Musings on Sports Economics

The secret victory for competition

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, 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 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!

Posted by
Andy Schwarz

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