US: Antitrust Economist testifies on NCAA Pay Cap

Referring to American Athletic Conference Commissioner Mike Aresco, class counsel Jeff Friedman told Helzinga, “Mr. Aresco’s view is if players were paid, it would adversely affect consumer demand… Do you believe that a hypothetical commissioner acting economically rationally – who believed consumer demand would go down if players were paid – that that hypothetical commissioner would advocate for his or her conference to pay players?”

Elzinga replied potential lost profits from a perceived reduction in amateurism wouldn’t necessarily deter a school or conference from increasing athlete pay.

“A rational commissioner could,” he said, “because the rational commissioner may decide engaging in a strategy that generates immediate benefits” in the form of enlisting a star player would offset the long-term costs of decreased revenues, as long as the other conferences shouldered some of those costs.

Accusing the NCAA of anti-competitive behavior, former Clemson University football player Martin Jenkins and three classes of current and former Division I football and men’s and women’s basketball players are suing for an injunction eliminating NCAA caps on compensation and benefits.

The NCAA’s trial argument hinges on its contention that paying student athletes above the cost of attendance diminishes revenues, as fans who value amateurism will turn elsewhere for entertainment.

According to Friedman, NCAA bylaws define “pay” as the payment of funds, awards, or benefits not permitted by the NCAA’s governing body.

“Essentially what that definition says is ‘pay’ is what we say it is at that moment in time, is that right, sir?” he asked Elzinga.

“That’s not my view,” Elzinga replied as court adjourned for the day.

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