Friday, May 13, 2011

Economists accuse BCS of antitrust violations

The NCAA men's basketball tournament captures national attention for three weeks every March as 68 teams compete in a single-elimination tournament.  One would think that college football, which has an even larger following, would also benefit from this approach.  Instead the Bowl Championship Series (BCS) offers a single match between the so-called top two teams, along with four other games.  Dozens of other teams, virtually every team with a break-even record, also play in bowl games.   Football is the only college sport where there is not a playoff to determine the team championship. 

I have always thought the NCAA was leaving a lot of money on the table by not having a playoff.  It would be straightforward to design a system where the top eight or 16 teams play off during the last half of December and the first two weeks of January.  The games could be played in the same cities that host major bowl games. Teams that did not make the cut could still play in the lower tier bowl games (e.g., the one in Lafayette, La.). 

Now 21 economists have sent a letter to the Justice Department demanding an antitrust investigation of the BCS.  Key issues: (1) the BCS guarantees a slot to good but not great teams from the member conferences (Virginia Tech and Connecticut last year) whereas a team from a non-BCS conference can go undefeated but still not be guaranteed a slot; (2) BCS members receive 86 to 91 percent of BCS bowl revenue in contrast to 61 percent of NCAA men's basketball tournament revenue; (3) consumers are harmed because output and quality are lower.  Here is the WSJ news account. 
The BCS shields preferred schools from competition by erecting barriers to competitive post-season entry, provides favored schools with fixed benefits, and harms consumers of post-season college football. Based on these observations, we believe that a formal antitrust investigation of the BCS is warranted. Indeed, this matter is particularly significant in this time of fiscal difficulty because the BCS is the principal impediment to a competitive post-season playoff that would generate much-needed additional revenue for all schools.

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