|
By
Ed N.
Matisik, Esq.
edmatisik@yahoo.com
April 20th, 2005
Federal Court Upholds
"Two-In-Four" Rule
FEDERAL COURT UPHOLDS NCAA RULE
LIMITING THE NUMBER OF IN-SEASON TOURNAMENTS IN WHICH DIVISION I MEN’S
BASKETBALL TEAMS MAY PARTICIPATE
In the late 1960’s, the NCAA became concerned about the inability of
colleges and universities located in Alaska, Hawaii, Puerto Rico, and the
territories and possessions of the United States to schedule home games for
their athletic teams. Many schools were reluctant to travel to colleges and
universities outside the contiguous 48 states (the “mainland”) because of
the time and expense involved, and the schools located outside the mainland
found themselves having to engage in a disproportionate amount of travel in
order to schedule enough games just to be competitive.
In order to help relieve the travel and scheduling burdens imposed on
the off-mainland schools, the NCAA introduced a rule providing for “exempt
games.” Under this rule, any game played at a NCAA-member institution
located outside the contiguous 48 states did not count toward the maximum
number of regular season games that an institution could schedule for a
particular sport. For example, when the maximum number of regular season
games that a NCAA Division I football team could play was eleven, those
teams that played a regular season game at the University of Hawaii could
schedule one additional regular season game that season, home or away, for a
total of twelve regular season games. The rule applied to all sports at all
NCAA member institutions located off the U.S. mainland.
In 1985, the Metropolitan Intercollegiate Basketball Association (MIBA),
an group of five New York City-area schools—Manhattan College, New York
University, Wagner College, Fordham University, and St. John’s
University—that runs the annual post-season National Invitation Tournament,
organized the first Preseason National Invitation Tournament (PNIT). Under
the current format, 16 Division I men’s basketball teams participate in the
annual tournament, with the first two rounds held at campus locations in
mid-November of each year, and the semi-final and final games held at
Madison Square Garden in New York City on the long Thanksgiving weekend. In
order to encourage schools to participate in the PNIT, the NCAA granted
“exempt game” status to all PNIT games regardless of the location of those
games. It was the first time that the NCAA extended the exempt game rule to
games played on the mainland, but both the NCAA and the MIBA felt that the
application of the rule to PNIT games was necessary for the PNIT to be a
viable annual tournament. If the PNIT had not been granted exempt status, a
school would have had to allow for four PNIT games—the maximum number of
PNIT games a team could play if it made it all the way to the tournament
final game—in its regular schedule. The 14 teams that did not make it to
the PNIT final would, therefore, lose the ability to schedule one, two, or
three regular season games for that year if PNIT games were not granted
exempt status.
Shortly after the PNIT began, additional in-season holiday
tournaments—like the Great Alaska Shootout and the Rainbow Classic—were
organized in Alaska, Hawaii, and Puerto Rico so that teams could take
advantage of the exempt game rule by traveling to an “exotic” location
during the holidays and playing two or three games that would not count
against their regular schedule.
The NCAA instituted a major revision of the exempt game rule in 1996.
The revision still provided for exempt game status for all games played in
Alaska, Hawaii, and the non-mainland areas of the United States, but all
in-season tournaments granted exempt status would now be counted as one game
toward the maximum number of games that a team could play in a given
season. For example, the PNIT is now counted as one game for all
participants, whether they are eliminated in the first round or go on to the
final and end up playing four games in the tournament. The NCAA also added
a requirement that in order for a tournament to be granted exempt status, it
had to apply for that status every year. It should also be noted that many,
if not most, in-season tournaments—such as the classic four-team “holiday”
tournaments that many teams play in each season—are unaffected by the exempt
game rule; schools simply allow for the two tournament games when putting
together their schedule for the season.
Coupled with its revisions to the exempt game rule, the NCAA also added
a rule which came to be known as the “Two in Four Rule” (TFR). The TFR
prohibits a team from participating in more than two exempt game tournaments
in any given four-year period. Thus, a team could play in one in-season
exempt tournament every other year, or two exempt tournaments in one season
every four years. The NCAA stated that they adopted the TFR to prevent the
exempt tournaments from being “free game” showcases for the major teams from
the major conferences, and to give mid-majors and the smaller Division I
programs the opportunity to play in the major in-season tournaments.
