Lawyers, Football and Money

When the recent round of BCS show trials began on Capitol Hill, I firmly planted my flag with the masses who thought the politicos should just butt out. However, I found ex-lawyer and noted college football blogger Clay Travis‘ recent defense of Congress’ intervention pretty compelling. Travis, author of Dixieland Delight: A Football Season on the Road in the Southeastern Conference and the forthcoming On Rocky Top: A Front-Row Seat to the End of an Era, took time out of his busy schedule to discuss the finer points of the BCS flap with Homerism.

Blatant Homerism: I think you’re right that the general perception of Congress’ BCS hearings is that they are somehow motivated by a desire on the part of some politicians to affect a playoff in college football. After all, Orrin Hatch from the great state of Utah is leading the charge. Based on what you’ve written, however, competition in the marketplace, rather than on the playing field, seems to be the real issue at hand. Would you say that’s correct?

Clay Travis: To a degree, yes. Certainly for antitrust, since antitrust requires you to define a marketplace before you can prove that an antitrust violation occurs. Here the marketplace is pretty easy to define, it’s the 119 top division college football teams. Often in antitrust situations there’s a battle over what the marketplace is, think satellite radio when XM and Sirius argued that satellite radio wasn’t the marketplace, downloadable music was. As a general rule, the larger the marketplace the least likely there is to be an antitrust violation. I don’t think Congress is interested in the actual playing field results with this caveat: At its most fundamental level the big six conferences have designed a system where its virtually impossible for someone from one of the other five conferences to ever end up in the top two of the BCS standings.

Utah made a run last year, had several great wins, and finished sixth in the final BCS standings before the bowl. So it’s a combination of two things: 

  1. The system is designed to reward the big guys financially; 
  2. It doesn’t give the little guy a chance to compete and leaves them with no alternative system. 

BH: So Congress is more interested in how the money gets doled out than who the national champion is?

CT: Well, I think Congress is being a bit disingenuous here. I think the reality is that if a “small five” conference member won a national championship or advanced to the BCS title game, there wouldn’t be any real argument in a political context. The money would still be an issue in terms of how it’s distributed (that’s the real antitrust angle), but the playing field would be level. Which, to be fair, is, I think, what most people, in Congress and otherwise, have a real issue with.

Put it this way, imagine if the BCS existed in high school football. You had a division that ostensibly rewarded a state championship, but only those schools that drew more than, I don’t know, 2,000 people to their games each week could compete for the championship based on how the playoffs were seeded. Would any state in America stand for that? I don’t think so. Would it violate federal antitrust law? (No, because the Sherman Act only applies to interstate commerce.) Would it get changed? Yep.

So I think what you’ve got is a situation that many feel is unfair and there’s a search for a legal reason why that system is unfair. Antitrust offers the best legal reason. But antitrust is just the legal hook that furnishes a potential remedy for the outrage.

BH: We all know the BCS exists–it has a Web site, networks negotiate over the rights to televise BCS games, we see the weekly BCS standings. Yet, it’s not a legal entity. How, then, can it be subject to antitrust regulations?

CT: Good question. Just because something is well-designed legally doesn’t mean that an arbiter of justice can’t pierce the construct of the company. Look at price-fixing, for instance. Generally if companies conspire to fix prices, they don’t first register a shell corporation to help regulate their price-fixing. Yet, does that mean that those companies aren’t individually responsible for violating the law?

It’s a clever legal shell game, but that’s all it is. Here we have an entity that I think any judge in the country would recognize does exist. Same with any Department of Justice investigator. In fact, the way the BCS is designed, without full legal identification, is a tremendous red flag. It just leaps right out and grabs you. “Look, look, the lawyers were aware of a potential issue here and this was their resolution.” It’s too cute.

It shows that the BCS lawyers were aware of the antitrust applications to their actions.

It’s like Bill Clinton responding to questions about a sexual relationship by saying, “There is no relationship.” Immediately you ask yourself, why is he using the present tense? Why is he reverting to lawyer mode?

Smart fans should be asking themselves, wait, why doesn’t the BCS exist?

BH: Bottom line: Does the BCS violate existing antitrust law?

CT: Yes. I believe the BCS as constituted violates Section 1 of the Sherman Act.

BH: If the Department of Justice decides to launch an investigation of the BCS, what do you think the most likely outcome would be? Is there room for some kind of compromise here?

CT: Well, another good question. If it happens, the investigation will come from the DOJ Antitrust Division. They have the power to bring criminal charges if their investigation uncovers an antitrust violation. Would it come to that? Doubtful.

Typically they would work with a corporate entity to craft a compromise that didn’t violate antitrust laws. So I think that would be the most likely outcome. The investigation would set off alarm bells, the media would be all over it, and the BCS would be reformatted. How? I don’t know. We’d be even further down the college football rabbit hole then.

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2 Responses to “Lawyers, Football and Money”

  1. Tommy Says:

    Interesting take, and as a lawyer myself (with no antitrust expertise other than law school itself), I generally agree with his thinking that the BCS quite likely does violate antitrust laws.

    It is also important that the remedy to this violation is by no means necessarily going to be a playoff.

    I saw an interesting analysis by a BYU economics professor detailing how bowl revenues have been shelled out since the inception of the BCS. It certainly provides empirical support for the claim of a violation to the antitrust laws.
    http://www.econosseur.com/assets_c/2009/07/TotBowlRevInfAdj.html

    The only point I'll disagree with is that Congress should stay out of college football. Why?

    College football is extremely important to millions of Americans, and it is largely the job of our elected officials to improve our quality of life.

    Sure, health care and national defense are more important.

    But, at least for me, college football is not that far down the lsit.

    Furthermore, hosting a college football playoff game could have a potentially giganctic effect on a local economy.

    Look what the bowls do for the few select states that get to host them (Texas, Florida, and California for the most part). Why not spread that wealth around to hotels and restaurants in 40 or so other states that could potentially host college football playoff games?

    Maybe I'm pathetic, but a college football playoff system would greatly enhance my quality of life.

    I don't want my Senator to work on the BCS to the exclusion of anit-terrorism efforts, the economy, or health care, but they waste time on a lot of crap that is less important than college football to me already.

    I hope they shake it up. It will be legally difficult for a court to require a playoff, but the political pressure of Congress could certainly get us there a lot quicker than our current trajectory.

  2. AK Says:

    Tommy,

    Good points. I've definitely come around on the idea of Congress getting involved.

    It's interesting that everyone thinks the issue here is playoff vs. BCS. It would seem to me that the legal argument is more about evening the playing field when it comes to splitting the BCS money. How the champion is determined seems to be a secondary matter.

    BH

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