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Economist Casts Doubt on NCAA Pay Cap at Antitrust Trial

An antitrust economist handed a win on Wednesday to student athletes challenging  the National Collegiate Athletic Association's rules capping compensation for playing college sports, contradicting his own research categorizing some types of compensation as "pay to play."

OAKLAND, Calif. (CN) - An antitrust economist testifying in a federal bench trial over the National Collegiate Athletic Association's caps on compensation for student athletes contradicted his own research Wednesday categorizing some types of compensation as "pay to play," boosting athlete claims that the caps are unjustified.

University of Virginia economist Kenneth Elzinga disputed that giving student athletes incidental benefits, like plane tickets home to attend a funeral, amounts to paying athletes to play for their schools.

Elzinga made the statement on behalf of the NCAA even after confirming that his previous research characterized the provision of incidental benefits above the cost of attendance as a breach of the NCAA's definition of amateurism, which prohibits payments to students for playing sports.

"I do not consider that pay to play," Elzinga said of incidental benefits after a long pause.

Accusing the NCAA of anti-competitive behavior, former Clemson University football player Martin Jenkins and three classes of current and former Division I football and men’s and women’s basketball players are suing for an injunction eliminating NCAA caps on compensation and benefits.

Although the NCAA and its conferences settled the case for $208 million in December 2017, presiding U.S. District Judge Claudia Wilken in Oakland ruled class members can still pursue an injunction, clearing the way for a two-week bench trial on the issue.

The NCAA's trial argument hinges on its contention that paying student athletes above the cost of attendance diminishes revenues, as fans who value amateurism turn elsewhere for entertainment.

Games would "readily degenerate into an uninteresting" mismatch, it argued in a written opening statement.

Noting that student athletes received compensation above the cost of attendance even before the NCAA relaxed its compensation rules in 2015, the NCAA says the case is about the elimination of compensation caps altogether. It predicts without them, wealthier schools will begin offering prospective players "millions of dollars" to play for them, while poorer schools will struggle to attract recruits.

A day earlier, Pac-12 Conference attorney Bart Williams, with Proskauer Rose, called the plaintiffs' prediction that individual conferences would pass their own compensation caps in the event an injunction is granted “speculation."

But on Wednesday, Stanford University sports economist Roger Noll called the NCAA's concept of amateurism "a fiction.”

Testifying for the plaintiffs, Noll explained the NCAA's amateurism rules change annually, as additional items are deemed eligible for compensation under the rules.

Whereas things like emergency travel funds were considered professional sports payments five or 10 years ago, they aren't now, Noll said.

"Whatever doesn't violate NCAA rules - that's the definition of amateurism," he said on cross-examination. "Whatever they say is allowed is consistent with amateurism."

Noll also said there is no empirical evidence to suggest the 2015 rule change allowing schools to compensate student athletes the cost of attendance had diminished sports revenues.

The change was in part a response to O'Bannon v. NCAA, in which the Ninth Circuit held that NCAA-member schools need not compensate athletes above the cost of attendance.

Elzinga, however, has said in his expert reports the rule change has caused sports revenues to drop.

He also disputed Wednesday the characterization of the NCAA's definition of "pay" under its amateurism rules by class counsel Jeff Friedman, who is with Hagens Berman Sobol Shapiro.

According to Friedman, NCAA bylaws define "pay" as the payment of funds, awards or benefits not permitted by the NCAA's governing body.

"Essentially what that definition says is 'pay' is what we say it is at that moment in time, is that right, sir?" he asked Elzinga.

"That's not my view," Elzinga replied as court adjourned for the day.

Elzinga's testimony continues Thursday.

Categories: Business Education National Sports

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