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S. HRG. 111–352 

THE BOWL CHAMPIONSHIP SERIES: IS IT FAIR 

AND IN COMPLIANCE WITH ANTITRUST LAW? 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ANTITRUST, 

COMPETITION POLICY AND CONSUMER RIGHTS 

OF THE

COMMITTEE ON THE JUDICIARY 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

JULY 7, 2009 

Serial No. J–111–35 

Printed for the use of the Committee on the Judiciary 

( 

(II) 

PATRICK J. LEAHY, Vermont, Chairman 

HERB KOHL, Wisconsin 

DIANNE FEINSTEIN, California 

RUSSELL D. FEINGOLD, Wisconsin 

CHARLES E. SCHUMER, New York 

RICHARD J. DURBIN, Illinois 

BENJAMIN L. CARDIN, Maryland 

SHELDON WHITEHOUSE, Rhode Island 

AMY KLOBUCHAR, Minnesota 

EDWARD E. KAUFMAN, Delaware 

ARLEN SPECTER, Pennsylvania 

AL FRANKEN, Minnesota 

JEFF SESSIONS, Alabama 

ORRIN G. HATCH, Utah 

CHARLES E. GRASSLEY, Iowa 

JON KYL, Arizona 

LINDSEY O. GRAHAM, South Carolina 

JOHN CORNYN, Texas 

TOM COBURN, Oklahoma 

BRUCE A. COHEN, Chief Counsel and Staff Director 

MATT MINER, Republican Chief Counsel 

SUBCOMMITTEE ON ANTITRUST, COMPETITION POLICY AND CONSUMER RIGHTS

HERB KOHL, Wisconsin, Chairman 

CHARLES E. SCHUMER, New York 

SHELDON WHITEHOUSE, Rhode Island 

AMY KLOBUCHAR, Minnesota 

EDWARD E. KAUFMAN, Delaware 

ARLEN SPECTER, Pennsylvania 

AL FRANKEN, Minnesota 

ORRIN G. HATCH, Utah 

CHARLES E. GRASSLEY, Iowa 

TOM COBURN, Oklahoma 

CAROLINA HOLLAND, Democratic Chief Counsel/Staff Director 

JACE JOHNSON, Republican Chief Counsel 

(III) 

C O N T E N T S 

STATEMENTS OF COMMITTEE MEMBERS 

Page 

Kohl, Hon. Herb, a U.S. Senator from the State of Wisconsin ............................ 1 

WITNESSES 

Brett, Barry, Esq., Partner, Troutman Sanders, New York, New York .............. 8 

Monts, William, III, Esq., Partner, Hogan and Hartson, Washington, D.C. ...... 12 

Perlman, Harvey, Chancellor, University of Nebraska-Lincoln, Lincoln, Nebraska .................................................................................................................... 10 

Young, Michael, President, University of Utah, Salt Lake City, Utah ............... 6 

SUBMISSIONS FOR THE RECORD 

Brett, Barry, Esq., Partner, Troutman Sanders, New York, New York: 

statement .......................................................................................................... 33 

FoxSports.com, December 12, 2008, article .................................................... 61 

FoxSports.com, November 25, 2008, article ................................................... 65 

FoxSports.com, March 13, 2006, article .......................................................... 66 

FoxSports.com, July 20, 2007, article ............................................................. 68 

FoxSports.com, BCS Chronology, article ........................................................ 70 

Global Competition Policy, May 2009, article ................................................ 78 

Rush, Hon. Bobby L., a U.S. House of Representatives from the State 

of Illinois, statement ..................................................................................... 86 

Bleymaier, Gene, Director of Athletics, Boise State University, Boise, 

Idaho, statement ........................................................................................... 88 

Fox, Derrick, President and Chief Executive Officer, Valero Alamo Bowl, 

San Antonio, Texas, statement .................................................................... 91 

Troutman Sanders, charts ............................................................................... 99 

Hatch, Hon. Orrin, a U.S. Senator from the State of Utah, news release 

and letter ....................................................................................................... 106 

Troutman Sanders, charts ............................................................................... 108 

Mountain West, Colorado Springs, Colorado, proposal ................................. 110 

Troutman Sanders, charts ............................................................................... 123 

Law360, New York, New York, article ........................................................... 127 

Kaplan, Paul Michael, Esq., Partner, and Jennifer L. Bougher, Esq., Associate, Arent Fox LLP, Washington, D.C., statement and attachments ........... 137 

Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah, and Hon. 

Robert F. Bennett, a U.S. Senator from the State of Utah, May 8, 

2009, letter .................................................................................................... 163 

Frohnmayer, Dave, President, University of Oregon, and John D. 

Swofford, Commissioner, Atlantic Coast Conference, June 9, 2009, letter ................................................................................................................... 165 

Kustra, Bob, President, Boise State University on behalf of Presidents and 

Chancellors, Western Athletic Conference, statement ...................................... 171 

Monts, William, III, Esq., Partner, Hogan and Hartson, Washington, D.C., 

statement .............................................................................................................. 174 

Perlman, Harvey, Chancellor, University of Nebraska-Lincoln, Lincoln, Nebraska, statement ................................................................................................ 185 

Swofford, John D., Commissioner, Atlantic Coast Conference, Greensboro, 

North Carolina, statement .................................................................................. 195 

Thompson, Craig, Commissioner, Mountain West Conference, Colorado 

Springs, Colorado, statement .............................................................................. 207 

Young, Michael, President, University of Utah, Salt Lake City, Utah, statement ...................................................................................................................... 230 

(1) 

THE BOWL CHAMPIONSHIP SERIES: IS IT 

FAIR AND IN COMPLIANCE WITH ANTITRUST LAW? 

TUESDAY, JULY 7, 2009 

U.S. SENATE, 

SUBCOMMITTEE ON ANTITRUST, COMPETITION POLICY, 

AND CONSUMER RIGHTS

COMMITTEE ON THE JUDICIARY, 

Washington, D.C. 

The Committee met, pursuant to notice, at 2:30 p.m., in room 

SD–226, Dirksen Senate Office Building, Hon. Herb Kohl, Chairman of the Subcommittee, presiding. 

Present: Senators Kohl, Schumer, and Hatch. 

OPENING STATEMENT OF HON. HERB KOHL, A U.S. SENATOR 

FROM THE STATE OF WISCONSIN 

Chairman KOHL. Good afternoon to everybody here today. Today 

we will examine the state of competition in the college football 

Bowl Championship Series. College football is a sport enjoyed by 

millions of fans and is the central focus of the athletic programs 

at dozens of colleges and universities across our great Nation. 

I myself, of course, am a Badger fan and a fan of the Big 10. The 

revenues derived from participation in the end-of-year college football bowl games are essential to supporting college athletic departments. Dozens of lower-profile sports enjoyed by thousands of students are funded by successful college football programs. 

The Bowl Championship Series was created more than a decade 

ago in an effort to find a fair and equitable way to select universities to participate in the lucrative end-of-year bowl games and in 

order to have an objective means to select teams to participate in 

a National Championship game. 

While many believe this system is working well, critics of the 

BCS argue that it unfairly disadvantages those universities that 

are not aligned with the large athletic conferences. 

Today’s hearings will be an examination of whether the current 

BCS system truly serves the interest of competition of universities 

and of millions of college football fans. Today’s hearing was called 

at the request of Senator Orrin Hatch, and so I will now turn over 

the gavel to my good friend and our esteemed Ranking Member 

who will chair and conduct this hearing. 

I thank Senator Hatch for his work on this issue, and I also 

thank our panel of witnesses for the testimony that they will be offering today. 

2 

Senator Orrin Hatch. 

Senator HATCH [PRESIDING.] Well, thank you, Mr. Chairman. 

Mr. Chairman, I appreciate your willingness to schedule this 

hearing because I believe it will address a number of important 

issues, not the least of which is the legality of the Bowl Championship Series. I continue to enjoy our long service together on this 

Committee, Mr. Chairman, due in large part to your willingness to 

work with those of us on both sides of the aisle to address a wide 

variety of issues. Indeed, your willingness to address the concerns 

of members from both parties is almost unheard of in today’s very 

partisan climate. 

Turning to the BCS, I think we all know Congress’ interest in 

this issue in not a recent development. In the 10 years the BCS has 

been in existence, numerous congressional committees have held 

hearings to examine the legal and consumer protection issues associated with the BCS system. In fact, I chaired a hearing in the full 

Judiciary Committee on this issue in 2003. And over the years 

some changes have been made to the BCS system. Ostensibly, the 

system is now more open to non-preferred conferences than it once 

was. However, even with these changes in place, the BCS continues 

to place nearly half of all the schools in college football at a competitive and, perhaps more importantly, a financial disadvantage. 

These disadvantages are not the result of fair competition, but of 

the inherent structural inequities of the BCS system. And for these 

reasons, I believe that this hearing is necessary today. There is no 

shortage of opinion and ideas on how the BCS system should be 

changed. Indeed, I think any time college football fans gather together to watch a game, one of them has a playoff idea that they 

believe will solve all of college football’s problems. 

For today I think our time would be best served by leaving the 

debate over such alternatives in the living rooms of our country 

and instead focus on answering one question: Does the BCS comply 

with the law? 

The law requires that all business enterprises meet certain 

standards with regard to pro- and anticompetitive behavior. Our 

focus should, therefore, be on comparing the current system with 

the standards required by our Nation’s antitrust laws. 

Personally, I believe there are enough antitrust problems with 

the current BCS system that we will have more than enough material to cover during the course of this hearing. Put simply, Section 

1 of the Sherman Antitrust Act prohibits contracts, combinations, 

or conspiracies to limit competition. I have said before that I do not 

believe a plainer description of the BCS exists. 

The system itself is an agreement between the preferred conferences and the major Bowl Games as to how they will compete 

with one another and, more apparently, how they will compete 

against the non-preferred conferences. More still, under the current 

BCS regime, each of the six privileged conferences is guaranteed to 

receive a large share of the BCS revenue to distribute among their 

member schools. 

The remaining five conferences, which include nearly half of all 

the teams in Division I, all share a much smaller portion of the 

BCS revenue, even if one of their teams is fortunate enough to play 

their way into a BCS game. 

3 

Over the lifetime of the BCS, the preferred conferences have received nearly 90 percent of the total revenues. These disparities are 

explicit in the BCS arrangement. It brings to mind the major Supreme Court decisions prohibiting price fixing and horizontal restrictions on output. Under Section 1, such arrangements are prohibited. 

Section 2 of the Sherman Antitrust Act is violated when one is 

in possession of monopoly power and uses that power in a way not 

associated with growth or development as a consequence of having 

a superior product or business acumen. I think there is a strong 

argument that the BCS may very well be in violation of that provision as well. 

