NCAA Expert Defends Pay Caps in Antitrust Trial

OAKLAND, Calif. (CN) – Lawyers for student athletes challenging the National Collegiate Athletic Association’s caps on the amount of compensation they get playing college sports failed to prove in a federal bench trial Thursday the association’s conferences would enact their own caps if the national ones are scrapped.

Three classes of 53,000 current and former Division I football and men’s and women’s basketball players are trying to convince U.S. District Judge Claudia Wilken in Oakland to eliminate the caps.

They reason the NCAA’s individual conferences will enact their own limits on compensation to preserve amateurism in college sports, which is valued by many fans and believed to be a significant revenue driver.

But the NCAA says there is no guarantee the conferences would enact them. More likely, it says, wealthier schools would begin offering potential team members “millions of dollars” to play for them in the absence of pay limits, essentially turning those players into professional athletes.

Revenues from college sports would shrink, the NCAA argues, because fans who value amateurism would stop buying tickets to games, and television networks would pay conferences less money to broadcast the games.

The case stretches back to 2014, when former Clemson University football player Martin Jenkins sued the NCAA and its conferences for anti-competitive conduct and an injunction eliminating caps on compensation and benefits.

The NCAA sought dismissal, saying the claims were identical to those litigated in O’Bannon v. NCAA. In that case, the Ninth Circuit held that member schools need not compensate athletes above the cost of attendance.

In 2015, the NCAA relaxed its rules to allow schools to compensate athletes up to the cost of attendance. Many athletes already receiving federal Pell grants and student assistance funds administered by the NCAA were compensated above the cost of attendance once the change took effect, according to the parties.

The NCAA settled with the Jenkins classes in 2017 classes for $208 million. But Wilken said class members could still pursue an injunction, clearing the way for a two-week bench trial on the issue.

Seeking Thursday to convince Wilken the conferences would cap compensation under an injunction, class attorney Jeff Friedman tried repeatedly to elicit testimony from NCAA expert witness Kenneth Elzinga confirming the conferences wouldn’t allow unfettered competition.

The Hagens Berman Sobol Shapiro attorney noted that American Athletic Conference Commissioner Mike Aresco said in a deposition he believed television stations would pay substantially less to broadcast games if players were paid more money.

“Mr. Aresco’s view is if players were paid, it would adversely affect consumer demand,” Friedman told Elzinga, an economist at the University of Virginia. “Do you believe that a hypothetical commissioner acting economically rationally – who believed consumer demand would go down if players were paid – that that hypothetical commissioner would advocate for his or her conference to pay players?”

Elzinga replied potential lost profits from a perceived reduction in amateurism wouldn’t necessarily deter a school or conference from increasing athlete pay.

“A rational commissioner could,” he said, “because the rational commissioner may decide engaging in a strategy that generates immediate benefits” in the form of enlisting a star player would offset the long-term costs of decreased revenues, as long as the other conferences shouldered some of those costs.

“There is no doubt that an individual [school or conference] may be penalized by having a degraded product, but it has to be offset by potential benefits,” he said.

To prevent a school or conference from benefiting at the expense of others in the system by deviating from the rules, Elzinga said, a national body like the NCAA must be allowed to set and enforce compensation limits across conferences.

“You agree upon a common standard and enforce it within the joint venture,” he said.

Testimony continues Friday.

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