declaration of daniel a. rascher in support of motion by antitrust plaintiffs for class...
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Declaration of Daniel A. Rascher In Support of Motion by Antitrust Plaintiffs for Class CertificationTRANSCRIPT
DECLARATION OF DR. DANIEL A. RASCHER, Case No. 4:09-cv-1967 CW
In re NCAA Student-Athlete Name and Likeness Licensing Antitrust Litigation
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Case No. 09-cv-1967 CW DECLARATION OF DANIEL A. RASCHER IN SUPPORT OF MOTION BY ANTITRUST PLAINTIFFS FOR CLASS CERTIFICATION April 24, 2013
IN THE UNITED STATES DISTRICT COURTFOR THE NORTHERN DISTRICT OF CALIFORNIA
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1 DECLARATION OF DR. DANIEL A. RASCHER, Case No. 4:09-cv-1967 CW
I, Daniel A. Rascher, hereby declare the facts set forth herein are personally known to
me. If called as a witness in this case, I could and would competently testify thereto.
I. QUALIFICATIONS
1. My name is Daniel A. Rascher. I am Director of Academic Programs for
the Sport Management Master’s Program and Professor at the University of San Francisco
(“USF”). I teach courses in sport economics and finance and research methods to
graduate students. I am also a Partner of OSKR, LLC, an economic consulting firm
specializing in applying economic analysis to complex legal issues, as well as President
of SportsEconomics, LLC, (“SportsEconomics”) an economic, finance, and marketing
research consulting firm focused on the sports industry. Formerly, I was an Assistant
Professor and Associate Professor at USF and an Assistant Professor at the University of
Massachusetts, Amherst. I am also a visiting professor at the IE Business School in
Madrid, Spain. I was also previously a Principal at LECG, LLC, a provider of expert
economic consulting and testimony.
2. I received a Ph.D. in Economics from the University of California at
Berkeley. I have published numerous articles and a textbook in the field of sports
economics and finance and have worked on over one hundred consulting projects
involving the sports, entertainment, and tourism industries. I have consulted with counsel
for both Plaintiffs and Defendants on a variety of class certification matters, and recently
was disclosed as an expert witness on class certification issues in Phillips v. Comcast
(Case No. 3:12-cv-3606-MAS-DEA). I am also certified as a valuation analyst (Certified
Valuation Analyst) by the National Association of Certified Valuators and Analysts.
Attached as Appendix A is my curriculum vitae which includes my qualifications as an
expert witness and my testimonial experience.
3. I am being compensated at my usual and customary hourly rate at the time
of engagement on this case of $450 per hour, plus reimbursement of expenses. In my
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2 DECLARATION OF DR. DANIEL A. RASCHER, Case No. 4:09-cv-1967 CW
work on this matter, I have been assisted by OSKR staff, working under my supervision
and control. I have no direct financial interest in the outcome of this matter.
II. SCOPE OF WORK AND SUMMARY OF OPINIONS
4. Counsel for Plaintiffs asked me to provide an opinion on the expert reports
(and depositions) of Defendants’ economics experts and how their testimony impacts
class certification.
5. In approaching this assignment, I have reviewed a number of documents,
including materials provided by counsel and third party files, laid out in full in Appendix
B. These include the Expert Report of Daniel L. Rubinfeld Regarding Class
Certification (hereinafter “Rubinfeld Report”), the Expert Report of Lauren J. Stiroh,
Ph.D. In re: NCAA Student-Athlete Name & Likeness Licensing Litigation (hereinafter
“Stiroh Report”), the Expert Report of James J. Heckman In re: NCAA Student-Athlete
Name and Likeness Licensing Litigation (Hereinafter “Heckman Report”), the
Declaration of Alan J. Cox Regarding Class Certification (Hereinafter “Cox
Declaration”), the NCAA’s Opposition to Motion for Class Certification, Electronic
Arts Inc.’s and Collegiate Licensing Company’s Opposition to Plaintiffs’ Motion for
Class Certification, the Expert Report On Class Certification Of Roger G. Noll
(hereinafter “Noll Report”), the Corrections and Amendments to Expert Report on Class
Certification of Roger G. Noll (hereinafter “Noll Amendments”), the various fact
witness Declarations submitted in support of the Defendants’ opposition motions
including but not limited to the Declaration of James E. Delany in Support of the
NCAA's Class Certification Opposition Brief (hereinafter “Delany Declaration”) and the
Declaration of Todd Petr in Support of the NCAA’S Class Certification Opposition Brief
(hereinafter “Petr Declaration”). I have also reviewed the “2004-11 NCAA Revenues
and Expenses of Division I Intercollegiate Athletics Programs Report” (as well as the
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3 DECLARATION OF DR. DANIEL A. RASCHER, Case No. 4:09-cv-1967 CW
equivalent reports for Division II and Division III on which Mr. Petr’s Declaration
relies1 and public data provided by the EADA. I also rely on my knowledge of the
sports economics literature; to the extent I specifically cite to an article or study, I
include that title in Appendix B.
