unfairly limit competition and is involved in fixing reimbursements that deny other universities the same opportunities.

Or can the BCS system be unfair in many eyes but still legal?

Unfair vs Illegal

Admission into some universities like Notre Dame may increase someone’s opportunities for success, just as a football scholarship to some football programs may increase a player’s chances for getting to the NFL.  Yet as long as a BCS system provides an equal opportunity to success and equal reimbursement for BCS bowl participation, that system would be upheld by the courts.  Holes may exist in this and reasonable people may disagree.

The classic standard for violating the “Rule of Reason” standard such antitrust cases was written by Justice Brandeis:  “The legality of an agreement or regulation cannot be determined by so simple a test as whether it restrains competition.  Every agreement concerning trade, every regulation of trade, restrains…The true test of legality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroys competition.

Does a system’s pro-competitive aspects outweigh its anti-competitive aspects?

Brandeis continues on how to reach that judgment: “To determine that question the court must ordinarily consider the facts peculiar to the business to which the restraint is applied; its condition before and after the restraint was imposed; the nature of the restraint and its effect, actual or probable.  The history of the restraint, the evil believed to exist, the reason for adopting the particular remedy, the purpose or end sought to be attained, are all relevant facts.

The peculiar facts related to the business of sports leagues and conferences are given some leeway in antitrust issues in the courts not only because their formations are exclusionary in nature but also because they are established for the purpose of competition, usually ending in some reward for champions or qualifiers

For example, conferences can and do set their own rules that may distribute bowl royalties unequally, such as in the WAC, the Mountain West and the Big East.   The WAC’s rules allowed Boise State (’06-’07) and Hawaii (’07-’08) to keep 70% of the $6 million for their participation in BCS bowls with revenue-sharing by the other WAC teams of the other 30%.  Due to a change in conference agreements, Boise State kept only 50% of their BCS bowl revenue in ’08-’09.

As a conference agreement, a WAC school could not reasonably expect to sue Boise State in an antitrust case.  Utah State could not sue Boise State.  Boise State would argue that the pro-competitive aspects of the conference agreement reasonably outweighs the anti-competitive aspects of it and is necessary for competition.

The focus of any litigation by Utah, however, would be on the BCS as “an unreasonable restraint of trade” that acts as a “group boycott” limiting the non-automatic qualifier (non-AQ) schools.  Not only would the suit include BCS conference schools, including Notre Dame, but may also include the BCS bowls, media and likely some ranking systems like the coaches poll that could be proved to be biased.

Antitrust, The NCAA, and The Evolution of the BCS

The seeds of the BCS began when the Universities of Oklahoma and Georgia won an antitrust case against the NCAA, which sought to control television contracts and distribute revenue. As bowl games evolved with increasingly significant media rights and revenues for participants, the NCAA could only sit on the sidelines, observing as conference champions played in bowls with tie-ins.  Conferences then united to form the Bowl Coalition (1992), then the Bowl Alliance (1995) and, finally, the Bowl Championship Series (BCS) in 1997 with the goal of uniting the top two teams in the country for a national championship game.

Rating systems, bowls involved, and criteria have changed over the years since its inception.  The last change in selection criteria, which were revised in 2004 and which went into effect for the 2006-07 season, made it easier for non-AQ teams more access with a more liberal criteria. Prior to that agreement only one team, Utah in 2004-05, had met the criteria for being selected to a BCS bowl.  In the five years since then, six non-AQ teams have been to BCS bowls.

As another example of the dynamics in the history of the BCS, Utah, TCU and Boise State, who account for all but one of the seven BCS bowl appearances by non-AQ teams since 2004, have switched conferences this past summer.  Utah and TCU will join BCS conferences.  Utah joins the Pac-10 (12) this year.  TCU joins the Big East next year.  Boise State switched from the WAC to the Mountain West this year.  BYU has become an independent.

Utah and TCU have chosen to move into a group that “showers financial and reputational rewards on one member…” and into conferences with a guaranteed BCS bowl slot.

In Legal Terms

The focus of litigation by Utah would be that the BCS agreement acts as “an unreasonable restraint of trade” using a “group boycott” under Section 1 of the Sherman Antitrust Act, limiting the non-automatic qualifier (non-AQ) schools.  Not only would the suit include BCS conference schools, including Notre Dame, but may also include the BCS bowls, media and likely some ranking systems like the coaches poll that could be proved to be biased.