Worldwide Basketball and Sport Tours, Inc. (WBST), a sports marketing
firm responsible for the promotion of the Puerto Rico Shootout and the
Puerto Rico Holiday Classic, became concerned about the quality of the
schools that played in the tournaments they promoted and, consequently,
their ability to market the tournaments to the general public. WBST
believed that the TFR, as applied to in-season tournaments, harmed their
business by requiring the tournament organizers to invite a field of
less-prominent basketball programs which then impedes their ability to
promote the tournaments.
WBST sued the NCAA under the Sherman Anti-Trust Act (“Act”), claiming
that the NCAA instituted the TFR with the express purpose of restricting
tournaments’ ability to compete for top-quality basketball programs and
thereby adversely affect the ability of WBST and similar businesses to earn
a profit. WBST asked a federal court in Cincinnati to find that the rule
was illegal under the Act for its anti-competitive effect.
The court noted that in order for a plaintiff to prove a violation of
the Act, it must show that the alleged violator affected a specific market
or submarket. In order to meet this burden, WBST attempted to define the
market affected by the TFR by presenting the testimony of an expert witness,
statistician Dr. James Tollison. Tollison stated that the market affected
by the TFR was “Division I Men’s Basketball as a whole,” but he was forced
to admit on cross-examination that (1) he did not study the business of
competitors of WBST, (2) he did not study the events, if any, that were in
conflict with those promoted by WBST, (3) he did not perform a study of the
affect of the TFR on the consumers of Division I men’s basketball games, and
(4) his conclusions on the affect that the TFR had on prominent men’s
basketball programs was not based on any scientific analysis, but on “common
sense”. Accordingly, the three-judge panel entered a judgment in favor of
the NCAA because WBST had utterly failed to define the market affected by
the TFR as required by the Act.
Two judges of the panel, Judges Alice Batchelder and Deborah Cook, refused
to consider the actual merits of WBST’s claim, finding that “[W]e need not
reach the question of whether the NCAA’s Two in Four Rule is
anti-competitive…[n]or do we reach the question of whether [WBST has]
suffered…antitrust injury.” However, the third judge of the panel, Judge
Julia Gibbons, while concurring in the decision, issued a separate opinion
in which she explicitly found that the TFR does not violate anti-trust law.
Gibbons noted that the TFR does not affect WBST’s ability to promote men’s
Division I college basketball tournaments that are not subject to the exempt
game rule, nor does it affect their ability to market non-tournament games.
Rather, she found that the TFR is not an anti-trust restraint on WBST, but
is, rather, a subsidy that permits Division I teams to participate in
WBST-promoted events with only a limited cost in terms of games played.
Gibbons wrote:
If the promoters want Kentucky, they can
get Kentucky every year (provided Kentucky wants to come), by promoting
non-[exempt game] tournaments or a series of single-game events similar to
the ACC-Big Ten Challenge. To do that, they would have to give up the
advantage the subsidized format provides them and thus it may be more
difficult for the promoters to schedule high profile teams, but forcing
the promoters to make this choice has not caused them to suffer anti-trust
injury. If anything, the Two in Four Rule increases competition in
the relevant market because it limits an advantage the promoters of
[exempt game] events have had over the promoters of non-[exempt game]
events and [NCAA-]member institutions, and injury resulting from an
increase in competition is certainly not the type of injury the anti-trust
laws were designed to prevent. [emphasis in original]
However, it must be noted that the concurring opinion by Judge Gibbons
is not legally binding because it was not joined by another member of the
panel.
The case is Worldwide Basketball and Sport Tours, Inc. v. National
Collegiate Athletic Association, 388 F.3d 955 (6th Cir.
2004).
Learn more
about Ed Matisik:
http://www.collegehoopsnet.com/bios/EMatisik.htm
|
|
