[Congressional Record Volume 143, Number 37 (Thursday, March 20, 1997)]
[Senate]
[Pages S2613-S2618]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
ANTITRUST IMPLICATIONS OF THE COLLEGE BOWL ALLIANCE
Mr. McCONNELL. Mr. President, Senator Bennett of Utah, Senator Thomas
and Senator Enzi of Wyoming, and I have been working on a matter that
we wish to discuss with our colleagues in the Senate for the next few
moments. Senator Thomas needs to leave so he is going to lead off.
I yield the floor.
The PRESIDING OFFICER. The Senator from Wyoming.
Mr. THOMAS. I thank the Chair.
Mr. President, I rise today to speak about the college
football Bowl Alliance. I am concerned that under the Bowl Alliance
structure, athletic excellence is not being recognized in postseason I-
A college football play.
Fresh in the minds of Wyoming football fans is the last game of
regular season play when the nationally ranked Cowboys played against
No. 5-ranked Brigham Young University for the Western Athletic
Conference [WAC] championship title. Both teams went into the game
believing the winner would be selected for major postseason bowl
action. UW and BYU delivered a terrific conference championship game.
BYU won 28-25 over Wyoming in overtime play. It was the first WAC title
game won in overtime. Unfortunately, neither WAC team was invited to a
major New Year's bowl.
The 1996 selections to the New Year's bowl games shed revealing light
on the college football Bowl Alliance. Invitations to the most
lucrative major bowls games--the Orange Bowl, the Sugar Bowl, and the
Fiesta Bowl--were largely sent to high-profile, highly marketable teams
instead of worthy teams. Many sports fans were disappointed at the
postseason New Year's bowl matchups. I am concerned about the closed
selection process that has developed and the impact the Bowl Alliance
structure will have on I-A collegiate football.
The Bowl Alliance operates outside the purview of the National
Collegiate Athletics Association [NCAA]. The Bowl Alliance was created
in 1993 when the Atlantic Coast Conference, the Big East Conference,
the Big 12 Conference, the Southeastern Conference and Notre Dame came
together and took it upon themselves to provide and acquire teams to
participate in the major bowl games. These Bowl Alliance conferences
have contracts with the television networks and large corporate
sponsors--Federal Express, Tostitos, and Noika. Champions from each
alliance conference are automatically guaranteed a berth in one of the
major bowl games. The nonalliance conferences remaining out in the cold
are the Western Athletic Conference [WAC], the Big West Conference,
Conference USA, the Mid American Conference and the 11 Independent
teams.
The Bowl Alliance claims its purpose is to create optimal matchups
and identify and national champion. Considering the 1996 selections for
the bowl games, I question if quality matchups is the true goal. Last
season, TV viewers saw No. 20 Texas lose to No. 7 Penn State 38-15 in
the Fiesta Bowl. Texas' record was 8-4. The Orange Bowl showcased No. 9
Virginia Tech losing to No. 6 Nebraska 41-21.
Appearance in a Bowl Alliance game pays well. Each participating team
takes approximately $8,000,000 back to its school. In addition, the
teams get the national visibility and prestige that leads to strong
athletic recruitment. Conferences outside the alliance have a remote
chance of participating in one of the Alliance Bowls. Over time it will
hurt the quality of the nonalliance teams who will have difficulty in
recruitment. The Alliance Bowl structure will make the alliance teams
stronger and relegate the nonalliance teams to a second-tier status.
The alliance ensures its monopoly through the use of the at-large
rule. Although the champions of the self-selected Alliance Bowl
conferences automatically appear in one of the major bowl games there
are two remaining at-large spots. It is questionable as to whether
those two spots are truly at-large and open to any high-quality team
that can play their way into one of the spots. A team from the WAC was
deserving of one of those at-large spots last year, but the invitation
never came.
I am concerned for the future of the athletes and schools in the
nonalliance conferences. That is why I joined with Senators Mitch
McConnell, Robert Bennett, and Mike Enzi in writing to the Department
of Justice [DOJ] and the Federal Trade Commission [FTC] to request an
investigation of the Bowl Alliance. We suspect possible violations of
the Sherman Antitrust Act. In 1996, the eight Alliance Bowl
participants, including the Rose Bowl participants, went home with a
total of $68 million. The 28 teams that played in the minor bowl games
shared a pot of
[[Page S2614]]
$31 million. We requested a formal investigation of the matter. If
there is wrong-doing we want to see the DOJ and the FTC use their
statutory enforcement powers to break this lock on college football.
We are not asking for special consideration for any one team. We
would like to see genuinely open competition restored to college
football postseason bowls. Postseason play should be about recognizing
achievement. Letting the best teams play is in the best interest of our
student athletes and our schools.
I wish to associate myself with the efforts of the Senator from
Kentucky, the Senator from Utah, and my friend from Wyoming in doing
some things that we think have impact in football. The Bowl Alliance
has a great effect on small schools, particularly the University of
Wyoming, BYU, Louisville, and others, and so we think this is an issue
which needs to be discussed. I am very proud to be associated with the
comments my friends will make.
I thank the Chair.
Mr. McCONNELL. I thank my friend from Wyoming for his contribution to
the matter that we will now proceed to discuss with our colleagues.