6. Based on my review of these documents, I have come to several
conclusions that pertain directly to the testimony of Defendants’ economists. These are
as follows:
(a) Defendants’ citation to my testimony in Parrish v. NFLPA -- that
group and individual licensing typically coexist in sports, with group
licensing typically being equally shared -- supports the argument in
favor of class-wide analysis of impact and damages. Defendants cite
to my opinion in Parrish. Rather than invalidate Dr. Noll’s testimony
in this matter, the Parrish case corroborates it (This is discussed in
Section III below).
(b) NFL, NBA, and other pro athletes engage in both individual and group
licensing. In fact, they work in tandem by allowing stars to engage in
licensing opportunities that use only one or a few athletes, while group
licenses allow entire teams or leagues of players to benefit from those
group-wide opportunities (like video games or video clips), as Dr. Noll
explicitly described in Noll Report pp. 39-45. This is entirely
consistent with my and Dr. Noll’s testimony in Parrish. Defendants’
experts incorrectly imply that Dr. Noll does not believe that equal
sharing of group licensing revenues is feasible in this matter. The
1 “2004-11 NCAA Revenues and Expenses of Division I Intercollegiate Athletics
Programs Report.” Available at: http://www.ncaapublications.com/productdownloads/D12011REVEXP.pdf. Accessed April 17, 2013.
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4 DECLARATION OF DR. DANIEL A. RASCHER, Case No. 4:09-cv-1967 CW
focus of Drs. Rubinfeld, Stiroh, and Cox on individual licenses is
irrelevant to the question of whether group licensing would work in
college sports – it is a straw man (This is discussed in Section III
below).
(c) Equal sharing of group licensing revenues is common and efficient,
with proper analogies coming from other sports leagues such as MLB,
NFL, and NBA. It is an efficient way to divide up these revenues
because it minimizes the transactions costs of determining how much
each player was or will be featured/used, lowers costs of contracting
that would occur if each player needed a separate license agreement,
and allows the players to be credible in their commitment that there
won’t be a player or two who decide to hold up the process (and are
either blurred out of the product or force a higher payment just for
themselves). The NBPA’s “policy has been to distribute the Licensing
Fee to all members on an equal basis and without regard to whether
consumers purchased player-identified product with that particular
player’s attributes.”2 Defendants’ experts, again, spend much space on
discussing how individual licenses are, unsurprisingly, not shared
equally across players, even though Dr. Stiroh succinctly states in ¶99,
“group licensing revenues are distributed equally to all players in the
NBA Players Association (though individual players are free to pursue
individual licensing).” When Dr. Noll cited to individual licenses in
Parrish and when Drs. Rubinfeld, Stiroh, and Cox point to the same
issues here, both are evidence of why the group licenses would likely
2 Declaration of Ronald Klempner, March 5, 2013.
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5 DECLARATION OF DR. DANIEL A. RASCHER, Case No. 4:09-cv-1967 CW
be equally shared, rather than evidence against such a system. It is not
an either/or decision, rather both individual and group licensing
commonly work together (This is discussed in Section III below).
(d) Dr. Noll’s testimony that 50% of licensing-related revenues are a
reasonable estimate of the players’ total value3 is criticized by
Defendants’ experts, yet the evidence is clear that it is true. It is my
opinion that this critique of Dr. Noll’s work is incorrect – the
experience of other leagues in the United States and abroad,
specifically the NFL, NBA, MLB, NHL, the Canadian Football
League, multiple European soccer leagues (and even the PGA Tour)
show that players typically receive at least 50% of revenues, and often
more (up to 75%), and these sports leagues provide valid yardsticks for
calculating Plaintiffs’ damages in that world. In fact, comparisons of
the importance of winning to demand in college and pro sports are
consistent with college athletes being relatively more important.
