The Electric Commentary

Thursday, August 18, 2005

N.C.A.A. ends anti-trust suit by acquiring competition.

Did this really happen? Can this really happen? If you recall, the NIT was suing the NCAA for anti-competitive practices because the NCAA has a rule that requires member schools to enter the NCAA tournament if they are invited.

So what do you do if you're accused of anti-competitive practices? Eliminate the competition!

The N.C.A.A. settled an antitrust suit yesterday by buying the preseason and postseason National Invitation tournaments for $56.5 million. As part of the settlement, the semifinal and final games of the N.I.T. events will continue to be played in Madison Square Garden for at least the next five years.

The suit had been brought by the Metropolitan Intercollegiate Basketball Association, which is made up of five New York City universities: St. John's, Manhattan, Fordham, New York University and Wagner. All five are N.C.A.A. members. The metropolitan association, which owns the N.I.T., had accused the N.C.A.A. of trying to kill its tournaments.

For two weeks, a federal jury in Manhattan had heard the N.I.T.'s case. In his opening arguments, Jeffrey Kessler, the N.I.T. lawyer, said the N.C.A.A. "deliberately set out to get a monopoly, to eliminate competition, to make it impossible to compete."

At a news conference yesterday at the Garden, Myles Brand, the N.C.A.A. president, and John Sexton, the president of N.Y.U. and spokesman for the metropolitan association, acted like old buddies. (Actually, both were reared in Brooklyn.)

"We've resolved all our differences," Brand said.

Sexton called the agreement "a victory without defeat" and said it would make for a stronger N.I.T.

Of course, when there is competition, "victory without defeat" is tough to come by.

Update: From The Sports Law Blog:

The settlement described above proves to be more of a sale agreement: the NCAA has purchased the NIT for $41 million, along with furnishing a $16 million pay-out in order to end the litigation. Thus, any potential rivalry by the NIT is eliminated. This outcome, of course, contradicts everything the NIT had claimed to be fighting for -- namely, becoming a legitimate rival to the monopolistic NCAA (which, with its purchase of the NIT, becomes a true monopoly). Instead, the NIT has sold itself out, and allowed the NCAA to not only continue, but expand the very practices that the NIT had claimed were deleterious to basketball fans.


Indeed.

5 Comments:

  • Larry Ellison would be proud.

    By Anonymous Rashid Muhammad, at 9:30 AM  

  • I never really knew this was an option. I think I'm going to start up a bunch of businesses that fail because my product is inferior, then get a better-run business to buy me out by suing for antitrust violations.

    By Blogger MDS, at 11:13 AM  

  • Sounds like a winning business model to me.

    I don't know what to think of the NCAA here. On the one hand, it was brilliant to buy out the one and only plaintiff. On the other hand, the NCAA does involve itself in a ton of anti-competitive activity, and while the NIT was certainly an inferior business, (A good legal claim here, but not much in the way of substance) they were not the only ones affected by the NCAA's somewhat questionable practices.

    Basically all of the NCAA's enforcement powers derive from their monopoly status, and don't think that no one would leave the NCAA if formation of a rival league became feasible. Not all member schools are happy with NCAA rules.

    By Blogger PaulNoonan, at 11:27 AM  

  • I predict that the NIT tournament will lose legitimacy in the eyes of college basketball fans as a result of their sell-out.

    By Blogger dhodge, at 1:40 PM  

  • I wonder if any group of schools will ever leave the NCAA. There's no reason they couldn't. I think if, say, a bunch of the Texas, Alabama, and Florida football schools decided they would leave the NCAA, form a new coalition, and play each other, that could work. They'd have less TV money but fewer schools to share it with, and they'd still keep their attendance gate.

    By Blogger MDS, at 4:28 PM  

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