Mr. President, at a time when the country is swept away by March
madness--particularly, I notice the occupant of the chair has a fine
team in March madness that will probably, no doubt, come in second to
Kentucky in the end--and the excitement of competitive college
basketball, we are nevertheless reminded of the fundamental unfairness
of college football's pseudo playoffs. Specifically, I am talking about
the College Bowl Alliance.
The alliance is a coalition of top college football conferences and
top postseason bowls. Over the past few years, the alliance has entered
into a series of restrictive agreements to allocate the market of
highly lucrative postseason bowls. By engaging in this market
allocation, the coalition bowls and the coalition teams have ensured
that they will receive tens of millions of dollars, while the remaining
teams and bowls are left to divide a much smaller amount. The alliance
agreements have the purpose and effect of making the already-strong
alliance teams stronger while relegating the remaining teams to a
future of, at best, mediocre, second-class status.
Mr. President, in college football, there can be no Cinderella
stories. There can be no unranked, unknown Coppin State going to the
playoffs and beating the SEC regular season champion, South Carolina,
and going down to the wire with a Big 12 power like Texas.
A team like Coppin State could never make it to the lucrative college
football postseason. You see, a team like that would be excluded
because it's not in the College Bowl Alliance and its fans don't travel
well. It doesn't even have its own band.
College football has no room for a Sweet 16 that includes teams like
St. Joseph's and the University of Tennessee at Chattanooga. The
opportunity to be in college football's Elite Eight and Final Four is
essentially determined before the season begins.
The basic message, Mr. President, is that--if David wants to slay
Goliath--he'd better do it during basketball season. He won't be
allowed to play Goliath when the football postseason rolls around.
College football has no room for the underdog. In fact, as evidenced
by the 1997 New Year's bowls, college football doesn't even have room
for top-ranked teams--unless those teams are members of the exclusive
Bowl Alliance.
I first raised this issue in 1993 when my alma mater, the University
of Louisville, had a 7-1-0 record and a top ranking, but was
automatically excluded from the most lucrative New Year's bowls. I
contacted the Justice Department and explained that the alliance
agreements constituted a group boycott, and, thus, violated the Sherman
Act.
The Justice Department promised to promptly review the matter.
Shortly thereafter, the College Bowl Alliance entered into a revised
agreement whereby the 1997 New Year's bowls would be open to any team
in the country with a minimum of eight wins or ranked higher than the
lowest ranked--alliance--conference champion.
Despite this pledge, the alliance continued its apparent boycott of
nonalliance teams. During the 1996 season, Brigham Young University and
the University of Wyoming, both members of the nonalliance Western
Athletic Conference [WAC], met the alliance criteria. Wyoming finished
the season 10-2 and ranked 22d in the country, while BYU won 13 games
and was ranked the fifth best team in the country.
Neither team, however, was afforded an opportunity to play in the
alliance bowls. In fact, BYU's record and ranking was superior to
nearly every alliance team, including four of the six teams who
participated in the high-visibility, high-payout alliance bowls.
Mr. President, this issue is about more than football, apple pie, and
alma mater. This is about basic fairness and open competition. This is
about a few conferences and a few bowls dividing up a huge
multimillion-dollar pie among themselves.
In 1997, the eight participants in the alliance bowls, including the
Rose Bowl participants shared an estimated pot of $68 million while the
28 nonalliance bowl participants were left to divide approximately $34
million. In short, the market has been divided such that eight teams
rake in 70 percent of the postseason millions, while 28 teams get
nothing more than the leftover 30 percent.
This chart may have printing that is too small for the camera to pick
up, but it illustrates the nature of the problem.
The Alliance bowls--Fiesta, Sugar, Orange, and Rose--totaled $68.2
million. That is eight teams that benefited from the $68.2 million. The
nonalliance bowls--and here is a whole list of them--collectively
shared $34 million. Clearly, most of these teams never had an
opportunity, no matter how good they were, to participate in the New
Years Day payout bowls. Therein lies the antitrust problem, a clear
antitrust problem I might say.
These short-term millions lead to long-term benefits for the alliance
conferences. Guaranteed appearances in high-visibility bowls directly
translate to: more loyal fans, more generous alumni, and much more
willing athletic recruits.
If you don't believe it's easier for alliance teams to recruit, just
pick up the phone and call the coach at an independent school like
Central Florida, or the coach at the University of Louisville or BYU.
These coaches will tell you time after time that the top high school
athletes don't want to play for teams that don't have a shot at the top
New Year's bowl games.
Mr. President, in summary, there is substantial evidence that the
most powerful conferences and the most powerful bowls have entered into
agreements to allocate the postseason bowl market among themselves and
to engage in a group boycott of nonalliance teams and bowls. The effect
of these agreements is to ensure that the strong get stronger, while
the rest get weaker.
I have joined with my colleagues--Senator Bennett, Senator Enzi, and
Senator Thomas--to request that both the Justice Department and the
Federal Trade Commission investigate the intent and effect of the
alliance agreements. I ask unanimous consent that the Justice
Department letter be printed in the Record at the end of my remarks.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 1.)
Mr. McCONNELL. In closing, I'd like to point out that this effort is
much more than just a few Senators cheering for their home teams. The
Supreme Court has said it much more clearly than we ever could. So, I
quote the Court, which I seem to be doing quite often these days:
[O]ne of the classic examples of a per se violation of
section 1 is an agreement between competitors at the same
level of the market structure to allocate territories in
order to minimize competition . . . This Court has reiterated
time and time again that ``horizontal territorial
limitations . . . are naked restraints of trade with no
purpose except stifling of competition.''