Moreover, the 50% result does not require a union negotiation, but can
spring from interleague competition for athletes’ services (This is
discussed in Section IV below).
(e) Defendants’ experts believe there are multiple possible but-for
outcomes to this matter, and criticize Dr. Noll for not proving which
outcome is most likely. There are a number of reasonable outcomes
that could occur in the but-for world, including a bargained outcome
(through a licensing entity or through collective bargaining) or
competition across conferences, and the question of which outcome is
3 Expert Report on Class Certification of Roger G. Noll (hereinafter “Noll Report”),
August 31, 2012, p. 102.
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6 DECLARATION OF DR. DANIEL A. RASCHER, Case No. 4:09-cv-1967 CW
most likely is common to the class. Dr. Noll’s outcome is essentially a
less-restrictive alternative that the NCAA and its members would
likely prefer to a fully wide open market for athletic talent (This is
discussed in Section V below).
(f) Defendants’ experts believe that the transition from the current world
to one in which athletes receive revenues for their NIL is too
uncertain. Implicit in this assumption is that the NCAA’s cartel is so
distortionary as to make the result of the process of ending that
anticompetitive harm unknowable or unrecognizable. Yet, a strong
analogy exists – the change from the reserve clause in MLB during the
1970s to free agency. Competitive balance was unharmed, players pay
rose, profits increased, and more teams entered MLB (This is
discussed in Sections V and VI below).
(g) Moreover, analysis of the true (and high) economic profitability of
college football and basketball (shown in the academic literature)
points to minimal reshuffling of universities away from Division I
basketball and FBS football. Contrary to the declaration of Todd Petr,
college football and basketball are highly financially valuable to their
universities. Defendants’ experts’ reliance on that declaration (and
other NCAA financial studies) as a measure of the economic value of
college football and basketball is misguided. The vast entry of teams
and the very small number who have left show that playing football
and basketball at the highest level is profitable and beneficial to
universities. Further, the moratorium set by the NCAA to prevent
entry (while there was no moratorium to prevent exit) shows the
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7 DECLARATION OF DR. DANIEL A. RASCHER, Case No. 4:09-cv-1967 CW
excess demand for entry that has existed during the class period (This
is discussed in Section VII below).
(h) The evidence also shows that the current schools at which the athletes
are playing would essentially continue in the but-for world – they have
been competed for vigorously at the schools for which they are best
suited, just not on the basis of licensing revenue. The correlation
between school revenues and the quality of talent is very high, as is the
correlation between coaches’ pay and school revenues. The little
competitive balance that exists (acknowledged by the NCAA) would
not change much if group licensing revenues were paid to players (an
example of the Nobel Prize winning Coase Theorem); to the extent
some minimal amount of Defendants’ envisioned “re-shuffling” or
“rematching” would occur, it would not predominate. Again, the
natural experiment from baseball (and other sports leagues) that
transitioned from pay restraints to free agency has not substantially
altered the distribution of talent across teams. Moreover, there is
plenty of evidence showing that even as revenues have grown quickly
in college athletics, and even as expenses have chased those revenues,
as the academic explains that institutions of higher education are wont
to do – competitive balance has not changed substantially (This is
discussed in Sections VI and VII below).
III. DR. NOLL’S AND MY TESTIMONY IN THE PARRISH CASE DOES
NOT CONTRADICT DR. NOLL’S TESTIMONY IN THIS MATTER
3.1 MY TESTIMONY IN PARRISH WAS THAT FORMER ATHLETES ARE VALUABLE,
PROFESSIONAL LEAGUES HAVE DISTRIBUTED VALUE THROUGH GROUP
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LICENSING, AND WITHIN THE GROUP, EQUAL SHARING IS COMMON AND
EFFICIENT
7. In Dr. Rubinfeld’s Report,4 he quotes from Dr. Noll’s and my testimony in
Parrish v. NFLPA, claiming that Dr. Noll’s opinion in this matter is inconsistent with
his testimony in Parrish, suggesting that Dr. Noll’s Parrish testimony implies that
equal sharing of group licensing is not a feasible outcome for the O’Bannon but-for
world.5
8. As Dr. Rubinfeld quotes, I opined in Parrish that:
“Importantly, the NFLPA allows so-called ‘ad hoc’ or ‘premium’ licensing, which are for licensing deals of five or fewer players. By making this distinction, the NFLPA (and other sports unions) are able to diffuse the potential tensions between stars and other players, allowing stars to sign individual (or small-group) deals,
while participating equally in larger group licensing.”6
9. Defendants are explicitly pointing to my testimony in Parrish, as a way of
criticizing Noll’s work in this matter, but they have mischaracterized the nature of my
testimony there and its relevance here. What I wrote in Parrish, and which Dr.
