National Collegiate Athletic Ass'n v. Board of Regents of the University of Oklahoma

Justice Stevens

delivered the opinion of the Court.

The University of Oklahoma and the University of Georgia contend that the National Collegiate Athletic Association has unreasonably restrained trade in the televising of college football games. After an extended trial, the District Court found that the NCAA had violated § 1 of the Sherman Act1 and granted injunctive relief. 546 F. Supp. 1276 (WD Okla. 1982). The Court of Appeals agreed that the statute had been violated but modified the remedy in some respects. 707 F. 2d 1147 (CA10 1983). We granted certiorari, 464 U. S. 913 (1983), and now affirm.

The NCAA

Since its inception in 1905, the NCAA has played an important role in the regulation of amateur collegiate sports. It has adopted and promulgated playing rules, standards of amateurism, standards for academic eligibility, regulations concerning recruitment of athletes, and rules governing the size of athletic squads and coaching staffs. In some sports, such as baseball, swimming, basketball, wrestling, and track, it has sponsored and conducted national tournaments. It has not done so in the sport of football, however. With the *89exception of football, the NCAA has not undertaken any regulation of the televising of athletic events.2

The NCAA has approximately 850 voting members. The regular members are classified into separate divisions to reflect differences in size and scope of their athletic programs. Division I includes 276 colleges with major athletic programs; in this group only 187 play intercollegiate football. Divisions II and III include approximately 500 colleges with less extensive athletic programs. Division I has been subdivided into Divisions I-A and I-AA for football.

Some years ago, five major conferences together with major football-playing independent institutions organized the College Football Association (CFA). The original purpose of the CFA was to promote the interests of major football-playing schools within the NCAA structure. The Universities of Oklahoma and Georgia, respondents in this Court, are members of the CFA.

History of the NCAA Television Plan

In 1938, the University of Pennsylvania televised one of its home games.3 From 1940 through the 1950 season all of Pennsylvania’s home games were televised. App. 303. That was the beginning of the relationship between television and college football.

On January 11, 1951, a three-person “Television Committee,” appointed during the preceding year, delivered a report to the NCAA’s annual convention in Dallas. Based on preliminary surveys, the committee had concluded that “television does have an adverse effect on college football attendance and unless brought under some control threatens to seriously harm the nation’s overall athletic and physical *90system.” Id., at 265. The report emphasized that “the television problem is truly a national one and requires collective action by the colleges.” Id., at 270. As a result, the NCAA decided to retain the National Opinion Research Center (NORC) to study the impact of television on live attendance, and to declare a moratorium on the televising of football games. A television committee was appointed to implement the decision and to develop an NCAA television plan for 1951. Id., at 277-278.

The committee’s 1951 plan provided that only one game a week could be telecast in each area, with a total blackout on 3 of the 10 Saturdays during the season. A team could appear on television only twice during a season. The plan also provided that the NORC would conduct a systematic study of the effects of the program on attendance. Id., at 279. The plan received the virtually unanimous support of the NCAA membership; only the University of Pennsylvania challenged it. Pennsylvania announced that it would televise all its home games. The council of the NCAA thereafter declared Pennsylvania a member in bad standing and the four institutions scheduled to play at Pennsylvania in 1951 refused to do so. Pennsylvania then reconsidered its decision and abided by the NCAA plan. Id., at 280-281.

During each of the succeeding five seasons, studies were made which tended to indicate that television had an adverse effect on attendance at college football games. During those years the NCAA continued to exercise complete control over the number of games that could be televised. Id., at 325-359.

From 1952 through 1977 the NCAA television committee followed essentially the same procedure for developing its television plans. It would first circulate a questionnaire to the membership and then use the responses as a basis for formulating a plan for the ensuing season. The plan was then submitted to a vote by means of a mail referendum. Once approved, the plan formed the basis for NCAA’s negotiations *91with the networks. Throughout this period the plans retained the essential purposes of the original plan. See 546 F. Supp., at 1283.4 Until 1977 the contracts were all for either 1- or 2-year terms: In 1977 the NCAA adopted “principles of negotiation” for the future and discontinued the practice of submitting each plan for membership approval. Then the NCAA also entered into its first 4-year contract granting exclusive rights to the American Broadcasting Cos. (ABC) for the 1978-1981 seasons. ABC had held the exclusive rights to network telecasts of NCAA football games since 1965. Id., at 1283-1284.

The Current Plan

The plan adopted in 1981 for the 1982-1985 seasons is at issue in this case.5 This plan, like each of its predecessors, recites that it is intended to reduce, insofar as possible, the adverse effects of live television upon football game attendance.6 It provides that “all forms of television of the football *92games of NCAA member institutions during the Plan control periods shall be in accordance with this Plan.” App. 35. The plan recites that the television committee has awarded rights to negotiate and contract for the telecasting of college football games of members of the NCAA to two “carrying networks.” Id., at 36. In addition to the principal award of rights to the carrying networks, the plan also describes rights for a “supplementary series” that had been awarded for the 1982 and 1983 seasons,7 as well as a procedure for permitting specific “exception telecasts.”8

In separate agreements with each of the carrying networks, ABC and the Columbia Broadcasting System (CBS), the NCAA granted each the right to telecast the 14 live “exposures” described in the plan, in accordance with the “ground rules” set forth therein.9 Each of the networks agreed to pay a specified “minimum aggregate compensation *93to the participating NCAA member institutions” during the 4-year period in an amount that totaled $131,750,000. In essence the agreement authorized each network to negotiate directly with member schools for the right to televise their games. The agreement itself does not describe the method of computing the compensation for each game, but the practice that has developed over the years and that the District Court found would be followed under the current agreement involved the setting of a recommended fee by a representative of the NCAA for different types of telecasts, with national telecasts being the most valuable, regional telecasts being less valuable, and Division II or Division III games commanding a still lower price.10 The aggregate of all these payments presumably equals the total minimum aggregate compensation set forth in the basic agreement. Except for differences in payment between national and regional telecasts, and with respect to Division II and Division III games, the amount that any team receives does not change with the size of the viewing audience, the number of markets in which the game is telecast, or the particular characteristic of the game or the participating teams. Instead, the “ground rules” provide that the carrying networks make alternate selections of those games they wish to televise, and thereby obtain the exclusive right to submit a bid at an essentially fixed price to the institutions involved. See 546 F. Supp., at 1289-1293.11

*94The plan also contains “appearance requirements” and “appearance limitations” which pertain to each of the 2-year periods that the plan is in effect. The basic requirement imposed on each of the two networks is that it must schedule appearances for at least 82 different member institutions during each 2-year period. Under the appearance limitations no member institution is eligible to appear on television more than a total of six times and more than four times nationally, with the appearances to be divided equally between the two carrying networks. See id., at 1293. The number of exposures specified in the contracts also sets an absolute maximum on the number of games that can be broadcast.

