Association for Intercollegiate Athletics for Women v. National Collegiate Athletic Ass'n, 83-1342

• Decision Date: 18 May 1984
• Docket Number: No. 83-1342,83-1342
• Citation: 236 U.S.App.D.C. 311,735 F.2d 577
• Parties: , 1984-1 Trade Cases 66,007 ASSOCIATION FOR INTERCOLLEGIATE ATHLETICS FOR WOMEN, a Non-Profit Corporation, Appellant, v. NATIONAL COLLEGIATE ATHLETIC ASSOCIATION, an Unincorporated Association, Appellee.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 577

735 F.2d 577

236 U.S.App.D.C. 311, 1984-1 Trade Cases 66,007

ASSOCIATION FOR INTERCOLLEGIATE ATHLETICS FOR WOMEN, a Non-Profit Corporation, Appellant, v. NATIONAL COLLEGIATE ATHLETIC ASSOCIATION, an Unincorporated Association, Appellee.

No. 83-1342.

United States Court of Appeals District of Columbia Circuit.

Argued Jan. 11, 1984.

Decided May 18, 1984.

Appeal from the United States District Court for the District of Columbia (D.C.Civil Action No. 81-2473).

Katrina Renouf, Washington, D.C., with whom Margot Polivy, Washington, D.C., was on brief, for appellant.

Eben G. Crawford, Cleveland, Ohio, of the Bar of the Supreme Court of Ohio, pro hac vice, by special leave of court, with whom William D. Kramer and Judith Jurin Semo, Washington, D.C., were on brief, for appellee.

Before TAMM, WALD and GINSBURG, Circuit Judges.

Opinion PER CURIAM.

PER CURIAM:

This appeal arises from an antitrust action brought by the Association for Intercollegiate Athletics for Women (AIAW) against the National Collegiate Athletic Association (NCAA). AIAW alleged that NCAA unlawfully used its monopoly power in men's college sports to facilitate its entry into women's college sports and to force AIAW out of existence. United States District Judge Thomas P. Jackson, after trial, found no antitrust violation and entered judgment for NCAA. On appeal, AIAW contests the district court's fact findings and legal analysis. Although we disagree in part with one portion of the district court's legal analysis, that court's disposition ultimately and properly turns on fact findings that are not clearly erroneous. We therefore affirm the district court's decision rejecting AIAW's claims.

I. BACKGROUND

From 1906 to 1980, NCAA sponsored programs only for men's intercollegiate athletics. In 1967, the Commission on Intercollegiate Athletics for Women (CIAW) was organized to provide a governing body for women's athletics. In 1971, CIAW was transformed into AIAW, an organization that throughout its existence governed only women's sports. In 1971-72, AIAW sponsored seven national championships for its 278 members. By 1980-81, AIAW's membership had grown to 961 colleges and universities. AIAW's standing as the major governing body in women's sports ended, however, in the fall of 1981.

In the 1981-82 sports season, NCAA introduced twenty-nine women's championships in twelve sports. During the same season, AIAW suffered a significant drop in membership and participation in its events. AIAW's loss in membership dues totalled $124,000, which represented approximately twenty-two percent of the dues collected the previous year. Forty-nine percent of those institutions leaving AIAW elected to place their women's sports programs under NCAA's governance. Even among those schools that maintained AIAW memberships, a significant number chose to participate in NCAA events instead of the AIAW counterparts.

AIAW also suffered promotional losses. National Broadcasting Company (NBC) decided not to exercise its exclusive television rights to telecast AIAW championships. NBC's disinterest resulted in large part from a decline in the number and quality of participants in AIAW events. Association for Intercollegiate Athletics for Women v. National Collegiate Athletic Ass'n, 558 F.Supp. 487, 493 (D.D.C.1983). The Eastman Kodak Company and the Broderick Company, because of AIAW's participation losses, both sought to withdraw sponsorship of AIAW achievement awards. Id. at 493-94. AIAW's diminished stature following NCAA's entry into women's sports also hindered AIAW's efforts to market its logo. AIAW had further difficulty securing national championship sites, holding volunteer staff, and realizing profits from its Division I championship events. Id. Since AIAW's leadership expected these financial hardships only to worsen, it decided not to distribute membership renewal applications for the 1982-83 season. AIAW closed business on June 30, 1982.

On October 9, 1981, AIAW filed suit against NCAA in the United States District Court for the District of Columbia. AIAW alleged that NCAA violated sections 1, 2, and 3 of the Sherman Act, 15 U.S.C. Secs. 1, 2, 3 (1982), by using its monopoly power in men's college sports to facilitate its entry into women's college sports and to force AIAW out of existence. ¹ Specifically, AIAW asserted that NCAA's unlawful conduct consisted of predatory pricing, the use of financial incentives to "link" the sale of competitive services with the sale of monopoly services, and an illegal tying arrangement.