This fundamental principle of antitrust law should guide the review
of the Justice Department and the Federal Trade Commission. In the
words of the D.C. Circuit, ``the hallmark of the [unlawful] `group
boycott' is the effort of competitors to `barricade themselves from
competition at their own level.' ''
Today, we are calling on all interested parties to break the
barricade.
[[Page S2615]]
We are challenging the NCAA, the Bowl Alliance commissioners, and the
Alliance bowl committees to take action to bring about genuine
competition to college football and the postseason.
Postseason playoffs can be a reality for college football. It works
for college basketball, college baseball, and it works for college
football--at the Division I-AA, Division II, and Division III
levels. They all have a playoff system, all of them except Division I.
The opportunity to compete in postseason bowls should be based on
merit, not membership in an exclusive coalition.
So, Mr. President, I thank my good friend and colleague from Utah,
Senator Bennett, for his fine work on this issue. And also Senator Enzi
for his great work on this. We are hoping for the best. Obviously, the
solution to this problem that we would all prefer is for the
organizations themselves to solve the problem. But, if they do not, it
seems pretty clear to each of us that this is an antitrust case the
Justice Department should pursue.
With that, Mr. President, I yield the floor.
Exhibit 1
U.S. Senate,
Washington, DC, March 14, 1997.
Hon. Joel I. Klein,
Acting Assistant Attorney General, Antitrust Division, U.S.
Department of Justice, Washington, DC.
Dear Mr. Klein: We believe that there is substantial
evidence of serious violations of Section 1 of the Sherman
Act (15 U.S.C. 1) by the College Bowl Alliance
(``Alliance'').
The Alliance is a coalition of top college football
conferences and representatives of top postseason college
football bowls. Over the past few years, the Alliance has
entered into a series of restrictive agreements to allocate
the market of highly-lucrative New Years' bowls. By engaging
in this market allocation, the coalition bowls and the
coalition teams have ensured that they will receive tens of
millions of dollars, while the remaining teams and bowls are
left to divide a much smaller amount. In 1996, for example,
the eight Alliance bowl participants (including the Rose Bowl
participants) went home with a total of $68 million, while
the 28 non-Alliance bowl participants shared a pot of $31
million. Moreover, the Alliance agreements have the
additional purpose and effect of making the already-strong
Alliance teams stronger while relegating the remaining teams
to a future of, at best, mediocre, second-class status.
As you will recall, the Antitrust Division commenced a
review of this coalition in late 1993. Shortly thereafter,
the Alliance agreed that the top bowls would be open to all
teams based on merit. The 1997 New Year's Bowls, however,
proved to the contrary. We are writing to advise you of these
recent material events and to urge that you initiate a formal
investigation into this matter.
I. Background
Courts have routinely declared that agreements among
competitors to allocate territories and exclude would-be
competitors are a violation of Section 1 of the Sherman Act.
See, e.g., Smith v. Pro Football, Inc., 593 F.2d 1173, 1178
(D.C. Circuit 1978). As the D.C. Circuit has explained:
``The classic `group boycott' is a concerted attempt by a
group of competitors at one level to protect themselves from
competition from non-group members who seeks to compete at
that level. Typically, the boycotting group combines to
deprive would-be competitors of a trade relationship which
they need in order to enter (or survive in) the level wherein
the group operates. . . . [The hallmark of the `group
boycott' is the effort of competitors to barricade themselves
from competition at their own level.' ''
Id. This fundamental principle should be kept in mind while
reviewing the facts surrounding the College Bowl Alliance.
a. original college bowl alliance agreement
In 1991, five college football conferences (ACC, Big East,
Big Eight, Southeastern, and Southwestern conferences) and
the independent University of Notre Dame, formed a coalition
with the prestigious College Bowl Committees of the Federal
Express Orange, USF&G Sugar, IBM Fiesta, and Mobil Cotton
Bowls (``Alliance bowls'').\1\ The Pac-10 and Big Ten also
participated in the coalition, although their champions
played in the Rose Bowl under a separate agreement.
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\1\ The Bowl Alliance was originally called the Bowl
Coalition. Additionally, pursuant to the dissolution of the
Southwest Conference, the Big Eight became the Big 12, and
the Cotton Bowl dropped out of the coalition.
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The coalition agreement was expressly designed to reduce
competition in the postseason match-ups of teams and bowls,
and to guarantee every coalition team an opportunity to vie
for a lucrative, high-visibility bowl. The contract
specifically guaranteed that each coalition team
participating in any of the Alliance bowls would receive a
minimum payout based on similar terms. Typically, an Alliance
bowl team has taken home a purse in excess of eight million
dollars. Moreover, the original Request for Proposal
contained a clause requiring that no Alliance bowl or
Alliance team could compete in time slots opposite other
Alliance bowls.
The agreement also stipulated the procedure by which the
top-ranked and lesser-ranked Alliance teams were matched up
with participating Alliance bowls. Three conferences were
guaranteed berths at a specific Alliance bowl regardless of
the ranking of their champion team. Any team not in the
Alliance, however, was precluded from competing in any of the
Alliance bowls, regardless of its record or ranking.
