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The Making of the NCAA into a “Spectacularly Profitable Cartel”

2011 September 16
by Skip Sauer

This is from the engrossing portrait of college sports by Pulitzer Prize-winning author Taylor Branch in The Atlantic, “The Shame of College Sports.”  The article is a must-read, tour de force on the history, old and modern, of  the NCAA.  Do read the whole thing, but for the purpose of getting to the heart of matters economic, here are the paragraphs which describe how the NCAA locked down its essential cartel features:

In 1951, the NCAA seized upon a serendipitous set of events to gain control of intercollegiate sports. First, the organization hired a young college dropout named Walter Byers as executive director. A journalist who was not yet 30 years old, he was an appropriately inauspicious choice for the vaguely defined new post. He wore cowboy boots and a toupee. He shunned personal contact, obsessed over details, and proved himself a bureaucratic master of pervasive, anonymous intimidation. Although discharged from the Army during World War II for defective vision, Byers was able to see an opportunity in two contemporaneous scandals. In one, the tiny College of William and Mary, aspiring to challenge football powers Oklahoma and Ohio State, was found to be counterfeiting grades to keep conspicuously pampered players eligible. In the other, a basketball point-shaving conspiracy (in which gamblers paid players to perform poorly) had spread from five New York colleges to the University of Kentucky, the reigning national champion, generating tabloid “perp” photos of gangsters and handcuffed basketball players. The scandals posed a crisis of credibility for collegiate athletics, and nothing in the NCAA’s feeble record would have led anyone to expect real reform.

But Byers managed to impanel a small infractions board to set penalties without waiting for a full convention of NCAA schools, which would have been inclined toward forgiveness. Then he lobbied a University of Kentucky dean—A. D. Kirwan, a former football coach and future university president—not to contest the NCAA’s dubious legal position (the association had no actual authority to penalize the university), pleading that college sports must do something to restore public support. His gambit succeeded when Kirwan reluctantly accepted a landmark precedent: the Kentucky basketball team would be suspended for the entire 1952–53 season. Its legendary coach, Adolph Rupp, fumed for a year in limbo.

The Kentucky case created an aura of centralized command for an NCAA office that barely existed. At the same time, a colossal misperception gave Byers leverage to mine gold. Amazingly in retrospect, most colleges and marketing experts considered the advent of television a dire threat to sports. Studies found that broadcasts reduced live attendance, and therefore gate receipts, because some customers preferred to watch at home for free. Nobody could yet imagine the revenue bonanza that television represented. With clunky new TV sets proliferating, the 1951 NCAA convention voted 161–7 to outlaw televised games except for a specific few licensed by the NCAA staff.

All but two schools quickly complied. The University of Pennsylvania and Notre Dame protested the order to break contracts for home-game television broadcasts, claiming the right to make their own decisions. Byers objected that such exceptions would invite disaster. The conflict escalated. Byers brandished penalties for games televised without approval. Penn contemplated seeking antitrust protection through the courts. Byers issued a contamination notice, informing any opponent scheduled to play Penn that it would be punished for showing up to compete. In effect, Byers mobilized the college world to isolate the two holdouts in what one sportswriter later called “the Big Bluff.”

Byers won. Penn folded in part because its president, the perennial White House contender Harold Stassen, wanted to mend relations with fellow schools in the emerging Ivy League, which would be formalized in 1954. When Notre Dame also surrendered, Byers conducted exclusive negotiations with the new television networks on behalf of every college team. Joe Rauh Jr., a prominent civil-rights attorney, helped him devise a rationing system to permit only 11 broadcasts a year—the fabled Game of the Week. Byers and Rauh selected a few teams for television exposure, excluding the rest. On June 6, 1952, NBC signed a one-year deal to pay the NCAA $1.14 million for a carefully restricted football package. Byers routed all contractual proceeds through his office. He floated the idea that, to fund an NCAA infrastructure, his organization should take a 60 percent cut; he accepted 12 percent that season. (For later contracts, as the size of television revenues grew exponentially, he backed down to 5 percent.) Proceeds from the first NBC contract were enough to rent an NCAA headquarters, in Kansas City.

Only one year into his job, Byers had secured enough power and money to regulate all of college sports. Over the next decade, the NCAA’s power grew along with television revenues. Through the efforts of Byers’s deputy and chief lobbyist, Chuck Neinas, the NCAA won an important concession in the Sports Broadcasting Act of 1961, in which Congress made its granting of a precious antitrust exemption to the National Football League contingent upon the blackout of professional football on Saturdays. Deftly, without even mentioning the NCAA, a rider on the bill carved each weekend into protected broadcast markets: Saturday for college, Sunday for the NFL. The NFL got its antitrust exemption. Byers, having negotiated the NCAA’s television package up to $3.1 million per football season—which was higher than the NFL’s figure in those early years—had made the NCAA into a spectacularly profitable cartel.

Sixty years on, Byers’ creation is at the peak of its profit-making powers.  Is the attendant shame from cartelized exploitation too much to bear?  Branch’s article could mark a turning point towards compensating, at least in part, the athletes at the heart of the show.

One Response
  1. michael c permalink
    September 20, 2011

    This was a great article that gave some excellent perspective on the evolution of the NCAA from its simple beginnings. The tactics used by the NCAA to argue for amateurism in the legal system are very interesting, because when one examines them all together as this article does, they become contradictory and appear very self-serving.

    I was very surprised to learn how the NCAA fights against medical considerations for injured players. The rate of life-changing injury is so great in certain sports that the risks are certainly not compensated correctly. If a player was not a professional prospect, the chance of having to pay medical bills for life might outweigh the benefits of the free education. While college athletics remains loathe to pay players in proportion to their economic benefit to the school, I reject their assertion that the large profits that the accrue should not go to compensate players that were injured in the pursuit of that money.

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