Practically speaking, there are two relevant markets in question 

here. Given the drastic difference between the revenues and the 

prominence of the BCS bowls when compared to other bowl games 

played throughout late December and early January, I think it is 

safe to conclude that the BCS bowls constitute a market that is all 

their own. And if Supreme Court precedence has any relevance 

here, the National Championship game also constitutes a separate 

market. 

The BCS enjoys a monopoly over both these markets and has, 

through what appears to be deliberate action, restricted the ability 

of teams from non-privileged conferences to participate. 

The BCS selects participants primarily through the use of subjective polling, complex computer ranking systems, and a set of biased 

selection criteria. Not surprisingly, this system expressly limits the 

number of outside teams that are able to qualify for one of the lucrative and prestigious BCS bowl games. 

Take last year, for example. In 2008, two teams—Utah and Boise 

State—met the qualifications for the automatic BCS berth, but 

under the rules only one of them, the University of Utah, was invited to play in a BCS game. Furthermore, four teams—Utah, 

Boise State, Texas Christian, and Brigham Young—finished the 

season ranked higher in the BCS’ own standings than at least one 

of the teams that received an automatic bid. 

Clearly, the BCS bowl games exist in a category all their own, 

and the architects of the BCS system appear to have intentionally 

excluded teams from non-privileged conferences, not on the basis of 

competition, but due to prearranged agreements. 

The Section 2 problems continue with regard to the National 

Championship game, as the current system ensures that only 

teams from the BCS’ preferred conferences can qualify to play in 

the National Championship game. This is evidenced by the fact 

that although several teams from non-preferred conferences have 

gone undefeated over the years, none of them has even a remote 

chance of qualifying for the National Championship game. 

Indeed, last season alone, two teams—Utah and Boise State—finished the regular season with better records than any team from 

any of the preferred conferences. Yet neither was even a consideration when it came to crowning a national champion. The University of Utah finished the season by routing a team that had been 

ranked number one for much of the season. It is hard to imagine 

what more Utah could have done with its season in search of a NaVerDate Nov 24 2008 10:36 Apr 13, 2010 Jkt 055645 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\55645.TXT SJUD1 PsN: CMORC
4 

tional Championship. Yet under the BCS system, they were eliminated from such consideration before the season even started. 

Section 2 was specifically intended to prevent such exclusionary 

tactics on the part of monopolists. The problems with the BCS extend well beyond the football field and address more significant 

issues than qualifying for either a National Championship or participation in a BCS game. 

Ultimately, when we are talking about college football and the 

BCS, we are talking about institutions of higher learning. Each of 

these schools faces unique challenges when it comes to funding athletics and academic initiatives. The purposeful disparities in funding created by the BCS ensure that schools in privileged conferences, even those whose football teams are not all that competitive, enjoy advantages in offering scholarships and providing staff 

and facilities for their athletic programs. 

The increased visibility that a company’s automatic qualification 

into a BCS game guarantees that the teams from outside conferences face disadvantages with regard to recruiting players and 

hiring top coaches. This would be tolerable if the inequities were 

the result of inferior performance on the part of the teams on the 

outside, but I do not believe that the evidence really supports such 

a claim. 

In addition to facing unique financial challenges, colleges and 

universities are charged with a unique mission: educating our 

young people and preparing them for their careers. In addition, 

they are in large part subsidized by the taxpayers, either through 

the receipt of funds or by enjoying tax-exempt status. That being 

the case, I believe they should be held to the highest legal and ethical standards. 

For these reasons and others, the BCS has garnered the attention of Congress and the President, not to mention the dissatisfaction of fans throughout the country. Yet after the 2008 season, 

when the flaws in the BCS system were made all the more obvious 

than ever, the architects have sought to extend the status quo for 

the foreseeable future. 

Of course, the new agreement is even more lucrative and quite 

likely promises to expand the divisions between the privileged and 

the non-privileged programs. It is my understanding that even as 

Congress has focused its attention on the system, the BCS appears 

to be attempting to strong-arm those in weaker bargaining positions into signing a new agreement by July 9, many months before 

the current contract expires. 

Given the widespread public criticism of the current system and 

its obvious flaws with regard to competition, I had hoped that 

going forward would see a greater willingness to adapt on the part 

of the BCS. However, that does not appear to be the case. 

Now, I am certain that some members of today’s panel disagree 

with my conclusions. I welcome their testimonies and will give 

them ample opportunity to make their case to change not only my 

mind but the minds of, I think, millions of others as well. I am 

hopeful that rather than being just another chapter in the endless 

BCS debate, this hearing will shed some real light on the legal 

issues surrounding these matters. And toward that end, I want to 

thank all members of the panel for their attendance here today, 

5 

and I particularly want to thank the distinguished Chairman for 

allowing me to conduct this hearing. 

Now I would like to just introduce our panel of distinguished witnesses. 

Our first witness to testify today is President Michael Young. 

President Young is the president of the University of Utah. He is 

the former Dean and Law Professor of the George Washington University Law School. In addition, President Young was a professor 

at Columbia Law School. He also is a graduate of Harvard Law 

School, where he was note editor of the Law Review. 

Next we will hear from Mr. Barry Brett. Mr. Brett is a partner 

of Troutman Sanders in New York. He is also chairman of the 

American Bar Association’s Antitrust Section Committee on Sports, 

Labor, and Entertainment. Mr. Brett represents the Mountain 

West Conference here today, as I understand it. 

Also testifying today is Harvey Perlman, the Chancellor of the 

University of Nebraska at Lincoln. Chancellor Perlman is the 

former Dean of the University of Nebraska College of Law. Chancellor Perlman currently sits on the BCS Oversight Committee, and 

we are grateful to have all of you here today. 

Our next witness will be Mr. William Monts. Mr. Monts is a 

partner at Hogan and Hartson in Washington, D.C. He has 20 

years of experience in litigating antitrust cases, and for 18 of those 

years, Mr. Monts has represented various interests in post-season 

college football. 

I want to thank you all for appearing today. We want to welcome 

you to the Subcommittee’s hearing, and after each of you gives your 

testimony, we will proceed to questions. I do not know who is going 

to show up here today, but if they do not, I will have plenty of 

questions. 

However, before I swear in today’s witnesses, I would like to 

thank Mr. Paul Michael Kaplan, a partner at Arent Fox, for his assistance to the Subcommittee in preparing for today’s hearing. I 

would also note that the Subcommittee was looking forward to 

hearing the testimony of Bob Kustra, the president of Boise State. 

Unfortunately, due to a family emergency, he is unable to be with 

us today. Accordingly, I ask for unanimous consent that President 

Kustra’s and Mr. Kaplan’s testimony to the Subcommittee be included in the record and, without objection, so ordered. 

Now, if I could ask all of the witnesses to rise and raise their 

right hand as I administer the oath, I would appreciate it. 

Do you affirm that the testimony you are about to give before the 

Committee will be the truth, the whole truth, and nothing but the 

truth, so help you God? 

Mr. Young. I do. 

Mr. Brett. I do. 

Mr. Perlman. I do. 

Mr. Monts. I do. 

Senator HATCH. Thank you. 

So, President Young, we will proceed with you first, and we will 

just go right across the table. We are very grateful to all of you for 

being here, and we look forward to taking this testimony, and 

hopefully it will answer some of the questions that many of us 

have. 

6 

President Young. 

STATEMENT OF MICHAEL YOUNG, PRESIDENT, UNIVERSITY 

OF UTAH, SALT LAKE CITY, UTAH 

Mr. YOUNG. Senator Hatch, thank you very much for holding this 

very important hearing. 

I would not be here today if all universities had a realistic opportunity to compete for the National Championship and if the BCS 

revenues were equitably distributed among the institutions. If 

those were the facts and the only question was whether the correct 

teams were chosen to play in the championship each year, then the 

commissioners of the 11 Football Bowl Subdivision universities and 

conferences could adequately address any necessary tweaking to 

the BCS. But, unfortunately, that is not the case. 

I am here this afternoon to talk to you about the inherent unfairness of the BCS. The BCS embraces favoritism rather than fairness 

in three critical respects, among others. 

First, the champions of six of the 11 conferences that play major 

college football called the Automatic Qualifying Conferences—or, as 

you have so eloquently put it, ‘‘the privileged conferences’’—automatically receive berths in the five most prestigious and lucrative 

bowls each year, known as the BCS bowls. The champions of the 

other five conferences, called the non-AQ Conferences, must earn 

a place in the BCS bowls, and practically speaking, at most, as you 

have pointed out, only one non-AQ team will receive such a berth. 

The AQ Conferences, along with Notre Dame, effectively guarantee 

themselves nine of the ten berths in the top bowls every year, regardless of their performance on the field. 

Let me explain what I mean by that. Performance should be the 

measure by which all conferences, AQ and non-AQ alike, receive 

BCS bowl berths. If performance were the governing criteria, the 

Mountain West would be entitled to AQ Conference status. Over 

the past 2 years, the Mountain West has had a better record in 

interconference games against the AQ Conferences than any of the 

other ten conferences. Over the past 4 years, the Mountain West 

has been extremely competitive against the AQ Conferences, as I 

have indicated in my written testimony. Off-the-field agreements 

should not, as the BCS mandates, trump on-the-field performance. 

Second, the BCS has provided major college football with a dubious distinction: it is the only sport that effectively eliminates half 

of its teams from the championship before the season even begins. 

The BCS system effectively tells the world—and, more importantly, 

the pollsters—that non-AQ Conference teams are undeserving of an 

automatic bid to a BCS bowl. 

Coaches and administrators from AQ Conferences perpetuate the 

stereotype by frequently denigrating the non-AQ Conferences, stating, for example, that they are not real conferences. As a consequence, non-AQ teams are never appropriately ranked in the 

pollster popularity contests. 

Cementing the fate of non-AQ Conference universities is the fact 

that just two teams are selected at the close of the regular season 

to compete in the championship game. This fact, combined with 

second-class status of the non-AQ Conferences mandated by the 

7 

BCS, leads to the inevitable exclusion of non-AQ Conference teams 

from competing for the National Championship. 

In 2008, as you pointed out, Utah was denied an opportunity to 

compete for the National Championship. When your conference has 

the top interconference record against AQ Conference teams, and 

your university from that same conference has the top record in the 

country, you should have a chance to compete for the title. Championships should be decided by competition, not conspiracy. 

Third, the revenue inequities under the BCS system are stark. 

In 2008, Mountain West Champion Utah was ranked far ahead of 

the ACC and Big East Champions. Mountain West went 6–1 in 

regular season play against the PAC 10. And all four of these conferences sent one team to a BCS bowl game. Yet the three AQ conferences each received $18.6 million from the BCS, whereas the 

Mountain West received only $9.8 million. 