Rubinfeld quotes, is exactly the point here; group licensing revenues are not the only
licensing revenues available to athletes. As Dr. Noll explained in his report in this
matter,7 and as I explained in Parrish, in the current world, NFL and NBA athletes
(especially stars) can go after individual licenses in addition to the revenues they share
4 Rubinfeld ¶117, FN 145 and Rubinfeld ¶¶121-122.
5 Dr. Rubinfeld is not alone in making reference to the Parrish case; Dr. Stiroh (¶96) also
points to the case for the same general point. 6 Quoted in Rubinfeld Report (FN 145) and originally on page 9 of Expert Report of
Daniel A. Rascher of May 23, 2008 (Exhibit NNN of the Declaration of Ryan Hilbert in Support of Plaintiffs’ Opposition to Defendants’ Motion for Summary Judgment).
7 See Dr. Noll’s expert report, pp. 39-44 for a lengthy and detailed discussion of the
importance of both individual and group licensing contracts in markets without the restraints in suit.
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9 DECLARATION OF DR. DANIEL A. RASCHER, Case No. 4:09-cv-1967 CW
equally across all levels of skill and marketability. Dr. Noll has posited one but-for
world where the NCAA maintains a version of amateurism that does not allow specific
athletes to receive more than their teammates simply because they are more talented.
This is consistent with the testimony of Dr. Rubinfeld:
If the court grants the injunctive relief sought in this matter, the class
members will have the same two-track system available to them as I testified to in
Parrish. As Dr. Rubinfeld points out (by citing my testimony from Parrish), this
would help to ensure that stars are not unhappy participating in equal-sharing
arrangements of group-licensing revenue. Noll’s assertion that “market values of
licenses for retired players vary substantially”9 was (and remains) true for individual
licenses, and in the actual world in the event of an injunction, those athletes will be able
to capture some of their value via individual licenses. Another portion of their value,
however, is almost surely to be captured through group licenses, just as occurs in the
major leagues of the sports in suit. Rather than invalidate Dr. Noll’s opinion in this
matter, my testimony in Parrish confirms that it is appropriate.
10. As in Parrish, where my focus was on group licensing revenues rather
than all licensing revenues, damages analysis in the current case is about group
licensing revenues. My understanding is that the individual licenses through which
athletes would acquire revenue based on their individualized marketability would be
allowed by the relief sought by the injunctive class. Thus, when Dr. Rubinfeld focuses
8 Rubinfeld deposition (rough), pp. 41-2.
9 Expert Report of Roger G. Noll in Parrish, p. 62.
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on individual licenses, such as at ¶¶77-80, 89, 117, 121-122 of his report,10
or when Dr.
Stiroh does so, such as at ¶¶23-24,11
¶¶89-97, ¶¶110-512
, or Dr. Cox does the same,
such as at ¶21, ¶¶39-46, 48-4913,14
that is really not relevant to the question of valuing
the group licensing component of the but-for world, since those individual licenses are
not part of the damages class.15
Ironically, Dr. Cox actually explains Defendants’
economic error fairly succinctly:
10
11
At ¶23, Dr. Stiroh is explicit that she’s criticizing Noll for failing to evaluate individual licenses, saying that “[Noll] does not evaluate any damages associated with allegedly foregone individual licensing opportunities.”
12 The CLC and EA licenses to which Dr. Stiroh points are, of course, all individual or
small group licenses. 13
As one example, at ¶43, Dr. Cox says “Dr. Noll also ignores the fact that some members of the proposed class also have an incentive to enter individual licenses, rather than group contracts.” Dr. Cox fails to recognize that these are not either/or decisions, but instead licensing practices that are complementary. Indeed, in deposition, Dr. Cox testified that he was unaware that his own client, EA, has in fact made a group license with the NFLPA while also signing individual licenses with certain NFLPA members as well as certain retired NFL players.
