Simple Coase theorem application to the NCAA

The University of North Dakota has sued the NCAA over the latter’s banning of UND from postseason competition unless it changes or covers up its Native American nickname. In court papers filed Friday — which happened to be Native American Day in North Dakota — the university claimed it had been harmed by the NCAA’s injunction.

The lawsuit alleges the NCAA breached its contract by creating a new bylaw without a vote of the entire membership; acted in bad faith by exempting some teams and not others from the nickname mandate; and restrained trade in North Dakota by imposing the mandate.

UND will also seek cash damages from the NCAA, Stenehjem said.

According to one source, the cash damages sought are $2.6 million. If the NCAA was serious about reducing the number of universities using the mascot, a simple Coasian solution would be to pay the damages. In this case, exempting some teams but not others would be an efficient outcome — buying out UND and Indiana University of Pennsylvania (to name two) would be efficient because the schools are low revenue, while allowing the negative externality at Florida State or Illinois to continue because it’s not worth the money to be spent by the member organizations.

The question of due process — asking the full body of the NCAA university presidents to approve the mandate — would still remain, but the issue of treating different universities differently would make sense.

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