Thus, although the current plan is more elaborate than any of its predecessors, it retains the essential features of each of them. It limits the total amount of televised intercollegiate football and the number of games that any one team may televise. No member is permitted to make any sale of television rights except in accordance with the basic plan.

Background of this Controversy

Beginning in 1979 CFA members began to advocate that colleges with major football programs should have a greater voice in the formulation of football television policy than they had in the NCAA. CFA therefore investigated the possibility of negotiating a television agreement of its own, devel*95oped an independent plan, and obtained a contract offer from the National Broadcasting Co. (NBC). This contract, which it signed in August 1981, would have allowed a more liberal number of appearances for each institution, and would have increased the overall revenues realized by CFA members. See id., at 1286.

In response the NCAA publicly announced that it would take disciplinary action against any CFA member that complied with the CFA-NBC contract. The NCAA made it clear that sanctions would not be limited to the football programs of CFA members, but would apply to other sports as well. On September 8, 1981, respondents commenced this action in the United States District Court for the Western District of Oklahoma and obtained a preliminary injunction preventing the NCAA from initiating disciplinary proceedings or otherwise interfering with CFA’s efforts to perform its agreement with NBC. Notwithstanding the entry of the injunction, most CFA members were unwilling to commit themselves to the new contractual arrangement with NBC in the face of the theatened sanctions and therefore the agreement was never consummated. See id., at 1286-1287.

Decision of the District Court

After a full trial, the District Court held that the controls exercised by the NCAA over the televising of college football games violated the Sherman Act. The District Court defined the relevant market as “live college football television” because it found that alternative programming has a significantly different and lesser audience appeal. Id., at 1297-1300.12 The District Court then concluded that the NCAA *96controls over college football are those of a “classic cartel” with an

“almost absolute control over the supply of college football which is made available to the networks, to television advertisers, and ultimately to the viewing public. Like all other cartels, NCAA members have sought and achieved a price for their product which is, in most instances, artificially high. The NCAA cartel imposes production limits on its members, and maintains mechanisms for punishing cartel members who seek to stray from these production quotas. The cartel has established a uniform price for the products of each of the member producers, with no regard for the differing quality of these products or the consumer demand for these various products.” Id., at 1300-1301.

The District Court found that competition in the relevant market had been restrained in three ways: (1) NCAA fixed the price for particular telecasts; (2) its exclusive network contracts were tantamount to a group boycott of all other potential broadcasters and its threat of sanctions against its own members constituted a threatened boycott of potential competitors; and (3) its plan placed an artificial limit on the production of televised college football. Id., at 1293-1295.

In the District Court the NCAA offered, two principal justifications for its television policies: that they protected the gate attendance of its members and that they tended to preserve a competitive balance among the football programs of the various schools. The District Court rejected the first justification because the evidence did not support the claim that college football television adversely affected gate attendance. Id., at 1295-1296. With respect to the “competitive balance” argument, the District Court found that the evidence failed to show that the NCAA regulations on matters such as recruitment and the standards for preserving amateurism were not sufficient to maintain an appropriate balance. Id., at 1296.

*97 Decision of the Court of Appeals

The Court of Appeals held that the NCAA television plan constituted illegal per se price fixing, 707 F. 2d, at 1152.13 It rejected each of the three arguments advanced by NCAA to establish the procompetitive character of its plan.14 First, the court rejected the argument that the television plan promoted live attendance, noting that since the plan involved a concomitant reduction in viewership the plan did not result in a net increase in output and hence was not procompetitive. Id., at 1153-1154. Second, the Court of Appeals rejected as illegitimate the NCAA’s purpose of promoting athletically balanced competition. It held that such a consideration amounted to an argument that “competition will destroy the market” — a position inconsistent with the policy of the Sherman Act. Moreover, assuming arguendo that the justification was legitimate, the court agreed with the District Court’s finding “that any contribution the plan made to athletic balance could be achieved by less restrictive means.” Id., at 1154. Third, the Court of Appeals refused to view the NCAA plan as competitively justified by the need to compete effectively with other types of television programming, since it entirely eliminated competition between producers of football and hence was illegal per se. Id., at 1155-1156.

Finally, the Court of Appeals concluded that even if the television plan were not per se illegal, its anticompetitive limitation on price and output was not offset by any *98procompetitive justification sufficient to save the plan even when the totality of the circumstances was examined. Id., at 1157-1160.16 The case was remanded to the District Court for an appropriate modification in its injunctive decree. Id., at 1162.16

There can be no doubt that the challenged practices of the NCAA constitute a “restraint of trade” in the sense that they limit members’ freedom to negotiate and enter into their own television contracts. In that sense, however, every contract is a restraint of trade, and as we have repeatedly recognized, the Sherman Act was intended to prohibit only unreasonable restraints of trade.17

*99It is also undeniable that these practices share characteristics of restraints we have previously held unreasonable. The NCAA is an association of schools which compete against each other to attract television revenues, not to mention fans and athletes. As the District Court found, the policies of the NCAA with respect to television rights are ultimately controlled by the vote of member institutions. By participating in an association which prevents member institutions from competing against each other on the basis of price or kind of television rights that can be offered to broadcasters, the NCAA member institutions have created a horizontal restraint — an agreement among competitors on the way in which they will compete with one another.18 A restraint of this type has often been held to be unreasonable as a matter of law. Because it places a ceiling on the number of games member institutions may televise, the horizontal agreement places an artificial limit on the quantity of televised football that is available to broadcasters and consumers. By restraining the quantity of television rights available for sale, the challenged practices create a limitation on output; our cases have held that such limitations are unreasonable restraints of trade.19 Moreover, the District Court found that the minimum aggregate price in fact operates to preclude any price negotiation between broadcasters and institutions, *100thereby constituting horizontal price fixing, perhaps the paradigm of an unreasonable restraint of trade.20

