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62 Antitrust Bull. 3 (2017)

handle is hein.journals/antibull62 and id is 1 raw text is: Article The Antitrust Bulletin 2017, Vol. 62(l) 3-14 The NCAA Cartel, Monopsonistic K© The Author(s) 2017 Reprints and permission: Restrictions, and A ntitrust Poli cy sagepub.com/journalsPermissions.nav DOI: 10.1 177/0003603XI6688836 journals.sagepub.com/home/abx OSAGE Roger D. Blair* and Joseph Whitman* Abstract NCAA members behave like a buyer cartel and use the bylaws of the NCAA to maintain their collusive agreement. We model the NCAA as a collusive monopsony and demonstrate the impact on com- pensation and employment for student athletes, as well as the consequences for social welfare and distribution of surplus. Then we identify specific NCAA bylaws that restrain competition among cartel members, such as limits on the number of athletic scholarships awarded, recruiting, player transfers, and athletic housing. Lastly, we discuss the effects of the NCAA's recent move to lift the restriction on contract durations for student athletes and the recent Agnew antitrust litigation which may have precipitated this change. Keywords Monopsony, NCAA, Antitrust, Buyer Cartels 1. Introduction The National Collegiate Athletic Association (NCAA), which was founded in 1906, describes itself as a membership driven organization dedicated to safeguarding the well-being of student athletes.' While the origins of the NCAA can be traced to serious concerns for player safety, the NCAA can now be reasonably described as a profit-maximizing cartel that thrives on exploiting student athletes in the pursuit of profit.2 While the athletic competition on the field or in the arena may be fierce, there is a good deal of cooperation off the field. Nobel Laureate Gary Becker once characterized the NCAA as a cartel in sheepskin clothing.3 No doubt, the NCAA and most-if not all-of its members would object to this characterization, but we will argue that the cartel label is entirely appropriate.4 In this article, we will examine the NCAA's policies regarding student athletes. 1. This statement is featured prominently on the NCAA website: http://www.ncaa.org/about/who-we-are 2. ARTHUR A. FLEISHER III, BRIAN L. GOFF, & ROBERT D. TOLLISON, THE NATIONAL COLLEGIATE ATHLETIC ASSOCIATION (1992). 3. Gary S. Becker, The NCAA: A Cartel in Sheepskin Clothing, BUSINESS WEEK (Sep. 14, 1987). 4. Since the NCAA describes itself as a membership driven organization, the members can hardly claim that they are not independent economic entities working together. That is, they cannot claim to be a single entity. This makes them vulnerable to antitrust challenge under American Needle, Inc. v. National Football League, 560 US 183 (2010). *Department of Economics, University of Florida, Gainesville, FL, USA Corresponding Author: Roger D. Blair, Department of Economics, University of Florida, Gainesville, FL 32611, USA. Email: rdblair@ufl.edu

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