Rascher (rabid Cal fan) and I (Stanford) are going to Big Game together with our significant others. Can Middle East peace be far behind?
Jason Belzer and my piece from today’s Forbes can be found here:
Rascher & Schwarz, Neither Reasonable nor Necessary: “Amateurism” in Big-Time College Sports. Written in 1999, published in Spring 2000 in “Antitrust”
Non-Stanford fans may not know Pete Sauer, but he was part of the renaissance of our basketball program, part of the teams that re-established Stanford as a perennial contender int he Pac-10. I was saddened to hear just now that he died after an accident at a pickup game at age 35.
update: Sauer’s teammate Ryan Mendez posted this tribute to Sauer:
I wrote this 15 years ago, when I was extremely into a game called Diplomacy. Non-board game fans can probably skip, except to see how I looked when I was young and (reasonably) handsome.
I’m probably the last to know that John Infante is now publishing his insights at http://www.athleticscholarships.net/bylaw-blog.htm
But in case you didn’t know too, now you do!
My last question was about IP rights (http://sportsgeekonomics.tumblr.com/post/13925788205/sports-ip-antitrust-final-exam-question-if-i-were).
Today’s exam (purely for fun and amusement, I am not teaching) is inspired by a twitter discussion between Bomani Jones and Andy Glockner.
NBA Players B, J, and W decide amongst themselves in advance of their co-incident free agency periods to sign with team M. Team C, where J was employed prior to free agency sues all three players for violating the antitrust laws, sues B and W for tortious interference with their relationship with J, and also sues J for breach of contract.
Discuss the merits of each case. Be sure to touch on whether the antitrust case is ruled under a per se standard or rule of reason, and if the latter, be sure to define the relevant market.
Extra Credit: If the NBA had blocked B and J from joining W at M, weigh the pros and cons of B, J, W, and M suing the NBA under the antitrust laws. Cite legal precedents in your answer. Discuss why baseball examples are irrelevant.
Despite my focus on (college) sports economics on this blog, in my day job I am an antitrust economist who works on cases in all sorts of industries (with sports just being one of many).
Anyway, yesterday a judge made a major ruling in the private plaintiff version of the Apple & e-book publishers case worthy of discussion. In particular, the Plaintiffs survived a motion to dismiss (not surprising in itself, as the facts about the Defendants’ alleged meetings have a level of specificity rarely seen in complaints that get dismissed) but what is a powerful ruling, and one that I suspect may very well lead to a much quicker settlement of the case (as several publishers have already chosen to do in the DOJ matter) is that the judge has indicated that the Defendants will not be able to apply the Rule of Reason in their defense:
But in Tuesday’s ruling, Cote said she doesn’t have to apply the rule of reason. The judge concluded that the class action alleges a per se restraint of trade, in which Apple aided the publishers’ horizontal collusion. “Unlike those vertical restraints that are subject to the rule of reason, this agreement ‘has nothing to do with enhancing efficiencies of distribution from the manufacturer’s point of view,’” the judge wrote. “Rather, it has everything to do with coordinating a horizontal agreement among publishers to raise prices, and eliminating horizontal price competition among Apple’s competitors at the retail level.”
Quoted from a good piece by Alison Frankel: http://newsandinsight.thomsonreuters.com/New_York/News/2012/05_-_May/Ruling_in_e-books_class_action_is_blow_to_defense_in_DOJ_antitrust_suit/
Without the rule of reason, the Defendants’ ability to avoid a judgment shrinks dramatically. Instead of being able to say, yes we did it but it was good, it’s just a matter of did they, or did they not, agree to set prices collectively. They may succeed in showing that each deal was just b/w Apple and a single publisher and not coordinated, but if they cannot, they no longer have the fallback of “well, anyway, what we’re doing is good for consumers because …”
None of those becauses will matter. Very Big Deal.
The BCS is moving to a 4-team playoff and news reports have all missed the most important economic aspect of the change, a major victory for competition. Namely, the move to a 4-team playoff will mark the end of NCAA Bylaws §§ 17.9.4 and 22.214.171.124, which limit NCAA member participation to a single licensed Bowl game. Once the major conferences announce their desired playoff format, we can all bet the NCAA will repeal those pesky Bylaws pretty darn quick.
This is the secret victory for competition. Now, anyone can develop a playoff format and shop it around to schools. Prior to this, no matter how much someone wanted to make a better mousetrap, no schools (at least not in conferences with a championship game) could try out a playoff because the NCAA Bylaws said if they did, they would be kicked out of the NCAA and boycotted by the rest of the schools. Now, anyone can try to make a perfect playoff and sell it to teams. If some of the schools not chosen by the BCS 4-team system want to play in a traditional bowl game, great. But if maybe teams 5,6, 7, and 8 want to have their own 4-game playoff, or if the BCS snubs a non-AQ school that people think is more like a #3, we can start having competing playoff systems.
This is why when I co-wrote the letter to the DOJ that helped launch the recent antitrust investigation of the BCS, we focused on these bylaws as a tremendous barrier to real economic competition.
Of course, it may turn out that the format that the BCS settles on is great. As I wrote for ESPN.com last year, from a fan’s perspective the one-game BCS championship system is (was?) a lousy system for choosing a national champion, and I pretty much am certain that in 5 years, there won’t be anyone who says “Gosh, I wish they went back to a poll to determine a one-game championship.” People may end up fighting about the merits of how the four teams are selected, but even then the fights will be over 4 vs 5 and not 2 vs 3, which (again from a fan’s perspective) is a big win.
But even bigger is the fact that now, if we don’t like the system and there is the sort of groundswell to make a better system, an entrepreneur or a network can step in and fix the system. The NCAA can’t do the BCS’s dirty work and thwart future playoffs from starting up (and competing with the BCS for viewership and revenues) simply by the threat to boycott (and thus destory) the participanting colleges’ sports programs.
So hooray for economic competition and antitrust enforcement doing what it should do — opening up level playing fields for products (in this case, post-season systems) to compete on the merits of their products and let the best product win!