June 9, 2008
FOOTBALL/LAW: Commerce? We're Students!
You know, I'm not really an expert on this particular corner of antitrust law, so maybe I'm missing a good, persuasive argument for why this rule makes sense, but I have to express some cognitive dissonance at the Sixth Circuit throwing out a lawsuit by a former Kentucky assistant football coach on the grounds, among others, that the NCAA rule enforcement process is not subject to the antitrust laws because it does not involve commercial activity:
In order to state a claim under the Sherman Act there must be a commercial activity implicated....the appropriate inquiry is whether the rule itself is commercial, not whether the entity promulgating the rule is commercial.... Although the question before us is whether the
enforcement activities of NCAA violate the Sherman Act and not a particular rule, the analysis must focus on the enforcement action itself and not NCAA as a commercial entity....Bassett's Complaint contains considerable information on the size and scope of college football and the revenues generated by it. The Complaint is wholly devoid of any allegation on the commercial nature of NCAA's enforcement of the rules it determined Bassett had violated. Bassett's Complaint contends NCAA's enforcement process violated its own due process requirements and, as a result, constitutes a Sherman Act violation. We find Bassett's Complaint lacks the critical commercial activity component required to permit application of the Sherman Act.
...NCAA's rules on recruiting student athletes, specifically those rules prohibiting improper inducements and academic fraud, are all explicitly noncommercial. In fact, those rules are anti-commercial and designed to promote and ensure competitiveness amongst NCAA member schools. Violation of the applicable NCAA rules gives the violator a decided competitive advantage in recruiting and retaining highly prized student athletes. It also violates the spirit of amateur athletics by providing remuneration to athletes in exchange for their commitments to play for the violator's football program. Finally, violators of these rules harm the student-athlete academically when coaches and assistants complete coursework on behalf of the student-athlete.
If the rules themselves and the corresponding sanctions are not commercial, as the reasoning
in Smith supports, then the enforcement of those rules cannot be commercial. As long as the
enforcement of non-commercial rules is reasonably and rationally related to the rules themselves, we find enforcement is a non-commercial activity.
I'm not saying the rule should be different, since there is much to be said for keeping NCAA decisions of this nature from turning into federal lawsuits. But one gets the sense that the salami is being sliced rather narrowly here.
Sounds a lot like the old baseball is a sport not a business ruling from years gone by.
I wonder how Monte Ward would have felt about Fay Vincent's title, "We would have played for nothing."
The NCAA is a conspiracy or combination whose purpose is to restrain the compensation paid to athletes in the business of college football. The purpose of NCAA rules is to enforce the conspiracy's ability to restrain compensation. Without the rules, the conspiracy is toothless.
Enforcement of the rules is the primary method by which the conspiracy polices its members. It is the essence of the antitrust violation. But for the rules enforcement, the wages paid athletes would rise to their market level.
This ruling makes as much sense as the Court saying that price fixing is an antitrust violation, but executives of different companies playing golf and discussing what prices to set are not involved in "commercial" activity (since golf is recreation and conversation is simply socializing while recreating).