This million dollar battle in the college football market has caught the attention of a few antitrust enforcers on Capitol Hill. Consequently, the House of Representatives recently took on the task of examining whether or not there are serious antitrust problems involved with the BCS system that could potentially exclude teams such as those in the MAC conference from major bowl game participation. In particular, the House Judiciary oversight committee is currently reviewing the antitrust laws as they apply to college athletics. A hearing was held early last month, which fostered much discussion about the anticompetitive aspects of college sports conferences.
This review was prompted, in part, by the University of Miami's announcement that it would be leaving the Big East Conference for the ACC beginning in 2004. Miami's decision to join the ACC stirred up the pot in college sports conferences. Some claimed that free movement between/among conferences would destroy the ability of some schools to compete in Division I-A football. Others charged that the most popular football programs have become money-driven entertainment profit centers that shortchange the academic interests of student athletes. In addition, opponents of the Miami switch claimed that the BCS was partially to blame for this ACC-Big East battle.
Under the BCS arrangement, six of the eight slots in the Fiesta Bowl, the Orange Bowl, the Rose Bowl and the Sugar Bowl are reserved annually for the champions of the ACC, Big East, Big Ten, Big 12, Pacific-10 and Southeastern Conferences. The remaining two slots are open and may be filled by any Division I-A college football team. As a result, of the 56 bowl slots available to Division I-A college football teams, the BCS controls the four major and most lucrative bowl games, including the national championship game.
Originally, the BCS was established in 1997 to create a more objective basis for selecting a Division I-A college football national champion. Opponents of the system, however, contend that the BCS structure creates unfair disparities between BCS and non-BCS institutions. College football games, particularly post-season ones, generate hundreds of millions of dollars in annual revenue for Division I-A schools, mostly from exclusive television broadcast contracts. Thus, schools that are not members of one of the six BCS conferences are denied equal access to the same revenue from television broadcasts and national clout as those with membership privileges in the BCS.
According to Steve Young, a former NFL and Brigham Young University ("BYU") quarterback who testified at the September 4 congressional hearing, the BCS generated $109 million in revenue during the 2002- 2003 season. Of that, $104 million went to 64 schools coming from BCS conferences, while only $5 million was distributed to the remaining 54 schools in the five non-BCS conferences and independent institutions. Young testified that the $5 million failed to pay for expenses at those schools, and he was told that non- BCS schools each lost an average of $1 million in their football programs. Young was chosen to testify at the hearing on the Hill because he was the quarterback for the 1984 BYU football team, a member of the Mountain West Conference that was reluctantly voted No. 1 because none of the bigger football programs had a great season that year.
The projected revenue for the four 2004 BCS bowl games is $90 million. It is estimated that only $6 million of this amount will go to the 55 non-BCS Division I-A schools, whereas over $80 million will go to the 62 BCS schools. Curiously, in the five year history of the BCS, no team from a non-BCS conference has played in a BCS bowl game. Hence, the House oversight committee's role is to examine whether the disparity in revenue affects the level of athletic talent non-BCS schools can recruit, resources for academic facilities and student aid, and potential coach salaries.
The Supreme Court has previously held that intercollegiate athletic programs and associations are subject to antitrust scrutiny. Intercollegiate athletic conferences are regional groupings of similarly-situated member institutions where athletes compete against other conference members. Opponents of the BCS system insist that the present system governing the Division I-A college football championship and the major post-season bowl pairings may be purposefully exclusionary and violate the antitrust laws. As mentioned above, college football generates millions of dollars in annual revenue, most of which is income derived from exclusive TV broadcasting rights. Profit generated by these football programs flows back to participating schools, bestowing on those institutions a wide range of pecuniary benefits.
Reportedly, the 63 BCS schools have earned approximately $450 million since they began being BCS members five years ago, while the 53 Division I-A non-BCS schools have shared earnings of $17 million. Opponents of the BCS system contend that the BCS has created a substantial financial gap between BCS and non-BCS schools. The gap exists despite the fact that the BCS and non-BCS schools need each other in order for intercollegiate football to succeed. In fact, as evidenced by recent upsets of prestigious programs by smaller MAC teams, when BCS and non-BCS schools play against one another, they demonstrate that the schools are quite competitive.
Proponents of the BCS argue, however, that the value of the revenue derived from the BCS bowl games exists solely because of the BCS arrangement. TV networks, advertisers, corporate sponsors, and fans perceive the national championship game to be more valuable than any single bowl game alone that cannot guarantee a national championship arrangement. Such a system existed before the BCS was created to match the number 1 and number 2 teams in the nation in a traditional bowl game. In addition, these networks, advertisers, sponsors, and viewers perceive the other BCS bowl match-ups involving highly regarded teams more exciting as well and are also willing to pay higher prices to air, advertise during, sponsor, or watch those games. Hence, proponents of the BCS arrangement argue that it is a new product that is highly valued by consumers of football. By design, college football can be exclusive. Hence, it will be interesting to see how this battle - usually waged on a football field - plays out on Capitol Hill.
For more information, please contact Camelia Mazard at (202) 218-0028 or cmazard@sheppardmullin.com.