The story over time is even more telling. During the past 4 years, 

the Mountain West has competed very well against all six AQ Conferences, yet over that same period of time, Mountain West has received an average of $18 million, or 75 percent less than the six 

AQ Conferences. And over the past four seasons, the AQ Conferences have received $492 million, while the non-AQ Conferences 

have received less than $62 million. 

Simply stated, the competitive and revenue inequities of the BCS 

system condemns the non-AQ Conferences to a permanent 

underclass. Non-AQ Conferences struggle to build new facilities, 

pay competitive coach salaries, finance effective recruiting, and 

fund student scholarships. These economic inequities harm football 

programs, but also harm other sports that rely heavily upon the 

revenue from football. 

Student athletes can see these economic disparities between the 

programs, and they hear the message loud and clear from the AQ 

Conference coaches, that playing for a non-AQ team means no 

chance for a National Championship experience. 

Finally, and in my judgment, most importantly, as educators we 

work hard to teach the right values in the classroom. We want our 

students to take away from their college experience the belief that 

hard work and skill are the necessary tools to achieve. We want 

our students to strive to make all playing fields in life level and 

to give everyone the same opportunities to succeed. 

It is tough, however, to make these values stick when we teach 

a different message on the playing field. A BCS system that relegates non-AQ Conferences to permanent second-class status, that 

denies nearly half the schools of any opportunity to compete for the 

National Championship, and rewards nearly 87 percent of the revenues to the AQ Conferences, regardless of their on-field performance, sends the wrong message to our students. 

The BCS changes the old saying, ‘‘If you can’t beat them, join 

them,’’ to this: ‘‘If you can’t beat them, eliminate them.’’ This is a 

bad message and actions, after all, speak far louder than words. 

A variety of justifications for this system have been offered in the 

past by representatives of the BCS. As outlined in my written submission, in my judgment, none of these even pass the straightfaced argument test. And, in fact, some even cut entirely in the opposite direction. But the essential point is simple and straightVerDate Nov 24 2008 10:36 Apr 13, 2010 Jkt 055645 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\55645.TXT SJUD1 PsN: CMORC
8 

forward. This is a system designed to channel money to certain 

universities based on an agreement, not on achievement. Championships and opportunities are made available by conspiracy, not 

by competition. It harms higher educations, our student athletes, 

and the American public. 

Thank you. I would be delighted to take questions. 

[The prepared statement of Mr. Young appears as a submission 

for the record.] 

Senator HATCH. Thank you, President Young. 

We will turn to Barry Brett now, a distinguished attorney. 

STATEMENT OF BARRY BRETT, ESQ., PARTNER, TROUTMAN 

SANDERS, NEW YORK, NEW YORK 

Mr. BRETT. Thank you, Mr. Chairman, and thank you for inviting us to speak today on this very important issue and for holding 

this hearing. 

I am the chair of the antitrust practice group of Troutman Sanders. I was chair of the Sports and Entertainment Committee of the 

American Bar Association Antitrust Section and of the New York 

State Bar Association Antitrust Section. I was on the governing 

committee of the ABA Forum of Sports and Entertainment. In 

short, I am an antitrust lawyer by trade and a sports junkie by 

choice. 

I am very gratified to see the Committee addressing the Bowl 

Championship Series, which controls major post-season college 

football bowl games, controls the fictional National Championship, 

and uses this control to exclude all but its founding members from 

fair access to this competition and the hundreds of millions of dollars involved. The system offends the most basic antitrust law principles of competition. 

There are 88 playoffs run by the NCAA covering college sports. 

All can accommodate the needs of the students and academia. In 

what was just historically called Division I college football, however, the NCAA does not act. Instead, it allows a self-designated 

cartel, created and controlled by six conferences, to set the rules for 

access to major post-season football games and its National Championship. It allows these conferences to control the enormous revenue they generate and to prevent the playoff desired by the public. 

It is estimated that a playoff system would produce twice the 

current revenues of the BCS system. In antitrust terms and in the 

jargon of my business, the BCS system ‘‘limits output, limits consumer choice, and restrains competition in violation of the Sherman Act.’’ 

Our written submission details the history and workings of the 

BCS and sets forth many of the applicable legal precedents and 

principles. The BCS guarantees each of its six conferences a place 

in one of the major bowls and a large payday based on agreements 

rather than performance. In practice, the foreclosure has been almost complete. 

Teams from other conferences face great barriers to qualify for 

one of the major bowls, and they face what effectively have been 

insurmountable battles to qualifying for a chance at the fictional 

9 

National Championship. The six conferences have reserved for 

themselves approximately 87 percent of the BCS revenues. 

There have been 90 major bowl appearances by the original conference teams and only four appearances by non-original conference 

teams during the history of the BCS. Every contestant in the National Championship game has been from one of the original conferences. We have set forth in our printed materials data and studies showing this inequity and the manner in which it is not justified by performance. 

By any objective criteria, the excluded teams are as good as 

many of those included. Yes, the anticompetitive effects and economic disparities are dramatic. 

Some months ago, the Mountain West Conference submitted to 

the BCS a detailed proposal which provided for a playoff system 

that would finally yield a national champion based on competition 

and equal opportunity rather than reliance on poorly drawn, rarely 

understood, and deeply flawed formulae. The proposal would preserve the historic bowl games, add exciting games, and generate 

much more income for all concerned. 

On June 15th, USA Today reported that the proposal was not 

even put on the BCS agenda, and it has been summarily rejected. 

When rebuffed, the Mountain West Conference asked my partner 

Roy Bell and me to analyze and discuss with them whether the 

BCS structure violates Federal antitrust law. We have prepared a 

report, which has not been adopted as a position of the Mountain 

West Conference, but has been codified into a detailed legal memorandum to this Committee. 

In the words of the Supreme Court, ‘‘The Sherman Act was designed to be a comprehensive charter of economic liberty, aimed at 

preserving free and unfettered competition as the rule of trade.’’ 

The BCS offends everything the Sherman Act is designed to accomplish. Instead of competition on the merits, the BCS is a commercial enterprise which flouts the Sherman Act and sacrifices onfield competition in order to protect an enormous revenue stream. 

The BCS has nothing to do with amateurism or education, but is 

a commercial venture based on barriers to competition. The BCS 

has negotiated a new TV contract for almost $500 million. Each of 

the six controlling conferences is guaranteed at least $18 million a 

year. 

From the point of view of fans and players, the goals and barriers of sports are corrupted by commercial goals. Competitive success does not yield access to the National Championship. 

Twenty-five years ago, the Supreme Court established that 

NCAA rules limiting the televising of games was a violation of the 

Sherman Act. The NCAA fought vigorously to protect its restrictions, just as the BCS now defends its restrictions. The finding of 

a violation of Section 1 of the Sherman Act in that case was one 

of the great foundations for college football as we know it today 

and its enormous popularity. 

Every element of a violation of the Sherman Act is present in the 

BCS. The agreement required for a Section 1 violation is clear. The 

anticompetitive effects are manifest and shown in study after 

study. Price competition among the bowls is eliminated by agreeVerDate Nov 24 2008 10:36 Apr 13, 2010 Jkt 055645 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\55645.TXT SJUD1 PsN: CMORC
10 

ment. The claimed benefits of the arrangement are illusory and 

easily achieved by less anticompetitive alternatives. 

Similarly, all of the elements of a Sherman Act Section 2 violation are apparent. The BCS has secured, maintained, and exercised 

the power to exclude competition and control price, which are the 

hallmarks of the offense of monopolization. It has reserved for itself 

the spots in the major bowl games without regard to competitive 

success. The BCS will not even consider a playoff, and it reflects 

all of the evils of monopoly power that the Sherman Act prohibits. 

The competing teams, the schools, the student athletes, and the 

public want a playoff and the competition on the merits, which the 

Sherman Act requires. A group of competing businesses would face 

criminal antitrust scrutiny if they tried a stunt like this. Antitrust 

principles require that it end and that we bring back the principles 

of equal opportunity, competitive reward, and fair play on and off 

the field. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Brett appears as a submission 

for the record.] 

Senator HATCH. Well, thank you. We appreciate your testimony. 

Chancellor Perlman, we will take your testimony now. 

STATEMENT OF HARVEY PERLMAN, CHANCELLOR, 

UNIVERSITY OF NEBRASKA-LINCOLN, LINCOLN, NEBRASKA 

Mr. PERLMAN. Senator Hatch, thank you. 

I acknowledge that there are football fans and sports writers who 

believe the ideal system to crown a national champion is an NFLstyle playoff. Unfortunately, those of us responsible for our universities’ involvement in post-season football must try to craft a system that reflects the restraints of the real world. 

In my written statement, I have discussed those realities at 

length, and I will only highlight three of them here. 

First, any system of play must recognize that athletes who play 

football are also students. For the vast majority of them their success in the classroom will have far more to do with their success 

as adult citizens than their performance on the football field. As 

presidents and chancellors, this reality must be our highest priority. 

Second, not every school in Division I is equal on the football 

field or in any other field of endeavor. Each university has pillars 

of strength that were created by conscious investments, hiring of 

great leaders, natural advantages, significant philanthropic donations, dumb luck, or a combination of these factors. 

All students, like student athletes, can make individual choices 

among the strengths of the various institutions in which they could 

enroll, and these choices may enhance or diminish their future opportunities. This is a reality that cannot be ignored, nor is it one 

that can be easily changed. 

Third, any system designed to determine a national champion in 

intercollegiate football can only come about through the agreement 

of those universities who consistently field highly ranked teams. A 

system that did not involve schools from the six automatic qualifying conferences and Notre Dame could not claim to be one that 

11 

is likely to produce a national champion. This is not true of other 

conferences. 

To secure the participation of these essential conferences, the 

system must provide revenue in excess of their other opportunities, 

must be consistent with their academic values, must take into account the impact on the fans who provide their schools with support, must preserve the excitement of the regular season, and must 

honor the long-standing relationships that they have had with the 

bowls and the communities those bowls support. 

The current BCS is able to satisfy those requirements; we have 

yet to see an alternative arrangement that does the same. This has 

not worked out to the disadvantage of the five conferences that do 

not automatically qualify for a BCS bowl. Before the BCS, none of 

the teams in these conferences had agreements with any of these 

major bowls, and these teams seldom played in them. Since the 

BCS, they have had more access to these bowls. 

Because of the BCS, these conferences also receive considerably 

more revenue than they did under the old system. In fact, we know 

informally from media experts that the payments we make to these 

conferences is, in fact, a subsidy of their athletic programs because 

the access we have provided does not increase the market value of 

the BCS product. 

The bottom line is that with the BCS these conferences have increased their access to and exposure in national television markets, 

and they have substantially enhanced the revenue available to 

them from post-season football. There might be many concerns expressed about the BCS, but it is hard for me to see how these conferences can claim to be disadvantaged. 

