NCAA trial at halftime: Game over
NCAA's arguments in favor of amateurism seem to be falling flat in federal court
NCAA Trial At Halftime
The NCAA has been around so long, has so much cash, has so many friends in high places, has shaped the public mind so effectively about its need to exist, that it's hard to imagine it won't always exist. Then an unexpected moment of blinding clarity comes along that shakes the very foundation of that notion, and suggests the end is not just near -- that the end, actually, is here.
That moment presented itself last Thursday in the Oakland courtroom of U.S. District Court Judge Claudia Wilken, as she listened to testimony in what has become known as the Ed O'Bannon case. On the stand to her lower left was Neal Pilson, witness for the NCAA, a former CBS television executive who was there to say that without amateurism, many fans would turn away from college sports.
NCAA AT A CROSSROADS
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Skeptical, the lawyer for the plaintiffs read Pilson a quote from the writings of the late Paul "Bear" Bryant, in which the legendary University of Alabama coach observed in retirement, "I used to go along with the idea that football players on scholarship were student athletes, which is what the NCAA calls them, meaning student first and athlete second. We were kidding ourselves, trying to make it more palatable to the academicians. We don't have to say that, and we shouldn't. At the level we play, the boy is really an athlete first and a student second."
That was a win for the plaintiffs, just getting that in the court record. But then it got better.
The lawyer, Bill Isaacson, asked Pilson if he thought such an opinion has an impact on the affection that Crimson Tide fans have for their team, and more broadly, television ratings for games.
Pilson bristled, responding, "We're talking about the strongest possible school in terms of pro football. I read what Bear says, but I -- I think, frankly, the University of Alabama football advocates follow their team win or lose, paying them or not."
You read that right. The court transcript did not get it wrong. Pilson called Bama a pro team.
A couple of us reporters looked at each other to confirm what we thought we had just heard, before tweeting. For me, confirmation came in the form of the mass shifting of posteriors in courtroom seats after the verboten word fell from Pilson's expert mouth, an audible mash-up of doomsday nerves at the NCAA table of lawyers and restrained glee on the plaintiffs' side.
Pilson's choice of word could have been chalked up as inadvertent -- except it seemed the right one based on the testimony provided to Wilken. She heard from former Alabama receiver Tyrone Prothro about the NFL-quality workout areas and locker room/resort spa that serve the team's players. She saw the video game avatar that was created based on Prothro's physical and other characteristics. She learned that schools at the center of the college sports entertainment industry, like Alabama, derive more revenue than many sports franchises that declare themselves professional. That even former NCAA president Myles Brand tacitly abandoned ship in 2006, saying in his annual speech, "Amateur defines the participants, not the enterprise."
The idea might fly with member universities. It's hard to see how it flies under antitrust law.
The current NCAA chief, Mark Emmert, is due to testify on Thursday. Here's what he needs to know, as we enter the second half of a trial that has long threatened to reshape college sports: It's game over for the NCAA. Or at least game over in the way that one does not expect Chattanooga to make up a four-touchdown deficit to Alabama at halftime, in Tuscaloosa.
"They're stuck," one former NCAA insider who has been following the trial told me. "They're stuck in the arguments of the academic world, which differ from that of the real world."
The NCAA started strong, with a flea flicker. Lawyer Glenn Pomerantz cleverly led O'Bannon, the former star UCLA basketball player, down a logic pathway that he later regretted, prompting him to declare that players in the Little League World Series deserve to be paid because their games, too, are televised. Energized, the NCAA revisited the slippery slope with several subsequent witnesses, expressing horror at the idea of colleges offering high school prospects compensation packages that might include a deferred slice of revenues derived from the use of their names, images and likenesses on television and other licensed products.
But Wilken showed no interest in the issue. And why would she? The activities of youth and high school sports are not central to the allegation before her: That the NCAA is breaking federal law by restraining competition in the marketplace. As sports fans, we like competition. And so do the nation's laws, which prefer open markets under the notion that society thrives, and problems are best solved, when goods and services move most freely from buyer to seller. Restrict that flow with burdensome controls on the seller side, and you end up with an inch-thick NCAA rulebook of Byzantine proportions, endless so-called scandals such as Ohio State's tattoo-gate, and the raft of antitrust lawsuits now descending on cartel headquarters.