The allegation would be that these entities conspired in a “horizontal” price-fixing scheme, which limits the relative amounts that the non-BCS schools can earn and their opportunity to reach a national championship game.

But due to the increased frequency of non-AQ teams appearances in BCS bowls and the admission of two of the top non-AQ teams to BCS conferences undermine the “evil believed to exist” in this agreement between BCS and non-BCS schools?

Lines Are Drawn

A few months ago – with WAC Commissioner Karl Benson present – Jim Delaney, the Big Ten’s Commissioner said about the possibilities of changes in the BCS agreement:  “The notion that over time by putting political pressure on, it’s just going to get greater access, more financial reward and more access to the Rose Bowl, I think you’re really testing…. The only thing I would say, if you think you (the non-automatic qualifying leagues) can continue to pressure the system and we’ll just naturally provide more and more and more.  I don’t think that’s an assumption that our presidents, athletic directors, football coaches and commissioners necessarily agree with.”

Pac-10 Commissioner, Larry Scott, sounded the same: “The six (BCS) conferences have bent over backwards and tried to be politically correct to their own detriment, probably further than they had to, maybe should have.”

Big 12 Commissioner, Dan Beebe, voiced the alternative in blunt terms:  “Don’t push it past this because if you push it past this, the Big 12′s position is we’ll just go back to the old (bowl) system. You’re getting the ability to get to places you’ve never gotten before. We’ve Jerry-rigged the free market system to the benefit of those institutions and a lot are institutions that don’t even fill their stadiums.”

Until today, Mark Shurtleff, had been unable to get other states or federal antitrust agencies involved.  The Justice Department’s Antitrust head, Christine Varney, today sent a letter to NCAA President, Mark Emmert, asking why a playoff system is used for FBS football, what steps the NCAA has taken to create one, and what disadvantages fans, schools and players see to the BCS.  “Your views would be relevant in helping us to determine the best course of action with regard to the BCS.”

“Serious questions continue to arise suggesting the current Bowl Championship Series system may not be conducted consistent with the competition principles expressed in the federal antitrust laws,” wrote Varney.  Varney received a letter from a number of professors in April asking her to review the antitrust implications of BCS behavior.

Are big-time athletics headed to the courts once again?

Exhibit A - BCS Revenue/Payouts by Conference, 2004-11, Rankings, Non-AQ Participants

Exhibit B – BCS TV Ratings 2006-11

Exhibit C – NCAA 5 Year Summary of Revenue Distribution Including Income

Exhibit D – NCAA Bowl Finance:  Something changed in 1995

Further Reading:  Antitrust & The Bowl Championship Series, Nathaniel Grow, Harvard Journal of Sports & Entertainment Law, June 2010

The BCS, Antitrust and Public Policy, Andrew Zimbalist, Robert A. Woods Professor of Economics, Smith College.

Antitrust laws Do Not Provide Answer to Reforming the BCS, Gordan Schnell and David Scupp, Sports Business Journal Daily, August 2010

The Problem with Utah’s BCS Antitrust Claim, Josh Patashnik, The New Republic, 2009

Antitrust, Governance, and Post-Season College Football, Michael McCann, Boston College Law Review, 2011

An Antitrust Analysis of College Football’s Bowl Championship Series, Brett Fenasci, Loyola Law Review, 2004 (LexisNexis)

Network Effects, and Antitrust Law: Predation, Affirmative Defenses, and the Case of U.S. vs Microsoft, Max Schanzenbach, Stanford Technology Law Review, 2002

Next Week’s Article:  Arguments for both sides

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30 Responses

  1. TCU and Utah moving doesn’t help this case. Neither does the fact that the BCS can say to the courts that they have made some concessions for the Non-AQ schools. As you pointed out, those will be very strong arguments for the defendants in this case and I expect them to wield them like the hammer of Thor.

    I still think the discussion needs to be based more on picking/deciding a national champion and not about the money/exposure of the BCS bowls.

    Shouldn’t that be a major point for these talks?

    It’s great that TCU got accepted into the Rose Bowl (hooray!) and heck they even won it! But, they went undefeated and did not compete for a national championship.

    I just don’t like how everything is about the BCS bowls, and I think the discussion needs to seriously move away from making those bowl games out to be the holy grail(s) of college football.

