1984 Regents Decision: The NCAA is a Business
The Supreme Court Calls the Game a Business, and Busts-Up One Portion of the NCAA Cartel
NCAA seizure of control over its members’ TV contracts in 1951 brought the organization its first steady flow of income; it also emboldened executive director Walter Byers to designate and limit the games to be televised. But because only nine percent of mid-century American households owned a TV, and many athletic departments saw the new medium as a threat to live-attendance ticket sales, the NCAA’s seizure of control over TV had limited initial economic impact. But by the early 1960s, more than 90 percent of homes had a TV, and the NCAA’s 1961 TV package was generating $3 million in new revenue. And as the popularity of college football continued to grow during the 1960s and 1970s, a small set of athletic-powerhouse schools, including Notre Dame, Alabama, Texas, Ohio State, Michigan, Southern Cal, and Nebraska, were repeatedly selected by Byers for the weekly televised NCAA football game. (On any given Saturday, just one game was televised, and some schools never appeared on TV.) Because this NCAA “TV Aristocracy,” as Keith Dunnavant called it, was able to develop stronger rivalries, fan bases, ticket sales, alumni support, recruiting, and TV income, sixty-three of the excluded schools formed the College Football Association in 1976, to negotiate their own TV contracts, and to persuade the NCAA to lift its broadcast restraints.
In 1981, the CFA signed an NBC contract to televise games between 1982 and 1985; in response, the NCAA declared that any participating CFA school would be expelled from the NCAA. As a result, many CFA members dropped out, and its NBC contract fell through. But in +1981, CFA members Georgia and Oklahoma filed an antitrust action, NCAA v. Board of Regents of the University of Oklahoma, challenging what they claimed was ongoing NCAA cartel-based price-fixing in the college football TV market.
The Court Penetrates the NCAA’s Not-Business Scam, and Triggers a Quantum Leap
Spurred by school presidents tussling over juicy TV revenues from football operations they referred to as “commercial enterprises,” the U.S. Supreme Court found that the NCAA had been operating a business cartel in violation of the Sherman Antitrust Act. NCAA restraints on TV commerce, the court said, did not “serve any legitimate procompetitive purpose,” because the consuming public would benefit from having more games available in the televised football market. These findings, that the NCAA was both business and illegal cartel, along with some of Justice Stevens’ explanatory musings (the meaning and import of which would be the subject of long debate), generated one of college sports’ Quantum Leaps.
All Did Not Welcome the Court
But, unable to know that within a decade the decision would fuel an explosion in the popularity and profitability of televised college basketball and football, and the scope of athletic department operations, Byers and his non-CFA members initially saw Justice Stevens as an unwelcome stranger. They were clearly wrong: every NCAA member should now recognize him as one of the most welcome of all the strangers to have ever arrived at NCAA arenas.
Stevens Functioned as a Management Consultant, Telling the NCAA How to Run a Much More Profitable Business Cartel
The Player as Product-Maker, Product-Differentiator, and Product
Justice Stevens’ opinion, in fact, might now be seen as a set of PowerPoint nuggets, delivered by some whiz-kid management consultant retained by Walter Byers, to advise NCAA members about maximizing immediate and long-range sports Promo-Tainment income opportunities. Below is a listing of those Regents-based nuggets:
Nugget #1: You are a business. You make and sell a product. Your product is Football.
The Regents case is best known for having dismantled a portion of the NCAA’s TV cartel, but its fundamental underlying premise — that NCAA televised football was a business – was just as significant. Justice Oliver Holmes’ opinion in the Supreme Court’s 1922 Federal Baseball case had declared that “personal effort, not related to production, was not a subject of commerce,” and that professional baseball was not, therefore, commerce. A game was a game, not a business, Holmes suggested. By the early 1950s, NCAA attorney Joe Rauh was suggesting that his organization’s restraints upon its TV commerce were really just Not-Restrictions. And several years later, in 1956, Walter Byers crafted his Not-Business incognito for the NCAA’s new Scamateurism-based commerce. But Regents penetrated these deceptions, finding that NCAA football was both “industry” and “product” and that NCAA football players were a critical part of a business operation which generated substantial revenues for the schools.