Horizontal price fixing and output limitation are ordinarily condemned as a matter of law under an “illegal per se” approach because the probability that these practices are anti-competitive is so high; a per se rule is applied when “the practice facially appears to be one that would always or almost always tend to restrict competition and decrease output.” Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U. S. 1, 19-20 (1979). In such circumstances a restraint is presumed unreasonable without inquiry into the particular market context in which it is found. Nevertheless, we have decided that it would be inappropriate to apply a per se rule to this case. This decision is not based on a lack of judicial experience with this type of arrangement,21 on the fact that the NCAA is organized as a nonprofit entity,22 or on *101our respect for the NCAA’s historic role in the preservation and encouragement of intercollegiate amateur athletics.23 Rather, what is critical is that this case involves an industry-in which horizontal restraints on competition are essential if the product is to be available at all.

As Judge Bork has noted: “[S]ome activities can only be carried out jointly. Perhaps the leading example is league sports. When a league of professional lacrosse teams is formed, it would be pointless to declare their cooperation illegal on the ground that there are no other professional lacrosse teams.” R. Bork, The Antitrust Paradox 278 (1978). What the NCAA and its member institutions market in this case is competition itself — contests between competing institutions. Of course, this would be completely ineffective if there were no rules on which the competitors agreed to create and define the competition to be marketed. A myriad of rules affecting such matters as the size of the field, the number of players on a team, and the extent to which physical violence is to be encouraged or proscribed, all must be agreed upon, and all restrain the manner in which institutions compete. Moreover, the NCAA seeks to market a particular brand of football — college football. The identification of this “product” with an academic tradition differentiates *102college football from and makes it more popular than professional sports to which it might otherwise be comparable, such as, for example, minor league baseball. In order to preserve the character and quality of the “product,” athletes must not be paid, must be required to attend class, and the like. And the integrity of the “product” cannot be preserved except by mutual agreement; if an institution adopted such restrictions unilaterally, its effectiveness as a competitor on the playing field might soon be destroyed. Thus, the NCAA plays a vital role in enabling college football to preserve its character, and as a result enables a product to be marketed which might otherwise be unavailable. In performing this role, its actions widen consumer choice — not only the choices available to sports fans but also those available to athletes — and hence can be viewed as procompetitive.24

*103Broadcast Music squarely holds that a joint selling arrangement may be so efficient that it will increase sellers’ aggregate output and thus be procompetitive. See 441 U. S., at 18-23. Similarly, as we indicated in Continental T. V., Inc. v. GTE Sylvania Inc., 433 U. S. 36, 51-57 (1977), a restraint in a limited aspect of a market may actually enhance marketwide competition. Respondents concede that the great majority of the NCAA’s regulations enhance competition among member institutions. Thus, despite the fact that this case involves restraints on the ability of member institutions to compete in terms of price and output, a fair evaluation of their competitive character requires consideration of the NCAA’s justifications for the restraints.

Our analysis of this case under the Rule of Reason, of course, does not change the ultimate focus of our inquiry. Both per se rules and the Rule of Reason are employed “to form a judgment about the competitive significance of the restraint.” National Society of Professional Engineers v. United States, 435 U. S. 679, 692 (1978). A conclusion that a restraint of trade is unreasonable may be

“based either (1) on the nature or character of the contracts, or (2) on surrounding circumstances giving rise to the inference or presumption that they were intended to restrain trade and enhance prices. Under either branch of the test, the inquiry is confined to a consideration of impact on competitive conditions.” Id., at 690 (footnotes omitted).

Per se rules are invoked when surrounding circumstances make the likelihood of anticompetitive conduct so great as to *104render unjustified further examination of the challenged conduct.25 But whether the ultimate finding is the product of a presumption or actual market analysis, the essential inquiry remains the same — whether or not the challenged restraint enhances competition.26 Under the Sherman Act the criterion to be used in judging the validity of a restraint on trade is its impact on competition.27

I — ( 1 — I I — I

Because it restrains price and output, the NCAA’s television plan has a significant potential for anticompetitive effects.28 The findings of the District Court indicate that this *105potential has been realized. The District Court found that if member institutions were free to sell television rights, many-more games would be shown on television, and that the NCAA’s output restriction has the effect of raising the price the networks pay for television rights.29 Moreover, the *106court found that by fixing a price for television rights to all games, the NCAA creates a price structure that is unresponsive to viewer demand and unrelated to the prices that would prevail in a competitive market.30 And, of course, since as a practical matter all member institutions need NCAA approval, members have no real choice but to adhere to the NCAA’s televison controls.31

The anticompetitive consequences of this arrangement are apparent. Individual competitors lose their freedom to comp*107ete.32 Price is higher and output lower than they would otherwise be, and both are unresponsive to consumer preference.33 This latter point is perhaps the most significant, since “Congress designed the Sherman Act as a ‘consumer welfare prescription.’” Reiter v. Sonotone Corp., 442 U. S. 330, 343 (1979). A restraint that has the effect of reducing the importance of consumer preference in setting price and output is not consistent with this fundamental goal of antitrust law.34 Restrictions on price and output are the paradigmatic examples of restraints of trade that the Sherman *108Act was intended to prohibit. See Standard Oil Co. v. United States, 221 U. S. 1, 52-60 (1911).35 At the same time, the television plan eliminates competitors from the market, since only those broadcasters able to bid on television rights covering the entire NCAA can compete.36 Thus, as the District Court found, many telecasts that would occur in a competitive market are foreclosed by the NCAA’s plan.37

*109Petitioner argues, however, that its television plan can have no significant anticompetitive effect since the record indicates that it has no market power — no ability to alter the interaction of supply and demand in the market.38 We must reject this argument for two reasons, one legal, one factual.

