Monday, June 21, 2010

Conference Expansion and the BCS

Although the conference expansion frenzy has seemingly settled down for the time being (see earlier posts on the subject here and here), one of the questions that remains is what impact, if any, the minor reshuffling will have on the Bowl Championship Series. Specifically, following Utah's recent decision to join the Pac-10, the question arises of whether two of the most strident critics of the BCS, Utah Attorney General Mark Shurtleff and Utah Senator Orrin Hatch, will remain as interested in pursing antitrust claims against the BCS.

Both Attorney General Shurtleff and Senator Hatch have previously accused the BCS of violating federal antitrust law by granting preferential treatment to universities in the traditionally stronger "BCS Conferences," at the expense of teams from the historically less competitive "non-BCS Conferences." Both men became critical of the BCS following perceived snubs over the years to their home state schools, the University of Utah and Brigham Young University.

For his part, Senator Hatch has stated that he will continue his campaign against the BCS despite Utah's recent admittance into a BCS Conference. Indeed, Senator Hatch - a BYU alumnus - has a strong basis to argue that the BCS continues to violate antitrust law.

In a new paper, Antitrust & The Bowl Championship Series, I argue that the BCS remains quite vulnerable to attack under federal antitrust law. In particular, although recent modifications to the BCS have increased the access for non-BCS Conference teams, the BCS can still be challenged on several grounds.

First, I assert that the BCS can be attacked as an illicit group boycott, insofar as it distributes revenue unequally and without justification, to the detriment of universities in the non-BCS Conferences. For example, following the 2009-10 season, the BCS distributed at least $18 million in revenues to each of the six BCS Conferences, while the five non-BCS Conferences received a total of only $24 million, despite two non-BCS schools (Boise State and TCU) having been selected to participate in BCS bowl games. Thus, despite increased access to BCS games for the non-BCS schools, the non-BCS Conferences still face significant differential treatment with respect to the financial payouts accompanying an appearance in a BCS bowl game.

Second, and perhaps more significantly, the BCS can also be attacked as an illegal price fixing scheme, due to the fact that it enables formerly independent, competing entities (the participating BCS Conferences and bowl games) to collectively determine the amount of revenue to be distributed to BCS participants.

Given this continued antitrust vulnerability, combined with the fact that Senator Hatch seems intent to continue pushing for reform, and it appears that the legality of the BCS under federal antitrust law is an issue that will not be going away anytime soon.