Nugget #2: Your own TV-market restraints hurt your business. Get rid of them. Once you do, you will eventually make a lot – and I mean a lot — more money.
Nugget #3: You sell Football to fans. They are consumers. Very few are students on campus.
Nugget #4: In the minds of those consumers, your business has a valuable product-brand, called “The Revered Tradition of Amateurism.”
Stevens told the NCAA that its business possessed an attractive commercial brand, which he called “the revered tradition of amateurism.” “The NCAA seeks to market a particular brand of football – college football,” Stevens wrote, and “the identification of the ‘product’ with an academic tradition differentiates college football from, and makes it more popular than, professional sports to which it might otherwise be comparable, such as, for example, minor league baseball.”
Nugget #5: Your Product-Brand has three parts: 1) Football; 2) Made-by-the-Unpaid (MBU); and 3) Made-by-the-Academic (MBA).
Stevens also identified what he saw as the product’s commercially-alluring constituent parts. “In order to preserve the character and quality of the product,’” Justice Stevens said, “athletes must not be paid, must be required to attend class, and the like.” Though Stevens had before him little evidence about either class attendance or pay, his statement meant that the “character and quality” of the NCAA’s revered brand derived from three parts: football was tied to (“identified with”) two commercially-differentiating factors which, based on Stevens’ analysis, can be called “Made-by-the-Unpaid,” [MBU] and “Made-by-the-Academic” [MBA].
Nugget #6: Your player is your Product-Differentiator.
Nugget #7: Your player is also your Product-Maker. He makes football.
Nugget #8: Your player is also your Product. Your sports-business managers and other school staff shape that Player-Product, to ensure that the fan thinks of him as a highly-differentiated, Unpaid Academic.
Nugget #9: The economic and academic controls you impose upon your Player-Product, to ensure that he appears as an Unpaid Academic, will be protected from antitrust scrutiny. Work to maintain them both, because they have enormous value.
Stevens also suggested that the Player-Product’s Unpaid and Academic aspects so effectively maximized consumer welfare, and school TV income, as to make school control over the player’s pay and academic activity “pro-competitive” and, therefore, exempt from antitrust review.
Stevens’ Two Differentiators Were Off-Stage Factors
Though the two litigants’ eagerness to get at TV revenues made clear to Justice Stevens that neither revered the 1956 Not-Business scam invented by the NCAA, both happily let the court fall for the NCAA’s other scams. And, fall for them, Justice Stevens did. In most respects, his MBU and MBA factors merely restated the NCAA’s 1956 Not-Pay and Not-Job scams – even though his Differentiators (and the NCAA’s scams), were unusual, if not bizarre, in all of post-Civil War commerce. Some Product Differentiators, like the Big Mac’s secret sauce, or Coke’s formula, are inanimate; others, like Geico’s Gekko, have some life. Some, like the speed of Federer’s serve, are human Differentiators, which arise out of the performer’s physical presentation. A smaller sub-set, like the Everly Brothers’ filial relation, are based upon the consumer’s perception of the relationship between the performers.
But some Differentiators arise out of the consumer’s conception of the performer’s off-stage character or daily life. Early-1950’s movie moguls, for example, aimed to increase or maintain the market-differentiating power of their heart-throb, closet-gay Rock Hudson product, by requiring that he announce his off-stage, (and entirely staged) marriage to a woman. And some Differentiators, like the “Union-Made” label on a pair of jeans, derive from the consumer’s understanding of the relationship between business owner and laborer. Stevens’ MBU and MBA Differentiators were based both upon the consumer’s conception of both the player’s off-field life, and the relation between the owner-school and the laborer.
Stevens’ Differentiators Were Economic Factors
And Stevens’ designation of the MBA Differentiator was not driven by some need to preserve the sanctity of the academy, or the purity of a purportedly ancient or virtuous amateur game. His Sherman Act-assigned task was to assess the interplay of commercial factors, within a sports Promo-Tainment market. As a result, his MBA factor was significant only because it fortified the economically-differentiating character of his MBU factor, by helping ensure that the consumer would believe that the relationship between the school’s athletic business and its player-producer was devoid of economic aspect. No educational undertaking, Stevens’ silly Differentiators have helped the consumer believe, can ever be allowed to be tainted by any association with commerce.
