NCAA v. Board of Regents of the Univ. of Oklahoma and Univ. of Georgia Athletic Ass'n
82 L. Ed. 2d 70, 104 S. Ct. 2948 (1984)
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Rule of Law:
A horizontal restraint on price and output created by a joint venture is not per se illegal but will be found to be an unreasonable restraint of trade under the Rule of Reason if it is not necessary to produce the joint venture's product and has significant anticompetitive effects.
Facts:
- The National Collegiate Athletic Association (NCAA) is a voluntary association of colleges and universities that regulates many aspects of intercollegiate sports.
- Beginning in the 1950s, the NCAA adopted television plans that controlled the broadcasting of its members' football games, originally to protect live attendance.
- The 1982-1985 television plan at issue granted exclusive rights to networks ABC and CBS to televise a limited number of games, setting a maximum number of total broadcasts and limiting how many times any single school could appear on TV.
- The plan established a fee structure for telecasts, which effectively fixed the price paid to schools for their games, regardless of a specific game's popularity or viewership.
- Individual NCAA member institutions were prohibited from selling television rights to their football games outside of the NCAA's comprehensive plan.
- The College Football Association (CFA), an organization of major football-playing schools including the Universities of Oklahoma and Georgia, negotiated its own television contract with NBC, offering more appearances and revenue to its members.
- In response to the CFA-NBC deal, the NCAA threatened to impose sanctions on any of its members that complied with the contract.
- The NCAA's threat of disciplinary action caused most CFA members to back out, leading to the collapse of the CFA-NBC contract.
Procedural Posture:
- The Universities of Oklahoma and Georgia sued the NCAA in the United States District Court for the Western District of Oklahoma, alleging the NCAA's television plan violated the Sherman Antitrust Act.
- The District Court (trial court) found for the universities, holding that the television plan was a 'classic cartel' that illegally fixed prices and limited output, and granted an injunction.
- The NCAA, as appellant, appealed the decision to the U.S. Court of Appeals for the Tenth Circuit.
- The Court of Appeals affirmed the trial court's finding of a Sherman Act violation, concluding the plan was a per se illegal price-fixing scheme that also failed a Rule of Reason analysis, and remanded the case after modifying the injunction.
- The NCAA petitioned the U.S. Supreme Court for a writ of certiorari, which was granted.
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Issue:
Does the National Collegiate Athletic Association's television plan, which limits the total number of televised intercollegiate football games and fixes the price for broadcasting rights, constitute an unreasonable restraint of trade in violation of Section 1 of the Sherman Act?
Opinions:
Majority - Justice Stevens
Yes. The NCAA's television plan constitutes an unreasonable restraint of trade in violation of Section 1 of the Sherman Act. While horizontal restraints on price and output are normally illegal per se, the Rule of Reason is the more appropriate standard here because college football is an industry where some horizontal cooperation is essential for the product to exist. However, under the Rule of Reason, the NCAA's plan fails because its restraints on price and output have significant anticompetitive effects—reducing the number of games available to consumers, raising prices for broadcasters, and creating a price structure unresponsive to consumer demand. The NCAA's justifications for the plan are unpersuasive; the plan is not narrowly tailored to protect live attendance or maintain competitive balance, and it does not create procompetitive efficiencies. The district court's finding that more games would be televised in a free market is compelling evidence that the plan harms consumer welfare rather than enhancing it.
Dissenting - Justice White
No. The NCAA's television plan does not constitute an unreasonable restraint of trade. The majority errs by treating intercollegiate athletics as a purely commercial venture and ignoring the NCAA's fundamental, noneconomic goals of preserving amateurism and integrating athletics with education. The television plan, like many other NCAA regulations, is a legitimate and necessary tool to maintain a competitive balance among schools, prevent the professionalization of college sports, and ensure the long-term viability of the unique product of amateur athletics. The plan is procompetitive because it creates a more valuable, aggregated television product that can better compete in the broad entertainment market. By invalidating the plan, the Court subjugates the NCAA's legitimate educational goals to a purely commercial, 'every school for itself' approach that will ultimately harm the character of intercollegiate sports.
Analysis:
This landmark case established how antitrust law applies to sports leagues and other joint ventures that require horizontal cooperation. By rejecting a per se rule in favor of the Rule of Reason, the Court acknowledged the unique nature of sports, where competitors must cooperate to create the 'product.' However, the ruling made clear that such cooperation cannot extend to naked restraints on price and output that are not essential to the sport's existence. This decision dramatically deregulated the market for televised college football, shifting power from the NCAA to individual conferences and schools, leading to an explosion in the number of games broadcast and a massive increase in television revenue for major programs.
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