14
15 As just one example, in ¶89, Dr. Rubinfeld points to
But this is a perfect example of trying to
use irrelevant evidence from individual licensing to make points about group licensing. I do not believe Dr. Rubinfeld has pointed to any team- or conference-wide group licenses involving payments to athletes, for use of their student images.
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This is
exactly the point that I made in Parrish and that Noll makes in this matter17
-- in sports,
group licensing revenues are frequently distributed without regard to individual value
and rather than providing evidence that this would not happen in Plaintiffs’ but-for
world, it is the best yardstick for what would likely happen.
11. The Parrish case was actually tried in Court under Judge Alsup and there
was a jury verdict. The jury in Parrish found that the retired players did have value in
terms of group licensing and awarded $7 million in damages to the class of retired
players (and an additional $21 million in punitive damages) based on testimony from
me and another expert. In our testimony we laid out an equally shared group license as
the basis of the but-for world. That equally shared, class-wide verdict was reached for
a group license despite evidence that the money from individual licenses for retired
players went primarily to a handful of elite athletes. This verdict was consistent with
the economics of the industry because the existence of the two forms of licensing is
common across sports leagues and, as Dr. Rubinfeld quotes my testimony as his
authority, useful for helping fuse the stars and journeymen into a single licensing
system.
3.2 EQUAL SHARING OF GROUP LICENSING REVENUE IS COMMON AND EFFICIENT,
AND WORKS IN TANDEM WITH MORE VARIABLE INDIVIDUAL LICENSING
12. Equally-shared group licensing is a common way that the value of players’
NIL is generated and distributed. As I noted in Parrish,
16
Cox, ¶47. 17
Dr. Noll writes about the complementarity of individual and group licenses within a given sport at pages 39-45 of his report.
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“Licensors in sports commonly distinguish between individual licenses, which cover a small number of players (for example, five or fewer in this case), and group licenses, which cover a larger number of players (for example, six or more in this case). Licensors also often designate some or all of those group licensing revenues as shared revenues. Specifically, unlike individually negotiated ad hoc licenses, those portions of group licensing revenues that are shared are commonly divided up on an equal-share basis. For example, this method is followed by the National Basketball Players Association (“NBPA”), the Major League Baseball Players Association (“MLBPA”), the National Baseball Hall of Fame (“BBHOF”), as well as the Pro Football Hall of Fame (“HOF”). And of course, for its shared licensing revenues, the NFLPA/NFLPI uses a “gross licensing equal share pool” from which all eligible active players receive an equal share.” (Rascher Reply Report, pp. 4-5, citations omitted).
13. As Dr. Noll noted in this matter,
In a Declaration on which Defendants and their experts rely,19
Ronald Klempner, Interim Executive Director of the NBPA explains: “Since the
inception of the Licensing Agreement in 1995, union policy has been to distribute the
Licensing Fee to all members on an equal basis and without regard to whether
consumers purchased player-identified product with that particular player’s
attributes.”20
14. It is not happenstance that these examples result in equal sharing across
players/athletes. Equal sharing is an efficient way to divide these revenues up because
it minimizes the transactions costs of determining how much each player was or will be
18
Noll Report, pp. 102-3. 19
NCAA Opposition Motion, p. 8. Stiroh ¶99. Rubinfeld ¶115. 20
Declaration of Ronald Klempner, March 5, 2013.
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featured/used, lowers costs of contracting that would occur if each player needed a
separate license agreement, and allows the players to be credible in their commitment
that there won’t be a player or two who decide to hold up the process (and are either
blurred out of the product or force a higher payment just for themselves).
15. Dr. Rubinfeld has focused on individual licenses and how those are not
shared equally (“The evidence shows that former D-I basketball players have been paid
a range of licensing fees for use of their images in video clips.
).21
Drs.
