For those who believe that college athletes should be paid, the statistics involving the National College Athletic Association’s (NCAA) ever growing stream of revenue are an ever growing cause of concern. In particular, the NCAA’s detractors on this issue call attention to the enormous amounts of money that it makes from deals with television providers. In 2016, the NCAA generated “a record $1 billion in revenue from media rights fees, ticket sales, corporate sponsorships and a proliferation of television ads” from just three weeks of college basketball. Recent years have also provided universities and their athletic conferences with over $20 million in contractual payouts for a single football game at the end of the season.
To be clear, it is not the case that all of this money is being pocketed by executive directors, since a very large amount of it is being re-invested back into NCAA activities. Nevertheless, the statistics regarding how much money the NCAA makes from its TV contracts alone do very little to answer the hotly debated question of whether or not the athletes who help to provide the NCAA’s entertaining product should get a piece of the pricy pie.
In this particular post, I am not quite interested in diving into that question, but I am fascinated by the story of how the question arose in the first place.
Contemporary readers, who are familiar with headlines regarding the NCAA’s lucrative deals with broadcasting companies, will most likely be surprised to learn that the NCAA has not always focused its efforts on maximizing profits through the free market. In fact, in the early 1980s, the NCAA was primarily focusing on how to avoid losing a federal lawsuit that was accusing them of unlawfully restricting its members’ abilities to sign expensive television deals.
So how did the NCAA, a non-profit organization, which spent the majority of its existence strictly regulating and minimizing the revenues that could be accumulated from the televising of its members’ athletic programs, turn into one of America’s most controversial money-making enterprises? Well, like many of the social issues that we debate today, the Supreme Court is a highly relevant actor, particularly to the answer of this question.
How the NCAA Found Itself In Court
The story truly begins with the initial commingling of TV and college football. While the first ever televised college football game took place in the fall of 1939 between Fordham and Waynesburg, the relationship between college football and television really began to take off in the 1940s when the University of Pennsylvania decided to broadcast all of its home games over a ten year period.
In the early 1950s, the NCAA took notice of the rumblings that were going on in Philadelphia, and, rather than seeking to third wheel off of the relationship with television that the University of Pennsylvania had fostered, the NCAA decided to prioritize the modest sized in-game attendance that ticket sales could provide as opposed to the large scale at-home attention that TV deals could maximize.
To meet this objective, the NCAA assembled a three person “Television Committee,” which delivered a report in 1951 concluding that television was having “an adverse effect on college football attendance, and, unless brought under some control, [it would threaten] to seriously harm the nation’s overall athletic and physical system.”
The NCAA then unanimously developed its 1951 television plan which only permitted one game a week to be televised in each region and required there to be 3 weekends during the season in which no games were televised at all. For the next 30 years, college football’s relationship with TV programming was regulated by similarly restrictive policies such as this one. These deals would last on a one to two year basis, and they were then quickly renewed with minor alterations, such as the provision of exclusive rights to certain broadcasting companies for specific sets of seasons.
These TV programming plans became subject to court room inspection as a result of the NCAA’s 1981 plan with CBS and ABC for the 1982–1985 seasons. Among other restrictions, this plan set out the number of live telecasts that could take place, and it placed a limit on how many times a college could appear on national programming. The Supreme Court summarized this plan in the following manner: “Although [the 1981 plan] is more elaborate than any of its predecessors, it retains the essential features of each of them. … No member is permitted to make any sale of television rights except in accordance with the basic plan.”
The Universities of Oklahoma and Georgia, members of the College Football Association CFA, which was a grouping of the five major college athletic conferences and major football-playing independent schools, sought to work around the NCAA’s restrictive plans. Working through the CFA, these universities obtained their own TV contracts with NBC which “would have allowed a more liberal number of appearances for each institution, and would have increased the overall revenues realized by CFA members.”
The NCAA responded with the threat of heavy sanctions against the CFA’s members who complied with the CFA-NBC contract, and it “made it clear that [the sanctions] would not be limited to the football programs of CFA members, but would apply to other sports as well.” As a result, the University of Oklahoma and the University of Georgia filed a lawsuit against the NCAA and its 1981 plan claiming that the enforcement of the programming deal was violating federal anti-trust laws.
The Court’s Ruling & Its Impact On The NCAA’s Future
In a 7–2 decision, the Court ruled against the NCAA’s regulation of television contracts, as the majority held that the NCAA’s 1981 plan created a structure in which the market could not be “responsive to viewer demands in terms of price and output” and thus violated the Sherman Act. The Court’s decision was ultimately intended to end the NCAA’s long established practice of unilaterally fixing prices for television rights and limiting the amount of games that could be aired.
In short, this Supreme Court decision forced the NCAA to bind the televising of college sports with the free market rather than its own governing interests. Since the NCAA effectively lost its ability to limit its members’ abilities to maximize revenues through TV deals, the market began to pump profits into college sports at a scale that would drastically change both colleges’ balance sheets (some now making over $192.6 million in revenue from college sports alone) and the public’s perception of college sports as a whole.
The two dissenting justices in this decision forecasted the issues we now debate today. Justice White, who himself was an All-American college football player, and Justice Rehnquist sought to frame the NCAA’s restrictive TV contract policies within the context of the NCAA’s founding mission: providing college students with the opportunity to participate in a properly regulated system of amateur sports in an effort to enhance their higher education.
Writing in a combined dissenting opinion, White and Rehnquist pointed out previous court decisions which explained that the NCAA exists “primarily to enhance the contribution made by amateur athletic competition to the process of higher education, as distinguished from realizing maximum return on it as an entertainment commodity.” They added that the pursuit of this goal required a system of regulation, which included restrictive TV contract policies, with the intent of keeping “university athletics from becoming professionalized to the extent that profit-making objectives would overshadow educational objectives.”
Whether one agrees with the legal logic provided by these two justices or not, it is hard to deny that their social policy concerns have been vindicated in recent history. The combination of free market profit pursuits and high level college athletics has produced a new NCAA system whose financial statements can easily be seen to run in contradiction with its stated educational goals.
Ultimately, depending on where you stand regarding the issue of paying student-athletes, this Supreme Court case could be viewed in one of two ways. For those who wish to preserve the college sports’ amateurism, this case was a lost opportunity for the Court to enforce the NCAA’s founding ideals and the beginnings of a now legally enforced problem for college sports.
For those who are interested in providing student-athletes with the compensation they believe that they are owed, then the arguments presented in the decision of this case, emphasizing the NCAA’s requirements as an actor in the free market as opposed to it requirements as an educational non-profit, could very well be the origins of a solution.