III. Board of Regents (1981-1984) and Its Consequences
The U.S. Supreme Court’s 1984 decision in NCAA v. Board of Regents—in which the NCAA lost its thirty-year monopoly over televised football—is the most consequential single event in college sports history.
Board of Regents fundamentally transformed the big-time college sports marketplace and accelerated the professionalization and commercialization of big-time college football.
Nearly every structural, regulatory, financial, and values-based change in big-time college sports are connected to Board of Regents, including (1) escalation in the output of sports products and the value of broadcast media contracts, (2) football-driven conference realignments, (3) the increasing separation of Power 5 interests under the NCAA umbrella (e.g., Power 5 Autonomy classification and legislation in 2014), (4) big-time football’s rolling, hostile takeover of NCAA governance, (5) increased pressure from external regulatory threats (e.g., courts, legislatures, administrative agencies, free markets) to enhance athlete benefits and protections), (6) the NCAA and Power 5’s campaign (2019 - present) for protective federal legislation in response to external regulatory pressures, (7) increased dissonance between the values fo higher education and the college sports entertainment industry, and (8) perceived tensions between the interests of revenue-producing sports (football and men’s basketball) and “Olympic” and women’s sports.
In the federal courts context, Board of Regents’ ripple effects have substantially influenced the federal judiciary’s thinking about its role in regulating college sports.
Because of some offhand language in the Court’s opinion that championed amateurism, Board of Regents fueled nearly forty years of judicial deference to the NCAA’s regulatory authority in college sports-related litigation that followed.
Board of Regents also produced two other crucial dynamics in college sports’ regulatory and financial models: (1) it fundamentally shifted the balance of voluntary regulatory power away from the NCAA membership and national office and toward big-time football interests, and (2) it left the NCAA scrambling to find replacement revenue to fund the NCAA bureaucratic state.
A. Football Sues for Its Financial Freedom
From 1952 to 1981, the NCAA had an iron-fisted monopoly over televised football. The NCAA negotiated broadcast media contracts, determined the televised football schedule, and controlled the distribution of football revenues.
As the television market and new broadcast technologies evolved, big-time football powerhouses (what are now the Power 5) began to question whether the NCAA’s monopoly over televised football was in their best interests.
In 1977, the football “bigs” formed the College Football Association (CFA), an organization designed to promote and protect big-time football interests, including more control over televised college football.
In 1981, the University of Georgia Athletic Association and the University of Oklahoma Board of Regents (as representatives of the CFA) filed a federal antitrust suit against the NCAA in Oklahoma, claiming that the NCAA’s monopoly over televised football violated federal antitrust laws.
The federal district court agreed with the universities, finding the NCAA’s monopoly a per se violation of free competition laws. It issued an order against the NCAA that struck down the NCAA’s TV contracts as a violation of the Sherman Antitrust Act.
The district court left the future of big-time college football to the free markets.
In 1984, the U.S. Supreme Court upheld the lower court ruling in a 7-2 opinion.
Board of Regents marked a fundamental change in the college sports business model and freed big-time football to control its economic destiny.
The result has been an exponential growth in the value of big-time football and the increasingly professionalized nature of nearly all college sports products.
The dominance of Power 5 football interests over all aspects of college sports—including voluntary regulation through the NCAA governance structure—directly results from Board of Regents.
B. The Supreme Court’s “Magic Dicta”
In some offhand language irrelevant to its’ holding (“dicta”), the Supreme Court appeared to endorse the NCAA’s role as the sole guardian of amateurism.
The Court’s majority pointed to amateurism’s “revered tradition” and said athletes should not be paid.
It also said the NCAA should have “ample latitude” to regulate college sports and that “the preservation of the student-athlete in higher education adds richness and diversity to intercollegiate athletics and is entirely consistent with the goals of the Sherman Act.”
These stray comments fueled a pattern of extraordinary judicial deference to the NCAA’s regulatory authority. Courts routinely cited the “magic” language from Board of Regents to dismiss legal challenges to NCAA rules and market behavior.
The magic dicta created a practical form of amateurism-based legal immunity for the NCAA (and later the Power 5). While it arose in an antitrust case, it formed the basis for immunities in other contexts as well.
Not until the Ninth Circuit’s decision in O’Bannon (2015) did a federal appeals court (at least symbolically) reject the Supreme Court’s comments in Board of Regents as irrelevant dicta with no legal consequence.
In Alston (2021), the Supreme Court finally gave the Board of Regent’s magic dicta a proper burial. The court rejected the NCAA’s and Power 5’s claims for judicially created antitrust immunity based on Board of Regents and held that the NCAA and Power 5 were subject to the full application of antitrust laws.
C. The NCAA’s Hoopapalooza and Power 5 Football’s Free Ride
An invisible by-product of Board of Regents is that the Power 5 do not share a penny of football revenue with the NCAA.
Power 5 football products operate almost entirely outside the control of the NCAA, even though Power 5 institutions remain under the NCAA regulatory umbrella.
The major bowl games and the College Football Playoff are not NCAA “championship” products, and the NCAA receives no revenue from them. The bowls have always operated independently of the NCAA, and the CFP was purposefully structured to operate completely outside NCAA control.
The CFP is set up as a for-profit limited liability company and divides its money between the Power 5 (80% share) and the Group of 5 (20% share).
The NCAA plays a minor, technical role in “approving” post-season football events through a certification process. Beyond that, the NCAA has no more connection to the CFP than to the NFL playoffs.
Thus, after Board of Regents, the NCAA and its national office bureaucracy had to find a new source of revenue.
The NCAA turned to the Division I men’s basketball tournament, now known as “March Madness.” The NCAA aggressively marketed that tournament because its bureaucratic life depended upon it.
What was once a niche tournament has been marketed and packaged by the NCAA and its corporate sponsors into one of the most popular and profitable sporting events in American history.
In 1984, the broadcast media rights for the Division I men’s basketball tournament were worth approximately $15 million ($45 million today). Today those rights are worth $1 billion each year.
Through long-term, escalating contracts with CBS and Turner Broadcasting (the current contract was signed in 2016 and runs to 2032), the NCAA guarantees its survival.
This means that March Madness money underwrites the entire NCAA bureaucratic state, and Power 5 football gets Association-wide benefits for free. These Association-wide benefits include nearly all legal expenses (settlements and legal fees/costs).
Football revenue dwarfs men’s basketball revenue in the overall college sports marketplace.
To Power 5 football oligarchs, March Madness revenue is petty cash. But it’s enough for the NCAA to fund Power 5 football’s litigation and congressional strategies.
The NCAA also spreads the March Madness money around, offering payouts to lower-level Division I and block grants to Divisions II and III. These distributions keep non-Power 5 interests happy enough and compliant enough to acquiesce to the Power 5 football-dominated status quo.
The image below shows the NCAA’s functional expenses for the tax year 2019 - 2020 (NCAA 2019 Form 990 tax return). Power 5 football doesn’t contribute a penny to these massive expenses.
This arrangement has created a toxic dynamic where Power 5 football interests are substantially immunized from the financial consequences of high-stakes federal litigation.
The NCAA, or more accurately, Division I men’s basketball players, subsidize Power 5 football interests.
Notably, this class of NCAA athletes has the highest concentration of African-American athletes in any sport, in any Division.
These athletes are essentially funding the weapons being used against them in litigation and lobbying.
As the value of Power 5 football grows—particularly post-season football with an expanded CFP—the inequity of the men’s basketball subsidy does as well.
