After last week's article that is a Primer on the issues in the Utah vs the BCS case, we follow up with an article presenting arguments from both sides. Questions asked were from the Justices of the Court to the lawyers for each side.
The Court includes: Justices Whiskey, Eric Murtaugh, JIm Miesle, Whiskeyjack, Coach and TLNDMA. Lawyers for each side are Mouth of the South (Henry Clay Redux) and Michael Collins (Up the Rebels).
Questions for the BCS lawyer, Mouth of the South:
1. How do the pro-competitive aspects of the BCS agreement outweigh the anti-competitive aspects?
The BCS has done for its entire existence what college football has been incapable of doing for the vast majority of its 142-year existence: produce a Division I, College Football National Champion by way of a National Championship game played by the two top-ranked teams in the country. The BCS therefore provides consumers with a product that did not previously exist. The purpose of the Sherman Act is to protect the consumer. The BCS has produced this product without reducing the quality or quantity of the product available to the consumer, and without increasing the price to the consumer. It cannot seriously be disputed that the BCS has a pro-competitive effect, as it creates a product where none previously existed.
The BCS also fosters and creates competition by distributing and generating previously unprecedented revenues to BCS and non-BCS schools. The BCS also allows non-BCS schools the chance to play in bowl games that were previously unavailable. Last year’s Rose Bowl provides a perfect example. TCU simply could never have played in the Rose Bowl before the BCS, as this game was reserved for the Big 10 and Pac-10 champions.
2. How do you explain the disparity in revenue for BCS and non-BCS conferences and teams?
Opponents of the BCS argue that the BCS creates a "financial and prestige" gap between BCS and non-BCS conference schools. This argument strains credulity. The "financial and prestige" gap among NCAA Division I schools existed long before the BCS and is the result of factors completely unrelated to the BCS:
"For example, the University of Nebraska enjoys enormous "financial and prestige" success for reasons unrelated to participation in the BCS. Nebraska sits as "the flagship state university in a sparsely populated area." Moreover, "the closest professional [football] teams [to compete for fans] are located in cities hundreds of miles beyond [the state’s] borders." These factors have helped to create a significant revenue-generating fan base for this university’s football program. Nebraska’s total budget for athletics exceeds $50 million. The vast majority of this budget comes from revenues attributable to fan and alumni support; each football home-game generates between $2.5 and $3 million. Moreover, Nebraska dedicates significant revenues from other university sources to its football program. As a result of these factors, revenues derived from the BCS arrangement are less than 2% of Nebraska’s athletic budget ." 
The "financial and prestige" gap that the BCS opponents bemoan is neither caused nor exacerbated by the BCS. It is instead the result of universities’ budgetary constraints, endowments, state tax revenues, fan and alumni donations. It is likewise the result of universities’ monetary and temporal investments in cultivating their fan bases, their brand loyalty.
3. What sort of realistic chance do non-BCS teams have of playing a national championship game?
To directly and honestly answer the Court’s question—an infinitely better chance than they had under the previous "system." Before the BCS, non-BCS teams had no chance to play in the national championship game because there was no national championship game.
But with all due respect to the Court’s line of questioning, whether non-BCS teams have a realistic chance of playing a national championship game is completely irrelevant to the issues now before the Court. The issue, under Sherman antitrust case law, is this: do the BCS’s competitive benefits outweigh its anti-competitive effects such that the consumer benefits? The BCS is for the consumer an improvement over the previous "system" with no increase in cost or decrease in product quantity or quality. The BCS, further, can hardly be a competitive limit on non-BCS schools because, again, it provides such schools with unprecedented and never-before-realized opportunities by way of revenue-sharing and bowl participation.
4. Boise State has finished in the top ten three consecutive years and has gone to one BCS bowl in that time. How do you justify leaving out one of the top teams in the nation twice and steering revenue that could be theirs to one of your BCS conference teams? How does that not violate antitrust laws?
Respectfully, the Court has lost sight of the purpose of the Sherman Act, the overriding concern of which is to protect the consumer. As long as the net effect is to benefit the consumer, the Sherman Act is unconcerned with perceived inequities between business partners.