Even the NCAA's hired-gun outside economist, Daniel Rubinfeld, has called the NCAA a cartel. Plaintiffs' lawyers showed Wilken a textbook where he wrote as much. Rubinfeld will try to dance out of that when he takes the stand next week, but arguing otherwise would place him in contrast with just about every other economist who has analyzed the NCAA, an association of member universities that acts in a collective manner to regulate competition. Further, there's no dispute -- even on the NCAA side -- that the cartel fixes prices, another test under antitrust law. Its rules set the maximum allowed payment to athletes, above the value of any scholarships they receive, at $0.
Except ... when the NCAA wants to carve out an exception, usually to serve its needs. The latest deviation came on the opening day of the trial, when the NCAA announced that it agreed to pay $20 million to settle a separate-but-related lawsuit tied specifically to use of player names, images and likenesses in an EA Sports video game that has since been cancelled. Current players who are due a cut from the settlement will not be in violation of the NCAA's amateurism rules, NCAA chief lawyer Donald Remy told reporters later that day. Amateurism, whose definition has constantly evolved throughout NCAA history and has no basis in the law, is a very squishy concept -- rooted in idealism, perhaps, but now little more than a tool to control player costs.
In February at a pre-trial hearing, Wilken warned the NCAA, "I don't think 'amateurism' is going to be a useful word here." Still, NCAA lawyers have introduced that word dozens of times during trial questioning, as if saying it over and over makes it a legitimate defense. It reminds me of the tactic that the University of Washington and its supporters used back in 1992, when another Seattle Times reporter and I investigated the reigning national champions and found the quarterback had taken a $50,000 loan in violation of NCAA rules. Washington's response was to essentially repeat the mantra, Don James is the cleanest coach in college football. Sports Illustrated said so! The NCAA itself rejected that notion, banning the Huskies from bowls for two years and TV appearances for one year.
The NCAA should know better than to pin its future on dubious catchphrases. The doubling down on the usual talking points, and the sentimental invoking of friendly ghosts such as John Wooden, feels more like a PR strategy than a legal strategy. Or perhaps their lawyers are already thinking appeal and have given up on Wilken, who seems disinclined to accept at face value the NCAA's claim that it needs a free pass from the courts to draw up its rules in order to integrate athletics into the educational mission of schools. She's asked for proof.
Much of the testimony that the NCAA will put forth in the final half of the trial will try to establish as much. The organization controls the witness list, which beyond Emmert includes a college president (University of South Carolina president Harry Pastides, who testified Wednesday) and a conference commissioner (Big Ten's Jim Delany). But testimony is not the same thing as proof. Statistics showing that athletes make more money than athletes after college are helpful, but not causal. And there's a high bar to get over. Prothro and O'Bannon, like former Northwestern quarterback Kain Colter before them in the National Labor Relations Board case in Chicago, established that athletes put much more time into their sports, 40-plus hours a week, than their academics. They saw themselves as athletes first, students second, steered into majors or classes that didn't conflict with team requirements.
To Remy, Prothro and O'Bannon offer evidence of the value of college sports. "Tyrone Prothro provides an example of an individual who otherwise would not have access to an education if not for the University of Alabama," he told reporters after a court session. But did the NCAA's restraint on players receiving compensation for their names, images and likenesses need to be in place in order for that to happen? Would Alabama not offer that athletic scholarship if it also could offer something more, as well? These are the questions that matter to a judge weighing an antitrust claim.
Another question before Wilken: Does the restraint need to be in place for the product of college sports to succeed in the consumer marketplace? Rubinfeld will say yes, as did Pilson. But Pilson simply killed the NCAA on this point, saying fans at Alabama and many other schools don't care about whether athletes are paid. He thought that payments at some level might affect enthusiasm for the college football and basketball product, that $5,000 was OK but $1 million was not, but it was all opinion. He offered no data to support his point of view.
Later in the trial, the NCAA will present results from a consumer survey suggesting that some fans will turn off from the game if players are paid. It could earn points with the judge there. But plaintiffs' economist Dan Rascher has already established that what fans say they will do, and what they end up doing, are two different things. Fans resisted free agency in baseball, but the sport has grown since, certainly as an industry. Same story with tennis when it moved to the Open era, and the Olympics when it opened up to professionals.