As a matter of law, the absence of proof of market power does not justify a naked restriction on price or output. To the contrary, when there is an agreement not to compete in terms of price or output, “no elaborate industry analysis is required to demonstrate the anticompetitive character of such an agreement.” Professional Engineers, 435 U. S., at 692.39 Petitioner does not quarrel with the District Court’s *110finding that price and output are not responsive to demand. Thus the plan is inconsistent with the Sherman Act’s command that price and supply be responsive to consumer preference.40 We have never required proof of market power in such a case.41 This naked restraint on price and output requires some competitive justification even in the absence of a detailed market analysis.42

*111As a factual matter, it is evident that petitioner does possess market power. The District Court employed the correct test for determining whether college football broadcasts constitute a separate market — whether there are other products that are reasonably substitutable for televised NCAA football games.43 Petitioner’s argument that it cannot obtain supracompetitive prices from broadcasters since advertisers, and hence broadcasters, can switch from college football to other types of programming simply ignores the findings of the District Court. It found that intercollegiate football telecasts generate an audience uniquely attractive to advertisers and that competitors are unable to offer programming that can attract a similar audience.44 These findings amply support its conclusion that the NCAA possesses market power.45 Indeed, the District Court’s subsidiary finding that advertisers will pay a premium price per viewer to reach audiences watching college football because of their demographic characteristics46 is vivid evidence of the uniqueness of this product.47 Moreover, the District Court’s market *112analysis is firmly supported by our decision in International Boxing Club of New York, Inc. v. United States, 358 U. S. 242 (1959), that championship boxing events are uniquely attractive to fans48 and hence constitute a market separate from that for nonchampionship events. See id., at 249-252.49 Thus, respondents have demonstrated that there is a separate market for telecasts of college football which “rest[s] on generic qualities differentiating” viewers. Times-Picayune Publishing Co. v. United States, 345 U. S. 594, 613 (1953). It inexorably follows that if college football broadcasts be defined as a separate market — and we are convinced they are — then the NCAA’s complete control over those broadcasts provides a solid basis for the District Court’s conclusion that the NCAA possesses market power with respect to those broadcasts. “When a product is controlled by one interest, without substitutes available in the market, there is monopoly power.” United States v. E. I. du Pont de Nemours & Co., 351 U. S. 377, 394 (1956).50

*113Thus, the NCAA television plan on its face constitutes a restraint upon the operation of a free market, and the findings of the District Court establish that it has operated to raise prices and reduce output. Under the Rule of Reason, these hallmarks of anticompetitive behavior place upon petitioner a heavy burden of establishing an affirmative defense which competitively justifies this apparent deviation from the operations of a free market. See Professional Engineers, 435 U. S., at 692-696. We turn now to the NCAA’s proffered justifications.

Relying on Broadcast Music, petitioner argues that its television plan constitutes a cooperative “joint venture” which assists in the marketing of broadcast rights and hence is procompetitive. While joint ventures have no immunity from the antitrust laws,51 as Broadcast Music indicates, a joint selling arrangement may “mak[e] possible a new product by reaping otherwise unattainable efficiencies.” Arizona v. Maricopa County Medical Society, 457 U. S. 332, 365 (1982) (Powell, J., dissenting) (footnote omitted). The essential contribution made by the NCAA’s arrangement is to define the number of games that may be televised, to establish the price for each exposure, and to define the basic terms of each contract between the network and a home team. The NCAA does not, however, act as a selling agent for any school or for any conference of schools. The selection of individual games, and the negotiation of particular agreements, are matters left to the networks and the individual schools. Thus, the effect of the network plan is not to eliminate individual sales of broadcasts, since these still occur, albeit subject to fixed prices and output limitations. Unlike Broadcast Music’s blanket license covering broadcast rights *114to a large number of individual compositions, here the same rights are still sold on an individual basis, only in a noncompetitive market.

The District Court did not find that the NCAA’s television plan produced any procompetitive efficiencies which enhanced the competitiveness of college football television rights; to the contrary it concluded that NCAA football could be marketed just as effectively without the television plan.52 There is therefore no predicate in the findings for petitioner’s efficiency justification. Indeed, petitioner’s argument is refuted by the District Court’s finding concerning price and output. If the NCAA’s television plan produced pro-competitive efficiencies, the plan would increase output and reduce the price of televised games. The District Court’s contrary findings accordingly undermine petitioner’s position. In light of these findings, it cannot be said that “the agreement on price is necessary to market the product at all.” Broadcast Music, 441 U. S., at 23.53 In Broadcast Music, the availability of a package product that no individual could offer enhanced the total volume of music that was sold. Unlike this case, there was no limit of any kind placed on the volume that might be sold in the entire market and each individual remained free to sell his own music without restraint. Here production has been limited, not enhanced.54 *115No individual school is free to televise its own games without restraint. The NCAA’s efficiency justification is not supported by the record.

Neither is the NCAA’s television plan necessary to enable the NCAA to penetrate the market through an attractive package sale. Since broadcasting rights to college football constitute a unique product for which there is no ready substitute, there is no need for collective action in order to enable the product to compete against its nonexistent competitors.55 This is borne out by the District Court’s finding that the NCAA’s television plan reduces the volume of television rights sold.

Throughout the history of its regulation of intercollegiate football telecasts, the NCAA has indicated its concern with protecting live attendance. This concern, it should be noted, is not with protecting live attendance at games which are shown on television; that type of interest is not at issue in this case. Rather, the concern is that fan interest in a televised game may adversely affect ticket sales for games that will not appear on television.56

Although the NORC studies in the 1950’s provided some support for the thesis that live attendance would suffer if *116unlimited television were permitted,57 the District Court found that there was no evidence to support that theory in today’s market.58 Moreover, as the District Court found, the television plan has evolved in a manner inconsistent with its original design to protect gate attendance. Under the current plan, games are shown on television during all hours that college football games are played. The plan simply does not protect live attendance by ensuring that games will not be shown on television at the same time as live events.59

There is, however, a more fundamental reason for rejecting this defense. The NCAA’s argument that its television plan is necessary to protect live attendance is not based on a desire to maintain the integrity of college football as a distinct and attractive product, but rather on a fear that the product will not prove sufficiently attractive to draw live attendance when faced with competition from televised games. At bottom the NCAA’s position is that ticket sales for most college games are unable to compete in a free market.60 The *117television plan protects ticket sales by limiting output—-just as any monopolist increases revenues by reducing output. By seeking to insulate live ticket sales from the full spectrum of competition because of its assumption that the product itself is insufficiently attractive to consumers, petitioner forwards a justification that is inconsistent with the basic policy of the Sherman Act. “[T]he Rule of Reason does not support a defense based on the assumption that competition itself is unreasonable.” Professional Engineers, 435 U. S., at 696.