Stevens’ Differentiators were Subjective — and Manipulable — Factors
“This is the west, sir. When the legend becomes fact, print the legend.” – reporter, to Jimmy Stewart, in The Man Who Shot Liberty Valence.
And because Stevens’ two Differentiators were off-field factors, divorced from the fan’s direct perception of the game, they would prove well-suited to the spins and cons of post-1984 NCAA big-time sports. According to Stevens’ formulation, that the two Differentiators were founded in fact was irrelevant: he needed only identify the concept (or even, perhaps, fantasy) which the consumer held in his mind, and pursued with particular purchasing passion.
Stevens’ Paradigm: NCAA as Organ-Grinder, and Player as Organ-Grinder’s Monkey, Leashed on the NCAA’s Tether
But if the game was a business, how could its player, assigned so many fundamental roles, possibly be considered anything other than its employee? How, for example, could Stevens have rationally concluded that the game-business would get anything done, or produced, without the toil of paid employees? The answer lies in the implicit, perverse paradigm at the heart of Stevens’ analysis: think of yourselves, management-consultant Stevens told NCAA members, as Organ-Grinders, and your player, as your Organ-Grinder’s Monkey-on-a-Tether, with a tin cup on the sidewalk in front of you both. And you, Stevens told the litigants, get all the coin in the cup (though you must be sure to allow each member to put out its own cup). And because, Stevens pronounced, the entertainment consumer who passes before you on that sidewalk reveres the notion that your monkey-player-on-a-tether is an unpaid academic, you must use that tether to keep that monkey’s hand out of that cup. And Stevens’ perverse economic paradigm depended upon the fiction that any monkey-on-a-leash just had to be an economically-infantile creature – even if, by the early 1980s, every player was an adult.
The Court’s Perversion: Transmuting ‘No-Pay’ From Legal Sin, to Legal Virtue
The Management Consultant’s Dream: You Don’t Pay the Help?
The Regents decision officially transmuted the absence of worker pay – an element so pernicious, that it triggered the Civil War – into a purportedly market-differentiating, and ever-so-commercially-alluring factor, deserving of protection from antitrust scrutiny. Consider, for a moment, if mid-19th-century cotton-king plantation owners had retained a management-consultant like Justice Stevens: would he have also told those business owners that their slave-based operations should continue to refuse to pay their slaves, because to do so was just part of a revered tradition of slavery, which would therefore maximize consumer attraction to the product, and income from that business? Both slaveholders and 20th-century college football owner-schools loved not-paying their help, but only the latter group of business owners – fortified by the Regents decision — had the audacity to enter the 21st century touting the absence of worker pay as a reason for the consumer to revere and buy their products.
The Fetishization of Player No-Pay Status
“The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum, a great variety of morbid symptoms appear” — Antonio Gramsci
Stevens had jettisoned the NCAA con that the game was a Not-Business – but also laid the groundwork for what would emerge, over the coming decades, as a central element of modern NCAA sports: the NCAA cartel’s fetishization of player No-Pay status. Stevens’ formulation claimed that, like some Qing Dynasty male, who achieved a high level of sexual titillation when viewing females with feet deformed by culturally-mandated foot-binding, the American sports Promo-Tainment consumer was commercially-titillated when viewing athletic performers he understood to have been both unpaid and academically-focused.
Justice Stevens Helped Secure the Not-Pay and Not-Job Scams as Strands for the NCAA’s Emerging Tether
The Supreme Court generated a college sports Quantum Leap, by declaring that: 1) the NCAA was a business cartel restricting members’ broadcast rights in violation of the Sherman Act; and 2) some portion of that NCAA business deserved protection from antitrust scrutiny, because its football product was a part of a commercially-enticing “Revered Tradition of Amateurism,’ which was differentiated, in the mind of the consumer, by its Made-by-the-Unpaid (MBU) and Made-by-the-Academic (MBA) factors. Justice Stevens’ decision helped the NCAA economically fetishize the player’s unpaid and academic aspects, as items to be purchased. The decision also fortified the notion that the player must be barred from any access to third-party-derived income. But Regents’ primary impact may have been to ensure the role of player No-Pay as a central strand of what was then a still-emerging tether used by the school to control a newly-adult player.
Copyright 2021 William Wilson