BCS: Bowl Championship Series Or Big Cash Settlement?

Written by: Eric Blaine
Researched by: Eric Wasik
Edited by: Casey Sanders
Managing Editor: Mary Anne Nash

It should come as no surprise that political figures can get as excited about sports as the rest of us, college BCS Footballfootball in particular. With strong regional and state affiliations, enthusiastic alumni, and big-time media alliances, college football games are one of the things that make college so much fun. Barack Obama is a fan; so was Richard Nixon. In fact, Richard Nixon even declared that the winner of the 1969 Texas-Arkansas game would be the national champion. This later prompted Joe Paterno to ask, “How could [he] know so much about college football in 1969 and so little about Watergate in 1973?” Lately, though, college football has been making some political figures hopping mad, and unlike the beloved JoePa, it has less to do with the right to call one’s team champion than with enormous piles of money. Utah Attorney General Mark Shurtleff is investigating whether to seek an anti-trust suit against the BCS, the system by which the major bowls and the national championship are divvied up, for unfair restriction on competition.

The key to this possible suit may lie in a 1984 Supreme Court decision, NCAA v. Board of Regents of the University of Oklahoma, and its holding that sporting events are a type of market and therefore subject to anti-trust litigation.

The Pre-Season: Where This Mess Started

The BCS, or Bowl Championship Series, is a complicated legal arrangement between the NCAA, major bowl organizers, college football conferences, major media outlets, and individual universities. There are a number of excellent sources which explain how exactly the BCS works, but for our purposes, the pertinent facts are these: the BCS system determines which teams can earn a spot in one of the most prestigious postseason bowl games- the Fiesta Bowl, the Sugar Bowl, the Orange Bowl, and the Rose Bowl. These premier bowl games offer a school’s conference a multi-million dollar paycheck (split by all the conference teams), and the school itself an unparalleled stage on which to show off.

However, not every team has an equal shot at getting into one of the lucrative bowl games. Certain conferences are guaranteed a spot in one of the premier bowls. These “BCS Conferences” will always send their champion to a premier bowl, regardless of whether a team from a non-BCS conference (the “mid-majors”) has a better record. That means, of course, that these conferences are currently assured a $17 million dollar payout, plus all the other perks of a major bowl appearance. The only way a mid-major team can earn a spot is through a complicated set of circumstances, and even when they meet these conditions, only one mid-major is guaranteed a spot.

At the end of the 2008 regular season, two teams from mid-major conferences, the Utah Utes and the Boise State Broncos, were undefeated. Under the BCS formula, only the higher ranked team, Utah, won a spot in a major bowl. Boise State was passed over for a premier bowl berth in favor of seven BCS conference teams, none of which were undefeated and one of which had a record of 9-4.

Commercial Break: Anti-trust And Anti-competition

To fully understand the BCS controversy, we must go back to the earliest days of market regulation. During the 19th century, one corporation was barred by law from owning the stock of another corporation. Society held a deep distrust of the impersonal, immortal, capital-rich corporate structure. Along came a lawyer working for John Rockefeller’s Standard Oil, who devised an elegant solution: the corporate shareholders could transfer their stock to a trust, and the trust could then operate control over the corporation, or buy stock in a new corporation, for the commercial benefit of the shareholders. Through artful manipulation of the fiction of separate control, directors and managers could circumvent the law. Thus, more economic power was consolidated into ever fewer hands, leading many critics to complain of price fixing, collusion, and a profound lack of competition. Standard Oil became the paradigmatic example of a monopolistic trust, which led to some unfavorable depictions.

In response, Senator John Sherman rammed through Congress a bill that would grant the Federal government, the authority to “bust-up” trusts and combinations that restrained trade, and allowed private individuals to bring actions against the alleged wrongdoers directly. By the early 20th century, the Sherman Anti-Trust act had been used to break up such commercial giants as American Tobacco, Northern Securities, and finally, Standard Oil itself. Though these days corporations can own each others’ stock, the motivation for anti-trust regulation remains the same: to prevent unfair collusion and business practices that limit competition and establish monopolistic, consumer-unfriendly dynamics.

Since that time, anti-trust law and college football haven’t intersected too often. The most prominent exception is NCAA v. Board of Regents of the University of Oklahoma. The NCAA employed a television broadcasting contract scheme with the stated purpose “to reduce, insofar as possible, the adverse effects of live television upon football game attendance and, in turn, upon the athletic and education programs dependent upon that football attendance….” Authorities from a number of universities alleged that the NCAA was acting like a classic cartel, “hav[ing] sought and achieved a price for their product which is, in most instances, artificially high.” These universities alleged that the NCAA imposed production limits on its members, and maintained mechanisms for punishing members who sought to stray from these production quotas.

