By: Kaitlyn Scherz
The Pac-12 we all knew and loved (or hated, depending on where you’re from) ended in 2024. With poor management regarding the conference’s media rights deal with ESPN, ten member schools fled to other conferences, leaving behind Washington State and Oregon State to fend for themselves.[1] Faced with no other choice for the 2024 football season, the Pac-12 entered into an agreement with the Mountain West Conference to play its member schools.[2] As an expression of gratitude for letting its schools play with the Mountain West, the Pac-12 subsequently recruited five of the Mountain West’s member schools to join the Pac-12.[3] While the Mountain West placed a provision in its contract with the Pac-12 that imposes poaching penalties reaching $55 million in liquidated damages to protect itself from this exact scenario, the Pac-12 is challenging the provision as a violation of Section 1 of the Sherman Antitrust Act.[4]
The Pac-12 filed a lawsuit in the U.S. District Court in the Northern District of California seeking declaratory judgment that renders the poaching penalties unenforceable.[5] The Pac-12 alleges that the poaching penalties create a barrier to entry for Mountain West member schools seeking to enter the Pac-12.[6] The Pac-12 emphasizes that the poaching penalty restricts its ability to present competitive offers to Mountain West members schools which limits the schools’ mobility.[7] The Pac-12 further argues that paying the $55 million poaching penalty would deplete the conference of its resources to rebuild itself and recruit additional schools.[8]
The Pac-12 asserts that the poaching penalty is per se unlawful and the Mountain West cannot provide any substantive justifications, so the judge’s analysis should end there.[9] However, the Pac-12 acknowledged that even if the rule of reason were to be applied, the procompetitive justifications for the poaching penalty are pretextual.[10] While the Pac-12 may be sure that the poaching penalty is a per se violation, antitrust cases involving sports leagues and conferences are subject to the rule of reason standard.[11] Under the rule of reason, the Pac-12 would have to show that the poaching penalty unreasonably restrains trade in terms of competition for the Mountain West’s member schools. Once that showing has been made, the Mountain West will have an opportunity to show the procompetitive justifications for the poaching penalty. If that showing is made, the Pac-12 will be able to argue that the Mountain West could have achieved the same outcome through less restrictive means.
The Pac-12’s showing that the poaching penalty restricts trade can be shown through the high amount it must pay that clearly serves as a deterrent for the Pac-12 to recruit Mountain West member schools. The poaching penalty is also in effect until the Pac-12’s grace period to rebuild itself to the required minimum eight member schools expires, demonstrating the Mountain West saw its member schools as a target for the Pac-12’s recruiting efforts and wanted to protect itself from a mass exodus like the Pac-12 experienced.[12]
However, the Mountain West has some possibly compelling procompetitive arguments in favor of the poaching penalties. The Mountain West could argue that as it is a conference in a sports league, it needs to have provisions like the poaching penalty in place to be able to put a product on the field in the first place. Sports leagues must have some anticompetitive rules to create uniformity in its product. If teams could leave conferences without penalties and compete on their own, the conference structure itself would collapse. The Mountain West could further argue that the poaching penalty is not preventing its member schools from leaving the conference, the Pac-12 merely has to pay the poaching penalty it agreed to pay in the agreement. If the Pac-12 thinks the cost of the poaching penalty is too high, it can charge the schools it recruits an entrance fee or an expansion fee to recoup the cost of the poaching penalty.
If a court agrees with the Mountain West’s arguments, the Pac-12 could argue that the Mountain West could have enforced its exit fees bylaw against the member schools without imposing a poaching penalty on the Pac-12. Exit fees are a common practice by conferences to prevent member schools from leaving, and even the Pac-12 received $65 million in exit fees from the ten schools that left the conference.[13] The Pac-12 may argue the Mountain West’s member schools were disincentivized from leaving the conference through the exit fees, and the poaching penalty is the Mountain West doubling up on preventing the schools from leaving.
Whether the Pac-12 will succeed on its claim against the Mountain West will not change the decision of the Mountain West member schools who have already decided to leave, but it could be a lesson to all college conferences that they cannot get too protective of their member schools.
[1] Austin Curtright, What happened to the Pac-12? Explaining the fall and rebuild for former power five league, USA Today (Jan. 1, 2025), https://www.usatoday.com/ [https://perma.cc/WUT9-WJ9K].
[2] Kyle Bonagura, Pac-12 files ‘poaching penalty’ lawsuit in federal court, ESPN (Sept. 24, 2024), https://www.espn.com/ [https://perma.cc/K98C-PU97].
[3] Ralph Russo, Mountain West files motion to dismiss Pac-12 lawsuit challenging poaching penalties, The Athletic (Nov. 25, 2024), https://www.nytimes.com/ [https://perma.cc/7GCC-CXVK].
[4] Complaint for Declaratory Judgment, The Pac-12 Conference v. The Mountain West Conference, No. 4:24-cv-6685 (N.D. Cal. Sept. 24, 2024).
[5] Id.
[6] Id. at ¶ 6.
[7] Id.
[8] Id. at ¶ 8.
[9] Id. at ¶ 64.
[10] Complaint for Declaratory Judgment, supra note 4, at ¶ 65.
[11] Nat’l Collegiate Athletic Ass’n v. Bd. of Regents of Univ. of Oklahoma, 468 U.S. 85, 86 (1984); Am. Needle, Inc. v. Nat’l Football League, 560 U.S. 183 (2010).
[12] Complaint for Declaratory Judgment, supra note 4, at ¶ 52.
[13] Eben Novy-Williams & Michael McCann, PAC-12 TO KEEP $65+ MILLLION FROM EXITING SCHOOLS IN SETTLEMENT, Sportico (Mar. 24, 2024), https://www.sportico.com/ [https://perma.cc/E6HZ-EMAU].