Stiroh and Cox have done the same, pointing to Dr. Noll’s testimony in Parrish for this
same (and unsurprising) proposition that the distribution of individual licensing is
skewed towards star players.22
Drs. Rubinfeld and Stiroh also point to MRP studies
that show a range of value for college athletes.23
However, as I testified in Parrish, the
wide variation in the value of individual licenses to which Defendants’ experts cite is
irrelevant to how group licenses would work in the but-for world. Group licensing
revenues are very often shared equally. What Dr. Rubinfeld has done is akin to
throwing up evidence that many drivers make right turns as evidence that no one turns
left. The portion of my testimony in Parrish that Dr. Rubinfeld cites speaks to why,
with respect to licensing, the analogous claim is false. My opinion there, as here, is that
the nature of team-sport licensing is that individual and group licensing work together
in tandem and the existence of a highly skewed distribution of individual licensing says
little or nothing about the value of (or distribution of the value of) a parallel group
license in the same sport or league.24
Dr. Stiroh echoes my opinion in Parrish when
21
Rubinfeld Report, ¶79. 22
Stiroh ¶96. Cox ¶42. 23
Stiroh ¶96. Rubinfeld ¶¶74, 147. 24
In at least one case, a Defendants’ expert simply misstates the factual record from Parrish on which the Defendants specifically rely.
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she notes that “In the National Basketball League (sic) (“NBA”), group licensing
revenues are distributed equally to all players in the NBA Players Association (though
individual players are free to pursue individual licensing).”25
When Dr. Noll cited to
individual licenses in Parrish and when Drs. Rubinfeld, Stiroh, and Cox point to the
same issues here, both are evidence of why the group licenses would likely be equally
shared, rather than evidence against such a system. It is not an either/or decision, rather
both individual and group licensing commonly work together.
3.3 EX ANTE GROUP LICENSING MATCHES PLAINTIFFS DAMAGES TO PLAINTIFFS
THEORY OF HARM
16. In addition to criticizing the equal sharing provisions in Dr. Noll’s Report,
Dr. Stiroh and Dr. Rubinfeld question whether Dr. Noll’s use of ex ante licensing is
consistent with Plaintiffs theory of damages.26
This is incorrect -- the typical practice
in group licensing in sports is that licenses are negotiated on behalf of the group in
advance of usage. For example, Dr. Stiroh points to the declaration of Keith Gordon of
the NFLPA, where he makes clear
However, as
was made clear by the Parrish materials to which Defendants’ expert point – NFL players receive individual licensing to appear on the cover of EA games and in specific features within the game, and then also share equally in a group license between the NFLPA and EA.
25 Stiroh, ¶99.
26 Stiroh, p. 35, prior to ¶89: “Dr. Noll’s Proposed Ex Ante Blanket Group Licenses that
Assume Equal Distribution of Revenues Is Not a Likely Outcome in the But-For World.” Rubinfeld, ¶¶94-95: “Under this assumption (combined with his ‘ex ante’ assumption that a school would need NIL rights from all students on the roster because it would never be sure which athletes would appear in a broadcast), Professor Noll concludes that each and every player would hold veto power over a broadcast and have the ability to ‘hold up’ schools.”
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17.
Rather than invalidate Dr. Noll’s assumption that the
group licensing deals in suit would be negotiated ex ante, this evidence makes clear that
this assumption is appropriate for linking the theory of harm (that players are denied the
right to negotiate group licensing deals) with the damages in suit (for ex ante group
licenses). Such a model is consistent with the practices in the best yardstick industries,
and demonstrates the lack of such negotiations is a common impact on the class. In
contrast, including ex post and/or individual licenses, as Defendants propose, would
misalign damages and the Plaintiffs’ claims.