Finally, there is an assumption that the uneven distribution of 

revenues generated by the BCS is responsible for disparity in athletic success. When considered from an institutional perspective, 

the revenue a university like mine receives from the BCS is a very 

small proportion of our total revenue. 

My university’s athletic department budget for next year will be 

approximately $75 million. If the Big 12 Conference places one 

team in a BCS bowl, the University of Nebraska can expect a distribution of approximately $1.5 million. This is 2 percent of our 

budget. To put this in perspective, if we added an additional home 

football game, we could more than double that revenue. 

To be sure, some schools are thought to have an advantage because of the schedule they play, their history of success, the size 

of their budgets, and the support they receive from fans and donors. But at the beginning of the season, every Division I football 

team has an equal chance to become national champion if they 

rank first or second in the country. 

You would not predict that the University of Nebraska would 

have enjoyed the success we have had on the football field. We 

come from one of the smallest population States in the country and 

must recruit athletes nationwide. We do not have mountains or 

seashores or large cities or a moderate climate capable of attracting 

student athletes, and we labored long in the obscurity of losing seasons. But we sustained a loyal fan base, we hired and retained gifted coaches who were skilled at recruiting student athletes getting 

12 

them to play at the height or even sometimes beyond their athletic 

abilities. 

We built this success, as we have built our recent academic success, by working harder and being more creative than the competition. We believe these options remain open for all schools in Division I. We do not believe that the BCS has made this process more 

difficult. In fact, by granting greater access and exposure to these 

schools than ever before and providing them with more revenue 

than ever before, we have created the opportunities for them to be 

successful. 

Thank you. 

[The prepared statement of Mr. Perlman appears as a submission for the record.] 

Senator HATCH. Well, thank you, Chancellor Perlman. 

Let’s go to you, Mr. Monts, now and take your testimony. 

STATEMENT OF WILLIAM MONTS III, ESQ., PARTNER, HOGAN 

AND HARTSON, WASHINGTON D.C. 

Mr. MONTS. Thank you, Senator Hatch. I am William Monts. I 

am a partner in the law firm of Hogan and Hartson here in Washington, D.C. and have practiced for nearly 20 years in the firm’s 

antitrust, competition, and consumer protection practice group. 

For roughly 18 years, I have had the privilege of working on various matters related to post-season college football—first representing certain bowl games in connection with the Bowl Coalition, and in the past 14 years, representing certain conferences in 

connection with the Bowl Alliance and now the Bowl Championship 

Series. 

I have thought about these issues a great deal over the past 18 

years, not merely as a lawyer, but as an avid fan of the game. I 

have spent a great deal of time studying its history and the athletic, economic, and legal developments that have shaped it. 

I am going to limit my remarks today to an analysis under Section 1 of the Sherman Act and will assume, for the sake of argument, that a number of threshold issues that I covered in my written statement could be proved by a complainant against the BCS. 

I do that because, one, if the BCS passes muster under Section 

1, I believe it also passes muster quite easily under Section 2; and 

I want to focus on those issues that I understand are animating the 

hearing that brings us here today. 

The BCS would be analyzed as a joint venture under Section 1 

of the Sherman Act and would be reviewed under the so-called rule 

of reason under which procompetitive benefits of an arrangement 

are weighed against the anticompetitive effects. Only if the anticompetitive effects outweigh the procompetitive benefits is the 

agreement unlawful. So let me turn to that analysis. I believe there 

are at least four procompetitive effects that I would like to highlight here today. 

First, the BCS creates a guaranteed national championship 

match-up between the top two ranked teams each year. No conference or institution can produce that product on its own. It can 

only result from an agreement among the conferences and the University of Notre Dame. Without the agreement, there is no such 

game. 

13 

Second, the BCS creates attractive match-ups between conference champions and highly ranked runner-up teams in the other 

BCS bowls based on the a full-season’s results. The old bowl system often resulted in match-ups that were created after seven or 

eight games, as a bowl filled its empty slots by effectively committing to take a particular team. If that team later went on a losing 

streak at the end of the season, nonetheless, the bowl was often left 

with no other choice because other bowls had paired up with other 

attractive teams. 

Third, the BCS preserves and strengthens the bowl system overall, thus creating the maximum number of post-season opportunities for student athletes, coaches, and fans and the maximum number of post-season games. It is important to note that there are 

only five bowl games that are a part of the BCS and that there are 

29 other bowl games that are independent of the BCS and make 

their own decisions about teams that they choose and conferences 

with which they will have affiliation arrangements. 

Fourth, and finally, the BCS and the bowl system generally enhances the college football regular season by making every game 

meaningful. Today college football is widely regarded as having the 

best regular season in all of American sport. That I suggest to you, 

is largely the result of the BCS and the bowl system. 

Now, against these substantial procompetitive benefits stand 

what I understand to be two alleged anticompetitive effects. The 

first is that the BCS denies conferences access to the BCS bowls 

and the National Championship; and, secondly, that the BCS revenue is not split equally. Neither is an anticompetitive effect. 

The purpose of the antitrust laws is to protect not producers of 

college football but consumers. And in this case the immediate consumers are the bowl organizations and television networks; the ultimate consumers are the fans. If the BCS were to disappear tomorrow, nothing would arise to take its place. We would return to 

the old bowl system in which each conference competed with one 

another for the most attractive bowl slots. When that is understood, it is easy to see why the exclusion argument fails. 

BCS bowls could today, if they wished, always demand to have 

a champion from one of the five conferences without an annual 

automatic berth. Similarly, they could take one with an at-large 

pick. They have chosen not to do so. The BCS, nonetheless, guarantees those conferences access to those bowl games under certain 

circumstances—guarantees they would not have otherwise. 

In short, it enhances their bowl opportunities over what would 

be available to it in the absence of the BCS and, therefore, there 

is no denial of access. As for the championship game, if there is no 

BCS, there is no championship game and, thus, there is no denial 

of access there either. 

On the revenue distribution point, the BCS provides the five conferences now with revenues they would not be able to obtain on 

their own. Thus, far from being anticompetitive, it subsidizes those 

leagues. 

In any event, revenue distribution within a joint venture is not 

the concern of antitrust law. The issue is market output, and here 

there is no negative effect on output by the BCS. Either the venture is lawful and does not restrict output, in which case how it 

14 

divides up revenues among its 11 members, 12 members in this 

case, is of no antitrust concern; or the venture is not lawful, in 

which case it is enjoined and there will not be any revenues at all 

to distribute. 

At bottom then, the BCS has several procompetitive benefits and 

its alleged anticompetitive effects are non-existent. 

Let me make one final point because I think it further demonstrates why an antitrust claim is of no benefit to the five conferences without annual automatic berths. Even if one were to assume a Sherman Act violation, the remedy for the prevailing party 

is an injunction against the arrangement. The BCS will go away, 

but no court is going to write a playoff system or some alternative 

structure, establish selection procedures, negotiate relevant contracts, allocate costs and revenues that might be earned from the 

arrangement; that is just not what courts do. 

Having declared one form of cooperation—and a very mild form 

at that—unlawful, no court is going to set about crafting from 

whole cloth a more restrictive form of cooperation that would be required to have a playoff. The Sherman Act does not give it the authority to do so, and the Supreme Court in the last 5 years has 

cautioned against these sorts of judicial misadventures. 

Instead, we would be back to the old bowl system—but with one 

important caveat. With the judgment on the record that the BCS 

is unlawful, I suspect that conferences would be far less willing to 

entertain the concept of a playoff which would rest upon an agreement among the exact same parties, with the exact same market 

power, that would be far more restrictive than BCS and likely to 

have substantially adverse effects on the bowls. 

The peculiar irony of an antitrust claim is that it is likely to 

sound the death knell of the alleged playoff that the critics have 

insisted and claimed they want. In that sense, it would be a pyrrhic victory and would leave those conferences from whom the critics profess concern in a much worse position. 

Again, Senator, it is an honor to appear before you today, and 

I look forward to answering any questions you may have. 

[The prepared statement of Mr. Monts appears as a submission 

for the record.] 

Senator HATCH. Thank you, Mr. Monts. 

Let us start with you, President Young. It is my understanding 

that privileged—I call them ‘‘privileged’’—conferences can rely upon 

receiving a substantial yearly sum of BCS revenues. Under the 

BCS system, such revenues are guaranteed to the teams in the six 

privileged conferences regardless of how they perform on the field; 

and proponents of the BCS have implied that the revenue distribution is both fair and equal and that every conference that receives 

one bid in a BCS game in a year receives the same amount. 

Now, I personally think the numbers tell a different story. Is 

that true? And what are the practical effects of the current distribution of revenue? 

Mr. YOUNG. Senator, let me answer that question in two parts, 

if I may. I am going start with the paragraph from an op-ed piece 

that President Robert Kustra from Boise State University wrote, 

which I think illuminates the fallacy in the first part of that argument. 

15 

He says, ‘‘To take a page from recent history, in 2004 Boise State 

went undefeated and finished the season number 9 in the BCS, yet 

was excluded from a BCS bowl while number 13 Michigan and 

number 21 Pittsburgh qualified.’’ 

‘‘In 2006, Boise State went undefeated and finished the season 

ranked number 8, was invited to play, and defeated Oklahoma in 

one of the greatest games ever played.’’ 

‘‘In 2008, Boise State went undefeated again and finished the 

season number 9 in the BCS, yet was passed over for a BCS bowl, 

while number 10 Ohio Sate, number 12 Cincinnati, and number 19 

Virginia Tech were all chosen for BCS bowls.’’ 

And I could go on with a series of other examples even from our 

own conference. This year, three teams were ranked more highly 

in our conference alone than teams that were chosen to play in a 

BCS bowl. So it seems to me that it is challenging to make that 

argument. 

The second thing I would say with respect to revenue distribution, it is true if a non-automatic qualifying conference team does 

exceptionally well, much better, necessarily better, than a number 

of the automatic qualifying teams, and manages to work its way in, 

despite all these handicaps, it does, in fact, get less because the 

agreement within the five non-automatically qualifying is that that 

revenue will be divided up. And, frankly, we oppose that. But the 

system set up under this agreement forced us into an arrangement 

where we have to share those revenues with these other schools, 

so we get approximately half of what a BCS conference automaticqualifying team would get playing in the same bowl game. 

Senator HATCH. Chancellor Perlman, you have argued that the 

BCS revenue distribution is not only fair but better that it would 

be under any feasible alternative or system. However, last year 

both the PAC 10 and the Mountain West had exactly one team 

qualify for a BCS game. Yet the PAC 10 received nearly twice as 

much revenue as the Mountain West. As a result, the team that 

finished at the bottom of the PAC 10, which did not win a single 

game last year, was guaranteed before the season even started to 

receive more BCS revenues than the University of Utah, to pick 

one school, which finished the season as the only undefeated team 

in college football. 

Now, tell me how that result can be justified. 

