Notice & Comment

Sign Stealing and the Antitrust Laws, by Daniel A. Crane

As anyone who follows college football is aware, the University of Michigan is under investigation from the NCAA and Big 10 Conference for “sign stealing”—gathering information on future opponents’ play signals. Given Michigan’s national title aspirations, the potential for sanctions is obviously bad news. Michigan has now fired back with evidence that three other Big 10 teams—Rutgers, Ohio State, and Purdue—shared Michigan’s signs. Tu quoque aside, it turns out that sign stealing isn’t prohibited by NCAA rules. Rather, the issue is whether Michigan (or other teams) violated NCAA Bylaw 11.6.1 that prohibits “off-campus, in-person scouting of future opponents (in the same season).”

Before turning to the antitrust issues raised by enforcement of that rule, let me make it clear that, although I am employed by the University of Michigan, I do not represent it. These comments are solely my personal opinion. Further, although I of course don’t want Michigan to be penalized, I also would not want the Maize and Blue, or anyone else, to get away with cheating. Fair is fair, and foul is foul.

But the “cheating” question goes to the core of the antitrust issue. As already mentioned, there apparently isn’t any rule about gathering intelligence on an opponent’s signs. If a school can do that by reading lips from a TV screen, more power to them. The relevant rule isn’t about the integrity of the game like 11 men on the field or ineligible receivers. According to MLive, the rule was adopted in 1994 “as a cost-cutting measure designed to promote equity for programs that couldn’t afford to send scouts to other games.” In other words, if Michigan has cheated, it has cheated on a financial rule rather than one concerning the game itself.

Enter antitrust law. In recent years, NCAA rules that limit economic competition by member schools have been in serious antitrust trouble. In 2021, the Supreme Court unanimously held that the NCAA’s enforcement of rules limiting member school compensation of student athletes up to the full cost of their education violates Section 1 of the Sherman Act. National Collegiate Athletic Ass’n v. Alston, 141 S. Ct. 2141 (2021).  Six years earlier, the Ninth Circuit reached a similar decision regarding NCAA’s restrictions on student athlete name, image, and likeness rights. O’Bannon v. National Collegiate Athletic Ass’n, 802 F.3d 1049 (9th Cir. 2015). In the more distant past, the Supreme Court held that NCAA limitations on television broadcasting violated the Sherman Act. National Collegiate Athletic Assn. v. Board of Regents of Univ. of Okla., 468 U.S. 85 (1984). The common thread of these cases is that NCAA rules that limit member schools from freely determining how to allocate their resources can run afoul of the antitrust laws, even if (or perhaps because) those rules are designed to achieve intercollegiate economic parity.

To the extent that Bylaw 11.6.1 is intended to prevent schools from competing economically by determining how much to spend on their athletic programs, it runs squarely into AlstonO’Bannon, and Board of Regents. The NCAA or Big 10 might have a shot at justifying the rule as equalizing economic expenditures among member schools in order to promote competitive balance. The NCAA has made such arguments in the past, and in O’Bannon the Ninth Circuit accepted that promoting competitive balance may be a legitimate procompetitive justification in theory. The problem is that the courts have rejected the competitive balance justification in practice.  SeeAlston, 141 S. Ct. at 2152 (observing that NCAA had unsuccessfully attempted to justify its player compensation rules as promoting competitive balance); O’Bannon, 802 F.3d at 1072 (“We [] accept the district court’s factual findings that the compensation rules do not promote competitive balance.”). Anyone trying to justify Bylaw 11.6.1 as promoting competitive balance will have an uphill climb.

This is a bad time for the NCAA or Big 10 to be rattling antitrust cages. The courts are already grumpy with NCAA rules that limit economic competition, and the Justice Department has shown a heightened interest in antitrust issues in sports. The sign stealing scandal may be fodder for either jokes or righteous (hypocritical?) indignation for now, but it could unleash something that no one in the NCAA or Big 10 would want. Caveat emptor.

Daniel A. Crane is the Richard W. Pogue Professor of Law at the University of Michigan Law School.

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