Many times over the past couple of years, people of varying degrees of influence — most vociferously Utah Sen. Orrin Hatch — have tossed out words like “antitrust” and “Justice Department investigation” when it came to describing the BcS and how to deal with it.
In most cases, the BcS brushed off the calls for a change by suggesting that the government, in essence, minds its own business.
Now, a group of really, really intelligent individuals has renewed the call for Department of Justice intervention.
Ahead of its release to the public, the Wall Street Journal has obtained a copy of a letter signed by 21 law and economics professors and practitioners which asks “the Antitrust Division [of the DOJ] launch a formal investigation of the Bowl Championship Series (“BCS”), a cartel that controls distribution of competitive opportunities and benefits associated with major college football’s post-season.” Among the signatories are three professors from two SEC schools — Florida and South Carolina — as well as University of Chicago professor Richard H. Thaler, who I’m told is a pretty big deal in the world of economics.
You can read the entire letter sent by the group to the Assistant Attorney General HERE, but PlayoffPac — a must-follow if you’re into Twitter and are pro-playoff for college football — has pulled out the salient points for easier consumption.
—“The BCS secures a fixed and dominant portion of market access and revenue for its founding members …, regardless of their performance on the field or in the marketplace. These acts injure schools in major college football’s five other conferences … and also harm consumers by restraining output, fixing prices, and reducing quality. We believe the case here for government enforcement of the Sherman Antitrust Act is strong and potentially pursuable under multiple legal theories.”
—“Market-access rules and conditions for BCS Bowls result in a system that is at odds with consumer preferences, as shown by BCS Bowl selection decisions, television ratings, and attendance figures.”
—“The BCS revenue scheme is objectionable … because financial rewards do not correlate with consumer appeal. In three of the past four post-seasons, non-AQs earned either the highest or second-highest game attendance figures of any BCS Bowl. Furthermore, for three years in a row, BCS Bowls featuring non-AQs have garnered significantly better television ratings than contests between only AQs.”
—“On-the-field performance, which drives market preferences, also fails to justify the BCS’s disparate revenue allocation. AQs boast only a meager one-win, four-loss record against non-AQs in post-season BCS Bowls. And in 2010, a year recognized as the high-water mark for “outsider” participation, the BCS handed each AQ conference that placed one BCS Bowl team $17.7 million but gave two non-AQ conferences just $9.8 million and $7.8 million, respectively, for accomplishing an identical feat.”
It remains to be seen what impact, if any, this letter will have on the DOJ’s desire to actually launch an investigation.
In January of 2010, Assistant Attorney General Ronald Welch sent a letter to Utah Senator Orrin Hatch in which Welch states the DOJ is looking at the option of opening an investigation into the BcS in order to determine whether the BcS violate antitrust laws. In early November of last year, Utah attorney general Mark Shurtleff met with DOJ officials and came out of the meeting encouraged that the department has been “doing their due diligence” and working toward launching an investigation.
With this latest round of criticism of the cartel, though, we’re quite certain that we’ll get some spinning response along the lines of “it’s hard to imagine a bigger waste of taxpayer money than to involve the government in college football” from the BcS and its public mouthpiece. We prefer, though, to have Mr. Shurtleff’s words from last November be the final say for now on this aspect of the issue.
“You get the DOJ behind [a probe], and the BCS will finally say, ‘OK, we’ll go to a playoff.'”
From your lips to the DOJ’s ears, sir.