A principled antitrust analysis is not concerned with the inequities that arise when businesses parse out revenues amongst themselves; rather, the important question is whether the businesses have injured consumers by reducing output and raising prices.
The answer to that question here is a definitive "no." BCS and non-BCS conferences and universities are now the beneficiaries of bowl invitations and revenue-sharing that they did not have pre-BCS. College football consumers—fans—receive a completely new and high-quality product—a national championship game between the top two teams in the country. The BCS has clearly met its burden.
But to assuage the Court’s concerns, BCS-bowl selection relies on a number of objective components, and also upon subjective human polls. These polls that existed long before the BCS. The BCS merely uses the polls and other objective factors to place the top two teams in a Division I College Football National Champion. In the sense that it relies on the polls, the BCS is no more restrictive to competition than the previous "system." Because it produces a completely new product, the BCS is a vast improvement and a benefit to the consumer.
5. The current BCS agreement fixes amounts to all but BCS conference champions which has risen from $11 million a game to $18 million. Over that five years, BCS revenue has risen $44 million (23%) with reimbursements to non-AQ teams, Independents including Notre Dame, and FCS teams remaining constant. How is that not utilizing established market power to benefit from a network of predatory price-fixing?
This question ignores the fundamental purposes of the Sherman Act, which is to protect the consumer, not the competitor. The law is unconcerned "with the inequities that arise when businesses parse out revenues amongst themselves," as long as the result benefits the consumer. Here the consumers (fans) receive via the BCS a product that they have never received before—a national championship game between the two top-ranked teams in the country.
The notion that all teams should receive equal treatment is truly quaint, but ultimately absurd, delusional, and unconvincing. College football produces revenue for the participating universities. It therefore operates as a business, not as a democracy. BCS conference schools have larger fan bases and generate more revenue than smaller conference schools. They have done so through past investments in their programs, by which they have cultivated dedicated fan bases—i.e. consumer interest. This is simple, empirical, economic fact.
Disparities in BCS payouts to BCS conference and non-BCS conference schools are based on economic realities. BCS-conference schools have larger fan bases, attract greater numbers of fans to bowl games, and increase ratings when they play in bowl games. Factors predating and completely independent of the BCS have created the "financial and prestige" gap. The BCS’s profit-sharing agreements merely recognize that most BCS conferences bring more to the table, and thus receive a larger share of the revenue. The BCS’s revenue-sharing agreements are necessary to prevent free-riding by smaller conference schools.These revenue-sharing agreements produce no fewer games than the previous "system" and do not decrease output—the number of games—or hinder the consumer in any way.
The internet’s preeminent authority on antitrust litigation vis-à-vis college football has pointed out that the non-BCS conferences themselves recognize and account for the "financial and prestige" gap in their internal revenue-sharing agreements:
"For example, conferences can and do set their own rules that may distribute bowl royalties unequally, such as in the WAC, the Mountain West and the Big East. The WAC’s rules allowed Boise State (’06-’07) and Hawaii (’07-’08) to keep 70% of the $6 million for their participation in BCS bowls with revenue-sharing by the other WAC teams of the other 30%. Due to a change in conference agreements, Boise State kept only 50% of their BCS bowl revenue in ’08-’09." -- "Utah vs the BCS: A Primer", Michael Collins,2011
"A mere showing of substantial or even dominant market share alone cannot establish market power sufficient to carry out a predatory scheme. The plaintiff must show that new rivals are barred from entering the market and show that existing competitors lack the capacity to expand their output to challenge the predator's high price." from Rebel Oil vs Atlantic Richfield Co ruling
Here the Plaintiffs can hardly show that they are barred from entering the market—they already participate in and derive profits from the market. Nor can they claim to lack the capacity to expand output. Unlike the NCAA television plan that the Supreme Court struck down on antitrust grounds in NCAA v. Board of Regents, the BCS does not limit output at all. The BCS, quite simply, places absolutely no restrictions on the numbers of games universities may schedule, play, or televise. Non-BCS conferences and schools may increase revenue in any given year simply by fielding a superior team and earning an invitation to a BCS game. They may—and actually have—increased output by adding an extra game to the regular season. So overall output has increased in the BCS era.