Justice John Paul Stevens, writing for the majority, found against the NCAA. The NCAA policy was an unreasonable restraint of trade, and included factors the Court had previously found impermissible, including  horizontal restraints on competition, artificial limits on production, and bars against individual NCAA members from negotiating for better prices.

The Court noted that some activities (like college sports) can only be conducted jointly, and the joint nature of the activity does not make it per se unlawful. In many instances it will actually increase consumer choice and prove to be pro-competitive. However, the particular features of the NCAA television plan served to promote anti-competitive effects. “[I]f member institutions were free to sell television rights, many more games would be shown on television, and [...] the NCAA’s output restriction has the effect of raising the price the networks pay for television rights.”

Referee’s Call: Anti-trust Laws And The BCS

This year’s Sugar Bowl matchup was one to remember, where the Utah Utes from the mid-major Mountain West Conference overpowered a heavily favored opponent 31-17, becoming the only team in Division I-A/FBS college football to end the season undefeated. Still, the BCS Championship game would nevertheless award the title to a team from a BCS conference – one that was not undefeated.

Utah’s Attorney General Mark Shurtleff had enough. Almost immediately, he began to investigate possible anti-trust violations. Says Shurtleff, “It’s not about bragging rights. It’s a multimillion dollar – hundreds of millions – business where the BCS schools get richer and non-BCS get poorer.” Backing him up, the Utah Legislature soon called for replacing the BCS system. “You know, when this comes down to it, it’s all about money,” said Senate Majority Whip Scott Jenkins. “The fact is the BCS alliance controls large dollars, and to not be able to be in that group is not right.”

As the Utah AG blog puts it, “If a system unreasonably restrains the opportunity of our educational institutions to freely and fairly compete to be designated as a national college football champion–a designation desired by football fans throughout the nation–such a system could unfairly deprive our institutions and my state of these important and significant revenues.”

Heading Into Overtime

Besides the fact that there are more pressing issues to occupy our time, Shurtleff certainly has an uphill battle. The BCS has recently inked a $125 million dollar deal to extend to 2014, and the BCS has some influential backers, including major television broadcasters, the bowl organizers, and most especially the presidents of the various schools that make up the system. College presidents are adamantly against the most popular alternative, a multi-team playoff.

However, if the Utah AG’s office seeks to pursue an anti-trust suit, they could not ask for a better template than NCAA v. Board of Regents. The Supreme Court has already recognized that college football can be considered a market worthy of consumer protection, and there is no question that the BCS system spreads its benefits unequally. The real question will become whether it can be shown that the BCS system, like the NCAA television plan before it, was improperly restricting competition. This might be a hard sell, since even those who despise the BCS concede that it has done a great deal to make college football more popular (and, therefore, lucrative) than ever before.

In fact, however flawed the current system is, the most likely solution to Utah’s problems is both simple and, perhaps, insidious: its conference is seeking its own automatic BCS berth. Maybe the “rich will get richer,” but this way Utah will be among the rich.

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3 Responses to BCS: Bowl Championship Series Or Big Cash Settlement?

  1. Eric Blaine says:

    Update from the writer:

    As the Deseret News recently reported, the BCS will face an antitrust investigation from another source: the United States Senate Judiciary Committee. Utah’s Senator Orrin Hatch, an influential member of the committee, inserted into the committee’s agenda hearings on whether the BCS is an anti-competitive monopoly in. Senator Hatch had some strong words for the BCS, calling it anti-competitive, unfair, and un-American.

    Possibly undercutting a potential antitrust case, however, is that the Senator’s remarks focused more on the fact that the Utah Utes were allegedly denied a chance at playing for a national championship by the BCS structure, rather than that it was denied an equal chance at winning a large bowl-appearance fee. “The fact of the matter is that the Utah team was left out of the national championship picture,” Senator Hatch said, “not due to any competitive shortcoming, but because the BCS system categorically excluded them from consideration.”

    It is doubtful whether the drafters of the nation’s anti-trust laws envisioned them being used to help sports teams get a better chance at a championship trophy. While pillorying the system may score political points, given the apparent unpopularity of the BCS, it could also open up Congress to the type of scorn it earned itself by investigating steroid use in baseball. Many commentators wondered whether this was a worthy use of time, or for that matter, legally justified.

    Any investigation of the BCS for anti-trust violations is on firmer ground if it examines the financial impact of the allegedly anti-competitive system – that was the whole point of the Sherman Act.

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