A. NCAA's Contested Conduct

1. NCAA's Dues Policy

Before NCAA introduced women's events, NCAA members paid a single flat fee for the option of participating in all the events in their respective NCAA divisions. For the 1981-82 season, NCAA did not increase its flat rate, or charge a separate fee, for those members participating in the newly instituted women's events. NCAA continued this practice through June 1982 when AIAW closed business. AIAW asserts that the price for participating in a college sports program is the membership dues associated with that program. Since NCAA's "price" for participation in its women's program was effectively zero and thus well below the cost of the program, AIAW cites NCAA's dues policy as a classic example of predatory pricing. ²

2. NCAA's Proceeds Distribution Formula

Before 1981, NCAA guaranteed both transportation and per diem expenses to participants in all its championships. Also, after event administration expenses were deducted from revenues generated by a championship, remaining proceeds were distributed 50% to NCAA and 50% to institutions competing in the championship. When NCAA began to sponsor women's events, however, it changed this proceeds distribution formula. Although NCAA continued to guarantee reimbursement of transportation expenses, per diem expenses for championships were paid only from surplus revenue after event administration costs had been covered. Any revenues that remained after paying per diem expenses were used first to repay NCAA for the travel allowance, and only then were distributed to participating institutions. NCAA readily concedes that these changes reduced the likelihood of teams receiving either per diem reimbursements or championship proceeds.

AIAW argues that revisions in NCAA's distribution formula created financial incentives for schools whose men's teams already participated in NCAA events to enroll their women's teams in NCAA as well. The revisions, notes AIAW, decreased payments to current men's participants substantially below their former level. Because NCAA has monopoly power in men's sports, it allegedly did not fear losing participants in men's events due to the reduced proceeds allocated to those events. The only effect, AIAW argues, was to encourage coeducational institutions to enroll their women's programs in NCAA events to recoup lost proceeds shifted from men's to women's sports. AIAW contends that only by obtaining NCAA's relatively generous women's reimbursements could a coeducational institution avoid a net loss in subsidization for its entire athletic program. AIAW thus claims the revisions in NCAA's distribution formula produced irresistible inducements for coeducational schools to transfer their women's programs from AIAW to NCAA. These inducements allegedly constituted an "unlawful linkage," tantamount to a coercive tie, of women's events to the monopolized men's events.

3. NCAA's Sale of Television Rights

In the winter of 1981, NCAA negotiated the sale of television rights for its men's basketball championship with Columbia Broadcasting System (CBS) and National Broadcasting Company (NBC). In the course of negotiations, NCAA asked each network to clarify its position, inter alia, on a proposed rights fee for televising NCAA's women's basketball championship game. CBS originally offered $225,000 over three years for the women's basketball championship. NBC proposed $525,000 for the same television rights. NCAA, however, awarded CBS a contract covering both the men's and women's championships. NCAA's presentation indicates that its decision stemmed from CBS's offering some three million dollars more than NBC for the men's championship, and from the efficiencies of selling both championships to the same network.

AIAW contends, however, that NCAA tied the sale of television rights for its women's basketball championship to the rights for its men's counterpart. Because NCAA is a monopoly seller of television rights for men's college basketball championships, AIAW alleges NCAA was able to thrust its women's championship upon an unwilling purchaser. AIAW thus argues that CBS was forced to purchase the women's event, in which it had no interest, in order to obtain the men's event, which was of paramount importance. ³

B. District Court's Decision

The district court characterized NCAA, in one respect as an "[e]leemosynary organization [ ] ... [that] exist[s] primarily to enhance the contribution made by amateur athletic competition to ... higher education ...." 558 F.Supp. at 494. In another respect, the court found that NCAA was a "vertically integrated seller [ ] of governance and promotional services for athletic competition" and capable of considerable restraint on commercial enterprise. Id. at 494, 497. Because of its noncommercial dimension, the district court concluded that NCAA was not subject to liability deriving from conduct alone. Rather, "[s]ection 1 claims are judged under the Rule of Reason even when restraints are patent, and there must be proof of specific intent as a predicate to a finding of an abuse of monopoly power under [s]ection 2." Id. at 495 (citations omitted).

With regard to AIAW's monopolization claim, the district court found as a factual matter that NCAA did not achieve monopoly power in women's sports during the 1981-82 season, the sole year NCAA was in competition with AIAW. Id. at 501. ⁴ The...