Telecast Deregulation and Competitive Balance: Regarding NCAA Division I Football

I Introduction The National Collegiate Athletic Association (NCAA) exerted complete control over college football telecasts from the early 1950s until 1984. The NCAA negotiated exclusive contracts with the television networks that, among other things, limited the number of appearances by any one member school over a specified time period, set the times at which games could be televised, and required the airing of a certain number of games involving non-football powers (e.g. teams from Division I-AA, II, and III). For instance, the last NCAA Television Plan allowed two networks, ABC and CBS, to air 14 exposures each annually. These exposures could be made up of a mixture of national and regional games, but each network had to telecast 82 different teams over a two-year period. The two networks together were required to show at least 115 different teams on television over the two years. The NCAA also set a maximum number of six appearances for any team during this period, with no more than four national appearances.(1) The NCAA acknowledged that its Television Plan "restrained trade" and was arguably a per se violation of the Sherman Act. Yet, the NCAA pointed out that professional sports had often been granted exemptions from prosecution when restrictive business practices were necessary to promote competitive balance.(2) The NCAA also asserted that an uncontrolled market for televised college football games would skew the distribution of television appearances toward the traditional football powers. Since television appearances are an aid in recruiting top athletes, such a skewed distribution of appearances would enable the powerful to become even more dominant, and doom the weak sister football teams to further weakness. The NCAA argued that competitive balance-relative equality of team playing strength-could only be preserved if it retained control over football telecasts, and was able to spread appearances among a wide variety of teams. Nevertheless, on June 27, 1984, the U.S. Supreme Court decided in the National Collegiate Athletic Association v. Board of Regents of the University of Oklahoma and University of Georgia Athletic Association (468 US 85), that the 1982-1985 NCAA Football Television Plan violated the Sherman Antitrust Act. This ruling granted individual schools the property rights to college football telecasts-a right the schools have an option to sell or assign at their discretion. As schools, conferences and select organizations of schools began to negotiate their own television contracts, a large increase in the number of televised games ensued.(3) This paper presents an empirical analysis of competitive balance in NCAA Division I college football after the Supreme Court ruling.(4) The analysis differs from the previous empirical work in three ways. First, the study uses individual team winning percentages rather than highly aggregated data such as total revenue. Second, winning percentages are included for several years prior to and after the ruling. Third, the analysis is done at the conference or intra-league level which permits an examination of winning percentages derived from common year-to-year opponents. II Background Many, including the Supreme Court, argued that NCAA television restrictions hindered competitive balance, and that weaker teams would have a better chance to use television to attract players without NCAA control. Others, including the NCAA, predicted that the loss of NCAA jurisdiction over television appearances would diminish competitive balance. Pacey (1985) asserts that the NCAA had never protected competitive balance. Division I-AA, II, and III teams had received very spotty and intermittent coverage, with little competitive advantage derived from their television appearances. Even within Division I-A, there was not much evidence that the Television Plan protected competitive balance. The Supreme Court had found it hard to imagine that dissolution of the Television Plan could cause any more disparity than had already existed between the football programs of Ohio State University and Northwestern University. …