Petitioner argues that the interest in maintaining a competitive balance among amateur athletic teams is legitimate and important and that it justifies the regulations challenged in this case. We agree with the first part of the argument but not the second.

Our decision not to apply a per se rule to this case rests in large part on our recognition that a certain degree of cooperation is necessary if the type of competition that petitioner and its member institutions seek to market is to be preserved.61 It is reasonable to assume that most of the regulatory controls of the NCAA are justifiable means of fostering competition among amateur athletic teams and therefore procompetitive because they enhance public interest in intercollegiate athletics. The specific restraints on football telecasts that are challenged in this case do not, however, fit into the same mold as do rules defining the conditions of the contest, the eligibility of participants, or the manner in which members of a joint enterprise shall share the responsibilities and the benefits of the total venture.

The NCAA does not claim that its television plan has equalized or is intended to equalize competition within any *118one league.62 The plan is nationwide in scope and there is no single league or tournament in which all college football teams compete. There is no evidence of any intent to equalize the strength of teams in Division I-A with those in Division II or Division III, and not even a colorable basis for giving colleges that have no football program at all a voice in the management of the revenues generated by the football programs at other schools.63 The interest in maintaining a competitive balance that is asserted by the NCAA as a justification for regulating all television of intercollegiate football is not related to any neutral standard or to any readily identifiable group of competitors.

*119The television plan is not even arguably tailored to serve such an interest. It does not regulate the amount of money that any college may spend on its football program, nor the way in which the colleges may use the revenues that are generated by their football programs, whether derived from the sale of television rights, the sale of tickets, or the sale of concessions or program advertising.64 The plan simply imposes a restriction on one source of revenue that is more important to some colleges than to others. There is no evidence that this restriction produces any greater measure of equality throughout the NCAA than would a restriction on alumni donations, tuition rates, or any other revenue-producing activity. At the same time, as the District Court found, the NCAA imposes a variety of other restrictions designed to preserve amateurism which are much better tailored to the goal of competitive balance than is the television plan, and which are “clearly sufficient” to preserve competitive balance to the extent it is within the NCAA’s power to do so.65 And much more than speculation supported the District Court’s findings on this score. No other NCAA sport employs a similar plan, and in particular the court found that in the most closely analogous sport, college basketball, competitive balance has been maintained without resort to a restrictive television plan.66

Perhaps the most important reason for rejecting the argument that the interest in competitive balance is served by the television plan is the District Court’s unambiguous and well-supported finding that many more games would be televised in a free market than under the NCAA plan. The hypothesis that legitimates the maintenance of competitive balance as a procompetitive justification under the Rule of *120Reason is that equal competition will maximize consumer demand for the product.67 The finding that consumption will materially increase if the controls are removed is a compelling demonstration that they do not in fact serve any such legitimate purpose.68

VII

The NCAA plays a critical role in the maintenance, of a revered tradition of amateurism in college sports. There can be no question but that it needs ample latitude to play that role, or that the preservation of the student-athlete in higher education adds richness and diversity to intercollegiate athletics and is entirely consistent with the goals of the Sherman Act. But'consistent with the Sherman Act, the role of the NCAA must be to preserve a tradition that might otherwise die; rules that restrict output are hardly consistent with this role. Today we hold only that the record supports the District Court’s conclusion that by curtailing output and blunting the ability of member institutions to respond to consumer preference, the NCAA has restricted rather than enhanced the place of intercollegiate athletics in the Nation’s life. Accordingly, the judgment of the Court of Appeals is

Affirmed.

Section 1 provides in pertinent part:

“Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. . . .” 26 Stat. 209, as amended, 15 U. S. C. § 1.

Presumably, however, it sells the television rights to events that the NCAA itself conducts.

According to the NCAA football television committee’s 1981 briefing book: “As far as is known, there were [then] six television sets in Philadelphia; and all were tuned to the game.” App. 244.

The television committee’s 1981 briefing book elaborates:

“In 1952, the NCAA Television Committee initiated a plan for controlling the televising of college football games. The plans have remained remarkably similar as to their essential features over the past 30 years. They have had the following primary objectives and purposes:

“1. To reduce, insofar as possible, the adverse effects of live television upon football game attendance and, in turn, upon the athletic and education programs dependent upon that football attendance;

“2. To spread television among as many NCAA member colleges as possible; and

“3. To provide football television to the public to the extent compatible with the other two objectives.” Ibid.

Because respondents sought and obtained only injunctive relief against future violations of § 1 in the District Court, we do not consider previous NCAA television plans except to the extent that they shed light on the purpose and effect of the current plan.

“The purposes of this Plan shall be to reduce, insofar as possible, the adverse effects of live television upon football game attendance and, in turn, upon the athletic and related educational programs dependent upon the proceeds therefrom; to spread football television participation among *92as many colleges as practicable; to reflect properly the image of universities as educational institutions; to promote college football through the use of television, to advance the overall interests of intercollegiate athletics, and to provide college football television to the public to the extent compatible with these other objectives.” Id,., at 35 (parenthetical omitted).

The supplementary series is described in a separate article of the plan. It is to consist of no more than 36 exposures in each of the first two years and no more than 40 exposures in the third and fourth years of the plan. Those exposures are to be scheduled on Saturday evenings or at other times that do not conflict with the principal football series that is scheduled for Saturday afternoons. Id., at 86-92.

An “exception” telecast is permitted in the home team’s market of games that are sold out, and in the visiting team’s market of games played more than 400 miles from the visiting team’s campus, but in both cases only if the broadcast would not be shown in an area where another college football game is to be played. Id., at 62-72. Also, Division II and Division III institutions are allowed complete freedom to televise their games, except that the games may not appear on a network of more than five stations without the permission of the NCAA. Id., at 73-74.

In addition to its contracts with the carrying networks, the NCAA has contracted with Turner Broadcasting System, Inc. (TBS), for the exclusive right to cablecast NCAA football games. The minimum aggregate fee for the initial 2-year period of the.TBS contract is $17,696,000. 546 F. Supp., at 1291-1292.

