NCAA Antitrust Trial Looks at Money’s Effect on Smaller Leagues

     OAKLAND, Calif. (CN) – As student athletes’ class-action antitrust trial against the NCAA headed into its third week Monday, plaintiffs’ attorney Seth Rosenthal argued that even smaller college conferences are profiting massively from student athletes and pouring that money into ever more extravagant programs.
     “It’s fair to say there’s been an arms race in college sports,” Rosenthal said while questioning Conference USA Commissioner Britton Banowsky.
     Banowsky said he wasn’t sure what an “arms race” meant, but said he generally agreed that, “there hasn’t been discipline with the resources.”
     Conference USA is a mid-level conference of 16 Southern schools, including Rice University, Louisiana Tech, Tulane, Old Dominion, Marshall and East Carolina University.
     Banowsky said his conference has done “a better job” of keeping expenditures in line than others, but he’d like to see revenue from athletics directed toward other university programs.
     “We’ve see this growth in expenses,” Banowsky said. “As the revenues flow in, instead of capturing those to give to the library it’s just plowed back in to the athletic endeavors.”
     A lot of this revenue growth stems from lucrative television broadcast contracts. Even the smaller Conference USA has seen an $84 million revenue boost from two 6-year agreements with FOX and CBS Sports TV.
     “The size of the pie is enormous now for revenue for college athletics isn’t it?” Rosenthal asked. “You agree the athletes are at least in part responsible for this increase in revenue that CUSA has enjoyed. Without them there would be no product.”
     “There is more revenue flowing into the system than there has been ever, and there is significant growth in media revenues,” Banowsky said, adding that without the student athletes, there would be nothing to televise.
     Still, Banowsky said, most athletic departments in Division One schools around the country make no profit, and only a handful are self-supporting.
     Led by former UCLA basketball player Ed O’Bannon, college athletes are suing the NCAA for the right to a share in the television broadcast revenue for their names, images and likenesses.
     NCAA attorney Kelly Klaus asked Banowsky if schools would raise student fees to cover the cost of paying student athletes.
     “They might try, but what I’m hearing is funding is very tight,” Banowsky said. “State funding is tight. The ability to continue to raise student service fees for athletics is – something no president wants to travel that path. You’ve got students graduating in debt and you’re asking them to take on more for an athletic fee. I think that would be very difficult for a university president to undertake.”
     Klaus tried to show that if schools were forced to negotiate licensing agreements with college athletes, schools with less money will have no chance at competing against the bigger programs with more money.
     “What will be the effect of ability of Rice and other members to compete for prospective student athletes in the event that other schools were negotiating group licenses and paying significant compensation in those sports?” Klaus asked.
     “I doubt Rice would do that. But if other schools out of state were able to provide compensation above education costs, then I’m certain it will influence decision-making of the student athletes that Rice was recruiting,” Banowsky replied.
     He continued: “If you concentrated all the best players in schools with the highest resources, over time it would have a negative competitive effect. The teams with the best players would win more consistently then they do now.”
     During Rosenthal’s cross-examination, Banowsky said he would support some kind of compensation held in trust that student athletes can get after graduation, but that it must not be any more than the cost of attending school.
     Rosenthal pushed him on that point.
     “There’s so much money in the system right now that you believe you can set up a trust fund without undermining the concept of amateurism, ” Rosenthal said.
     “I’m an advocate for incentivizing athletes to graduate,” Banowsky said, “So long as it stays within the collegiate model and the fund doesn’t exceed the cost of their education.”

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