Exempt the NCAA From Antitrust

December 11, 2011

The National Collegiate Athletic Association has the potential to be a central and powerful regulatory body that can offer real reform, but antitrust restrictions prevent it from regulating all aspects of intercollegiate sports—including financial ones. Therefore, to create a strong and authoritative regulatory body that protects the interests of the games and the people who play them, the NCAA must be exempt from antitrust laws.

The central thesis of NCAA critics is that the association is a monolithic body that acts in its own interest rather than that of college sports and the student-athletes who play them. This position ignores the very composition of the NCAA, which represents more than 1,200 member institutions. The critics also ignore the fact that most of the revenue derived from NCAA events, including televised games, goes back to those institutions.

In 1984 the Supreme Court found that the NCAA's plan to regulate football on television violated the Sherman Antitrust Act. The NCAA's justification for that plan was primarily to protect competitive balance and the economic interests of all of its members. But those justifications failed to persuade the court. In his dissenting opinion, the former collegiate student-athlete Justice Byron White recognized the legitimacy of the NCAA's noncommercial goals and believed that the restrictions imposed by the plan were reasonable.

That reasonable, albeit restrictive, exercise of power resonates today as the collegiate sports landscape resembles the Wild West. And just as the West was won, intercollegiate sports is in need of a marshal with a plan and the unfettered authority to impose the plan.

An antitrust exemption would allow the NCAA to mandate, as a condition of membership, that revenues derived from NCAA-brokered television, licensing, and marketing deals; bowl-game participation; and other NCAA championship events be deposited in individual institutional budgets that benefit the college or university as a whole and not simply the athletic department. The athletic department then should receive only the budget percentage allocated to it by the institution. Such proportionate financial backing might slow the athletic arms race that exists but remains largely unacknowledged and might discipline spending at a time when some athletic departments mortgage their futures on the hopes of a bowl game or other windfall.

Finally, the provision of illegal benefits to young prospects and/or their families and grass-roots coaches continues to plague college sports, most notably football and men's basketball. More often than not, a prospect accepts the benefits with impunity, and too often he is given a pass because of perceptions of unequal bargaining power or economic or financial duress.

To greatly reduce or eliminate these incidents, we must hold the student-athletes accountable by delaying their draft status and making it easier for institutions to try to recover damages, even though their sanctions result from the actions of family, coaches, or friends. If the potential exists that draft status or playing careers will be adversely affected, future violations would be few and far between, because I don't believe that any athlete would jeopardize dreams of a professional career, whether they are realistic or not.

Len Elmore is a lawyer, former National Basketball Association player, and a member of the Knight Commission on Intercollegiate Athletics. He teaches in Columbia University's graduate program in sports management.