The Alliance conferences and Notre Dame received
substantial benefits from the coalition agreements. They were
assured a berth at a major postseason bowl--regardless of
their topmost ranking. Further, all of the participants in
the Alliance bowls were guaranteed to receive a substantial
minimum payment and national visibility. Such visibility in
turn enhanced fan support, alumni fund-raising, and athletic
recruiting for the bowl teams.
By dividing the lucrative market of major postseason bowls
among themselves, the Alliance Conferences and Notre Dame
expressly and effectively excluded a substantial number of
the other Division 1A teams from any of the prestigious New
Year's Bowls. The excluded teams were those which were either
independent or in non-Alliance conference such as the Western
Athletic Conference, the Big West, and the Middle America
Conference.
B. Initial Request for Antitrust Investigation
In response to these market allocations, Senator Mitch
McConnell formally requested that the Justice Department
investigate the intent and effect of the Bowl Alliance
agreements. Specifically, Senator McConnell pointed out that
the Bowl Alliance agreements precluded a non-Alliance team
from going to the significant and lucrative Alliance Bowls--
even when the non-Alliance team had a better record and a
better ranking than an Alliance team. In response, the
Justice Department commenced a review of the Bowl Alliance.
C. ``Revised'' College Bowl Alliance
Thereafter, the College Bowl Alliance entered into a
revised agreement whereby the 1997 New Year's bowls would
supposedly have two of the six Alliance slots ``open to any
team in the country with a minimum of eight wins or ranked
higher than the lowest-ranked conference champion from among
the champions of the Atlantic Coast, The Big East Football,
The Big Twelve and Southeastern conferences.''
At that point, Senator McConnell concluded that the ``new
arrangement seems to open competition to the top tier bowl
games.'' (Letter from Honorable Mitch McConnell to the
College Football Association, December 21, 1995.) The Justice
Department apparently made a similar determination.
Notwithstanding the promise of open competition, the
Alliance announced that it would consider non-Alliance teams
for the ``at-large'' openings only if they signed a special
restrictive agreement. The Alliance demanded that the terms
of this ``participation agreement'' be kept confidential.
Nevertheless, a key term of this agreement apparently was
that the at-large participants had to promise to accept an
offer from an Alliance bowl over any offers from non-Alliance
bowls. In the words of the Alliance, ``[t]here are no `pass'
or withdrawal options.''\2\
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\2\ In the fall of 1996, the Alliance sent out
``participation offers'' to presumably all of the non-
Alliance teams. Both Brigham Young University and the
University of Wyoming signed the restrictive participation
agreements, but included a proviso stating they would not
agree to all of the restrictive terms. Specifically, the
University of Wyoming explained that ``the University . . .
and the Western Athletic Conference will not comply with any
expressed or implied provision that prevents other members of
the WAC from participating in bowls that compete with any
Alliance Bowl, or with any other provisions that might
violate antitrust laws.''
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D. Continued Boycott of Non-Alliance Teams
The potential antitrust fears became a reality after the
1996 regular season when the Alliance continued its apparent
boycott of non-Alliance teams. During the 1996 season,
Brigham Young University and the University of Wyoming,
members of the non-Alliance Western Athletic Conference, had
``a minimum of eight wins or [were] ranked higher than the
lowest-ranked [Alliance] conference champion. . . .''
BYU, in fact, met both of the Alliance criteria by
compiling a remarkable 13-1 record and earning a ranking of
the fifth best team in the country. This record and ranking
was superior to nearly every Alliance team, including the
University of Texas, 8-5 record and a No. 20 ranking;
Pennsylvania State University, 11-2 record and a No. 7
ranking; Virginia Tech, 10-2 record with a No. 13 ranking;
and Nebraska, 11-2 record and a No. 6 ranking. Nevertheless,
BYU did not receive an at-large invitation to play in any of
the prestigious Alliance bowls; while Texas, Penn State,
Virginia Tech, and Nebraska all were invited to play in
various Alliance bowls, with the attendant financial and
recruiting benefits. Similarly, Wyoming finished with an
impressive 10-2 record and a No. 22 ranking, but was not
afforded an offer to play in the Alliance bowls.
E. Formation of the ``Super Alliance''
In June 1996, the Alliance lock on college football power
was strengthened as the Rose
[[Page S2616]]
Bowl agreed to join the Alliance, which guaranteed the Big
Ten and Pac-10 conferences automatic berths in an Alliance
bowl. The Alliance has officially renamed itself the ``Super
Alliance.''
II. Sherman Act Prohibits Market Allocations and Group Boycotts
The Sherman Act prohibits the Alliance agreements. Section
1 of the Sherman Act is violated where: (1) there is an
agreement, (2) that unreasonably restrains trade, and (3)
affects interstate commerce. 15 U.S.C. 1. It is beyond
dispute that interstate commerce is affected by the millions
of dollars that flow through the Alliance bowls to the
Alliance conference teams. Thus, our analysis focuses on the
existence of agreements and the unreasonable restraint of
trade.
a. the alliance is linked by at least three agreements
The Alliance coalition is linked by a minimum of three
agreements that limit competition. First, the Alliance
conferences--the ACC, Big East, Big 12, Big Ten, Pacific 10
and the Southeastern conferences--have horizontally agreed
not to compete with each other for the top postseason bowls.