Mr. PERLMAN. Senator, the bowls and the conferences have had 

relationships, and you have to think of this in the context of 

multiyear relationships. The alignment of the Fiesta Bowl with the 

Big 12 is based on the proposition that every year the Big 12 will 

produce at least one or two teams that are significantly highly 

ranked. The years when Oklahoma and Nebraska were not playing 

as well as they had been, we still produced a Texas or a Texas 

A&M or a Missouri. 

These relationships reflect not only the strength of a team in a 

conference, but the depth of strength in a conference. And those relationships were long standing before the BCS, and it was based 

on that that these revenue distributions are made. 

The fact is we know that from our conversations, negotiations 

with the media and others, that adding the other five conferences 

did not increase the revenue available through the BCS. So the 

16 

revenue is distributed based on the contribution made to the value 

of the product. 

Senator HATCH. OK. Well, let me go back to President Young. 

The BCS proponents have claimed that the current BCS system, 

including the distribution of BCS revenues and the system for 

awarding BCS bids, is required by the marketplace. 

Now, is that true? 

Mr. YOUNG. Well, again, I think there is little evidence that that 

is actually true, if you look at the data. If, for example, you look 

at the opportunity for bowls for the University of Utah, we were 

selected over teams—Cincinnati and Virginia Teach, for example— 

and that Sugar Bowl, in which we played, had a much, much higher viewership than the bowl in which Cincinnati and Virginia Tech 

played. It just is not clear to me at all where one can assert with 

confidence that the marketplace drives this in that particular way. 

I think that if you actually look as well at the period from 1982 

to 1991, you see seven of the ten teams that actually were ranked 

as national champions were not then in automatic-qualifying conferences and were put in, in part, as Commissioner Swafford said, 

in order to bring in the teams that had been playing for the National Championship and designed to solidify and create that certainty. 

And so one could argue that these teams have these relationships 

and, therefore, the finances follow. Or, conversely, the bringing of 

the teams into it has generated the money itself, and the current 

practice that excludes 51 of the teams in college football from having a realistic opportunity to prove themselves on the field in that 

way, it seems to me to belies the notion that this is market-driven. 

Senator HATCH. Chancellor Perlman—and then I am going to 

turn to Senator Schumer—you have argued that the marketplace 

that the six preferred conferences receive automatic bids due to 

their prominence in college football and to preexisting bowl tie-ins. 

Now, does that apply to every one of the privileged conferences? 

For example, let me give you an example. The Big East has no 

bowl agreement and in recent years have been outperformed on the 

field by outside teams in conferences. Now, what is the market justification for including the Big East and excluding the Mountain 

West? 

In addition, last year, two non-privileged teams qualified for BCS 

games, but only one was invited due to the BCS rules. What is the 

market justification for excluding eligible teams even when they 

could have been invited without affecting the automatic bids of any 

privileged conferences? 

Mr. PERLMAN. Senator, when the BCS was formed, the Big East 

conference did, in fact, produce a number of national champions 

and teams that played with national champions. When we revised 

the BCS system in 2003 and 2004, we created a pathway for conferences who were not automatic qualifiers to become automatic 

qualifier based on the strength and depth of the conference on the 

field. 

The Big East went through that process and was successful. That 

process is open to the other five conferences as well. So we did try 

and create a mechanism whereby conferences, through the strength 

17 

and depth of their success on the field could become automatic 

qualifiers in the Bowl Championship Series. 

Senator HATCH. Well, tell us about the specifics of that criterion 

because that has not been made public to my knowledge. 

Mr. PERLMAN. Well, Senator, it was part of the agreement of the 

group of five that all of them agreed to when we revised the system 

in 2003–04. I am not sure that I can give you the details without 

referring back to the contract, and I do not know if Mr. Monts remembers them as well. But there is a process, and it is one that 

has objective criteria for meeting that process. 

Mr. MONTS. Senator, may I add to that? 

Senator HATCH. Certainly. 

Mr. MONTS. There is a process. It relates to three different criteria: first is the ranking of the highest ranked team in the conference; second is the number of teams ranked in the top 25 of the 

final BCS standings; and then the third is the strength of the conference measured by the ratings of all of its teams from top to bottom. 

The standards work over a 4-year period. The 4-year period 

began in 2004 and went through 2007. There was a new period 

that began last year, will run through the 2011 regular season. 

And so based on those standards, we are in the new period, and 

certainly any conference that triggers them that does not now have 

an automatic berth will earn one. 

Senator HATCH. Have those criteria been made public, the four 

you mentioned here? 

Mr. MONTS. I do not know if they have been made public, Senator. They are part and parcel of the BCS agreement. 

Senator HATCH. OK. Let me go back to you, Chancellor Perlman. 

One of the arguments made in defense of the BCS specifically with 

regard to the National Championship game is that it is objectively 

open to every team regardless of their conference affiliation. 

Now, put simply, if the team is ranked No. 1 or two, it will not 

play in the National Championship no matter what conference it 

hails from. However, as a practical matter, while this standard is 

theoretically objective, it eliminates most teams from consideration 

before the season even begins. Isn’t that correct? Or, in your opinion, does every team begin the season with the possibility of playing in the National Championship game? 

Mr. PERLMAN. Senator, I can say certainly that the system allows 

every team an equal right to be No. 1 or No. 2 if they are successful on the field. 

I am not so naive as to think that, as a practical matter, some 

schools do not have, because of tradition, because of reputation, a 

better chance at it. It is the same as when Nebraska walks into 

NIH and seeks a Federal grant and we are competing against Harvard. Theoretically, we have the same opportunity. Do we as a realistic matter? I am not sure. 

But I do believe that—I mean, the problem is, of course, that we 

do not all play each other, and there is no conceivable way that we 

could play each other. And so a team that may be undefeated may 

not have played the same strength of schedule, may not have 

interacted with a sufficient number of teams to solicit a ranking of 

18 

one or two from those people that look at the system and try and 

pick the No. 1 or No. 2 teams. 

Senator HATCH. President Young, do you care to comment about 

that? 

Mr. YOUNG. Well, I think the key point—and I wanted to emphasize and appreciate Chancellor Perlman’s emphasis of the key 

point—is that the system is entirely self-referential and so that you 

have at least as one of the major data—— 

Senator HATCH. Self what, now? 

Mr. YOUNG. Self-referential. That is to say, it starts with a series 

of rankings, rankings based on a great deal of polling data—much 

of it by people who confessed this year that they have never seen 

a single Mountain West team play this year—and create a ranking 

system, and from that ranking system, then, however you perform 

on the field, whatever the strength of your schedule, climbing up 

that ranking becomes, at least to point one or two, virtually impossible. Coupled with the dialogic way of discussing BCS versus nonBCS, it makes it very difficult for any team in a process that is 

based in some large degree on popularity polling and on historic 

patterns rather than actual on-field performance to be ranked one 

or two. It is simply not realistic. 

Senator HATCH. Well, do you think that a team from an outside, 

non-privileged conference has a realistic chance to qualify for a National Championship game? 

Mr. YOUNG. Well, Senator Hatch, the University of Utah comes 

from the conference that this year had the best interconference 

record. Against the PAC 10 we were 6–1, and we were undefeated 

and unable to climb that ranking. 

I do not know what more we could do. We have worked hard; we 

have hired gifted coaches; we have invested heavily in our program. We have worked diligently by dint of tremendous sweat and 

labor and after a year like that could not rise. 

Senator HATCH. Well, let me just rephrase it in another way for 

both you and Chancellor Perlman. Let us take last year’s Utah 

team, for example. What more could they have done to play their 

way into a National Championship game? You know, if the BCS 

system ensures that most teams will not even have an outside 

chance of playing for the National Championship, isn’t it fair to say 

that it is exclusionary? 

Mr. YOUNG. Well, if we had been part of an automatic-qualifying 

conference, I suspect we would have had an opportunity to play for 

a championship. 

Senator HATCH. I see. 

Chancellor. 

Mr. PERLMAN. Senator, it is hard to respond to this without appearing to be disrespectful of Utah, which I am not. 

Senator HATCH. You do not want to be in this room. 

[Laughter.] 

Mr. PERLMAN. I know. I know. 

Senator HATCH. I happen to love the University of Nebraska, too. 

We have watched it for years, and your former coach was a good 

Member of Congress, and he is back with you, as I understand it. 

Mr. PERLMAN. He is. 

Senator HATCH. Well, that is going to do a lot of good, I think. 

19 

Mr. PERLMAN. It will. 

Senator HATCH. And you have been very kind to come here and 

give us your viewpoint. 

Mr. PERLMAN. Well, I just want to say—I mean, there is realistically something that Utah could do. They could have played the 

schedule Nebraska played last year, where we played Oklahoma, 

Texas Tech, and Missouri—all of them ranked within the top five. 

Senator HATCH. Did they even have a chance to do that? 

Mr. PERLMAN. Well, they got a non-conference schedule that they 

could fill. 

Senator HATCH. Well, they played a lot of big-time teams last 

year. 

Mr. PERLMAN. I know, but the issue is—— 

Senator HATCH. And they whipped one team that was No. 1 for 

most of the season. 

Mr. PERLMAN. And if they had have beaten Alabama before that 

bowl game instead of at that bowl game, they might have had a 

better shot at it. 

Senator HATCH. Well, I see. You are making my case for me. 

Mr. PERLMAN. You know, at some point—at some point—regardless of what system you talk about, somebody is going to have to 

pick the teams that play and the teams that are excluded. 

Senator HATCH. Is it fair to pick teams when you do not even go 

and see—when the criteria does not require you to even go and see 

a game? And let us use the Mountain West Conference as a perfect 

illustration. 

Mr. PERLMAN. I appreciate that it may seem unfair and it may, 

in fact, be unfair. 

Senator HATCH. Well, you know it is unfair. 

Mr. PERLMAN. But the fact is that somebody, no matter what system is proposed, is going to have to pick those teams that get to 

play and those teams that do not. And we have looked at every system possible. And you can look at the March Madness basketball, 

NCAA, where we have 64 teams, and we have a small committee 

locked in a room over that last weekend to pick the teams. And 

there is controversy every year about who is in and who is out. And 

it may be based on—— 

Senator HATCH. It is based on a playoff game, you know. 

Mr. PERLMAN. Well, you do, but the issue is the same. 

College baseball this year picked the 64 teams to play in the 

regionals, and there is enormous controversy about how many of 

the Big 12 got in as opposed to how many the ACC or the SEC got 

in. 

There is no perfect system in this. And do some of us start out 

with a disadvantage? As I say, Nebraska has advantages and it has 

disadvantages in all of the areas that this university competes with 

other universities. That is the way the world is, I am afraid. 

Senator HATCH. President Young, do you have anything to say 

about that? 

