June 13 (Bloomberg) -- National Collegiate Athletic Association limits on the licensing of player names and images are “leaving a lot of money on the table” in the merchandising market, a sports economist testified.
Daniel Rascher of the University of San Francisco took the stand today at an antitrust trial as a witness for ex-athletes seeking to force the NCAA to share the billions of dollars in revenue generated by college sports, mostly through television broadcast licensing.
Because the NCAA rules that treat athletes as amateurs mean companies making trading cards, video games, jerseys and other merchandise can’t exploit the players’ names, images and likenesses, the NCAA is “restricting demand in the marketplace,” Rascher said in federal court in Oakland, California, on the fifth day of a trial expected to last three weeks.
“The industry is constantly pressing to ease the restrictions on name, image and likeness, including Nike, Adidas and others,” Rascher said.
Retail merchandise sales in 2013 of National Football League-related items were $1.66 billion, and $1.75 billion for National Basketball Association goods, while NCAA sales were just $350 million because of rules that prevent sales of player-identified items, he said.
Former University of California at Los Angeles basketball player Ed O’Bannon, who filed the lawsuit about a decade after he was Most Outstanding Player of the 1995 Final Four, has said he was featured in DVDs about UCLA games and the 1995 championships offered for sale by the NCAA. He’s suing on behalf of a class of current and former players seeking to negotiate licensing deals for use of their images.
The NCAA had $912 million in total revenue last year, including $838 million from television, championships and marketing rights fees, according to its financial statement. Under current NCAA regulations, athletes can be stripped of their scholarships and barred from playing if they accept payments.
The NCAA claims O’Bannon’s lawsuit is baseless because its amateur model is legal and serves players and schools. It also benefits fans, who attract advertisers that pay big money to NCAA broadcasting partners and who have said in surveys that they oppose compensating athletes. Paying players would pit schools against each other to attract top talent, and cause some to stop fielding teams and fans to tune out in droves, the NCAA argues.
U.S. District Judge Claudia Wilken will decide the case without a jury.
Rohit Singla, an attorney for the NCAA, questioned Rascher on cross-examination about his economic modeling on potential pay for college basketball players if the NCAA is required to share revenue.
Based on Rascher’s model, Vanderbilt University’s 85 football players would receive $325,000 each over five years of play, based on sharing 50 percent of the 2010 broadcast payments to the school, Singla said. At University of Memphis, with a smaller TV broadcast income, the 85 players would be paid $14,000 over five years, while Oregon State University basketball players would collect $1.2 million and Idaho State University’s basketball team would share $330,000, he said.
His point was that sharing the money would create imbalances in NCCA conferences with bigger schools that bring in more revenue attracting the star players, something Rascher’s report said wouldn’t change what already occurs in recruiting.
Rascher agreed with Singla’s calculations, while arguing it’s up to the conferences to decide how to divvy the broadcast revenue. They will pick a model that satisfies their needs,”he said.
Rascher said his model is based on historical experience from NFL broadcast revenue sharing.
The case is In Re NCAA Student-Athlete Name and Likeness Licensing Litigation, 09-01967, U.S. District Court, Northern District of California (Oakland).
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