Math majors key to NCAA trial result

OAKLAND, Calif. -- Two math majors -- one from Cal Tech and the other from Princeton -- are likely to determine how college football and basketball operate in the future.

The men are brilliant. They are knowledgeable. They are articulate. They are the most important witnesses in the Ed O'Bannon v. NCAA trial. And they disagree on just about every major issue.

The Cal Tech graduate is Roger Noll, a professor of economics at Stanford University who is now retired and testified for the players who seek to be compensated for the commercial uses of their names, images and likenesses. The Princeton graduate is Daniel Rubinfeld, a former professor of economics at Cal Berkeley who teaches at New York University and testified for the NCAA.

Their conflicting and contradictory testimony on the effects of the NCAA's rules that ban any payment to college athletes will form the foundation of the decision that U.S. District Judge Claudia Wilken will issue in early August. Noll views the restraints on pay as price-fixing (zero pay) by a cartel and a violation of the nation's antitrust laws. Rubinfeld says the benefits of the restraints outweigh any harm that they cause and the NCAA is a benign "joint venture" that preserves the amateur ideal and allows athletes to enjoy the benefits of higher education.

Noll testified for two-and-one-half days in the first week of the trial. Rubinfeld began his testimony on Thursday and will conclude on Friday, the final day of the three-week trial. The trial has already produced more than 2,800 pages of daily transcripts, and the testimony of the two economists will consume more than 1,000 pages.

It is no secret that in making her decision, Wilken must choose between the two witnesses. Both sides have invested enormous time and money into producing the testimony from these world-class economists. Noll wrote 750 pages of reports for the players' legal team and was questioned under oath by NCAA lawyers for four days before the trial began. Rubinfeld has not yet described all that he did, but it is likely that he invested equal time and effort.

Wilken's evaluation of the economists will not be easy. Although both have mastered their specialty of industrial economics (the behavior of firms), their language in court is peppered with jargon and nomenclature that can be baffling. The NCAA is a "standards organization" or a "cartel" or a "joint venture." The schools in the NCAA are "firms." The players, the coaches and the facilities are "input." The fans are "consumers." The games and the championships are "product" or "output." The number and quality of the games are "demand."

That's just the beginning. What happens as an athlete is recruited and enrolls at a school is "upstream." A fan's experience is "downstream." If the schools are selling "educational services" to students, then the schools in the NCAA are a "monopoly." If the athletes are selling "services" to the schools, then it is a "monopsony."

The foregoing are terms they agree on. There are others that they argue about: "wealth transfer," "inelastic demand," "deadweight loss," "inefficient substitution," the "invariance hypothesis," the "Spearman correlation" and "human capital." Using any one of these terms prompts the two sides to argue.

After sorting through the thicket of economic terms and concepts, Wilken is supposed to make her decision under what antitrust lawyers, without irony, call the "Rule of Reason." She is to weigh the harm to the athletes who are unable to sell their names, images and likenesses and broadcast rights against the purported benefits of the prohibition. If she rules for the NCAA, nothing will change. If she rules for the players, everything will change.

The judge has a wide range of possible decisions. She could separate the names, images and likenesses and the broadcast rights into separate decisions. She could order immediate pay for players or rule that the money must be held in a trust fund until a player's eligibility expires.

With the enormous stakes, both sides invested heavily in their star witnesses. There is little information available about the fees paid to Noll and Rubinfeld, but there is some information on two other economists who testified in the trial. James Heckman, a Nobel laureate from the University of Chicago, charges $2,300 per hour. Lauren Stiroh, an economist who works only in litigation, and her firm did 8,000 hours of work for the NCAA. At $200 per hour, a conservative estimate, the bill for their work is at least $1.6 million.

When the O'Bannon trial adjourns Friday, the judge will have heard 23 witnesses. They included three former athletes, the president of the NCAA, a couple of conference commissioners and two experts on consumer surveys. But the most important witnesses are the two math majors who examined the same data and reached opposite conclusions.