“The football television committee’s briefing book for 1981 recites that a fee of $600,000 was paid for each of the 12 national games telecast by ABC during the regular fall season and $426,779 was paid for each of the 46 regional telecasts in 1980. App. 250. The report further recites: “Division I members received $27,842,185 from 1980 football television revenue, 89.8 percent of the total. Division II’s share was $625,195 (2.0 percent), while Division III received $385,195 (1.3 percent) and the NCAA $2,147,425 (6.9 percent).” Id., at 251.

“The District Court explained how the agreement eliminates competition for broadcasting rights:

“First, the networks have no intention to engage in bidding. Second, once the network holding first choice for any given date has made its choice and *94agreed to a rights fee for that game with the two teams involved, the other network is then in a monopsony position. The schools cannot threaten to sell the broadcast rights to any other network. They cannot sell to NBC without committing a violation of NCAA rules. They cannot sell to the network which had first choice over that particular date because, again, they would be in violation of NCAA rules, and the network would be in violation of its agreement with NCAA. Thus, NCAA creates a single eligible buyer for the product of all but the two schools selected by the network having first choice. Free market competition is thus destroyed under the new plan.” 546 F. Supp., at 1292-1293.

The District Court held that the NCAA had monopolized the relevant market in violation of § 2 of the Sherman Act, 15 U. S. C. § 2. See 546 F. Supp., at 1319-1323. The Court of Appeals found it unnecessary to reach this issue, as do we.

The Court of Appeals rejected the District Court’s boycott holding, since all broadcasters were free to negotiate for a contract as carrying networks and the threat of sanctions against members for violating NCAA rules could not be considered a boycott if the rules were otherwise valid. 707 F. 2d, at 1160-1161.

In the Court of Appeals as well as the District Court, petitioner argued that respondents had suffered no injury of the type the antitrust laws were designed to prevent, relying on Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U. S. 477 (1977). Both courts rejected its position, 707 F. 2d, at 1150-1152; 546 F. Supp., at 1303-1304. Petitioner does not seek review on that question in this Court. Brief for Petitioner 5, n. 1.

The Court of Appeals rejected petitioner’s position that it should set aside many of the District Court’s findings as clearly erroneous. In accord with óur usual practice, we must now accord great weight to a finding of fact which has been made by a district court and approved by a court of appeals. See, e. g., Rogers v. Lodge, 458 U. S. 613, 623 (1982). In any event, petitioner does not now ask us to set aside any of the findings of the District Court, but rather argues only that both the District Court and the Court of Appeals erred as a matter of law. Brief for Petitioner 6, n. 2, 18-19.

“Judge Barrett dissented on the ground that the NCAA television plan’s primary purpose was not anticompetitive. “Rather, it is designed to further the purposes and objectives of the NCAA, which are to maintain intercollegiate football as an amateur sport and an adjunct of the academic endeavors of the institutions. One of the key purposes is to insure that the student athlete is fully integrated into academic endeavors.” 707 F. 2d, at 1163. He regarded the television restraints as fully justified “in that they are necessary to maintain intercollegiate football as amateur competition.” Id., at 1165. He added: “The restraints upon Oklahoma and Georgia and other colleges and universities with excellent football programs insure that they confine those programs within the principles of amateurism so that intercollegiate athletics supplement, rather than inhibit, academic achievement.” Id., at 1167.

See, e. g., Arizona v. Maricopa County Medical Society, 457 U. S. 332, 342-343 (1982); National Society of Professional Engineers v. United States, 435 U. S. 679, 687-688 (1978); Chicago Board of Trade v. United States, 246 U. S. 231, 238 (1918).

See Arizona v. Maricopa County Medical Society, 457 U. S., at 356-357; National Society of Professional Engineers v. United States, 435 U. S., at 694-696; United States v. Topco Associates, Inc., 405 U. S. 596, 608-611 (1972). See also United States v. Sealy, Inc., 388 U. S. 350, 352-354 (1967) (marketing association controlled by competing distributors is a horizontal combination). See generally Blecher & Daniels, Professional Sports and the “Single Entity” Defense Under Section One of the Sherman Act, 4 Whittier L. Rev. 217 (1982).

“See, e. g., United States v. Topco Associates, Inc., 405 U. S., at 608-609; United States v. Sealy, Inc., supra; United States v. American Linseed Oil Co., 262 U. S. 371, 388-390 (1923); American Column & Lumber Co. v. United States, 257 U. S. 377, 410-412 (1921).

See, e. g., Arizona v. Maricopa County Medical Society, 457 U. S., at 344-348; Catalano, Inc. v. Target Sales, Inc., 446 U. S. 643, 646-647 (1980) (per curiam); Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, Inc., 340 U. S. 211, 213 (1951); United States v. Socony-Vacuum Oil Co., 310 U. S. 150, 212-214 (1940); United States v. Trenton Potteries Co., 273 U. S. 392, 396-398 (1927).

While judicial inexperience with a particular arrangement counsels against extending the reach of per se rules, see Broadcast Music, 441 U. S., at 9-10; United States v. Topco Associates, Inc., 405 U. S., at 607-608; White Motor Co. v. United States, 372 U. S. 253, 263 (1963), the likelihood that horizontal price and output restrictions are anticompetitive is generally sufficient to justify application of the per se rule without inquiry into the special characteristics of a particular industry. See Arizona v. Maricopa County Medical Society, 457 U. S., at 349-351; National Society of Professional Engineers v. United States, 435 U. S, at 689-690.

There is no doubt that the sweeping language of §1 applies to nonprofit entities, Goldfarb v. Virginia State Bar, 421 U. S. 773, 786-787 (1975), and in the past we have imposed antitrust liability on nonprofit entities which have engaged in anticompetitive conduct, American Society of Mechanical Engineers, Inc. v. Hydrolevel Corp., 456 U. S. 556, 576 (1982). Moreover, the economic significance of the NCAA’s nonprofit character is questionable at best. Since the District Court found that the NCAA and its member institutions are in fact organized to maximize reve*101nues, see 546 F. Supp., at 1288-1289, it is unclear why petitioner is less likely to restrict output in order to raise revenues above those that could be realized in a competitive market than would be a for-profit entity. Petitioner does not rely on its nonprofit character as a basis for reversal. Tr. of Oral Arg. 24.

