Antitrust: NCAA’s Most Obvious Indiscretion still Looms Large 15 Years after Clarett

While some of college basketball’s brightest stars prepare to take center stage in the NCAA Basketball tournament, it is important to remember why some of these players are actually there in the first place: a clear antitrust violation by the NCAA.

With March Madness now in full swing, it is time to once again look at one of the hottest topics in all of amateur athletics, and the reason that many of these players will be taking place in the tournament at all: the prevention of high school seniors from being able to enter their names into the NBA draft. We have discussed the Rule and the effects that it has had on high school athletes over time, as well as the way some athletes have begun trying to circumvent the year-removed requirement. Let us now look at one of the most dangerous, and yet seemingly least talked about downfalls of the “one and done” rule: the fact that it should be blocked as an anti-trust violation.

The NBA’s collective bargaining agreement has a requirement that athletes have to be 19 years old, and a year removed from high school in order to enter the NBA draft. From a player’s perspective, this can obviously be frustrating, for a number of reasons. The risks and dangers of a falling stock and/or a major injury, like that of Michael Porter Jr. in last year’s draft, are always lurking around the corner for elite high-school seniors that are not allowed to take their talents directly to the NBA. These risks are coupled with weak arguments by the NBA and NCAA that the “one and done” rule somehow aids in the education of young individuals, by forcing them to attend college for at least one season. However, these claims do not seem to hold much weight when actually analyzed, as these elite athletes are only spending one season at a university and effectively have no “need” to attend classes after the end of the basketball season, as they are looking ahead to the NBA draft at that point.

With these factors being the ones that are ultimately portrayed in the headlines, one of the legal aspects of the “one and done” rule is arguably the key to ending the restraint. The rule seems to meet all of the requirements of a violation under the laws of anti-trust, which would require it to be removed from the CBA if that were deemed to be the case. The Sherman Anti-Trust Act was the first Federal act that outlawed monopolistic business practices, and the Sherman Antitrust Act of 1890 was the first measure passed by the U.S. Congress to prohibit trusts. Under Section 1 of the Act, there is a prohibition on “every contract, combination or conspiracy that restrains interstate trade, or trade with foreign nations, so long as those restraints are unreasonably restrictive of competition in a relevant market.” Although courts must ultimately choose from one of three standards to analyze the particular restraint (per se, rule of reason, quick look), we will simply analyze the “one and done” rule under the Rule of Reason, as this is the standard that most antitrust claims are analyzed under. According to a Rule of Reason analysis, the test focuses on the state of competition within a well-defined relevant agreement. The courts undergo a full analysis of: (i) the definition of the relevant product and geographic market, (ii) market power of the defendant(s) in the relevant market, (iii) and the existence of anticompetitive effects. The court will then shift the burden to the defendant(s) to show an objective procompetitive justification.

In dissecting this, courts ultimately look at several factors to decide if the Rule does in fact impose an unreasonable restraint on competition. Some of these factors include: (i) intent and purpose in adopting the restriction; (ii) the competitive position of the defendant—specifically, information about the relevant business, its condition before and after the restraint was imposed, and the restraint’s history, nature and effect. It is important to note that none of these factors are decisive alone, and are balanced by the court in order to determine whether the restraint on trade is “competitively unreasonable.”

Now, in terms of “one and done,” it does not seem to be debatable that the NBA’s requirement that athletes be a year removed from high school before entering the NBA draft is a contract, combination or conspiracy that restrains interstate trade, and is unreasonably restrictive of competition in a relevant market. So, we then must turn to using an individual standard of review to analyze the restraint, and as previously mentioned we will use the Rule of Reason for the sake of fairness. Under the first prong, the relevant product in question is professional basketball as a whole, and the relevant geographic market would be all of the United States of America (as well as Toronto). Effectively blocking those individuals that are not one-year removed from high school from entering the NBA draft clearly effects the professional sport of basketball as a whole, and every market that the NBA accounts for. It seems clear that the courts would view this as a very important group of people that will feel the affects of the regulation. As to the second prong, the market power of the defendants, the NBA would seem to have some of the strongest market power that a defendant could possibly have. The NBA is the premiere source for professional basketball not only in America, but in the entire world, and they are unrivaled when it comes to the power that they possess. Lastly, under the third prong, the “one and done” rule clearly provides anticompetitive effects, as it is barring a large group of individuals from joining the ranks and competing in the way that they would like to. The NBA is clearly restraining these players from the trade that they would like to participate in, and the anticompetitive effects of this cannot be overstated.

If this antitrust argument sounds familiar, it is because it has actually already been raised before. In 2004, Ohio State’s star running back, Maurice Clarett, brought a suit against the NFL for the same type of claim. Under the Sherman Act, Clarett sued the NFL over its rule that limited eligibility for entry into the NFL draft to players that were three full college football seasons removed from high school graduation. Although the argument gained traction, the Court of Appeals ultimately ruled that since there is an anti-trust exemption for CBA provisions which would otherwise be in violation, Clarett did not have a valid claim. This exemption applies when the provision in question regards primarily only the parties to the CBA, are negotiated in good faith bargaining and are about a mandatory subject of bargaining. The Court also made it clear that: because NFL players had unionized and selected an exclusive bargaining representative, prospective players were prohibited from directly negotiating terms and conditions of their employment with any team, and an NFL team would be committing an unfair labor practice if it were to bargain with a player individually without the union’s consent.

To put it plainly, the Court in Clarett got it wrong. The plight of an athlete is so much different from that of a normal working citizen, and it should be treated as such. The Court analogized Clarett’s situation to that of apprentices in a union hall that also enter into a bargaining unit. This is a lazy comparison at best, as the difference in longevity of the two careers alone shows how differently they should be handled. The career-length of a professional athlete, even the elite athletes, is much shorter than that of an average laborer, meaning that it is that much more important for these athletes to be able to enter the professional workforce under the terms that they see fit. In Clarett, the NFL and the players’ union did not even specifically bargain over the eligibility rule, and yet the Court ignored this and claimed that this did not exclude the rule from the non-statutory exemption under the Sherman Act. It seems baffling that an issue that was not even bargained over could just be swept under the same “exemption rug,” because it does not seem plausible that it could then be said to have satisfied the requirement that the requirement was negotiated in good faith bargaining. That clearly makes the inclusion of these type of eligibility rules when it comes to athletes even more unfair. The only remedy for this type of unfair behavior is to reexamine the issue in Clarett, and to decide that these athletes can in fact bring an antitrust claim against these professional sports leagues, despite what was decided in Clarett’s case.

This clearly shows that there is more than enough ammunition for the “one and done” rule to be considered an unreasonable restraint on trade. If the courts were to analyze this regulation under all three standards, it would open the floodgates to provide more opportunities for the Rule in question to be deemed as a violation of anti-trust. It seems that the “one and done” rule may be closer to being abolished than it has been in a long time, but if high school athletes want to attack the rule on their own, it would seem that an anti-trust claim would be a great place to start, and they should ultimately have success regardless of how Clarett fared fifteen years ago.

-Will Hython

Photo Credit: Justin Sievert (Sporting News); Craig Meyer & Stephen J. Nesbitt (Pittsburgh Post-Gazette)

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