Monday, July 28, 2003

Antitrust News: NCAA Dunked

In what I hope is not a harbinger of future antitrust troubles, the NCAA fell prey this evening to a federal judge in Ohio who struck down a college basketball rule limiting participation in in-season mini-tournaments. ESPN's Andy Katz reports as follows:
College basketball got a rare dose of offseason good news Monday night when an Ohio federal judge rescinded the NCAA's 2-in-4 rule.

That means tournaments such as the Maui Invitational, Great Alaska Shootout, Preseason NIT, Coaches vs. Cancer Classic and any other in-season exempted events are more likely to include at least one to two major-name teams.

In a 38-page ruling, Judge Edmund A. Sargus ruled in favor of the plaintiffs (Gazelle Group, Inc., Worldwide Basketball and Sport Tours, Inc., Sports Tours International, and Sports Promotions, LLC). The lawsuit by the plaintiffs started on Dec. 21, 2000, against the NCAA's 2-in-4 rule that restricted teams to two exempted events in a four-year cycle.

Some schools were grandfathered into the rule and were allowed to play three such events in a four-year cycle. An exempted event is a tournament that counts as only one game on the maximum 28-game schedule for Division I teams.

Sargus said the 2-in-4 rule was in violation of Sections One and Two of the Sherman Act. Sargus said in his ruling that, "The NCAA is hereby permanently enjoined from enforcing the 'two-in-four' rule.'' This means that teams are eligible to play in a certified event on an annual basis, like they were prior to the 2-in-4 rule in 2000. But the NCAA rule limiting teams to one of these events a season is still in place. Teams cannot play in an exempted event in the same season that they go on a foreign trip.

Sargus put off a ruling on this case in July, 2002 to see how the rule would affect the tournaments in Year Three of the legislation.

"Last season was the turning point,'' said Bill Markovits, attorney for the plaintiffs. "The judge was looking to see what would happen and he saw what we predicted, and that was a decrease in output and quality of events.''

Markovits said the NCAA certified 28 events but only 17 were able to go forward because the other 11 couldn't fill their fields with eligible teams. There were 25 events the previous season. The number of exempt games decreased from 251 to 144.
I'll review the judge's full opinion when I can obtain a copy, but for now I would note that there is nothing in the Sherman Act that prevents a private membership association from passing rules for its internal governance. Whether the rule is a good idea--and it's not in my opinion--is not a subject for a federal judge to decide when there's no independent contractual dispute. The tournament organizers were clearly unhappy with the NCAA's rule, but that does not give them the right to use the courts of law to impose their wishes upon another organization.

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