6. Why wouldn't a playoff benefit college football more than the current BCS arrangement?
Again with all due respect to the learned Justice, the BCS need not prove that a playoff would benefit "college football" more than the current BCS arrangement. "Antitrust laws require restraint to be pro-competitive, but they don’t require the restraint to be as pro-competitive as possible."
It is outside of Court’s antitrust jurisdiction to decide whether one post-season system is better than another. The Court can only decide whether the BCS is "reasonably necessary to meet" its pro-competitive goals. The Court is not free to substitute its own business judgment for that of the BCS. As a matter of law, whether a playoff system would be "benefit college football" is irrelevant. The only relevant inquiry is whether the BCS is a pro-competitive restraint that is reasonably necessary to benefit the consumer. It clearly is. The opponents of the BCS must address these issues via negotiation with their counterparts or via legislation.
 Brett Fenasci, An Antitrust Analysis of College Football’s Bowl Championship Series, 50 Loy. L. Rev. 967, (2004); and
Christopher Pruitt, Debunking A Popular Antitrust Myth: The Single Entity Rule and Why College Football's Bowl Championship Series Does Not Violate the Sherman Antitrust Act, 11 Tex. Rev. Ent. & Sports L. 125, 151 (2009)
Questions for the Non-BCS Lawyer, Michael Collins:
1. How do the anti-competitive aspects of the BCS agreement outweigh the pro-competitive aspects?
The prior agreement, which provided little money to non-BCS teams and made it almost impossible for our teams to participate in BCS bowls, should be viewed as their original intent. The changes that loosened the purse strings they controlled still fix the amounts that almost half of FBS schools receive. We have no chance at participating in a national championship game, which was the purpose of the BCS agreement.
Utah finished the 2008-09 season 13-0, the only undefeated FBS team. Like the national champion, Florida, who had one loss, Utah defeated four ranked opponents, including #4 Alabama, 31-17. But Utah finished second in the polls due to strength of schedule considerations. The only fair way to resolve this would have been a playoff. Until then, non-BCS teams will not appear in the national championship game and will not be considered for the title even if undefeated.
In fact, the BCS agreement is an illegal group boycott that distributes revenue unequally and to the overwhelming advantage of the decision-making conferences and effectively deprives them of an opportunity to play in the national championship. Further, it acts as an illegal price-fixing scheme that limits the relative amounts that non-BCS teams can attain to BCS schools (85% to 15% - or less). As college football grows in popularity, that price fixing widens the gap between BCS and non-BCS teams. (1)
My eminent opponent would even defend the prior BCS agreement as beneficial to the consumer because it produced a national championship game. Rankings are never predictable as we see weekly in college football. Would we pick the top two ranked teams in any other sport to play for a college championship?
In this case, they are used to deprive the consumer of exciting matchups and the building drama a playoff brings. It is time to release FBS football from their control and have a playoff for the national championship. Until then, the consumer - football fans everywhere - are disadvantaged.
2. Since the current BCS agreement went into effect five years ago, six non-AQ teams went to BCS teams. Non-BCS teams with lower ranking have been given slots in BCS bowls over higher ranking teams from BCS conferences. TCU got the opportunity to play in the Rose Bowl in 2010 - only the second time in 64 years that a non-Big Ten or Pac 10 team has played in Pasadena - outside of national championship games. How are non-BCS schools being deprived of opportunity to compete in the BCS bowls?
And non-BCS teams have competed well -- 4-1 over some of the top BCS conference teams. We should look at this in stages. First, we had no opportunity to participate. From 1998 to 2005, only Utah in 2004 qualified for automatic qualification limited to a top 6 ranking. Second, with changes in their selection rules to include the highest ranking non-BCS team as long as they ranked in the top 12, non-BCS teams have participated regularly with significant wins. The third phase? What about playing on an even field for the national championship. Four teams finished with undefeated records after the 2004 regular season, including Utah. Why shouldn't all four playoff for the title? Utah finished second in 2008-09 as the only undefeated team in FBS.