Next, the Alliance bowls--the Sugar, Fiesta, and Orange
bowls--have horizontally agreed not to compete with each
other for the top-ranked teams. Third, the Alliance
conferences and the Alliance bowls have vertically agreed to
further their horizontal agreements by limiting participation
with non-Alliance teams and non-Alliance bowls. These
agreements individually and in their totality demonstrate ``a
conscious commitment to a common scheme designed to achieve
an unlawful objective.'' Monsanto Co. v. Spray-Rite Serv.
Corp., 465 U.S. 752, 768 (1984).
Moreover, strong evidence suggests the existence of an
``anti-overlap'' agreement. The coalition's original Request
for Proposal contained an explicit ``anti-overlap'' clause.
Under the terms of such an agreement, no Alliance bowls or
teams could compete in time slots opposite other Alliance
bowls. Although this clause was officially removed following
a letter of protest from the Holiday Bowl, the Alliance's
exclusive prime television slots are strong indicators of an
anti-overlap agreement. Such circumstantial evidence may be
used to prove the existence of an agreement. See id.
b. the alliance agreements unreasonably restrain trade under either a
per se test or a rule of reason test
The effect of these interlocking agreements is to
unreasonably restrain trade. Courts determine the
reasonableness of a restraint by applying either a per se
test or a rule of reason test. See, e.g., NCAA v. Board of
Regents, 468 U.S. 85, 100-01 (1984). The Alliance agreements
fail under either analysis.
(1) per se analysis
The facts underlying the Alliance warrant the stringent per
se analysis. Although courts have often analyzed regulations
of sports organizations under a rule of reason, see, e.g.,
Justice v. NCAA, 577 F. Supp. 356, 380 (D. Ariz. 1983)
(citations omitted), such a lenient review is inappropriate
where the purpose of the regulations is to eliminate business
competition. See, e.g., id. (citing M & H Tire Company, Inc.
v. Hoosier Racing Tire Corp., 560 F. Supp. 591, 604 (D. Mass.
1983); Blalock v. Ladies Professional Golf Assoc'n, 359 F.
Supp. 1260, 1264-68 (N.D. Ga. 1973)). The Alliance cannot
cloak its purpose and effect under the garb of NCAA self-
regulation, cf., Justice, 577 F. Supp. at 379 (rule of reason
is appropriate where NCAA enforced rules against compensating
athletes), where the underlying facts demonstrate that
business-minded entities acted with the clear intent to
exclude non-Alliance bowls and non-Alliance teams from multi-
million dollar opportunities.
Courts have routinely condemned such market allocations and
group boycotts under the per se rule. See Fashion
Originators' Guild v. Federal Trade Comm'n, 312, U.S. 457
(1941) (group boycott); United States v. Addyston Pipe &
Steel Co., 85 Fed. 271 (6th Cir. 1898), mod., 175 U.S. 211
(1,899) (market division). As the Supreme Court has
explained:
[o]ne of the classic examples of a per se violation of
section 1 is an agreement between competitors at the same
level of the market structure to allocate territories in
order to minimize competition. . . . This Court has
reiterated time and time again that ``horizontal territorial
limitations . . . are naked restraints of trade with no
purpose except stifling of competition.''
United States v. Topco Associates, 405 U.S. 596, 608 (1972)
(citations omitted).
For example, in United States v. Brown, 936 F.2d 1042 (9th
Cir. 1991), the Ninth Circuit held that an agreement between
two billboard advertising companies providing that each would
not compete with the other's former billboard leaseholds for
one year was per se illegal. Similarly, the agreement among
the Alliance bowls not to compete with each other for teams
should be per se illegal. Id. Likewise, the agreement among
the Alliance teams not to compete with each other for the
Alliance bowls should be struck down. Id.
(2) Rule of reason
The Alliance agreements also fail under a rule of reason
analysis. Under the rule of reason, courts require a
plaintiff to show that there are significant anti-competitive
effects. See NCAA v. Board of Regents, 468 U.S. 85, 100-01
(1984). Once this burden has been met, the defendant must
show that there are pro-competitive effects, which then
shifts the burden back to the plaintiff to demonstrate that
such effects can be achieved in a less restrictive manner.
Id. at 120 (striking down restraint on broadcast of college
football where there was no sufficient pro-competitive
justification).
(a) anti-competitive effects
As set forth above, the anti-competitive effects of the
Alliance on college football generally and the New Year's
bowls specifically are undeniable. Instead of having all the
bowls bidding for all the teams, a super-coalition of
powerful bowls and powerful teams has divvied up the prized
opportunities among themselves. As the Supreme Court stated
in NCAA v. Board of Regents, ``[t]he anti-competitive
consequences . . . are apparent . . . [when] [i]ndividual
competitors lose their freedom to compete.'' 468 U.S. at 107-
08.
The facts of the 1996 season indicate that non-Alliance
teams were not allowed to genuinely compete for one of the
lucrative Alliance bowls. For example, BYU was not invited to
an Alliance bowl in spite of having a ``minimum of eight
wins'' and being ``ranked higher than'' four of the
Alliance teams participating in Alliance bowls. Moreover,
non-Alliance bowls were unable to genuinely compete for
the Alliance teams in light of the anti-overlap rule and
the ``no-pass'' rule--the latter of which mandated that
all Alliance-eligible teams must accept offers from
Alliance bowls--regardless of how lucrative a non-Alliance
bowl offer might be.