While as the guardian of an important American tradition, the NCAA’s motives must be accorded a respectful presumption of validity, it is nevertheless well settled that good motives will not validate an otherwise anticompetitive practice. See United States v. Griffith, 334 U. S. 100, 105-106 (1948); Associated Press v. United States, 326 U. S. 1, 16, n. 15 (1945); Chicago Board of Trade v. United States, 246 U. S., at 238; Standard Sanitary Manufacturing Co. v. United States, 226 U. S. 20, 49 (1912); United States v. Trans-Missouri Freight Assn., 166 U. S. 290, 342 (1897).

See Justice v. NCAA, 577 F. Supp. 356, 379-383 (Ariz. 1983); Jones v. NCAA, 392 F. Supp. 295, 304 (Mass. 1975); College Athletic Placement Service, Inc. v. NCAA, 1975-1 Trade Cases ¶60,117 (NJ), aff’d mem., 506 F. 2d 1050 (CA3 1974). See also Brenner v. World Boxing Council, 675 F. 2d 445, 454-455 (CA2 1982); Neeld v. National Hockey League, 594 F. 2d 1297, 1299, n. 4 (CA9 1979); Smith v. Pro Football, Inc., 193 U. S. App. D. C. 19, 26-27, 593 F. 2d 1173, 1180-1181 (1978); Hatley v. American Quarter Horse Assn., 552 F. 2d 646, 652-654 (CA5 1977); Mackey v. National Football League, 543 F. 2d 606, 619 (CA8 1976), cert. dism’d, 434 U. S. 801 (1977); Bridge Corp. of America v. The American Contract Bridge League, Inc., 428 F. 2d 1365, 1370 (CA9 1970), cert. denied, 401 U. S. 940 (1971); Gunter Harz Sports, Inc. v. United States Tennis Assn., 511 F. Supp. 1103, 1116 (Neb.), aff’d, 665 F. 2d 222 (CA8 1981); Cooney v. American Horse Shows Assn., Inc., 495 F. Supp. 424, 430 (SDNY 1980); Los Angeles Memorial Coliseum Comm’n v. National Football League, 468 F. Supp. 154, 165-166 (CD Cal. 1979), preliminary injunction entered, 484 F. Supp. 1274 (1980), rev’d on other grounds, 634 F. 2d 1197 (CA9 1980); Kupec v. Atlantic Coast Conference, 399 F. Supp. 1377, 1380 (MDNC 1975); Closius, Not at the Behest of Nonlabor Groups: A Revised Prognosis for a Maturing Sports Industry, 24 Boston College L. Rev. 341, 344-345 (1983); Kurlantzick, Thoughts on Professional Sports and the Antitrust Law: Los Angeles Memorial Coliseum v. National Football League, 15 Conn. L. Rev. 183, 189-194 (1983); Note, Antitrust and Nonprofit Entities, 94 Harv. L. Rev. 802, 817-818 (1981). See generally Hennessey *103v. NCAA, 564 F. 2d 1136, 1151-1154 (CA5 1977); Association for Intercollegiate Athletics for Women v. NCAA, 558 F. Supp. 487, 494-495 (DC 1983); Warner Amex Cable Communications, Inc. v. American Broadcasting Cos., 499 F. Supp. 537, 545-546 (SD Ohio 1980); Board of Regents v. NCAA, 561 P. 2d 499, 506-507 (Okla. 1977); Note, Tackling Intercollegiate Athletics: An Antitrust Analysis, 87 Yale L. J. 655, 665-666, 673-675 (1978).

See Jefferson Parish Hospital Dist. No. 2 v. Hyde, 466 U. S. 2, 15-16, n. 25 (1984); Arizona v. Maricopa County Medical Society, 457 U. S., at 350-351; Continental T. V., Inc. v. GTE Sylvania Inc., 433 U. S. 36, 50, n. 16 (1977).

Indeed, there is often no bright line separating per se from Rule of Reason analysis. Per se rules may require considerable inquiry into market conditions before the evidence justifies a presumption of anticompetitive conduct. For example, while the Court has spoken of a “per se” rule against tying arrangements, it has also recognized that tying may have proeompetitive justifications that make it inappropriate to condemn without considerable market analysis. See Jefferson Parish Hospital Dist. No. 2 v. Hyde, 466 U. S., at 11-12.

“The Sherman Act was designed to be a comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade. It rests on the premise that the unrestrained interaction of competitive forces will yield the best allocation of our economic resources, the lowest prices, the highest quality and the greatest material progress, while at the same time providing an environment conducive to the preservation of our democratic political and social institutions. But even were that premise open to question, the policy unequivocally laid down by the Act is competition. And to this end it prohibits 'Every contract, combination ... or conspiracy, in restraint of trade or commerce among the Several States.’” Northern Pacific R. Co. v. United States, 356 U. S. 1, 4-5 (1958).

In this connection, it is not without significance that Congress felt the need to grant professional sports an exemption from the antitrust laws for joint marketing of television rights. See 15 U. S. C. §§ 1291-1295. The *105legislative history of this exemption demonstrates Congress’ recognition that agreements among league members to sell television rights in a cooperative fashion could run afoul of the Sherman Act, and in particular reflects its awareness of the decision in United States v. National Football League, 116 F. Supp. 319 (ED Pa.1953), which held that an agreement among the teams of the National Football League that each team would not permit stations to telecast its games within 75 miles of the home city of another team on a day when that team was not playing at home and was televising its game by use of a station within 75 miles of its home city, violated § 1 of the Sherman Act. See S. Rep. No. 1087, 87th Cong., 1st Sess. (1961); H. R. Rep. No. 1178, 87th Cong., 1st Sess., 2-3 (1961); 107 Cong. Rec. 20059-20060 (1961) (remarks of Rep. Celler); id., at 20061-20062 (remarks of Rep. McCulloch); Telecasting of Professional Sports Contests: Hearings on H. R. 8757 before the Antitrust Subcommittee of the House Committee on the Judiciary, 87th Cong., 1st Sess., 1-2 (1961) (statement of Chairman Celler); id., at 3 (statement of Rep. McCulloch); id., at 10-28 (statement of Pete Rozelle); id., at 69-70 (letter from Assistant Attorney General Loevinger).