Only the 2009-10 season saw the top ten ranked teams go to the five BCS bowls. Last year unranked Connecticut with five losses played in the Fiesta Bowl for $18 million and was beaten by 28 points while tenth ranked Boise State with one loss played in a bowl for $1 million. If the top ten teams had played in BCS bowls over the past five years, Boise State would have gone to two more BCS bowls - last year and 2008-09.
We assert that college football consumers - whether fans, the non-BCS universities, their students or taxpayers in their states - are damaged by the continuation of this illegal agreement by the parties who have the ability to control the marketplace and the conditions for revenue reimbursement.
3. Two non-BCS teams - Utah and TCU - that accounted for four of the seven BCS bowl appearances and four of the five non-BCS wins are moving to BCS conferences. Isn't that an indication that the current BCS agreement has helped make them more attractive to BCS conference inclusion? If the top non-BCS teams continue to be absorbed into BCS conferences, why should we mandate a solution?
BCS participation has allowed both of them to showcase how great their teams and coaches are. Both universities are committing to their current coaches and to improving facilities to become conference champions in their new conferences. Both will see an influx of new revenue from being part of those conferences. How much opportunity to excel and invest in their teams does the BCS afford those left outside it who don't have the resources, fanbase, or media market that is attractive for BCS conference affiliation? Those teams may never be included in BCS conferences.
For those teams, like Boise State in a small market, their only opportunity to excel nationally, keep top notch coaching, and invest in facilities is through a BCS bowl. The BCS has rejected proposals for a playoff and changes in selections rules that emphasis non-conference wins. TV ratings for games with non-BCS teams are not lower than the average and, in some cases, higher. The changes we ask you to mandate would eliminate the predatory pricing structure that directs money to the bowls and the BCS conferences instead of the NCAA and all its universities.
4. You argue that the BCS violates antitrust laws by creating a network of partners that have in a price-fixing scheme that funnels the vast majority (82-84%) of BCS revenue to the major conferences. BCS revenue has increased 44% since 2004-05. (2)
How is the BCS agreement not anything more than a successful method that has improved college football's entertainment value in the largest media markets?
If Microsoft appeared before you and guaranteed other software companies with operating systems that they would receive 15% of a growing market, but no more, wouldn't that be a restraint of trade? What if another company had a better product but could not showcase it? BCS Champions receive a guaranteed $18 million, which keeps growing. Non-BCS automatic qualifiers receive half of that, which is divided up further. Over the past five years, BCS conferences have gotten $627 million (85.6%). Non-BCS confernces have gotten $105.45 million (14.4 percent).
Instead of Boise State going to a BCS bowl in 2009 (#9) and 2011 (#10) and collecting $9 million for two at-large berths, Virginia Tech (#19) and Connecticut (unranked) went to BCS bowls as automatic qualifiers collecting $36 million in total for their conferences. Further, non-BCS AQ money contributes to the general pool that pays the other non-BCS conferences and is further divided by a revenue sharing formula.
The football fan does not benefit when low ranked conference champions are provided a short cut and the huge revenue that comes with a BCS appearance. TV ratings suffer (rating 5.4) when Virginia Tech (#19) played a Cincinnati (#12) in 2009 or when unranked Connecticut is pounded by Oklahoma (#7), rating 6.15, last year. A rematch between Oklahoma and Boise State (#10) would have been much more exciting to the college football fan and more competitive.
5. Don't the BCS conferences represent the largest potential TV markets? The largest non-BCS TV market used to be Salt Lake City (33rd). Now Las Vegas (42nd) and Albuquerque (44th) are the only non-BCS TV markets in the top 50. Denver represents the 18th largest TV market while Boise ranks 112th. Isn't that why Colorado was chosen to join the Pac 10 rather than Idaho's Boise State - and why the champions of BCS conferences in these markets are included as automatic qualifiers?