    Putting it in terms of “fairness” and anti-trust and all that, the BCS will always win because we’re still playing by their rules. The Non-AQ schools have more access to BCS bowls, everyone has made more money, those schools are better than ever…how can a court possibly rule against what is going on when you look at it like that?

    It might not be the lawyerly approach, but I feel like it just needs to be known that the current system is stupid and way more money can be made through a playoff.

    And yes I would love to see some Utah guy in front of a committee saying, “The BCS is stupid.”

    We’ve been eating mediocre food and the BCS has spread a little bit more of the mediocre food to those in need. We could be eating delicious five course meals and have more for everyone with a playoff. But how does a case like this prove that point when all we’ll be talking about is the mediocre food and who should get more access to it?

    That’s my lame analogy.

  2. While I am not a fan of the BCS, I have a hard time when sports leagues are in the court room. As a taxpayer, I find it extremely frustrating that more important issues aren’t the focus. That being said, the BCS is stupid. It is basically a country club setting and I feel like the little guy is suing the country club because they don’t have enough money to join, but sure like the look of the golf course, tennis courts and pool. The system is broken, but do we really need to rely on the judicial system to fix it?

    Not that I am a lawyer, but it sounds like the case against the BCS is kind of weak, especially with the changes made that took effect a few years ago. Lack of access? Cowboy up and play these tougher teams in your out of conference schedule. I bet the Big 12 and Big East are still looking for football playing members. It just feels like the little brother is going home and complaining to mom that they didn’t get to play with the older kids.

    All that being said, the ball is in the NCAA’s court. With the Fiesta Bowl scandal (do you call it that?) and over-riding public opinion against the BCS system, is it time they step in and fix it? I believe that DI fooball is the only championship they don’t sponsor officially. Why not change it while you can?

  3. Whiskeyjack said:

    May 5th, 2011 at 9:30 am

    First, props to Eric for the Mjolnir reference.

    Second, I question whether Utah has standing to bring this lawsuit. They’re one of the few non-AQ schools to have enjoyed BCS berths recently, and they’re joining the PAC-12, which would make them complicit in any monopoly that might exist.

  4. “More money can be made in a playoff.” Are you sure about that? Let’s say it’s 16 teams, I doubt it could be more. That’s 15 games. The bowl system has about 34?? I guess it could make more TV revenue but, how much and divided how many ways?
    Secondly to the nonAQ schools, how many of you get in each season, in a playoff system? Careful what you wish for, you just might get it.

  5. It’d be so much more money it’s not even close.

    I haven’t seen many projections but I trust Dan Wetzel’s research as he has been nailing stories for years.

    Current bowl system pays about $220 million each year.

    A 16-team playoff would generate $25 million a game PER TEAM. That’s a $750 million purse right there.

    Seeing as how college football is right behind the NFL as the second most popluar sport in the United States, I don’t think these figures are that far off and are pretty much agreed upon even by those who oppose a playoff.

    The bowls can still be around and would take a 50% reduction in revenue, so the grand total climbs to $850 million for CFB’s postseason, or nearly four times the amount of money that is generated now.

  6. Eric,

    I think one of the weak points in the BCS is the national championship selection criteria. The non-BCS conferences never will have any chance, which is one of the reasons (money the other) that TCU and Utah are moving to BCS conferences. Recruiting and improved competition will help them build down the road. Who votes for an undefeated non-AQ team for the NC game against two of the conference champions?

    What happens if Utah goes 4-5 in conference this year? TCU and Boise State will vie for the non-AQ bid and next year Boise State may have no competition, but may have more difficulty in building a strong resume with weaker competition.

    A limited playoff would be an improvement, though maybe not justification for an antitrust case. Yet, like the breakup of AT&T, changes in the environment with BCS conferences absorbing the best non-AQs into superconferences, may be similar to change from land lines to cell phones, obviating the original price-fixing allegations.

  7. Jim,
    Thanks for your comments. The analogy changes, too, when the country club is Augusta National and those trying to get in are minorities and women.

    Law can be a lot like Archimedes’ lever. Find a place in the law for a lawyer to stand on and he can move the world.

  8. Whiskeyjack,

    Shurtleff could file on behalf of BYU, Utah State or the citizens of Utah, too. Yet a lot of suits are made just to attain concessions and never reach court. Sounds like the BCS Commissioners, who have teams from universities with the best Law Schools in the nation, appreciate that and are saying no more. Bring it on.