These anti-competitive effects are in direct contravention
of well-established Supreme Court precedent. In NCAA, the
Court explained that `` `[i]n a competitive market, each
college fielding a football team would be free to sell the
right to . . . its games for whatever price it could get.' ''
NCAA, 468 U.S. at 106 (quoting district court and striking
down restraints). The Alliance agreements clearly restrict
such a right for both the non-Alliance bowls and the non-
Alliance teams. See also United States v. Paramount Pictures,
Inc., 334 U.S. 131, 154 (1948) (striking down block booking
because it ``eliminate[s] the possibility of bidding for
films theater by theater. [Such agreements] eliminate the
opportunity for the small competitor to obtain the choice
first runs, and put a premium on the size of the circuit.'')
(b) No Pro-competitive Effects
The Alliance cannot establish that its restrictive
agreements produce any pro-competitive effects. In fact, the
Alliance's own language reveals that it did not have even a
pro-compeititve purpose. The Alliance states that its
``framework enhances the quality of postseason college
football match-ups, increases the likelihood of pairing the
two highest ranked teams in the nation in a bowl game, and
provides excitement for the coaches, players, and fans.''
According to a recent Sports Illustrated article, the purpose
and effect of the Alliance is not to determine the true
national champion, but rather ``is to avoid the creation of
NCAA-run national playoffs. . . . The Alliance exists to keep
the power and the money in the hands of the Alliance bowls
and the four conferences that receive guaranteed berths in
those bowls. . . . Any national championship games that
result are a bonus.'' Layden, Tim, ``Bowling for Dollars,''
Sports Illustrated, Dec. 16, 1996 at 36.
The Alliance goals fall far short of actually allowing the
best teams to compete in the best bowls. The 1996 season is a
painful reminder of this fact. Instead of consumers getting
to watch a highly-competitive match-up between No. 5 ranked
BYU and another top-ranked team, they were forced to endure
two blow-outs in the Alliance: the Fiesta Bowl where No. 7
Penn State defeated No. 20 Texas 38-15, and the Orange Bowl,
where No. 6 Nebraska trounced No. 9 Virginia Tech 41-21.
These match-ups were based on membership in the Alliance, not
on merit.\3\
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\3\ Additionally, there is evidence which indicates that the
decision was not based on consumer preference. One poll is
reported to have shown that fans would have preferred the
following teams in an Alliance bowl: BYU--48%, Penn State--
22%, and Colorado--21%. As the Court has stated, ``[a]
restraint that has the effect of reducing the importance of
consumer preference . . . is not consistent with [the]
fundamental goal of anti-trust law.'' NCAA, 468 U.S. at 107
(citation omitted).
---------------------------------------------------------------------------
In short, the Alliance ``framework'' fails to enhance
competition, as well as failing to meet its own stated goals.
The rule of reason inquiry must end here where the anti-
competitive restrictions are ``not offset by any pro-
competitive justifications sufficient to save the plan . . .
.'' NCAA, 468 U.S. at 97-98.
III. Conclusion
Based on the facts available at this time, it is clear that
the Alliance agreements fail under either a per se rule or a
rule of reason. As the Supreme Court has explained, ``the
essential inquiry remains the same--whether or not the
challenged restraint enhances competition.'' NCAA, 468 U.S.
at 104. The restrictive Alliance agreements reduce
competition in the lucrative New Year's bowls, and guarantee
every Alliance team an opportunity to reap the short- and
long-term profits of a high-visibility bowl. The Alliance not
only perpetuates the current power structure, but, in fact,
exacerbates it. The strong get stronger, while the rest get
weaker.
As policymakers and football fans, we urge the Justice
Department to use its statutory enforcement powers to break
this lock on
[[Page S2617]]
college football. We have every reason to believe that your
investigation will reveal additional evidence of the
Alliance's anti-competitive purpose and effects. Action must
be taken to restore genuinely open competition to college
football and to postseason bowls.
Sincerely,
Mitch McConnell.
Craig Thomas.
Robert F. Bennett.
Mike Enzi.
The PRESIDING OFFICER. The Senator from the home State of the BYU
Cougars, the Senator from Utah.
Mr. BENNETT. Mr. President, I thank you for that commercial. I must,
in the spirit of full disclosure, report that I am not a graduate of
Brigham Young University but of the University of Utah, which happens
to be ranked in the top three in the current basketball season along
with the University of Kansas and the University of Kentucky. I wish
the Final Four could include Utah, Kentucky, and Kansas, but I am
afraid Utah and Kentucky will have their showdown prior to the Final
Four and only one of the two will make it. If it is not Utah--as I am
confident, of course, that it will be--I hope, for the sake of my
friendship with the Senator from Kentucky, that it will be Kentucky
that goes to the Final Four with Kansas.
But the very fact that we can have this conversation about the NCAA
underscores the importance of what we are talking about with respect to
football. These teams will get to the Final Four in basketball on the
playing field and not in the boardroom. The decision will be made on
the basis of how good they are and how entertaining they can be on
television by virtue of their skill, rather than how sharp the
negotiators were that put together the stacked deck in advance of the
final event.
I have a chart here that reports what happened in the last bowl
circumstance. Every team in color, whether it is the two in yellow, the
two in orange, or the two in red, appeared in an alliance bowl.