Then why not pick conference champions based on market size? Appealing to large markets is smart marketing. But automatic BCS conference champions are determined by competition not market size - as should BCS appearances be. The BCS agreement is just a cartel who decides how much of a slice of the pie to give the little guys, while dividing the rest equally. This is football we're talking about. It's stupid not to have a college football playoff for FBS.
6. Non-BCS conferences joined with BCS conferences in this agreement bring all the major bowls into an attractive arrangement for television and to produce a national championship game between the top two ranked teams. What do you propose if their television partners and the BCS bowls refuse to participate in any other arrangement?
There's too much competition in the marketplace for such shenanigans, unless you think America is controlled by the few. The goal of the Sherman Antitrust Act is to prevent restraints on free competition and commercial transactions which restrict production, raise or otherwise control the prices, market and competition to the detriment of purchasers or consumers of goods and services. Wouldn't they be attempting to control the prices, the market and the competition by any refusal to participate?
The BCS bowls are subject to your rulings. As an active partner in the BCS who generate an inordinate amount of revenue for themselves, they may not want to deviate from the current arrangement, however illegal. But a playoff that includes them would be too attractive to bow out of.
I'd love to see playoff games in the north, perhaps in domed stadiums, near hometown fanbases, if there were an eight team playoff. There's plenty of data that suggests the revenue would be much greater and advocates who want the universities - not some corrupt bowls - to share more of the income. How could this not be attractive to potential television partners?
7. The universities earned an ability to control their television rights in a landmark antitrust case against the NCAA. Do you advocate that the alleged antitrust violations by the BCS are enough to overrule that Court's concerns? Would you give the NCAA a limited antitrust exemption to solve this?
We ask that the Court expand the NCAA's antitrust exemption to include control over television rights for the BCS bowls only. Conferences still retain the rights to their TV contracts which have lately resulted in billions of dollars revenue. The NCAA certifies bowls and would be impartial - as they are with the championships in all other sports in all divisions except for FBS football. To obtain that for FBS football, they need the court's ruling.
The Court clearly found this was a "horizontal restraint" on output and price by the NCAA on member institutions and that "The NCAA creates a price structure that is unresponsive to viewer demand". The Court found: "Today we hold only that the record supports the District Court’s conclusion that, by curtailing output and blunting the ability of member institutions to respond to consumer preference, the NCAA has restricted, rather than enhanced, the place of intercollegiate athletics in the Nation’s life."
Hasn't the BCS "restricted, rather than enhanced, the place of intercollegiate athletics in the Nation's life"? Hasn't the BCS ignored the consumer's growing calls for a playoff for a national championship by "curtailing output and blunting the ability of its member institutions to respond to consumer preference"?
8. Isn't the BCS a single entity which your clients joined willingly and continue to be participants?
The BCS may purport to be a single entity by the BCS conferences, but what's the alternative for non-BCS conferences? Giving up $1 million or more a year in revenue without the possibility of appearing in a BCS bowl?
The Court has given a pass to trade-restraining parties who could cast themselves as a "single entity" rather than as independent entities. The BCS has cast itself in that light as an agreement to determine a national champion. But the Court has also resolved that agreements cannot "deprive the marketplace of independent centers of decisionmaking" and limit or restrain actual or potential competition. Justice Stevens said that otherwise, "Members of any cartel could insist that their cooperation is necessary to produce the ‘cartel product’ and compete with other products."
Recently, the Court decided against the NFL on those same grounds when the NFL cast themselves as a single entity. Decision-making in the BCS is made by the BCS conferences. Participation by non-BCS entities is purely based on expediency and should not be misinterpreted as equal participation with agreement on all aspects of the outcome.
(1) Antitrust & The Bowl Championship Series, Nathaniel Grow, Harvard Journal of Sports & Entertainment Law, June 2010, and
The BCS, Antitrust and Public Policy, Andrew Zimbalist, Robert A. Woods Professor of Economics, Smith College, 2010.
I am honored to be cited by the eloquent opposing counsel, MoS. Thanks to all for their participations. Feel free to render your decisions.