NCAA SC Ruling

Antitrust Jury Award Rocks NCAA

Organization forced to pay $56 million

New York, March 10, 1999 -- Nineteen ninety-eight will not go down as a banner year for the National Collegiate Athletic Association. First, the venerable organization settled a long-standing lawsuit by basketball coach Jerry Tarkanian for $2.5 million. The suit alleged a pattern of unfair prosecution by the NCAA over his tenure as coach at the University of Nevada-Las Vegas (UNLV), where he and his teams were penalized three times for what the NCAA concluded were rules violations.

The Tarkanian matter pales in comparison to the $67 million slam-dunk against the organization by a Federal Jury in Kansas City. The jury awarded more than 1,900 coaches $22.3 million in damages from the NCAA for engaging in a conspiracy to restrain the salaries of those coaches under the "restricted-earnings" rule, which capped their annual salaries at $16,000. This amount, automatically tripled to $67 million, was rendered after a month-long damages phase of this proceeding and is the largest in the history of the NCAA and its member institutions.

The only reason why this case got to this point is the NCAA's stubbornness and arrogance.

In the 1980s, the NCAA, concerned over the rising costs of maintaining athletic programs, sought to cut expenses. Part-time assistant coaches were targeted. In 1989, a committee recommended a rule that would limited the number of coaches in all Division I sports and required institutions to designate one of their coaches in every sport other than football a "restricted earnings coach."

To do such a thing constitutes an unlawful restraint one's right to compensation, a form of restraint of trade under antitrust laws. This point should be known to any third-year law student.

Not surprisingly, a group of coaches sued. The case of Law v. NCAA had three classes of plaintiffs, one representing men's basketball coaches, one representing baseball coaches and one representing coaches in all other sports. A jury slapped the organization with a $19 million ruling, tripled to $58 million under the antitrust laws.

The NCAA sought to appeal, until calmer heads prevailed and it settled the case in January 1999 for . The cough up all that money, the organization will have to dip in to its coffers and to its member schools. which might be a problem. Since antitrust law is very much a creature of case by case analysis, challenges to other rules involving broadcasting or contractual issues would clog up the courts and weaken the overall powers of a once omnipotent amateur organization.

The NCAA may have had this coming. Its high handedness and pieties have alienated many in the press and the public. As one of the attorneys put it: "I have never understood why this organization acted the way I did. I never believed those folks would be this stubborn."