The National Collegiate Athletic Association is mired in several lawsuits that could threaten the future of the organization, including a four billion dollar class action lawsuit spurred on by current and former student athletes who say they should have received millions of dollars in revenue from TV broadcasts and video games in recent years.
The effects that historically Black colleges and universities (HBCUs) face with antitrust laws — laws that balance competition and prevent the creation of monopolies — vary depending on the situation. How might pending changes to antitrust laws as they relate to college sports governance alter HBCUs’ plans?
Andy Schwarz is an economist specializing in antitrust laws who has been involved with several notable cases involving the Indianapolis-based nonprofit, including O’Bannon v. NCAA and Alston v. NCAA. Both cases dealt with the NCAA rules regarding the compensation of student athletes.
Schwarz is also an executive board member of the Professional Collegiate League (PCL), which would directly pay athletes involved for the use of their labor in a developmental basketball league. Open Campus spoke to him about how the current situation impacts HBCUs and their athletic programs in a unique fashion.
If the NCAA were to fall apart in the coming years, how would HBCUs respond to that matter compared to their predominantly white institution (PWI) counterparts?
The HBCUs are petrified about changes in the law that will make college athletes considered to be employees, as one example. As a result, it puts them in really, I think, bad work of lobbying against athlete empowerment because it ends up being essentially lobbying against an HBCU. HBCUs’ mission as a whole is the sort of educational/socioeconomic uplift of a group of people who are overly represented in sports. And this is one reason why I think the antitrust outcome is a lot better for the HBCUs. If there were a law passed tomorrow saying that all college athletes from Division 1 down to Division 3, even D1 down to D2 would be entitled to minimum wage, I could see schools like Xavier University of Louisiana saying we are going to shrink our athletic department, or we’re going to get rid of our athletic department. This is an expense we don’t want to pay.
When HBCUs have to make choices due to financial limitations and NCAA adjustment, how do they weigh the importance of sports programs against other educational or administrative needs?
Most colleges spend money on chemistry. They don’t make a lot of money from selling chemistry classes, and you don’t pay per class, you pay to the admissions department for the whole package of goods and then everything on campus spends money. The question is when you’re spending money on sports, are you getting value for it that’s worth it, and are there better uses of the money that you have to forgo to get it? Because you shouldn’t have sports if there are better uses of the money and not enough money to go around. The fact that HBCUs lose money on sports is immaterial. With their limited budget, are sports the right thing to be bringing in money for? If it doesn’t bring in benefits you shouldn’t spend on it, if it brings in benefits you should spend on them.
Are there any proposals that are aimed at addressing antitrust concerns, especially in the context of HBCU Sports and what are the possible outcomes?
There are many proposals for fixing the NCAA’s antitrust issues. At one extreme are efforts by the NCAA and the Power 5 (now Power 4) conferences to get immunity from antitrust law so they can continue violating the law, but without legal penalty. At the other end of the spectrum are efforts by athletes, litigators, and even the Department of Justice and state Attorneys General, to enforce the antitrust laws so the NCAA falls into line with the rest of America. My colleague Dan Rascher and I have proposed moving all rules related to the quantity of scholarships and the amount of payments allowed to athletes to the conference level, so that if the Big Ten and the MEAC want to have scholarships but no pay, they can, and if the SWAC and the SEC want to allow pay, they can do that too.
Are there any instances where antitrust would affect HBCU negotiations with sponsorships or broadcasting rights?
The premise behind the PCL, was (and still is, though we’re somewhat in suspended animation until we raise funds) that if HBCU raised capital to compete as a fully professional college sports league, the combined appeal of HBCUs to the talent pool in football and basketball, and the specialness of those HBCU brands, would allow an HBCU conference to rise to the level of the Power 5 (now Power 4). But it really depends on whether someone with vision can see that to get to that spot, HBCUs have to be the preferred destination for “must watch” college talent. It’s a case of “it takes money to make money” as investment would be needed to get the HBCUs out of their current low-funding, low-visibility mode into a high-funding, high-visibility future.
From an economist’s perspective, how generally have administrators justified these decisions? How would you explain realignment and why it matters in layman’s terms to someone who doesn’t know?
Administrators often use paternalistic language like “protecting athletes from exploitation.” In reality, preventing athletes from earning their full value is exploitation. Realignment is simply college sports programs, as businesses, acting like rational businesses. They want to grow their revenue. Especially if the labor force can’t really complain, then if that growth in revenue results in costs being imposed on college athletes, like extra travel time, etc., the schools don’t have to bear those costs. There is also, generally, an upside to realignment, to the extent that conferences become more homogeneous in their goals for a sport. If all schools that will do whatever it takes to win end up in a one subdivision/small set of conferences, and all schools that see that as too extreme end up in another subdivision/set of conferences, both sets of conferences might be more internally competitive, and athletes might earn a more competitive share of the pie.