Mr. YOUNG. Well, I appreciate those comments very much, and 

I do appreciate the tremendous football team that Nebraska fields 

and wish that they were willing to play us. If you look at the 

ranked teams in the top 20 that we played—— 

20 

Senator HATCH. There you have a challenge. Now, let us get 

this—— 

[Laughter.] 

Mr. PERLMAN. I will report to Athletic Director Osborne when I 

get back. 

Senator HATCH. You tell Osborne I want a University of Utah 

game. 

Mr. PERLMAN. All right. 

Mr. YOUNG. I have heard that before. We really appreciate that 

and the tremendous programs that those are. But given the 

rankings of the teams that we played—again, it gets very hard to 

figure out what we do in a system that inherently stacks it against 

us, and that I think becomes the most fundamental concern. 

We are not concerned about external constraints placed on our 

system. I envy Nebraska’s athletic budget, and they produce tremendous success because of it. 

My athletic budget is less, but we Westerners do more with less, 

and those kinds of constraints are ones we understand. It is the 

systemic constraints where the system starts systemically balanced 

and structured against the possibilities that are the problem—the 

man-made constraints, not those constraints that come because of 

weather and mountains and my capacity to fundraise or not 

fundraise. 

Senator HATCH. President Young, I wanted to ask you about the 

message the current BCS system sends to our young people. As you 

know, a group of colleges and universities are the primary movers 

behind the current system. It is these same institutions that we 

charge with the task of educating our young people and preparing 

them for the workforce. 

What impact, if any, does the BCS have on your efforts to teach 

students the proper values? 

Mr. YOUNG. Senator, if I may take the liberty of reading two 

things that encapsulate it a bit? 

Senator HATCH. Sure. 

Mr. YOUNG. One comes from my written testimony, and it just 

focuses on the fact that I believe, as I believe most Presidents believe, that we have a paramount responsibility to teach our students to be good citizens, to model fairness and equity and to lead 

by example. This is true in all aspects of university life, but particularly true for college football, which creates such great interest 

and enthusiasm and attention among our student body. College 

sports should promote fairness and equity and the fundamental 

American concept that anyone with the skills and drive to succeed 

can achieve the highest level of greatness. 

These are not the messages being sent by college football today. 

The BCS system, with its stranglehold on college football, sends 

the message that economic power rather than athletic ability is the 

key to success. As Commissioner Swafford said, ‘‘Fairness depends 

on where you sit.’’ Rather than promoting fairness and equity, the 

BCS system promotes the status quo—a system of schools who 

have and those who have not—and virtually assures that many 

highly successful athletic programs will be forever excluded from 

the highest levels of recognition and financial gain. And these are 

not values that we want our students to really model or emulate. 

21 

I will read one last statement, if I may, which I think is beautifully written, that highlights our obligation, and it comes from 

David Frohnmayer, President of Oregon State University, who 

says, ‘‘We can easily go too far—authority is seductive; we can 

reach a personal tipping point. . . .Some environments blind us to 

the human consequences of our actions—so we MUST be attuned 

to the consequences of our behavior. . . .This ethical life is hard 

work—‘‘knowing right from wrong’’ requires diligence, self-scrutiny 

and looking into a very well-lit and refractive mirror.’’ And, of 

course, President Frohnmayer is the most recently retired Chair of 

the BCS. 

I agree wholeheartedly with his statement and what we ought to 

be teaching our students, and I do not believe that the BCS does 

that. 

Senator HATCH. Thank you. 

Chancellor Perlman, our State universities were created so each 

student would have an opportunity to attend college. Now, getting 

an education has increasingly become a prerequisite to achieve the 

American dream, which says if you work hard enough, you too can 

be a success and enjoy the fruits of your labor. But under the BCS 

system, it does not matter how good of a team you are. In the BCS 

system, there are significant and largely insurmountable obstacles 

at play in the so-called National Championship. 

Now, if your school does not belong to a privileged conference, 

that becomes even harder. Therefore, does not the BCS system violate the intellectual and ideological foundation which was the basis 

for the creation of State universities? 

Mr. PERLMAN. Well, Senator, of course, it is always—it depends 

on your perspectives on these matters. As I tried to indicate in my 

testimony, both written and oral, universities come with a set of 

endowments, some of them that they have earned, some of them 

that they acquired through luck. We are all different. It seems to 

me that one of the things that universities ought to teach students 

is the fact that, however the natural set of endowments are 

arrayed against you, hard work and creative activity can cause you 

to rise to the top. 

Bowl Championship Series gives every school an opportunity to 

play for the National Championship. It has increased the access of 

students and schools that did not have it before. It has increased 

the revenue of schools that have aspirations for playing at the 

highest level of college football. I do agree that the issue is one 

about students, and if you would permit me to also provide you a 

quote, it is from Gary Patterson, football coach at TSU, which I believe is a member of the Mountain West Conference: 

‘‘Obviously, a true playoff gives you a national champion. But my 

answer has always been it’s for the kids. And bowl games are for 

the kids. If you’re in the playoff, you spend all week at your place, 

and if you get beat, you’re done. You never experience a new place; 

you never see new things. For me, the key to the bowl games is 

you get to experience another place; you get to learn about another 

program. A lot of our kids never get to go to the West Coast. In 

all this arguing, we tend to forget about the kids, about their academic load and everything else that comes with being a studentathlete. I have a tendency to stick with the bowls.’’ 

22 

I think that is the attitude in most of the university presidents 

I come in contact with. 

Senator HATCH. Well, let me go back to President Young. Both 

Chancellor Perlman and Mr. Monts, in his testimony, in his written testimony, have stated that the BCS is needed to protect the 

overall bowl system and to preserve the exciting nature of the regular season. 

Now, in the past, proponents of the BCS have also argued that 

any playoff proposal would harm the schools’ academic missions. 

Do you agree with any of those claims? 

Mr. YOUNG. Not a single one of them, as it turns out. If you actually look at the regular season, I think March Madness in basketball certainly created a lot of excitement in a particular of period 

of time. But, in fact, because selection into March Madness depends in some large measure on performance on the court during 

the regular season, in fact, there is some substantial evidence that 

TV revenues for the regular season have actually gone up, not 

down, as has attendance as well. 

I think in addition, if you look at the regular season at the moment, given the way the system is structured, there are comparatively few games that have actual National Championship implications. I included this in my written testimony. If you go to a system, even a modified playoff system like ours—as we have suggested from the Mountain West—and I am not in any way, as I do 

not think the conference is, wedded to that particular system but 

simply trying to show there are alternatives that achieve all the objectives without engaging in harm. If you look at that system, it basically would extend the season by a week for two teams, and that 

hardly seems problematic, particularly given what Division II and 

Division III do in terms of their playoffs, where it is extended by 

21 to 29 days, respectively. 

Eighty-eight NCAA sports, and only one without a playoff. My 

suspicion is if I were to ask any one of the students from any one 

of the non-BCS automatic qualifying conferences, ‘‘Would you like 

to go to the West Coast and go to a party, or would you like to actually compete for the National Championship? ’’ I doubt there is 

little disagreement among the 2,000 athletes who are currently 

largely precluded from participating in that. 

And, finally, with respect to destroying the bowls, in fact, since 

the BCS system has been created, there has been an addition of 

a number of bowls. The revenue for the existing bowls has actually 

gone up. There is very little evidence that that has harmed the 

bowl system. In fact, it appears by all evidence to have increased 

the number of bowls, enthusiasm for bowls, revenue for bowls in 

the United States as well. I think that is unarguable. 

Senator HATCH. I am going to get to you antitrust lawyers, so do 

not worry. I know President Young has to leave by 4, and I am trying to cover as much as I can with these two great presidents. 

Let me go to you again, Chancellor Perlman. Do you care to respond to that? It seems to me that the bowls outside the BCS exist 

on a completely separate plane and would not be affected by the 

establishment of a playoff. Also, under the current system, most 

teams are eliminated from National Championship consideration if 

23 

they lose a single game, and their games fall off the national radar 

after that loss occurs. 

Now, wouldn’t the establishment of a playoff mean that more 

regular season games have championship implications because 

teams would remain in contention even after they have suffered a 

loss? 

Mr. PERLMAN. Senator, I think with respect to the impact on the 

bowl games, I think in at least all of the proposals I have seen for 

a playoff, it would be inconceivable how that would work and still 

retain the bowl system as we know it. You cannot run—I do not 

think you can run Nebraska in the Rose Bowl 1 week and if we 

win we go to Orlando the next week, and if we win that we go to 

the Cotton Bowl in Dallas and play for the National Championship. 

I do not think our fans are going to travel that much in December 

and January. I do not think they can afford to travel that much, 

which means that those teams will then be playing on their home 

fields. 

That withdraws a number of teams from the bowl system that 

currently are playing in bowls, and we can right now barely fill out 

the bowls that we have. I do not think you can think it will not 

have a diminished impact on the bowls across the country if we 

went to a playoff system. 

Senator HATCH. President Young, we will end with you and let 

you catch your airplane. 

Mr. YOUNG. From 1999 to 2009, it increased from 23 to 34 bowls. 

The March Madness actually has increased the number of basketball tournaments around the country by a substantial margin, not 

decreased it. 

It is possible everybody will say these bowls, while they have 

been great for the thousand sponsors of these bowls—and it is 

about a thousand sponsors—will say, What were we thinking? This 

has not been good for the economy of our city. These teams that 

otherwise are not in this playoff system, we do not want to see 

them play; we do not want to have them; they are second and third 

in their conferences, so we are just going to cancel the bowl because there is now a playoff system. 

It is possible. But it strikes me as enormously unlikely. Possible, 

but I would be stunned if that is what happened. 

Senator HATCH. Well, thank you. You need to catch a plane. But, 

you know, there are some university presidents who would not 

want to testify in this hearing. Do you understand why? 

Mr. YOUNG. I do not, really, and I will tell you why I do not: because this is part of a broad dialog. I have enormous confidence in 

my fellow presidents and chancellors that they understand that 

open, honest disagreement is the stuff of which great systems and 

great countries and great universities are made. If the notion is 

that somehow the University of Utah will be viewed badly because 

we aired these concerns, it strikes me as entirely implausible. I 

have the utmost respect for my fellow presidents, their athletic directors. I cannot imagine that they would stand back and say we 

are not going to schedule Utah. In fact, I think I just got an agreement we were going to be scheduled. 

Senator HATCH. All right, Perlman. I want to see this—— 

[Laughter.] 

24 

Mr. YOUNG. So I appreciate that, Senator, but I think the great 

gift to America is higher education, and, for those who stand at the 

top of those institutions, I have enormous respect. I cannot imagine 

that these respectful disagreements on these issues will do anything other than deepen our collaboration, cooperation, and camaraderie. 

Senator HATCH. Well, thank you. 