    Varney’s public move though is a shot across the bow. Usually the Federal Antitrust Division does not back down.

  9. Eric,

    Looks like we have come full circle. From Okla vs the NCAA to prevent the NCAA from controlling broadcasting rights of individual teams to a proposed playoff system for which the NCAA would bargain and reach agreement for broadcasting rights to these super-media entities – unless that leads to another court fight between the BCS conferences and the NCAA.

    http://www.cbssports.com/mcc/blogs/entry/6270202/28551497

  10. Bernie Machen, former President of Univ of Utah, became U. of Florida’s President in 2004 and was partially responsible for bringing Urban Meyer to Florida. He has seen both sides. His solution?

    “When I was at Utah, our athletics budget was around $20-22 million per year. Our budget here is $84.5 million … and the major difference is the bowl revenue and TV revenue …. I don’t think most people begrudge what we got because of being in the championship game, but all SEC schools got the same amount of money that we got. And Utah could beat a lot of SEC schools. That’s the unfairness. I think that’s got to be fixed one way or the other. One way to fix it would have been a playoff.”

  11. At the risk of being ovely simplistic, who in the end get’s to decide the criteria for getting in a playoff? Who get’s to decide how many teams are in the playoff? If it’s an eight team playoff (three rounds, very likely ) wouldn’t access still be very limited? My point being, what really changes for the non AQ schools. If the six AQ champs get in with two at large, do the non AQ teams deserve a shot over the 2nd place SEC or Big (10 or 12) teams?
    As it is now, schools like Utah and TCU could argue that occaisionally they deserve a BCS shot but, not that they are the best team in the nation. In the next couple years these two schools in particular, will find out the difference when playing in a BCS conference.

  12. I would think at some point the NCAA will have to take control (somehow) and institute a playoff of whatever variety. I agree that trying to “solve” how this all happens is incredibly difficult, but that would probably be the most common way. You know…just like every other college sport in this great nation of ours.

    How does an 8-team playoff not enormously increase access to a title?

    You can come up with any number of rules for the playoff, but I think the likelihood of those really good non-AQ teams being left out would be almost zero. Personally, I’d like to see a set of rules where a 11-1 BYU gets in over a 9-3 Big East champ, or something to that effect.

    Again, I go back to this not being about the bowl games per se. I’m more bothered when really great teams don’t make the title game and never get a shot at a championship because of the current system. Nearly every other year there are legitimate claims for teams to be in the title game and someone who gets “screwed.”

    I know the schools care (because they have to since its the system we use) but I don’t really care if school x gets left out of a BCS bowl game because school y got in instead. Sure that sucks for school x but I want to talk about championships, not glorified exhibition games.

    2010 TCU and 2008 Utah had no claim to being the best teams in the nation?

  13. Michael,

    Ahhh, a Dennis Dodd article?

    fire

    Just kidding….but not really.

  14. I finally learned how to post pictures in the comment section!!

    #winning

  15. TLNDMA –

    Even in an 8 team playoff, every one of those teams has a chance to win the national title. In the current system, there are only 2 team with the same chance. DI football is, more than any other collegiate sport, the haves vs. the have nots. Because of this, there are legitimately no more than a dozen teams on an annual basis who have a remote chance at playing in the title game, and many of them play eachother during the conference schedule.

    As far as money goes, Eric is right. It may seem counterintuitive, but there is much more money in a playoff. The teams that don’t make the cut will still play in a bowl game under the old system. What a playoff does is add more games for the best teams, which in turn draws the most fans/attention.

    Michael — good point about the analogy. Still, it seems to me that these smaller programs want to have their cake and eat it too. They want a chance to play with the big boys for a title, but aren’t willing to invest the resources to do so. They don’t schedule them on a regular basis. They can’t fill their stadiums every Saturday afternoon. Sure, part of it is because they don’t have the resources, but that clearly hasn’t stopped teams like TCU, Boise St or Utah in gaining respect and national exposure over the past few years even with “limited resources” from bowl money or television contracts. The argument becomes a chicken-and/or-egg one pretty quickly, but still–why does this need to go to the courts?

    Ultimately, there is enough negative energy surrounding the BCS good ol’ boys club that will lead to significant changes in the way that the a national champion is determined. Will the new system be any better than the old? Perhaps, but something tells me it won’t be ideal.

