June 16, 2014

In re Student Athlete Name and Likeness Litigation – Recap Of The First Week Of Trial

By David Scupp

The participants in the highly anticipated, and potentially transformative, antitrust trial In re Student Athlete Name and Likeness Licensing Litigation spent their first week of trial grappling with the myths and realities of college athletics.

Plaintiffs, led by former UCLA basketball star Ed O’Bannon, challenge the NCAA’s rules denying compensation to college athletes for use of their name and likeness in television broadcasts, rebroadcasts, game clips, and video games. To win, plaintiffs will have to overcome the NCAA’s “amateurism” justification for restricting its athletes’ compensation – a defense that the NCAA has employed successfully for decades. This will be one of, if not the, primary battlegrounds in the case. Much of the testimony heard during the first week of trial focused on this issue.

Plaintiffs opened their case by calling O’Bannon himself. His testimony sought to debunk the “myth” of the “student athlete” that participates in college athletics merely as an “avocation.” He explained that at UCLA academics were not a priority, with the 40 to 45 hours he spent per week on basketball related activities, dwarfing the 12 hours per week he spent studying. O’Bannon asserted that he attended UCLA to play basketball, and only “masqueraded” as a student. He also made clear that he does not see college athletes as “amateurs.”

O’Bannon was followed by plaintiffs’ economist Roger Noll, a professor emeritus at Stanford University. His testimony developed the framework for plaintiffs’ rule of reason antitrust case.

Noll characterized the NCAA as a cartel that implements a price-fixing agreement among its member schools, and harms competition in two markets: (1) the higher education services market in which schools compete for the best athletic prospects; and (2) the sub-market of the collegiate licensing market, in which broadcasters and video game developers compete for licenses to make commercial use of athlete’s names, likenesses, and images.

Noll stated that the source of the NCAA’s market power is its rules and restrictions on athletes, and the rewards to the athletes for participating (presumably a “free” college education and a shot at the pros, etc.). He explained that college athletes suffered antitrust injury because they could not profit off of their name, image, and likeness, that the NCAA’s restraints reduce the number of scholarships that schools would otherwise offer, and that they also reduce the quality of products involving athletes’ name, image, and likeness. He also opined that the NCAA’s restraints do not enhance competition at all.

Noll also gave testimony debunking the NCAA’s “amateurism” defense and other pro-competitive justifications. He disagreed with the NCAA’s statement that college athletes participate in sports as an “avocation,” claiming that hasn’t been the case for 100 years. He also noted that the Olympics – the former bastion of “amateur” athletics – became much more popular after removing restrictions on athlete’s compensation. Noll also agreed that the NCAA’s “amateurism” requirement does not help level the playing field, and may actually prevent weak teams from improving. He testified that the NCAA’s restraints do not help integrate academics and college sports, and noted that athletes are often separated from non-athletes. Noll’s testimony also explored less restrictive alternatives such as deferred payments, group licenses, and direct sponsorship.

Following Noll’s two days of testimony, former Alabama football star Tyrone Prothro took the stand. His testimony complimented O’Bannon’s in its description of how athletics, not academics, dominated Prothro’s college life. Prothro testified that he spent 40 hours per week on football activities at Alabama, and that he felt like “an athlete first, and a student second.”

Edward Desser, former president of the National Basketball Association Television and New Media Ventures, was plaintiffs’ next witness. He has been in the sports media business for 37 years and claims to have negotiated hundreds of sports TV contracts. His testimony supported plaintiffs’ argument that athletes’ name and likeness rights are transferred as part of television deals. That transfer may either be express in the contract or implied, but (contrary to the NCAA’s argument) it necessarily exists. No one, noted Desser, wants to televise an empty arena or have to blur out the players.

Desser was followed by the NCAA’s expert Neal Pilson, a former CBS executive and NCAA media consultant. In contrast to Desser, Pilson’s testimony supported the NCAA’s argument that the NCAA conveys the rights to access stadiums and arenas, not the rights to the players’ names and likenesses. He also opined that paying college athletes would have a negative impact on college sports.

Next to testify was sports economist Dan Rascher. He testified that NCAA football and basketball is as big – if not bigger – business than most “professional” sports. He also attacked the NCAA’s financial reports as understating revenues and overstating expenses. He also opined that compensating college athletes would not drive fans away, and also disagreed that paying college athletes would unlevel the playing field. College sports, according to Rascher, are already heavily unbalanced, with the same group of basketball and football teams winning each year.

Concluding the first week of testimony was former Vanderbilt football player Chase Garnham. Like O’Bannon and Prothro, Garnham explained how football overshadowed academics during his time in college.

Week two of trial begins today. The day will begin with the conclusion of Garnham’s testimony. He will be followed by Professor Ellen Staurowsky, one of the leading academics on Title IX. Prof. Staurowsky is likely to cover a variety of matters relating to athletics and education.

Edited by Gary J. Malone

Categories: Antitrust Litigation

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