Cool stuff from Orrin Hatch

I will probably write a blog post next week sometime about Mr. Orrin Hatch and his push on getting us a playoff system. Needless to say he is my favorite politician of all time right now simply because of the following text that I found on his blogsite.
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I have never been a person to say that sports, music or the arts are not important. I think they are. --- I will write some more on this on another day. This was very interesting to me and I hope to the 100 or so of you that read my blog,.... that you find it interesting as well.
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July 7th, 2009
Media Contact(s): Mark Eddington and Andrea Saul, (202) 224-5251

IN CASE YOU MISSED IT: HATCH'S OPENING STATEMENT AT BCS HEARING

WASHINGTON – Sen. Orrin Hatch (R-Utah), ranking member of the Senate Antitrust Subcommittee, hosted a hearing today about the legality of the Bowl Championship Series (BCS). Hatch’s opening statement at the hearing follows: Mr. Chairman, I appreciate your willingness to schedule this hearing because I believe it will address a number of important issues, not the least of which is the legality of the Bowl Championship Series. I continue to enjoy our service together on this committee, Mr. Chairman, due in large part to your willingness to work with those on both sides of the aisle to address a wide variety of issues. Indeed, your willingness to address the concerns of Members from both parties is almost unheard of in today’s partisan climate. Turning to the BCS, I think we all know Congress’s interest in this issue is not a recent development. In the 10 years the BCS has been in existence, numerous congressional committees have held hearings to examine the legal and consumer-protection issues associated with the BCS system. In fact, I chaired a hearing in the full Judiciary Committee on this issue in 2003. Over the years, some changes have been made to the BCS system. Ostensibly, the system is now more open to non-preferred conferences than it once was. However, even with these changes in place, the BCS continues to place nearly half of all the schools in college football at a competitive and, perhaps more importantly, a financial disadvantage. These disadvantages are not the result of fair competition, but of the inherent structural inequities of the BCS system. For these reasons, I believe today’s hearing is necessary. There is no shortage of opinion and ideas on how the BCS system should be changed. Indeed, I think any time college football fans gather together to watch a game, one of them has a playoff idea that they believe will solve all of college football’s problems. For today, I think our time would be best served by leaving the debate over such alternatives in the living rooms of our country and, instead, focus on answering one question: Does the BCS comply with the law? The law requires that all business enterprises meet certain standards with regard to pro- and anti-competitive behavior. Our focus should therefore be on comparing the current system with the standards required by our nation’s antitrust laws. Personally, I believe there are enough antitrust problems with the current BCS system that we’ll have more than enough material to cover in the course of this hearing. Put simply, Section 1 of the Sherman Antitrust Act prohibits contracts, combinations, or conspiracies to limit competition. I’ve said before that I don’t believe a plainer description of the BCS exists. The system itself is an agreement between the preferred conferences and the major bowl games as to how they will compete with one another and, more apparently, how they will compete against the non-preferred conferences. Worse still, under the current BCS regime, each of the six privileged conferences is guaranteed to receive a large share of the BCS revenue to distribute among their member schools. The remaining five conferences, which include nearly half of all the teams in Division I, all share a much smaller portion of the BCS revenue, even if one of their teams is fortunate enough to play their way into a BCS game. Over the lifetime of the BCS, the preferred conferences have received nearly 90 percent of the total revenues. These disparities are explicit in the BCS arrangement. It brings to mind the major Supreme Court decisions prohibiting price-fixing and horizontal restrictions on output. Under Section 1, such arrangements are prohibited. Section 2 of the Sherman Antitrust Act is violated when is one is in possession of monopoly power and uses that power in a way not associated with growth or development as a consequence of having a superior product or business acumen. I think there is a strong argument that the BCS violates this provision as well. Practically speaking, there are two relevant markets in question here. Given the drastic difference between the revenues and prominence of the BCS bowls when compared to the other bowl games played throughout late December and early January, I think it’s safe to conclude that the BCS bowls constitute a market all their own. And, if Supreme Court precedence has any relevance here, the national championship game also constitutes a