  16. Maybe then best way to fill the field of a playoff would be to have NO Automatic Qualifiers. As it is fluid from year to year which teams deserve to be in the top 8-16. Who’s to say one year a conference might deserve multiple teams and the next none or one. That would mean a commitee to pick em and that would certainly create some issues.

  17. If I were to create a playoff, I wouldn’t have any auto bids. But we all know that’s not going to happen. The Big Six will send their champions to the playoff. Unless, there are some built in rules where you have to be at least ranked to get in or something like that.

  18. The National Championship is a weak point in the legal defense of the BCS. The counter argument would be no non-AQ team is qualified to be in it. (Tipping my hand for next week’s article). When the BCS went beyond the concept of bowls as post-season rewards with the opportunity to play another top team and national accolades and exposure were the winner’s rewards, then arguments of who should be in it, what should be the criteria and who is excluded are let into the discussion.

    Of course, you have to seriously reconsider the Coaches Poll as too biased, or eliminate voting for teams in their conferences. Watered down schedules may result. Would anyone want to play ND?

    TCU in 2010 and Utah in 2008 would have gotten their chances. Then there is 2004 with four undefeated teams at the end of the regular season including Utah. Auburn had a legitimate gripe too.

  19. Why not an eight team playoff with the top 8 in the rankings playing regardless of conference?

    That would leave ND out in 2006-07 with three Big Ten teams in it. Conference championships are big money with great TV contracts. But not having a conference championship may give conference teams a better chance to have two or three go to the playoffs.

    Here is who would have been left out:
    In the thirteen-year history of the BCS, twenty one BCS conference champions have finished below the top eight teams. Here they are:
    * 2010-11: Virginia Tech (13) and Conn (unranked)
    * 2009-10: Georgia Tech (9)
    * 2008-09: Cincinnati (#12), Virginia Tech (#19)
    * 2007-08: West Virginia (#9)
    * 2006-07: Oklahoma (#10), Wake Forest (#14)
    * 2005-06: West Virginia (#11), Florida State (#22)
    * 2004-05: Michigan (#13), Pittsburgh (#21)
    * 2003-04: Miami (#9), Kansas State (#10)
    * 2002-03: Florida State (#14)
    * 2001-02: Maryland (#10), LSU (#13)
    * 2000-01: Purdue (unranked)
    * 1999-00: Stanford (unranked)
    * 1998-99: Wisconsin (#9), Syracuse (#15)

    Notre Dame will get an automatic qualifying berth if it finishes in the top eight. Every year one (sometimes two) BCS conference champions do not finish in the top eight.

  20. By the way, the reason taxpayers should care is that the anti-trust exemption given to the NCAA takes a lot of money from us and puts it in their pockets so that they can deliver a better experience than competing collegiate tournaments.

    In addition, especially for schools like Utah and Boise, the taxpayers in those states are paying for athletic departments that then get left out of the game that is the reason taxpayers pay for those athletic departments.

    As usual, the rule in sports is: once it’s about money, everyone cares.

  21. Chase,
    Thanks for the great comment. What that may mean is that the US Antitrust division could weld the hammer of Thor with an unspoken threat of removing the NCAA’s antitrust exemption.

    By my calculations the past BCS bowl season netted $175 million – a 44% increase over the 2004-05′s $122 million. Some have suggested the BCS conferences eventually could withdraw from the NCAA, but what would be their tax status? The tax exemption would keep them tied to the NCAA, until it would ever be removed.

    Corollary: Once it becomes big money, everyone cares more.

  22. Chase –

    I just want to clarify my stance. As a taxpayer, I get frustrated when federal/state resources get diverted to solve problems like this (or the NFL lockout, Congressional hearings on PEDs/steroids in MLB, etc) instead of addressing more critical needs for the populace. As a football fan, I do care about this issue and think the system is fundamentally flawed.

    Michael –

    Your comment makes me think about a possible doomsday scenario, where major conference players essentially leave the NCAA (and as you say probably lose their non-profit tax exemptions for athletics) and become semi-professional. The appealing part to most of the schools involved would be that their athletic departments could essentially be self-sustaining and even pump money back into the the university. Something to think about there…

  23. And, probably without tax-exempt status, the taxpayer reaps the benefit of abandoning the NCAA. Those players get paid. The NCAA becomes more in line with their stated values.

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