Mr. PERLMAN. Senator, if I might just be permitted, I want to indicate the same thing. This is a conversation that has been going 

on for a long time. Any conversation depends on the perspective 

you have. It will not in any way diminish our respect for presidents 

that testify from a different perspective. 

The universities around this country have an enormous range of 

relationships. Intercollegiate football is just one. And, frankly, I do 

not think it is the most important one, and I think we engage collaboratively in a wide variety of areas for the good of the country, 

and I am sure that will continue regardless of what position is 

taken with respect to post-season football. 

Senator HATCH. Well, thank you. I expect that to be the case. I 

appreciate both of you being here. You need to catch your plane, 

and I would be happy to let you go at this time. 

Mr. YOUNG. Thank you, Senator. I would be deeply grateful. I 

have a son getting married, and if I miss his wedding, I just have 

a feeling he will be very huffy. 

[Laughter.] 

Mr. YOUNG. So I very much appreciate your indulgence. Thank 

you so much, and thank you for the privilege of testifying and for 

the opportunity to be with this enormously distinguished panel. 

Senator HATCH. I just want to tell everybody what a great university president you are. You are a terrific human being, and you 

have got a terrific intellectual background as well, which is always 

nice to see in a university president. 

Mr. YOUNG. Will that be in the record, Senator? 

[Laughter.] 

Senator HATCH. It is on the record. We will send it to you. 

All right. Now, let me go to Mr. Monts, and we will excuse you, 

President Young. We appreciate your efforts in being here, especially with the family problems. 

Mr. Monts, in your written testimony, you purposefully limit 

your antitrust analysis to only a discussion of Section 1 of the 

Sherman Antitrust Act. However, I believe that an analysis of both 

Sections 1 and 2 is required to fully appreciate and understand the 

legal arguments for modifying the BCS system. Now, how can one 

argue the BCS system does not violate Section 2? 

And let me just add one other thing. The Supreme Court in U.S. 

v. Grinnell lays out a two-part test for determining if a Section 2 

violation has occurred. The first prong of the test asks if there is 

a monopoly power in the relevant market. Well, does not the BCS 

exclude competition by limiting the number of non-privileged conference teams which can qualify for the BCS bowl? And regarding 

the question of relevant markets, who would argue the vast sums 

expended to acquire the exclusive television rights for broadcast of 

the BCS bowls and the National Championship game is not evidence of distinct markets? 

25 

Now, the second part of the Grinnell test, if the willful acquisition or maintenance of that power is distinguished from growth or 

development as a consequence of a superior product, business acumen, or historic accident, now here, again, I believe the Supreme 

Court’s criteria is met. Has not the BCS acquired and maintained 

its monopoly power by limiting the participation of non-privileged 

conferences in the management of the BCS structure? And does the 

BCS not limit the five non-privileged conferences collectively to a 

single vote, whereas the privileged conferences get one vote each? 

Now, how can you say that Section 2 is not violated under those 

circumstances? 

I asked a number of questions there, and I would be happy to 

repeat them if—— 

Mr. MONTS. I may need you to unpack them again for me, Senator, but I will address those, because I think the first question or 

the question you raised about the question of governance is not 

really an antitrust issue at all. There is a BCS Presidential Oversight Committee. That committee was created with the agreement 

of all conferences, all 11 conferences and the University of Notre 

Dame. At the time it was created, that was a request that was 

made by those five conferences to have one seat on that committee, 

and that was agreed to. 

Senator HATCH. I understand that if the University of Notre 

Dame finishes eighth or better, it will qualify for one of the—— 

Mr. MONTS. If the University of Notre Dame finishes eighth in 

the Nation or better, it in that season will earn an automatic berth 

in a BCS bowl game. 

Senator HATCH. That is my understanding. 

Mr. MONTS. Just as if a team in one of the five other conferences 

finishes 12th or better, a champion finishes 12th or better, or 16th 

and higher than one of the champions from the annual automatic 

qualifying conferences, it, too, will earn an annual automatic berth. 

Senator HATCH. Right. 

Mr. MONTS. Now, I think the way to look at this, Senator, is to 

look at it in comparison to what we would have without the BCS, 

and this is where I think the antitrust argument falls flat, and it 

is this: Without the BCS, we would simply be back in the old bowl 

system in which each conference makes its own bowl arrangements. That is what we had for many, many years prior to 1991 

with the formation of the Bowl Coalition and what we would return 

to if the BCS went away. We would have each conference negotiating for the best bowl deal it could arrange for its champion and 

for its runner-up teams, just as we have today. 

Senator HATCH. Not if you have a playoff system. 

Mr. MONTS. No court is going to write that, Senator. None whatsoever. That is not what courts do. 

Senator HATCH. There are some that would. 

[Laughter.] 

Senator HATCH. I can even name the judges. 

Mr. MONTS. But no court has the authority, in my view, under 

the antitrust laws, and it would be extraordinary, in my view, because the BCS is a form of cooperation today if we assume a Section 1 agreement. 

26 

Now, what we are asking, what is being asked of the court is to 

enjoin the BCS and then replace it with another form of cooperation. That is not what the antitrust laws do. Courts do not sit there 

and serve as super-regulatory bodies or public utility commissions 

to deal with post-season college football or any other—— 

Senator HATCH. No, but they can decide what is right and wrong. 

Mr. MONTS. Pardon? 

Senator HATCH. They can decide what is right and wrong. 

Mr. MONTS. Certainly, Senator. They will decide—— 

Senator HATCH. Once they do that, then you have to comply. 

Mr. MONTS. But the remedy that would be issued by a court is 

simply an injunction against the BCS agreement, and then each 

conference would be on its own in terms of negotiating its bowl arrangements. That is essentially what happened with the NCAA v. 

Board of Regents case. The Supreme Court issued a decision, the 

NCAA television agreement was enjoined, and each conference is 

now selling its own regular season television rights individually. 

The same thing would happen with the BCS if it were to go away. 

Senator HATCH. Mr. Brett, do you agree with that? 

Mr. BRETT. No, I do not, Senator Hatch. 

Senator HATCH. Would you hit your button there? 

Mr. BRETT. I am sorry. I do not. The fact is that in all the years 

that I have been practicing—and it is, unfortunately, a lot longer 

than Mr. Monts. In fact, I was in the Grinnell cases way back 

when. And I know how in each one of those cases and in every monopoly case the defendant will invariably claim that this is the only 

way to do it, we must do it, this is the best system, and we are 

doing something good. 

It is unheard of, in antitrust parlance, for a group of competing 

entities to form their own cartel, set up a series of rules, and say 

this is the best way to do it, therefore, allow us to do it. 

We have abundant evidence that their claim that this is the best 

system and the only system is a flawed premise. In fact, there are 

88 playoffs run by the NCAA. It is very curious that in the most 

lucrative of sports, the NCAA has stepped out of the picture and 

allowed this separate cartel to function. The NCAA has rules operative in the basketball program which require that all teams involved that are invited, participate and play within that structure. 

A structure administered by the NCAA, for example, could very 

easily adopt a playoff system and implement a playoff system. 

The suggestion that this is the best or the only way to do it is 

not a decision that should be made by a group of competitors by 

agreement in a manner which excludes competing companies and 

excludes others who are not involved. The data as to the impact of 

this system is abundant. The data to show the discriminatory and 

anticompetitive effects is abundant. The impact on the public, 

which is the primary concern of the antitrust laws, is dramatic. 

There can be little doubt that if there were a playoff system or 

some free competition, every school in the country would want to 

participate. Can one imagine USC and Texas, which were so indignant at not having the opportunity to compete for the National 

Championship last year, saying that they would not want to participate in that competition? And we would have all liked to see 

those games, see USC, see Texas in there. 

27 

Their system is one that does not make sense, but it just simply 

follows the practice of every monopolist of saying we have to do it. 

Those arguments were made by the NCAA in the Board of Regents 

case. They were made more recently in a case where they tried to 

limit the compensation given to coaches. And, again, in all those 

circumstances the courts evaluated and rejected the arguments of 

the NCAA that, ‘‘Our way is the best way and the only way to do 

it.’’ The evidence does not support it, and the fact that they can do 

88 playoffs in other sports suggests that there is no reason that it 

cannot be and should not be done in this sport as well. 

Senator HATCH. In your testimony, Mr. Brett, you argue the BCS 

violates Section 1 of the Sherman Antitrust Act. In his written testimony to the Committee, Mr. Paul Kaplan of our very important 

law firm down here, one of the important firms, Arent Fox, agrees 

with your analysis that there is a Section 1 violation. However, Mr. 

Kaplan argues the BCS construct should be evaluated under a per 

se rule. 

Now, he argues the BCS system is an illegal horizontal constraint. On the other hand, you argue for a rule-of-reason analysis, 

as I understand it. Why do you believe the Subcommittee should 

evaluate the BCS system using the rule of reason? And if we use 

the per se rule, do we reach a different conclusion? In addition, do 

you believe the BCS system violates the rule of reason? 

Mr. BRETT. I do believe it violates the rule of reason. I think that 

there are certainly indicia of the BCS system which reflect areas 

to which the per se rules apply. Certainly there is an absence of 

price competition with respect to bowl games, bowl televising of 

games, and they are sold as a package. Those are certainly areas 

of practice which could be subject to per se consideration. 

We in our submission took a more conservative view of saying 

that we do not have to deal with the per se rules which the Supreme Court has sought to narrow, which were not applied in the 

Board of Regents case and the more recent law case; so that without dealing with that controversial proposition, we think it is very 

clear under the rule of reason that it is a violation of Section 1 of 

the Sherman Act, and we think it is also very clear that it is a 

very, very obvious violation of Section 2 of the Sherman Act; that 

there is absolutely no doubt that this monopoly was illegally acquired and maintained and it continues to be maintained by exclusionary conduct. The relevant market is easy. The monopoly power 

is manifest. And I do not know even know what the arguments are 

that would be advanced in defense. 

Senator HATCH. Well, so would it not be safe to say that a reasonable case can be made under both the per se and rule-of-reason 

analysis that there is a violation here? 

Mr. BRETT. Absolutely. 

Senator HATCH. If you have a—— 

Mr. MONTS. I do, Senator, because I do not think there is any 

credible case to be made on the per se rule. There would be no BCS 

without an agreement, and there would be no other alternative system without an agreement among the conferences and the participants. 

In fact, the only way that we can have any kind of post-season 

structure of any sort, no matter how it is structured, is through an 

28 

agreement of the parties. So the suggestion that there is a per se 

violation in any way here strikes me as simply flatly wrong. 

In terms of the rule of reason, the question in antitrust is output, 

and there is no game that I am aware of that is not played; there 

is no conference that is not playing—no team that is not playing 

the maximum number of games it is entitled to play under NCAA 

rules. 

The fact of the matter is there is just no output restriction here 

whatsoever, and that being the case, there is no violation at all. 