The two teams in white, No. 2 and No. 4, that did not appear in an
alliance bowl, appeared in the Rose Bowl, which is now part of the
alliance. Only one of the top seven teams did not appear in a lucrative
alliance bowl--and that happens to be the team from BYU.
Rather than go on in a parochial fashion, as the Senator from the
State in which BYU appears, I would like to summarize this circumstance
from a source that is clearly not parochial and not particularly biased
to BYU as a school.
I am quoting from the article that appeared in Sports Illustrated on
the 16th of December, 1996, entitled, ``Bowling For Dollars.'' In the
article they made it very clear what the real criteria was here.
Quoting from the article:
Sunday's selections shed revealing light on the alliance. .
. , It was the shunning of Brigham Young, however, despite
the fact that the Cougars have a higher ranking and a better
record than either of the at-large teams chosen (Nebraska and
Penn State) by the alliance, that served to trash two widely
accepted myths.
Myth No. 1: The purpose of the alliance is to determine the
true national champion.
Sports Illustrated says:
Not even close. The purpose of the alliance is to avoid the
creation of NCAA-run national playoffs. Such playoffs would
put the NCAA in charge of the beaucoup dollars the event
would generate. The alliance exists to keep the power and the
money in the hands of the alliance bowls and the four
conferences that receive guaranteed berths in those bowls.
A fairly direct statement to the point raised by my friend from
Kentucky.
Now, Sports Illustrated goes on:
Myth No. 2: The alliance bowls exist to give fans the best
possible games.
Bowls are businesses, with major corporate sponsorship and
huge television deals. Their purpose is to fill stadiums,
generate TV ratings, and create precious ``economic impact''
on their communities in the days leading up to the games.
Now, Mr. President, comes the paragraph that makes it clear that
Sports Illustrated is not necessarily friendly to BYU in every
circumstance, but summarizes why this decision was made.
BYU fails, not only on the strength-of-schedule issue but
also on the economic-impact side. Bowls, particularly the
Sugar Bowl, thrive on bar business. One of the tenets of the
Mormon faith is abstinence from alcohol. You do the math. In
the French Quarter, they don't call the most famous
thoroughfare Milk Street. ``We used to go to the Holiday
Bowl, and our fans would bring a $50 bill and the Ten
Commandments, and break neither'' says BYU Coach LaVell
Edwards. Nebraska fans, on the other hand, travel like
Deadheads, and spend like tourists.
Choosing bowl teams based in significant part on the
rabidity and spending habits of their fans isn't fair to the
audience watching the bowls at home. For all its flaws, BYU
would even be a more intriguing opponent for Florida State
than a team the Seminoles have already beaten. Unfortunately,
money rules all matchups.
Mr. President, BYU did go to a postseason game--the Cotton Bowl. The
Presiding Officer from Kansas and this Senator from Utah entered into a
friendly wager, which fortunately this Senator from Utah won when BYU
beat the team from Kansas.
Satisfying as that victory was for Brigham Young University, the
point made by Sports Illustrated is still important. It is the fans on
television who support the tremendous amount of money available to
these alliance bowls, by tuning in and being available as an
advertising audience.
It is those fans who were deprived of the opportunity of seeing the
best game available on New Year's Day.
So for that reason, I am delighted to join in this effort to see to
it that we do something to see that the antitrust laws apply here and
that a conspiracy in a boardroom does not take place to siphon off the
heavy money to one group at the expense of not only the other group but
also of the fans.
Mr. McCONNELL. Will the Senator yield for a question?
Mr. BENNETT. Yes, I yield.
Mr. McCONNELL. I am not sure it is a question, but rather an
observation. Also, the BYU Cougars, as a result of the Cotton Bowl
appearance probably--I don't have the figure in front of me, maybe
staff does--probably got about $2.5 million as opposed to the roughly
$8 million that would have been available had they been selected, as
they obviously should have been selected, for an alliance bowl. We are
talking not just about bragging rights here, we are talking about real
money. We are talking about a $6 million differential, Mr. President.
So this is not just putting a trophy in the school gym. This is a big
business with huge economic implications.
Mr. BENNETT. The Senator from Kentucky is exactly correct. One of the
reasons, I am sure, why the Senators from Wyoming are joining in this
effort is that under the rules of the Western Athletic Conference,
Brigham Young would not take that money home by itself. It would be
shared with the other schools in the conference, one of whom posted a
sterling record themselves, the Wyoming Cowboys. They were frozen out
of any bowl appearance at all on New Year's Day. They cannot even salve
that particular wound with the money Brigham Young would distribute
throughout the Western Athletic Conference with participation in an
alliance bowl.
As I said before, the money comes primarily from television revenues,
and by creating a restraint-of-trade circumstance to hold those
television revenues for a certain set of conferences, the leaders of
the alliance have damaged every other conference in the country,
including schools like Wyoming, which would have received a significant
amount of money had it been available to the Western Athletic
Conference.
The message out of the alliance is: WAC need not apply, regardless of
how their teams are or have ever been.
I yield the floor.
Mr. ENZI addressed the Chair.
The PRESIDING OFFICER. The Senator from Wyoming.
Mr. ENZI. Thank you, Mr. President. Today, I am pleased to join my
colleagues, Senator Thomas from Wyoming, Senator McConnell from
Kentucky, and Senator Bennett from Utah, in urging the Justice
Department to exercise its enforcement powers to break the current
anticompetitive lock on college football, if football does not do it
itself.
