NCAA-MIBA Deal Made Business Sense for the NCAA

Sep 8, 2005

Ultimately, the stakes were too high for a deal not to get done in the ongoing antitrust litigation involving the NCAA and the Metropolitan Intercollegiate Basketball Association (MIBA), which operates the National Invitational Tournament.
So, on August 17, a deal was announced where the NCAA would pay $40.5 million to MIBA to purchase the rights to both the preseason and postseason NIT as well as another $16 million to settle all outstanding legal issues. The combined amounts will be paid over a 10-year period.
“From an antitrust perspective, the settlement was the equivalent of a merger or acquisition,” said Jeffrey Harrison, a law school professor at the University of Florida, who specializes in antitrust law.
Indeed, with both the NCAA and MIBA becoming winners.
Harrison pointed out that the risk that MIBA would have taken in going to trial was that the market might be construed too narrowly to support a claim of an antitrust violation, forcing MIBA, in defeat, to absorb significant legal costs and go back to square one in terms of competing with the NCAA’s monolithic year-end basketball tournament.
Jeffrey Kessler, co-chair of the litigation department for Dewey Ballantine and lead counsel for MIBA in the case, told Sports Litigation Alert that the “the five schools that own the Metropolitan Intercollegiate Basketball Association are very happy with this settlement.
“It assures the future success of the Preseason and Postseason NITs in New York City for years to come and it provides fair compensation to the schools for these events. It also allows for a healing of the rift, which the dispute caused in the intercollegiate basketball community.”
The real winner, however, was the NCAA, which derives 90 percent of its revenue from the year-end tournament. A loss to MIBA, which is owned by Wagner College, Manhattan College, Fordham University, St. John’s University and New York University, would have been “devastating.”
NCAA General Counsel Elsa Cole said as much in an interview with the Indianapolis Star, telling the paper: that “the ultimate (adverse) outcome, though remote, would be so devastating there’s no way not to take something like this seriously.”
In weighing the various factors, one might easily determine that the NIT, in making it to trial, had close to a 50-50 chance at success.
The Argument
Its complaint alleged that some of the NCAA’s rules are unreasonable restraints of trade in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. In addition, the plaintiff claimed that the NCAA uses the rules affecting postseason competition to achieve or attempt to gain monopoly power in the market for Division I men’s college basketball tournaments, in violation of Section 2 of the Sherman Act, 15 U.S.C. § 2. The complaint also asserted a common law claim of tortuous interference with contract.
The Messenger
Kessler, a highly experienced, charismatic litigator, easily fills the role as the champion for the little guy, which likely would have been played well to a mostly New York City jury.
“It does make a difference who the attorney is in such cases,” said Harrison. “When you go from attorneys talking to other attorneys prior to a trial to arguing before a jury, the balance of power can shift dramatically. All the sudden, the demeanor of the lead attorney for one side can win over a jury, even if he or she does not have the most sound case.”
Tulane University Professor and noted sports law expert Gary Roberts added, in an interview with the Star, that “any time you take an antitrust case to a jury of people off the street, it’s a crapshoot. The issues are very complex and the laws themselves are sufficiently vague that it could come out in a lot of different ways.”
Such unpredictability would have almost certainly favored Kessler, who was assisted by Dewey Ballantine partner David Feher and associates Lisa Deutsche, Michelle Lo and Jeffrey Rugg in representing MIBA. Bruce S. Meyer and Renee M. Fishman of Weil, Gotshal & Manges LLP also assisted during the ongoing litigation.
No matter who might have won, NYU President John Sexton sought to put a healing spin on the litigation and settlement in a final press conference on the issue:
“People sometimes misread the intentions of all the actors in a drama. Are there some who would read the relationship over the years between the NCAA and NIT as a relationship counter-pointed to what we did today? My guess is that there would be. But even counter-pointed relationships can turn on a dime and become wonderful. The counter-pointed appearance early on in this case wasn’t necessarily the reality. Today we celebrate the fact that there is a tremendous mutuality of interest.”
The NCAA was represented Gregory L. Curtner, Kimberly K. Kefalas, Atleen Kaur and Eric McLand of Miller, Canfield, Paddock & Stone, P.L.C., in New York, NY.


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