NCAA Trots Out Economics Expert in Trial
OAKLAND, Calif. (CN) - NCAA attorney Glenn Pomerantz was careful to ensure that his economics expert included the words "name, image and likeness" in his definition of pay-for-play during his testimony in the NCAA antitrust trial Thursday. U.S. District Judge Claudia Wilken seems very interested in the subject and has asked questions about it during the trial.
Last week, Wilken questioned Nobel laureate economist James Heckman about whether being paid for one's name, image and likeness is "the same as being paid for the activity itself."
On Thursday, she asked economist Daniel Rubinfeld why he kept using "pay for play" when referring to student athlete payments.
"I'm having trouble with the use of the term pay for play. Do you include in that the use of pay for name, image and likeness?" Wilken asked, interrupting Rubinfeld after he'd said: "The market has spoken. There are lots of amateur institutions and none of them allow pay for play."
Rubinfeld said that in his mind, they're the same thing.
The issue stems from a lawsuit brought by a class of student athletes led by former UCLA basketball player Ed O'Bannon, who claim they should be paid for the use of their names and images in TV broadcasts. After settling claims with sports video game maker EA, their claims remain against the NCAA for rights to a share in the revenue from television broadcasts.
Rubinfeld said that other collegiate athletic associations, high school associations, and even the amateur tennis league in which he competes disallow compensation as part of their tenet of amateurism.
Amused by Rubinfeld saying he had only been paid in the form of reimbursement for a can of tennis balls, Wilken asked, "You mean there wasn't a bobble head?"
Questioning got serious as Rubinfeld delved into the economic issues of the case. He touted the "pro-competitive benefits" of NCAA rules that prohibit payment to student athletes beyond the cost of attending school. He said the rules increase the number of teams, the number of games, the popularity of college sports and the happiness of fans, arguably the consumers in this situation.
If those restrictions are lifted, as the O'Bannon class asks, it would "reduce output" and "harm consumer welfare," Rubinfeld said.
"It's likely that output would diminish if those rules were changed, because we would be in a world where there was pay for play and that would lead to competition that would have some schools choosing to pay substantial sums to recruit athletes and some schools choosing not to participate for financial or philosophical reasons."
Pomerantz asked: "What if the payments were for name, image and likeness rights? Would your answer be any different?"
"No," Rubinfeld answered.
Wilken stopped Rubinfeld to ask about competitive balance. She seemed hung up on Pomerantz's argument that wealthier schools with bigger programs would end up winning more games and hurting competitive balance.
"Payments to the players wouldn't make the school have less money," Wilken said. "It might be allocated differently, but they wouldn't have any more or less money."
The judge pointed out that as it is now, wealthier schools already use all sorts of tactics that require money to attract the best prospects, such as paying skilled coaches and building new facilities.
Pomerantz answered: "All it would do is show the cash payments that would go to the student athletes for their NIL [name, image and likeness] rights, if the rules were changed as the plaintiffs are asking. So they would pay cash."
Rubinfield added: "The resources will be the same but in the world we're describing more money would be available to recruit athletes directly.This is a prediction about the future, which economists do all the time."
On cross-examination, Rubinfeld insisted that the NCAA is not a cartel. He had already testified that it was, by definition, as it consists of entities that join together and agree to form restraints on a market, but he pushed another characterization with plaintiff attorney Michael Hausfeld.
Rubinfeld said he would call the NCAA a joint venture, kind of an offshoot of a cartel, but one where the restraints it imposes produces competitive benefits.
Hausfeld drew chuckles from the courtroom when he asked if Rubinfeld had heard of Adam Smith. He quoted from Smith's "Wealth of Nations," saying, "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public."
"Regardless of the name used," Hausfeld said, when combinations of competitors get together to enforce agreements, restraint of trade inevitably results.