“It is clear from the evidence that were it not for the NCAA controls, many more college football games would be televised. This is particularly true at the local level. Because of NCAA controls, local stations are often unable to televise games which they would like to, even when the games are not being televised at the network level. The circumstances which would allow so-called exception telecasts arise infrequently for many schools, and the evidence is clear that local broadcasts of college football would occur far more frequently were it not for the NCAA controls. This is not a surprising result. Indeed, this horizontal agreement to limit the availability of games to potential broadcasters is the very essence of NCAA’s agreements with the networks. The evidence establishes the fact that the networks are actually paying the large fees because the NCAA agrees to limit production. If the NCAA would not agree to limit production, the networks would not pay so large a fee. Because NCAA limits production, the networks need not fear that their broadcasts will have to compete head-to-head with other college football telecasts, either on the other networks or on various local stations. Therefore, the Court concludes that the membership of NCAA has agreed to limit production to *106a level far below that which would occur in a free market situation.” 546 F. Supp., at 1294.

“Tuming to the price paid for the product, it is clear that the NCAA controls utterly destroy free market competition. NCAA has commandeered the rights of its members and sold those rights for a sum certain. In so doing, it has fixed the minimum, maximum and actual price which will be paid to the schools appearing on ABC, CBS and TBS. NCAA has created the mechanism which produces a uniform price for each national telecast, and a uniform price for each regional telecast. Because of the NCAA controls, the price which is paid for the right to televise any particular game is responsive neither to the relative quality of the teams playing the game nor to viewer preference.

“In a competitive market, each college fielding a football team would be free to sell the right to televise its games for whatever price it could get. The prices would vary for the games, with games between prominent schools drawing a larger price than games between less prominent schools. Games between the more prominent schools would draw a larger audience than other games. Advertisers would pay higher rates for commercial time because of the larger audience. The telecaster would then be willing to pay larger rights fees due to the increased prices paid by the advertisers. Thus, the price which the telecaster would pay for a particular game would be dependent on the expected size of the viewing audience. Clearly, the NCAA controls grossly distort the prices actually paid for an individual game from that to be expected in a free market.” Id., at 1318.

Since, as the District Court found, NCAA approval is necessary for any institution that wishes to compete in intercollegiate sports, the NCAA has a potent tool at its disposal for restraining institutions which require its approval. See Silver v. New York Stock Exchange, 373 U. S. 341, 347-349, and n. 5 (1963); Associated Press v. United States, 326 U. S., at 17-18.

See Fashion Originators’ Guild of America, Inc. v. FTC, 312 U. S. 457, 465 (1941); Standard Sanitary Manufacturing Co. v. United States, 226 U. S., at 47-49; Montague & Co. v. Lowry, 193 U. S. 38 (1904).

“In this ease the rule is violated by a price restraint that tends to provide the same economic rewards to all practitioners regardless of their skill, their experience, their training, or their willingness to employ innovative and difficult procedures.” Arizona v. Maricopa County Medical Society, 457 U. S., at 348. The District Court provided a vivid example of this system in practice:

“A clear example of the failure of the rights fees paid to respond to market forces occurred in the fall of 1981. On one weekend of that year, Oklahoma was scheduled to play a football game with the University of Southern California. Both Oklahoma and USC have long had outstanding football programs, and indeed, both teams were ranked among the top five teams in the country by the wire service polls. ABC chose to televise the game along with several others on a regional basis. A game between two schools which are not well-known for their football programs, Citadel and Appalachian State, was carried on four of ABC’s local affiliated stations. The USC-Oklahoma contest was carried on over 200 stations. Yet, incredibly, all four of these teams received exactly the same amount of money for the right to televise their games.” 546 F. Supp., at 1291.

As the District Court observed:

“Perhaps the most pernicious aspect is that under the controls, the market is not responsive to viewer preference. Every witness who testified on the matter confirmed that the consumers, the viewers of college football television, receive absolutely no benefit from the controls. Many games for which there is a large viewer demand are kept from the viewers, and many games for which there is little if any demand are nonetheless televised.” Id., at 1319.

Even in the context of professional football, where Congress was willing to pass a limited antitrust exemption, see n. 28, supra, it was concerned about ensuring that telecasts not be subject to output limitations:

“Mr. GARY. On yesterday I had the opportunity of watching three different games. There were three different games on three different channels ....

“Would this bill prevent them from broadcasting three different games at one time and permit the league to enter into a contract so that only one game would be permitted?

“Mr. CELLER. The bill does not prevent what the gentleman saw yesterday. As a matter of fact the antitrust exemption provided by the bill shall not apply to any package contract which prohibits the person to whom league television rights are sold or transferred from televising any game within any area except the home area of a member club on the day when that club is playing a home game.

“Mr. GARY. I am an avid sports fan. I follow football, baseball, basketball, and track, and I am very much interested in all sports. But I am also interested in the people of the United States being able to see on television the games that are played. I am interested in the television audience. I want to know that they are not going to be prohibited from seeing games that might otherwise be telecast.

“Mr. CELLER. I can assure the gentleman from Virginia that he need have no fears on that score.” 107 Cong. Rec. 20060 (1961).

The impact on competitors is thus analogous to the effect of block booking in the motion picture industry that we concluded violated the Sherman Act:

“In the first place, they eliminate the possibility of bidding for films theater by theater. In that way they eliminate the opportunity for the small competitor to obtain the choice first runs, and put a premium on the size of the circuit.” United States v. Paramount Pictures, Inc., 334 U. S. 131, 154 (1948).

546 F. Supp., at 1294. One of respondents’ economists illustrated the point:

*109“[I]t’s my opinion that if a free market operated in the market for intercollegiate television of football, that there would be substantially more regional and even more local games being televised than there are currently. I can take a specific example from my home state of Indiana.

“I am at Ball State University, which until recently was a division one-A institution, although now is a division one-AA institution in terms of intercollegiate football. When Ball State plays Indiana State, that is a hotly contested game in an intrastate sense. That is a prime example of the type of game that probably would be televised. For example, when Ball State is playing Indiana State at Terre Haute, Indiana, that [would be] a popular game to be televised in the Muncie area, and, vice versa, in Terre Haute when the game happens to be in Muncie.” App. 506-507.

National Collegiate Athletic Ass'n v. Board of Regents of the University of Oklahoma

Related Cases