While the NCAA has ample cash to fight this and other antitrust suits -- in part because they've restricted that loot from reaching players -- its lawyers have been dealt a poor hand. So the cards they're playing are sentiment and technicality, the five of diamonds and four of clubs in an antitrust argument. One of their key arguments is that players have no name, image and likeness rights in the first place, that there's nothing for the schools and NCAA to transfer to broadcasters when they sign these billion-dollar deals. Further, they claim that they aren't actually selling games to broadcasters, but access to a stadium, empty or otherwise. Got it.
These notions defy common sense and do not square with the reality of those familiar with the organization's business dealings. "I don't recall ever getting into a conversation about stadium access," the former NCAA insider told me. "The reality is these are competitions that are ticketed, with special access functions. The media agreements were to record those events."
The NCAA has objected strenuously to the inclusion of live broadcasts into a lawsuit that started five years ago with O'Bannon's claims related to video games. But in today's media, the platforms are symbiotic. EA's "NCAA Football" was seen by the NCAA as a tool to connect with kids and drive them into the live broadcast. Fans then flip on the TV and see studio hosts demonstrating plays with virtual players, also in service of game promotion, and with sponsors attached.
EA and the IMG-owned Collegiate Licensing Company, which handled the licensing for the NCAA, settled their side of the video games claim in May for $40 million after emails emerged showing the lengths they went to in order to exploit specific player likenesses in avatars. Wednesday, EA executive Joel Linzner testified that he wanted to and was willing to pay players for such use, but was prohibited by NCAA rules. It's another bad turn for the NCAA, as his statement shows that there is a market for players' licensing rights, another factor that matters under antitrust law.
Emmert has a lot of ground to make up for the NCAA. But he's like Dennis Rodman coming off the bench, potentially just as much a liability as an asset. One of the reasons the NCAA says it needs the restraint on players is that it allegedly promotes competitive balance, that by denying them a share of media revenues, talent is more likely to go to programs with lesser resources. But Emmert has a long record of saying just the opposite. Expect the plaintiffs to present quotes from Emmert such as, "When you look at a student who's being recruited by heavily funded institutions, those kids are rarely asking, 'Do I go here, or do I go to an institution that has less money?' If students have the opportunity to go to that dominant athletic program, they're going to go." And: "I don't think any of the Butler kids were recruited by, you know, Kansas."
He's right. Statistics presented by Rascher show that an overwhelming number of four- and five-star recruits already go to the power conferences.
Wilken, annoyed as she has been about some of the techniques used by NCAA lawyers in their questioning of witnesses, has been careful not to tip her hand as to which way she may rule. She, an audience of one, could still rule in favor of the NCAA when her written decision is issued, most likely no earlier than August. But the NCAA's inability to support its position with factual data spells trouble for the governing body and will continue to do so as the appeals process plays out.
Along the way, over the first half of the trial, we've also gotten a sense of how an injunction against the NCAA might play out. Michael Hausfeld, lead lawyer for the plaintiffs, describes a college sports industry in which the conferences, not the NCAA, have the power to determine the compensation levels of athletes. Unlike the NCAA, none of the conferences have market power, meaning more than half of the total college sports market. So each can set its rules without worrying about violating federal antitrust laws. The SEC, for instance, could decide among its members to share, say, 32 percent of all media and licensing revenues with the athletes; the Big Ten, meanwhile, could provide 25 percent but guarantee all scholarships through grad school or add other benefits that make sense to its members.
As long as the conferences don't get in a room together and agree to fix prices in the way the NCAA currently does, they're golden. They're competing, as required under federal law.
This scenario challenges the model that is being pursued by the power five conferences, which are pushing for more autonomy within the NCAA structure to make decisions. Whatever they end up voting on in August may end up getting revised if Wilken rules against the NCAA and the model that Hausfeld submits as legal takes hold.
In the end, what's unlikely to hold is the notion that Alabama football is an exercise in amateurism.
Indeed, maybe we're already moving on. Most interesting about Pilson's oral gaffe on the stand was that no one -- not the judge or even the NCAA's lawyers -- tried to correct his testimony. They let it go, saying nothing, perhaps not wanting to draw any more attention to it. Or because any further pursuit of that correction might lead down a path that demonstrates Bama has more in common with the Dallas Cowboys than the Chattanooga Mocs.
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