An update on NCAA lawsuits that could impact college football

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The slow-moving Ed O’Bannon antitrust litigation has yielded an interesting nugget related to college football’s possible future. In a recently unsealed deposition from the lawsuit, NCAA vice president Wally Renfro confirmed there had been discussion of seeking a congressional exemption from federal antitrust laws, a move that would quash the O’Bannon lawsuit and potentially strengthen the NCAA’s power to control college football. Jon Solomon described Renfro’s testimony in the Birmingham News:

“I believe that what this suggested is a discussion point about whether this might be the right time or not,” Renfro said. “This is a topic that has come up numerous times over the years that I’ve been at the NCAA. There have been a number of instances that had nothing to do with lawsuits in which the membership or others have questioned, queried, wondered whether (the NCAA) … should seek an antitrust exemption on behalf of its member institutions.”

[NCAA vice president David] Berst testified that he has wondered whether an exemption should be pursued to “operate as some kind of a conscience” to help preserve amateurism and possibly control spending.

“I’m just trying to be creative in my thinking and sometimes provocative in trying to think of different ways,” Berst said. “And to me, it’s a possible avenue — unlikely and remote — and I have been told many times impossible that we could ever get there.”

This discussion took place three years ago, before the O’Bannon class action picked up steam. Now that there’s a real threat the class may be certified and proceed to trial, the NCAA might reconsider the “unlikely and remote” option of seeking congressional immunity. There is, in fact, a precedent for doing so.

In 2002, a group of medical residents filed an antitrust class action against the National Resident Match Program, a NCAA-like cartel formed by teaching hospitals to limit competition and fix prices for postgraduate medical services. The case survived an initial round of legal challenges in early 2004 when Congress stepped in to end the lawsuit by granting a retroactive antitrust exemption to the NRMP. Congress specifically stated the benefits of NRMP outweighed any anti-competitive harm to residents or consumers:

Antitrust lawsuits challenging the matching process, regardless of their merit or lack thereof, have the potential to undermine this highly efficient, pro-competitive, and long-standing process. The costs of defending such litigation would divert the scarce resources of our country’s teaching hospitals and medical schools from their crucial missions of patient care, physician training, and medical research. In addition, such costs may lead to abandonment of the matching process, which has effectively served the interests of medical students, teaching hospitals, and patients for over half a century.

The NCAA could certainly advance similar arguments regarding its “amateurism” policies; namely that the mere threat of antitrust litigation would divert resources away from college football programs and undermine the “highly efficient, pro-competitive, and long-standing” rules at the heart of the sport’s governance. Indeed, in its famous 1984 decision striking down the NCAA’s television restrictions under the antitrust laws, the Supreme Court nonetheless recognized,

The NCAA plays a critical role in the maintenance of a revered tradition of amateurism in college sports. There can be no question but that it needs ample latitude to play that role, or that the preservation of the student-athlete in higher education adds richness and diversity to intercollegiate athletics and is entirely consistent with the goals of the Sherman Act.

So it’s not inconceivable the NCAA might seek congressional intervention here and receive a respectful hearing. But asking doesn’t guarantee approval. The medical resident exemption–which was snuck into a completely unrelated piece of legislation–came about because Congress wanted to protect hospitals, which depend heavily on Medicare and Medicaid funding, from the nascent attempt to organize residents. Congress doesn’t have the same vested political interest in college football.

Any exemption proposal would also face significant opposition from the two agencies charged with interpreting and enforcing the antitrust laws, the Federal Trade Commission and the Department of Justice. The FTC, an independent agency comprised of career antitrust lawyers, has been especially active in recent years in limiting the scope of existing antitrust immunity and would not welcome any new exemptions. And the antitrust bar, unlike other lawyer interest groups, is relatively bipartisan, so Democrats and Republicans alike would be skeptical of granting the NCAA a broad exemption over the FTC’s objections.

That’s not to say the NCAA could not obtain some limited form of relief. Previous Congresses granted the NFL antitrust exemptions to merge with the American Football League and negotiate league-wide television contracts. But those came with strings attached, notably provisions keeping the NFL off Saturday television to protect college football’s exclusivity. Today’s Congress might be willing to deal with the NCAA, but legislators will want something in return.

One possible condition might be something along the lines of the athlete “Bill of Rights” proposed in the California legislature. In exchange for limited antitrust immunity, the NCAA would agree to new mandates regarding scholarships, health care and even benefits to non-revenue sports (essentially an increased Title IX quota). Congress could even go so far as to insist on new recruiting rules or even restrictions on coaching salaries. In this sense, an antitrust exemption could open the door for direct federal regulation of college football, which would end up doing more harm than the antitrust lawsuits themselves.

Still, if NCAA leaders fear a loss in the O’Bannon litigation–which might yield billions in damages under the Sherman Act–they might decide that a federal bailout is worth the additional regulatory burden. The question would then become, How will individual NCAA members react? Will SEC schools be willing to stick with an NCAA living under de facto federal occupation?

This suggests yet another possibility: Rather than approving an NCAA-based antitrust exemption, Congress could craft a limited exemption for the conferences. This would preserve competition among the conferences–which would placate the FTC and DOJ–while helping to discourage frivolous litigation. It would also shift political power away from the NCAA, which just about everyone in college football would agree is a good thing.

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