I have a special interest in college athletics. I followed college
athletics for some years, and I enjoy the excitement and competition of
college basketball and football. I especially enjoy the competition in
the Western Athletic Conference. My son, Brad, played basketball at the
University of Wyoming, and so I watched numerous WAC games, both as a
Cowboy fan and as a father. I am disappointed to see the University of
Wyoming and other very
[[Page S2618]]
competitive WAC teams kept out of the top college bowl games because of
the anticompetitive College Bowl Alliance. These clandestine agreements
keep our players on the bench and in the grandstand when they should be
out there on the field.
I think it is interesting we are discussing the anticompetitive
effects of the college football alliance in the midst of the NCAA
college basketball tournament. The NCAA basketball playoff system,
while not perfect, aims to include the finest 64 college basketball
teams in the Nation. In this tournament, any of those 64 teams has the
possibility of winning the national championship. This arrangement is
designed to maximize competition for the benefit of all the players,
the fans, and the schools involved. In contrast, the College Bowl
Alliance has decreased the competitiveness of college football to the
detriment of the fans and schools involved.
The alliance is a coalition of top football college conferences and
representatives of the top post-season college football bowls. Over the
past few years, the alliance has entered into a number of restrictive
agreements designed to divide the market of the most highly lucrative
New Year's football bowls. These agreements effectively preclude the
nonalliance teams from having access to the most prestigious and
lucrative bowl games, even when one of the nonalliance teams has a
better record and a higher national ranking than any of the alliance
teams. These restrictive agreements are bad for football, and they
violate Federal antitrust law.
Just this last January, as you have heard, 2 of the top 25 ranked
football teams in the country fell victim to this anticompetitive
alliance. Brigham Young University, a member of the nonalliance Western
Athletic Conference, finished the year with a remarkable record of 13
and 1 and was ranked 5th in the Nation. Another member of the WAC, the
University of Wyoming, finished its regular season with a formidable 10
and 2 record and a national ranking of 22, but it was not given an
offer to play in any of the alliance bowls. In fact, as has been
mentioned, despite its excellent year, the University of Wyoming was
not given the opportunity to play in any post-season bowl game. This
came as a great disappointment to the Cowboy fans nationwide.
The alliance is bad for football since, as a practical matter, it
prohibits teams from outside the alliance playing the top bowl games.
The football games are now taking a back seat to the money games being
played behind doors closed to both players and the fans. This has
resulted in alliance teams having an institutional advantage in both
bowl receipts and future recruiting.
In 1996, the eight alliance bowl participants, including the teams
playing in the Rose Bowl, split a total of $68 million. That was eight
teams. In contrast, the 28 nonalliance participants divided a total of
$31 million. This disparity in financial return is not good business.
It results in a built-in advantage for alliance teams in the areas of
future recruiting and program development.
The alliance agreement provides unlawful economic protection for its
members to the detriment of college football generally. The alliance's
market allocation agreements have, in turn, hurt consumers. One poll
has shown that college football fans would have preferred to have seen
several nonalliance teams, including Brigham Young University and the
University of Colorado, in top bowl games. These agreements amounted to
changing the rules with 2 minutes left in the fourth quarter. These are
precisely the type of market allocation agreements the Sherman
Antitrust Act was passed to prohibit.
I strongly urge the Justice Department and the Federal Trade
Commission to use their statutory powers to end the alliance's
anticompetitive stranglehold on college football if they cannot do it
on their own.
I thank the Chair and yield the floor.
Mr. GRAMS addressed the Chair.
The PRESIDING OFFICER. The Senator from Minnesota.
Mr. McCONNELL. Will the Senator from Minnesota just allow me a couple
minutes?
The PRESIDING OFFICER. The Senator from Kentucky.
Mr. McCONNELL. Mr. President, I thank my good friend from Wyoming for
his important contribution to this issue and express to our colleagues
that we intend to stay interested in this. There is some indication in
today's paper that some accommodation to the WAC and to the Conference
USA may be forthcoming. But I want to reassure all of those who have
been left out that the antitrust case is clear and that the four of us
plan to continue our interest in this, if the problem is not solved by
the organizations themselves. I thank my friend from Wyoming for his
important contribution.
Mr. BENNETT addressed the Chair.
The PRESIDING OFFICER. The Senator from Utah.
Mr. BENNETT. Mr. President, I would like to add one more statement
for the edification and information of Senators. The Senator from
Wyoming referred to his team's record of 10 and 2. One of those two was
a loss to Brigham Young University literally in the last seconds with a
field goal that no one expected anybody could make that caused the game
to go into overtime, and then Brigham Young won in overtime.
If that had gone the other way, it would have been Wyoming that would
have earned the position that BYU was denied. They would have beaten
the fifth ranked team, would have had a 10 and 1 record and would have
been a clear choice for an alliance bowl. It was BYU's victory over
Wyoming that pulled BYU to that level. That is why I am happy to join
with him in saying we both got robbed.
The PRESIDING OFFICER. The Senator from Minnesota has the floor.
Mr. GRAMS. Thank you very much, Mr. President.
Not to take away from the debate of my fellow Senators and friends
here, I still have to just root on our Minnesota Gophers tonight as
they take on Clemson in the ``Sweet Sixteen'' and hope and wish them
the best.
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