separate market. The BCS enjoys a monopoly over both these markets and has, through what appears to be deliberate action, restricted the ability of teams from non-privileged conferences to participate. The BCS selects participants primarily through the use of subjective polling, complex computer ranking systems, and a set of biased selection criteria. Not surprisingly, this system expressly limits the number of outside teams that are able to qualify for one of the lucrative and prestigious BCS bowl games. Take last year for example. In 2008, two teams, Utah and Boise State, met the qualifications for an automatic BCS berth, but, under the rules, only one of them, Utah, was invited to play in a BCS game. Furthermore, four teams, Utah, Boise State, Texas Christian, and Brigham Young, finished the season ranked higher in the BCS’s own standings than at least one of the teams that received an automatic bid. Clearly, the BCS bowl games exist in a category all their own and the architects of the BCS system appear to have intentionally excluded teams from non-privileged conferences, not on the basis of competition, but due to pre-arranged agreements. The Section 2 problems continue with regard to the national championship game as the current system ensures that only teams from the BCS’s preferred conferences can qualify to play in the national championship game. This is evidenced by the fact that, although several teams from non-preferred conferences have gone undefeated over the years, none of them had even a remote chance of qualifying for the national championship game. Indeed, last season alone, two teams, Utah and Boise State, finished the regular season with better records than any team from a preferred conference. Yet, neither was even a consideration when it came to crowning a national champion. The University of Utah finished the season by routing a team that had been ranked number one for much of the season. It’s hard to imagine what more Utah could have done with its season in search of a national championship. Yet, under the BCS system, they were eliminated from such consideration before the season even started. Section 2 was specifically intended to prevent such exclusionary tactics on the part of monopolists. The problems with the BCS extend well beyond the football field and address more significant issues than qualifying for either a national championship or participation in a BCS game. Ultimately, when we’re talking about college football and the BCS, we’re talking about institutions of higher learning. Each of these schools faces unique challenges when it comes to funding athletics and academic initiatives. The purposeful disparities in funding created by the BCS ensure that schools in privileged conferences, even those whose football teams are not all that competitive, enjoy advantages in offering scholarships and providing staff and facilities for all their athletic programs. The increased visibility that accompanies automatic qualification into a BCS game guarantees that the teams from outside conferences face disadvantages with regard to recruiting players and hiring top coaches. This would be tolerable if the inequities were the result of inferior performance on the part of the teams on the outside. But, I don’t believe the evidence supports any such claim. In addition to facing unique financial challenges, colleges and universities are charged with a unique mission – educating our young people and preparing them for their careers. In addition, they are, in large part, subsidized by the taxpayers, either through the receipt of federal funds or by enjoying tax-exempt status. That being the case, I believe they should be held to the highest legal and ethical standards. For these reasons and others, the BCS has garnered the attention of Congress and the President, not to mention the dissatisfaction of fans throughout the country. Yet, after the 2008 season, when the flaws in the BCS system were made more obvious than ever, the architects have sought to extend the status quo for the foreseeable future. Of course, the new agreement is even more lucrative and, quite likely, promises to expand the divisions between the privileged and the non-privileged programs. It is my understanding that, even as Congress has focused its attention on the system, the BCS appears to be attempting to strong-arm those in a weaker bargaining position into signing a new agreement by July 9, many months before the current contract expires. Given the widespread public criticism of the current system and its obvious flaws with regard to competition, I had hoped that, going forward, we’d see a greater willingness to adapt on the part of the BCS. However, that does not appear to be the case. Now, I’m certain that some members of today’s panel disagree with my conclusions. I welcome their testimonies and will give them ample opportunity to make their case and to change my mind. I am hopeful that, rather than being just another chapter in the endless BCS debate, this hearing will shed some real light on the legal issues surrounding these matters. Toward that end, I thank all the members of this panel for their attendance here today.

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