OAKLAND, Calif. -- Why doesn't the NAIA try to compete for NCAA players by paying them? That was the crux of one argument by an NCAA expert who said Wednesday the Ed O'Bannon plaintiffs have not proven they are harmed by NCAA rules preventing them from being paid.
NCAA economic expert Lauren Stiroh testified that if, as the plaintiffs allege, college athletes are meaningfully restricted under antitrust law from being paid for their names, images and likenesses, universities outside the NCAA would be attempting to “fill in the gap” by paying players.
“So some rival NCAA would try to round up other schools not in the NCAA?” U.S. District Judge Claudia Wilken asked, sounding skeptical.
Stiroh explained that numerous college athletic associations could pay players, starting with the National Association of Intercollegiate Athletics (NAIA). Since O'Bannon economic expert Roger Noll previously said the NCAA doesn't compete with these associations, the market should correct itself if there's an NCAA restriction based on antitrust analysis, Stiroh said.
The early portion of Day 13 of the O'Bannon trial focused on consumer surveys. The afternoon hit on the complicated and difficult world of antitrust analysis. As evidenced by Wilken's repeated questions during Stiroh's testimony, which will resume Thursday, that's the area where the case ultimately figures to be decided.
The O'Bannon plaintiffs have alleged the NCAA's rules against being paid hurts two markets: the “college education” market, in which schools compete to recruit the best players; and the “group licensing market,” in which broadcasters and video game developers compete for group licenses to use names, images and likenesses of players.
Stiroh said the NCAA rules don't restrict the education market because, for instance, there are no allegations of too few players or too few games. Stiroh agreed there's an alleged harmed market for use of athletes' names, images and likenesses (NILs), but believes the plaintiffs haven't proven the harm.
According to Stiroh, for there to be an antitrust issue there has to be an affect on the market that eventually impacts consumers. For instance, Stiroh said the plaintiffs haven't examined what happens to the price and output in the video-game market by withholding college athletes' names. In other words, Stiroh said, EA could make other video games unrelated to college sports.
Wilken remarked that would be a market for video games of college football and basketball players that can't be filled by dancers.
Stiroh said professional sports agreements show broadcast payments are used for athletes' salaries for playing in games, not NIL transactions. The plaintiffs are trying to get a share of TV revenue moving forward. Jerseys being sold with player numbers is a royalties or intellectual property dispute, not an antitrust issue, she said.
O'Bannon attorney Bill Isaacson pressed Stiroh on her reasoning that other college athletic associations could pay players.
He showed some rules in the National Christian Athletic Association, which is one of the alternatives listed in Stiroh's expert report. Among the rules for that association: coaches and players can't use profanity or abusive language, and schools must sign and comply with a statement of religious faith. The unspoken message by the plaintiffs: NCAA players aren't going to want to play in an association with less resources and rules such as those.
“Did you even investigate any of these rules, doctor?” Isaacson asked. Stiroh said she had reviewed some of them, not all.
Grand View University in Iowa, the NAIA football champion last season, reported athletic department revenue of $6.3 million in 2012-13. Florida State, the national champion in major college football, listed its revenue at $89.1 million.
NCAA chief legal officer Donald Remy said it's not a question of whether the NAIA or others have the finances to be competitive. Rather, Remy said, Stiroh's point is that within the context of antitrust analysis, other organizations that don't have the NCAA's alleged restraints could compete in that space by paying players. Remy cited as an example the USFL's entry into professional football to compete with the NFL.
“There's no restraint on the rest of the world from developing the product that the plaintiffs' lawyers want and competing against the collegiate model of athletics that the NCAA has had for 100 years, and say ours is better,” Remy said.
After Stiroh's testimony ends, the NCAA has two more witnesses to call before the trial ends Friday: economic expert Daniel Rubinfeld and NCAA executive vice president for championships and alliances Mark Lewis.