Senator HATCH. Mr. Brett. 

Mr. BRETT. There is certainly restraint on output. If there were 

a playoff system as proposed by the Mountain West, for example, 

there would clearly be two or three additional games played each 

year, and one can imagine the revenues that would be generated 

by games that would have that kind of imprimatur of a genuine 

National Championship. If they are paying half a billion dollars for 

these games, imagine what they would pay for the Super Bowl of 

college football. So that there is a restraint on output. There are 

less anticompetitive restrictions or restraints on matters in which 

the same results can be achieved, and those have to be considered. 

And not only is there a restraint on output, there are exclusionary 

rules adopted by this self-designated group, with no portfolio and 

no authority such as the NCAA or any other group would have. 

They designated themselves as the arbiters of what is necessary to 

create a system where they get 87 percent of the revenues. That 

is just directly contrary to the spirit and objectives of the Sherman 

Act. 

Senator HATCH. Let me ask both Mr. Monts and Chancellor Perlman, if you care to comment, Chancellor. Many have argued that 

a playoff system would mean more money not only for the privileged BCS conferences but for all the schools in the country. I have 

to assume that television networks, advertisers, and sponsors 

would welcome some sort of a playoff system if for no other reason 

than it would mean a few more games. 

Now, wouldn’t that be the case? Wouldn’t the playoff system 

mean more money for everybody? 

Mr. PERLMAN. It might, Senator, but I do not think you can be 

assured of that. If we are right that the value of the regular season 

would decline with a broader playoff, then it is not clear the total 

amount of money would be the same. 

But as a university president sitting between two antitrust lawyers, I would just comment that I think university presidents that 

I talk to are legitimately concerned about the number of games 

that you can ask student athletes to play under these circumstances and at this level, not only for the health of student athletes but for their academic success. 

These athletes are strong, they are fast, and they get beat up in 

these games. And I think that there are limits to how many they 

would play, and I guess I would argue that at least that output restraint would have some basis in reason. 

Senator HATCH. OK. Mr. Monts. 

Mr. MONTS. I certainly agree with Chancellor Perlman, but the 

question is the overall revenues from all of college football, regular 

season and post-season. 

29 

I part company with Mr. Brett, I think, on a couple of avenues. 

The argument that output is restricted because if we had a playoff 

there would be more games is a little bit like saying, well, we 

would have more games if the National Football League extended 

its season to 18 games or 20 games rather than the current 16; or 

we would have more output if the NCAA did not limit regular season games to 12—or 13 for those who travel to Hawaii—but had 

15 or 16. There must be some limit on that, and so no matter what 

the structure is, one could always hypothesize a different format 

that would come up with more games. 

The difficulty, I think, again, Senator, is going back to what 

would we have if there were an antitrust injunction entered 

against the BCS, and the answer is we would have each conference 

selling its own bowl rights individually, and the only way we could 

have any kind of structure that would create any sort of National 

Championship playoff or any alternative structure to the BCS 

would be through some other agreement of those conferences and 

Notre Dame. 

This is the agreement that the conferences and Notre Dame can 

reach. To have a National Championship requires the participation 

of each and every one. 

Now, several conferences have alternatives. For example, the Big 

10 and PAC 10 have played for many, many years in the Rose 

Bowl, going back to January 1, 1947. Those conferences have that 

alternative, and if they wish to simply go back to the Rose Bowl 

and not participate in the playoff, that will be their prerogative, 

and there will not be a National Championship structure. It will 

be very difficult to go to any sort of television network or even to 

the public at large and say, ‘‘We are going to have a National 

Championship arrangement, but we will not have USC, Michigan, 

Ohio State, Penn State’’—or many other fine teams. 

The same thing would be true if the Big 12 or the Southeastern 

Conference decided for whatever reason it wanted to continue individually its own bowl arrangement with its historic bowl partners. 

So the only way are going to have a championship is by the participation of all conferences. 

Now, let me address one other point that Mr. Brett made, because I think it actually makes my point rather than his, and that 

is, the NCAA’s rule requiring mandatory participation in the Men’s 

Basketball Championship. That rule was tested in the Metropolitan 

Intercollegiate Basketball Association v. NCAA case in New York. 

MIBA was the former operator of the NIT, the National Invitational Tournament, which was a competitive post-season tournament with the Men’s Basketball Championship. The specific 

challenges that MIBA raised in that case were to the mandatory 

participation rule and to the one-post-season-tournament rule that 

the NCAA had imposed. 

Now, MIBA survived a motion for summary judgment, meaning 

that the NCAA was going to have to try that case and at the risk 

of losing its mandatory participation rule, which is crucial to the 

playoff. So it settled it for $57 million. 

Now, the bowls would be in the exact same position today as the 

NIT if there were a playoff and they were deprived of teams. They 

would be deprived of the ability to compete for teams. That litigaVerDate Nov 24 2008 10:36 Apr 13, 2010 Jkt 055645 PO 00000 Frm 00033 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\55645.TXT SJUD1 PsN: CMORC
30 

tion playbook, I think, has been written, and I believe it cuts far 

more in favor of our position than it does Mr. Brett’s. So we must 

respectfully disagree on that point. 

Senator HATCH. Mr. Brett, do you have any comments? 

Mr. BRETT. Well, first, I am quite familiar with Judge 

Cedarbaum’s decision in the MIBA case, and it was not settled for 

$57 million. The NCAA bought the National Invitation Tournament, so there was no payment made and there was certainly no 

adjudication that the rule we referred to was incorrect. 

But I think more fundamentally, Senator, the real problem here 

is that what we have before us at the BCS now is a group of competitors who have formed a cartel which has worked out to their 

great advantage. They have managed to secure for themselves 87 

percent of the revenues and 90 of the 94 spots in the major bowls. 

And now they come in and tell us you must allow us to make the 

decision as to how these revenues are distributed, how these people 

are selected for the bowls, because we know the best way to do it. 

The fact that it works out to our great economic advantage is almost coincidental, but trust us, trust us to make the best decisions. 

That is directly contrary to what the Sherman Act requires, and 

it is directly contrary to the jurisprudence under antitrust law, 

where every single case will see a defendant coming in and saying, 

‘‘What we did was good and wholesome. We really did not mean to 

do anything harmful.’’ And the NCAA has lost again and again in 

asserting that its views as to the way to restrict competition were 

essential. 

The law is that competition, and not a group of self-designated 

competitors who should be competing, makes the rules. And it is 

not coincidental that the rules which they make, when we look 

back at their effect, have been dramatically in favor of those six 

conferences. And antitrust jurisprudence is to look for anticompetitive effects, and these effects have been dramatically and offensively anticompetitive. 

Senator HATCH. Well, let me just say, this has been a very interesting hearing for me, and you all have been excellent witnesses. 

I have to say I am having a lot of troubles with the BCS approach because, you know, Mr. Thompson comes up with some 

ideas, and maybe they were not what the BCS wanted, but they 

just kind of dismissed it without argument. And there is kind of 

an arrogance there that I see that just should not be there. And 

you know who I am talking about, too, and you are not it. But the 

fact of the matter is that I am really concerned about it because 

I think it is really the wrong example for our young people, and 

it is certainly not working well. And I do believe—I hate to say it 

to you, Mr. Monts. You have been very loquacious, and you are undoubtedly a good attorney. But I believe there are real antitrust 

issues here that are not going to be solved unless the folks at BCS 

start to work to resolve these matters. 

And, Mr. Perlman, I know a lot about you. You are a very fine 

man and a very good university administrator. I want you to go 

back and argue with these people and let them know that, hey, we 

are sick of it, to be honest with you. And I think Mr. Brett has 

made a pretty darn good case here today. 

31 

Did you have something you wanted to say? I do not want to cut 

you off. 

Mr. PERLMAN. I am sorry. I just wanted to clarify the record. 

Senator HATCH. Sure. 

Mr. PERLMAN. The BCS agreement that will start in 2011 was 

agreed to by all the conferences in November of 2008. The Mountain West proposals were brought to us after we had reached that 

agreement, and it was the position of the ten conferences that we 

would honor our commitments to ESPN and not review the Mountain West proposals at that time. But they have not been summarily rejected and, indeed, what we have stated publicly is that 

when the next BCS agreement is negotiated, we will consider the 

proposals of the Mountain West as well as any other proposals for 

changing the Bowl Championship Series to make it better. 

Senator HATCH. That is a long time away. 

Mr. PERLMAN. Well, it is actually not as long as you might think, 

because we start renegotiating the agreement about a year into 

whatever agreement we have. It is not immediate, but the fact is 

that all ten conferences have made a commitment to the current 

system, and we have signed an agreement to that effect with 

ESPN. And all of us thought that we did not want to upset that 

agreement and we thought we ought to honor our promises. 

Senator HATCH. Mr. Brett, do you have any comment about that? 

Mr. BRETT. There is right now a July 9 deadline for the signing 

of the agreement. Counsel for the Mountain West has requested 

that that deadline be extended to allow everyone to digest and take 

into account these proceedings and other events which are now 

going on. 

The ESPN agreement contemplates that it would be revised if 

the current system has to be upset for any reason, and it contemplates the possibility of it being upset for antitrust violations 

implicitly. 

There is no reason that that deadline cannot be lifted and there 

be given time for everyone to work out a more equitable system 

that does not violate the antitrust laws. Unfortunately, as history 

teaches us, one of the great evils of monopoly power is the arrogance and the willingness to move ahead and exercise that power. 

And that is what happens when you have a monopolist. 

Mr. Perlman and his colleagues are fine people, and I have been 

very impressed and very privileged to sit with him here today and 

hear his views. But they have gotten themselves into a situation 

where they have made so much money, they have got an economic 

interest that they want to keep, and it is being protected by a 

group of competing companies that have avoided competition. It is 

time that that stopped, and I think your observations were appropriate. There is no reason that contract has to be signed now. 

Senator HATCH. Well, thank you. I want to thank all three of 

you, and certainly President Young as well, for being here. This 

has been one of the most interesting hearings to me that we have 

had around here in a long time, and it is great to have great witnesses who could testify. So I appreciate your being here. You have 

not changed my viewpoint. In fact, it is reinforced, and in all honesty, I am very, very concerned about it as a Pitt graduate, you 

know, the law school. 

32 

All I can say is that this has been an informative hearing, and 

I am grateful for the four of you for taking your time to be with 

us today. 

With that, I am going to have to end the hearing. Thanks so 

much. 

Mr. BRETT. Senator Hatch, thank you, and thank you for allowing us to participate in this great exercise in democracy not available anywhere else. We appreciate the opportunity and the privilege. 

Mr. MONTS. Senator, it has been an honor. Thank you very 

much. 

Senator HATCH. An honor for us. Thanks so much. 

[Whereupon, at 4:11 p.m., the Subcommittee was adjourned.] 

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