Questions of price-fixing, amateurism fill first day of O'Bannon trial

Tuesday June 10th, 2014

Ed O'Bannon's case against the NCAA commenced on Monday morning in a courtroom in Oakland, Calif.
Isaac Brekken/AP

OAKLAND, Calif. -- You've presumably seen the word referenced in various columnists' inflammatory anti-NCAA screeds over the years. On Monday, in the first day of testimony in Ed O'Bannon v. NCAA, the nefarious-sounding noun entered the official record in a landmark federal antitrust suit, albeit in a strictly academic connotation.

"The NCAA," said Stanford professor of economics Dr. Roger Noll, "is a cartel that creates a price-fixing scheme among its members."

Over the next three weeks, U.S. District Judge Claudia Wilken's courtroom will play host to a de facto class in the business of college athletics. There will be discussions about video games, jersey sales and television broadcasts. One attorney on Monday asked O'Bannon: "What is a training table?"

Still, the fate of the NCAA's longstanding amateurism model -- the one that expressly prohibits student-athletes from receiving compensation beyond their scholarship -- rests on the plaintiffs' ability to prove one essential legal question: Is the NCAA an anti-competitive monopoly?

This is not a jury trial, so Wilken alone will ultimately provide the answer.

After nearly five years of motions, depositions, hearings and even settlements with former co-defendants Electronic Arts and the Collegiate Licensing Company (including another one announced on Monday), college sports' most important lawsuit in 30 years has finally reached trial. Wilken called the court to order at 8:35 a.m. Pacific Time on Monday, and by 8:36, O'Bannon was taking an oath as the opening witness.

The former UCLA basketball star answered questions for just under two and a half hours. Lead plaintiffs' attorney Michael Hausfeld's strategy was obvious. In asking a series of detailed questions about both O'Bannon's recruitment and the time commitments of major college basketball, Hausfeld was clearly trying to establish that heavily recruited stars such as O'Bannon are primarily athletes, not students.

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O'Bannon said he spent 40 to 45 hours a week on basketball and only about 12 on academics. He said he took easy courses to which his advisers steered him and did not get to take desired drama and speech courses that conflicted with basketball. "I was an athlete masquerading as a student," he said.

One might wonder why O'Bannon's attitudes concerning academics have any bearing on the fact that he felt wronged seeing his avatar used in one of EA Sports' video games -- the original crux of this case. It's because one of the arguments the NCAA is expected to make in defense of its current model is that amateurism must be preserved is to maintain the "integration of academics and athletics."

"The fiction that's been put forward by the NCAA for decades ... is that the athlete is a student first," Hausfeld said afterward. "In fact, Mark Emmert said the athlete is a student who just happens to be an athlete. That's nonsense."

During cross-examination, NCAA lead attorney Glenn Pomerantz got O'Bannon to admit he enjoyed his experience at UCLA, including benefits beyond his scholarship (like visiting the White House after winning the 1995 national title). That's cute and all, but it doesn't address whether the NCAA engages in price-fixing.

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More pertinently, Pomerantz suggested -- as the NCAA has repeatedly said leading up to the trial -- that it expressly does not prevent former athletes from profiting off their likenesses. He contended that perhaps O'Bannon should have simply called EA Sports and demanded it negotiate permission to use his image.

However, this case has long since shifted its focus from former athletes to current ones, and from video games to the much bigger pot of gold -- television revenue. To that end, Pomerantz brought up several discrepancies between O'Bannon's 2011 deposition transcript and the state of the case today. Mainly, in '11 O'Bannon said he was not interested in representing current athletes because their circumstances were different: They're in school and on scholarship. On Monday, O'Bannon said, "I think they should be paid. With the amount of money they should be bringing in, I think they should be compensated."

O'Bannon seemed uncomfortable at times, perhaps surprisingly so given how long this day was coming. He felt differently. "At this point," he said afterward, "nothing really surprises me."

Noll, an experienced witness who has testified in numerous high-profile sports labor cases (and charges $800 an hour for his services), had few such hold-ups. He was happy to spend two and a half hours methodically delivering what was essentially a lecture on antitrust law. At points he talked so fast that the court reporter had to ask him to repeat things. And Wilken became so confused about one of his points that she asked for multiple explanations.

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Noll contends that the NCAA's practices are anti-competitive in two markets: the market for the recruitment of athletes (he alleges schools have conspired to fix the price of recruiting enticements at zero) and the market for products using athletes' likenesses (by fixing at zero the compensation they receive from said products).

"The NCAA determines the number of schools allowed to participate in both of these markets," Noll testified. "It can punish them by excluding them from competition."

At one point, Noll broke out a chart showing that 75 percent of schools with quarterbacks named to last season's Davey O'Brien Award watch list sold jerseys with those players' numbers. He contends that there is value in those players' images that they're not currently receiving; instead, schools "inefficiently substitute" revenue that could go directly to recruits to building lavish facilities to entice recruits and raising the salaries of coaches.

In perhaps a small victory for the NCAA, Wilken seemed confused and skeptical of the latter argument. "Who is harmed by these inefficiencies?" she asked, to which Noll proceeded to speak in even more confusing theoretical circles.

Unfortunately for courtroom observers, the case, which is scheduled to last three weeks, figures to be much heavier on economic theory than actual football and basketball. Noll will continue his testimony on Tuesday morning, after which the plaintiffs are expected to call another expert, then, eventually, another named plaintiff, former Alabama football star Tyrone Prothro.

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The NCAA's chief legal officer, Donald Remy, confirmed that his side will eventually call Emmert as a witness. That's when the tone of the trial will likely shift from price-fixing theories to touting the wonders of academia.

"The collegiate experience is something that's part and parcel to what we're defending here," Remy said on Monday afternoon. "Our argument is [compensating athletes] would change it drastically."

Remy was sitting at one of the head tables when Noll tossed out his cartel allegation. Presumably, he was expecting it. The plaintiffs have consistently used it in their pretrial filings. But he knows well the salacious connotations.

"By [Noll's] definition, every amateur athletics organization is a cartel," said Remy. "... Our institutions do get together and make decisions in the best interest of our membership as it relates to fairness and competition. That's just the way it is.

"... This is a case about whether student-athletes should get a group license for the rights to use of their image in broadcasts."

Technically, that is correct. But just on the first day alone, Wilken heard a former star player's description of academic and campus life. She learned about the ways in which schools recruit against one another. She heard O'Bannon entertain the question of whether all amateurs -- like, say, Little League baseball players -- deserve a piece of the revenue from their teams' respective TV broadcasts.

Yes, on the surface this case is about licensing. But in reality, the larger principle of amateurism -- and, in turn, the NCAA's entire operating model -- is on trial in a federal courthouse.

One woman, Wilken, has the ability to either uphold or overturn a more than 100-year-old tradition.

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