Another Antitrust Suit Against the NCAA

Josh Wright —  22 February 2006

The NCAA is no stranger to defending antitrust suits. Remember Maurice Clarett? How about the NIT? Tom Farrey of ESPN the Magazine brought my attention to a new and very interesting antitrust suit filed last week in Los Angeles on the theory that the NCAA has illegally conspired to prohibit member colleges from offering athletic scholarships covering the “full cost” of attendance. Apparently, the NCAA fixes a standard scholarship package, called “grant-in-aid,” which is approximately $2,500 less than the official cost of attendance. Farrey also notes that:

“[A]thletes are the only students subject to aid restrictions imposed by an agreement among universities. Talented students in music, chemistry or any other area can be bid upon by individual colleges, without limits on the total value of their scholarship packages.”

NCAA President Myles Brand had apparently come out in favor of a proposal bridging the gap between grant-in-aid and full cost in 2003, but to no avail. The lawsuit was filed on behalf of a class of scholarship athletes in the graduating classes from 2002-2010 by none other than (1998 California Antitrust Lawyer of the Year) Maxwell Blecher and seeks damages covering the difference in scholarship costs and full costs for some 20,000 athletes from 144 colleges (the article estimates this difference to be near $117 million, which would be trebled to $351 million). Of course, one expects that the NCAA will trot out the classic sports/antitrust defenses: the fixed scholarship is necessary to maintain “competitive balance” and “preserve amateurism.”
This suit will be a fun one to watch.

*For the sake of disclosure, this suit caught my attention because Ramogi Huma, a UCLA linebacker during the 1990s, was responsible for getting the class of plaintiffs together through his organization, Collegiate Athletes Coalition. CAC has received its own fair share of press for its work over the years with regards conditions for student-athletes (insurance for mandatory summer workouts, health care, eliminating employment restrictions, etc.). This fact caught my attention because, like many former Bruins who managed to make their way to the weightroom from time to time, I met Ramogi during the early days of the CAC. Though I have not been following their activities closely, the CAC has clearly grown from its UCLA days, with Congressional testimony under its belt (and apparently, support from the United Steelworkers of America), and involvement in a federal antitrust suit.

6 responses to Another Antitrust Suit Against the NCAA


    Two things to bear in mind which may make give plaintiffs some trouble. First, as the S. Ct. pointed out the NCAA case, intercollegiate football is a network industry in which competitors must cooperate to produce the product. This makes it improbable that any per se rule will be formally applied. Second, unlike normal academic disciplines, maintaining a “competitive balance” in intercollegiate athletics is a legitimate procompetitive justification. It is of no moment that the music department at the Univ. of Michigan constantly is better than the music department of Ohio State or vice versa. On the other hand, at least in theory, the fact that one school or the other is constantly the dominant one in football and the other is constantly the door mat could diminish interest in the rivalry (I must admit, however, that the domination of Ohio State by Michigan in the John Cooper era, and reversal of that domination in the Jim Tressel era (Go Bucks!) have not diminished the intensity of the football rivalry between the two schools).

    I think that the NCAA has a stronger argument that its limits on the amount of athletic scholarship grants is needed to maintain competitive balance than did its limits on TV appearences and assistant basketball coaches’ salaries (both or which have been found to violate section 1 of the Sherman Act).


    I am aware of this rule (I played at a school which has a similar rule prohibiting athletic scholarships). My initial reaction is that this argument is not invalid on its face, and it is certainly a plausible one for the Ivy League, but it strikes me as pretextual for the NCAA (without knowing more).


    Josh, you make a very good point about the 2500 rule not being widely known about among fans: this may well undermine the amateurism justification for the restraint, and your skepticism may well be warranted.

    Contrast this 2500 rule with the Ivy League’s better known rule forbidding athletic scholarships of any size. (For some background on this, see ) The Ivy League’s lack of athletic scholarships might well make fans believe that Ivy League players are more serious about their studies than players receiving athletic scholarships at other Division I schools. This may well give some added charm, nostalgia, and fan interest to the Harvard-Yale game than would otherwise obtain in a world without the restraint on athletic scholarships.


    Keith, I will admit that it is hard for me to make sense of the amateurism defense in this context. The fact that President Brand (the gatekeeper of the NCAA’s style of amateurism) apparently came out in favor of the proposal at some point, and the odd feature that these restrictions only apply to athletes, both rub me the wrong way without knowing more.

    Also, since (I presume) most consumers of the NCAA’s products do not know about the grant-in-aid restriction and this $2,500 gap, and the NCAA does not promote it, I am left skeptical of the argument that this is a method by which the NCAA preserves its brand of amateurism for the sake of its fans. That said, there is probably a lot at work here that is outside the facts presented in the article … so I am hesitant to make a judgment.


    Very interesting Josh. I wonder what the NCAA’s motive is to forbid more generous scholarships. If it’s purely about saving money, then the plaintiffs seem to have a good case. But amateurism might well be the motive. Just as forbidding player salaries might make fans more interested in NCAA sports than they otherwise would be, so might requiring requiring NCAA players to pay at least some tuition have a similar effect. The choice between drawing the amateurism-defining line at zero rather than at minus 2500 (or some other number) is inherently an arbitrary exercise.

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  1. Antitrust Review » Antitrust Suit Targeting the NCAA’s Standard Scholarship Package - February 22, 2006

    […] Check out this entry on Truth on the Market about another antitrust suit against the NCAA. Apparently, the claim is based on the theory that the NCAA has illegally conspired to prohibit member colleges from offering athletic scholarships covering the “full cost” of attendance. Apparently, the NCAA fixes a standard scholarship package, called “grant-in-aid,” which is approximately $2,500 less than the official cost of attendance. […]