Is The NCAA Not Only A Cartel, But Also An Inefficient One?

Back during the days of Red Grange, the NCAA was a rather powerless entity, much as it should be … [+] today.

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On Monday, the U.S. Supreme Court ruled unanimously that the National Collegiate Athletic Association violated antitrust law by maintaining rules that collectively limited the amount of educational benefits that any school could provide to its commercial athletes. The Court’s decision also implied that many of the NCAA’s other regulations that limit college athletes’ economic rights are subject to future review under antitrust law’s Rule of Reason. That, in itself, should have been enough for NCAA members to pass a few quick and permanent reforms.

Yet three full days after this Supreme Court decision, the NCAA has still failed to make a single permanent change to its bylaws—not even one so benign as to immediately and permanently grant college athletes the right to sign third-party endorsement deals. Instead, the NCAA leaders say they plan to address this matter using “temporary NIL measures.” This seems to be due to an internal lack of consensus.

As the NCAA continues to fail at changing its own bylaws even in the aftermath of the U.S. Supreme Court decision against it in National Collegiate Athletic Association v. Alston, one can reasonably ask not only whether the NCAA is an antitrust violator but also if the NCAA has become too large to operate rationally—even for a cartel.

As a matter of basic cartel theory, the NCAA may very much be on the way to legal and practical obsolescence. This is because, relative to other cartels, the NCAA does not seem to have the structural ability to quickly change its rules to ensure future compliance such as by simply and efficiently adding third-party pay to internally permissible compensation. This is because the organization’s membership is just too darn large.

Currently, the NCAA has over 1,200 voting members—or at least 1,187 more than OPEC, a cartel that arguably engages in a similar degree of antitrust violations but is able to change its business practices, should it ever need to do so, much more easily. Thus, while the NCAA may be incredibly efficient for its members in terms of passing rules to curtail athlete rights, it thus far is proving incredibly inefficient at unwinding some of them. Beyond just antitrust lawsuits, this inefficiency could ultimately be a part of the NCAA’s undoing.

While collegiate sports are very much a part of the American social fiber, the NCAA and nationally enforced restraints on athlete rights are not. Indeed, college sports operated arguably more efficiently from the late 1800s well into the late 1940s, when most decisions about college athlete rights were decided on the conference level by small groups of eight to ten schools and the NCAA remained in the background, working out of a little office with just one part-time employee. Thus, even if courts do not move toward the ultimate remedy and seek to break up the NCAA in its entirety, the association’s own internal failure to act reasonably in the face of future antitrust realities may lead to the association’s own demise.

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Marc Edelman (Marc@MarcEdelman.com) is a Professor of Law at Baruch College’s Zicklin School of Business, Sports Ethics Director of the Robert Zicklin Center on Corporate Integrity, and the founder of Edelman Law. He is the author of “A Short Treatise on Amateurism and Antitrust Law” and “The NCAA, Fair Pay to Play, Antitrust Scrutiny and the Need for Institutional Reform.”