IV. THE SPORTS LICENSING YARDSTICKS THAT DR. NOLL USES IN
HIS DAMAGES METHODOLOGY ARE VALID FOR
CALCULATING CLASSWIDE DAMAGES AND YIELD
REASONABLE ESTIMATES OF THE BUT-FOR PLAYER SHARE OF
REVENUES
18. Among the criticisms that Defendants’ experts level at Dr. Noll’s analysis
is their claim that the real-world outcomes on which he models his but-for world do not
provide support for the class receiving 50% of licensing revenues. Dr. Rubinfeld
summarizes this criticism, writing: “It is therefore not reasonable to assume that the
27
Stiroh, ¶99, quoting Gordon at p. 5. 28
See Noll, Exhibit 5. 29
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outcome of negotiations for licensing revenues in professional leagues would be
reflective of negotiations in intercollegiate athletics.”30
Dr. Stiroh echoes this criticism,
when she writes that the EA/NFLPA agreement is a poor analogy for the but-for group
licensing negotiations for video games and broadcast licensing.31
She also testified to
this effect: “it would not be appropriate to use the outcomes of a professional sports
league that were negotiated under different -- under different circumstances as a
reasonable outcome for college sports without specifying how the similar institutions
evolve.”32
Dr. Heckman also argues the same, writing “Dr. Noll’s Uses (sic) Flawed
Benchmarks in Comparing NCAA Division I Basketball and NCAA FBS Football to
the NBA and NFL.”33
19. It is my opinion that this critique of Dr. Noll’s work is incorrect, and I lay
out the reasons why the experience of other leagues in the United States and abroad,
specifically the NFL and NBA, but also MLB, the Canadian Football League, European
Soccer, and the NHL, are the ideal basis for modeling a but-for world and provide valid
yardsticks for calculating Plaintiffs’ damages in that world.
4.1 MAJOR LEAGUE ATHLETES RECEIVE AT LEAST 50% OF LICENSING REVENUES,
INCLUDING REVENUES FROM BROADCAST LICENSING
20. A standard economic method of calculating damages, especially in cases
where because of alleged misconduct, a market has not been allowed to develop, is to
look at comparables in other, similar markets. Just as a home appraiser may look to a
nearby house or neighborhood as a benchmark for valuing a house which has been off
30
Rubinfeld ¶123. 31
Stiroh ¶¶87-88, ¶¶98-101. See also Cox ¶¶46-49, where he discusses his reasoning for why NFL and NBA licenses in video games are not valid yardsticks for Dr. Noll’s analysis.
32 Stiroh Deposition, p. 159.
33 Heckman, p. 18, preceding ¶32.
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the market for a long time, so too do economists look to leagues in similar sports or
geographies as the starting point for estimates of what the but-for world would look
like.
21. Some economists distinguish damages methodologies that look at
behavior within an industry at a different period in time (which they call benchmarking)
from damages methodologies that look to other comparable industries (which they call
yardsticking). For example, Dr. Rubinfeld has written:
“A number of approaches have been used by experts to evaluate overcharges in antitrust litigation. The two most common involve the use of yardsticks and benchmarks. In a typical yardstick approach, one compares prices, margins, or rates of return during the period in which the antitrust violation is believed to have had an effect (the “impact period”) to prices, margins, or rates of return in other markets that are deemed to be reasonably comparable to the market at issue. In contrast, the benchmark approach evaluates prices only in the market at issue, comparing prices in the impact period to available prices before and/or after the alleged period of impact (the ‘non-impact period’). I comment first on the yardstick approach, after which I consider benchmarks. A. Yardsticks Under the yardstick approach, damages are measured by obtaining a “but-for price” from a market (the “comparable market”) that closely approximates the market in which the violation occurred. The “but-for price” is a measure of what the price of the product would be if the wrongful behavior had not occurred. A yardstick can come from a different, but related product market in the same or similar geographic market or from a different, but related geographic market in
which the same product or products are sold.”34
22. What Dr. Noll has done in this case is exactly what Dr. Rubinfeld
describes as the yardstick approach to antitrust damages. Under Dr. Noll’s yardstick
methodology, the but-for world in this matter is appropriately informed by what 34
Daniel Rubinfeld, “Antitrust Damages,” Research Handbook on the Economics of Antitrust Law (ed. Einer Elhauge), November 21, 2009. Available at: http://ec.europa.eu/competition/antitrust/actionsdamages/rubinfeld.pdf, citations omitted. Last accessed April 18, 2013.
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actually happens in group licensing deals in other sports leagues. As Dr. Noll has
pointed out, the professional leagues share about 50% of broadcast and other revenue
with the players.
The evidence from professional sports is consistent with Nash bargaining theory.
The most
recent collective bargaining agreement between the NFL and the NFL Players Association (NFLPA) provides more indirect evidence. The agreement sets team salary caps as a fraction of revenue, and the fraction of broadcast revenue that is included in the cap is 55 percent. In the NHL, the salary cap does not vary among the types of revenue, but ranges between 54 and 57 percent of all revenues. This agreement has
expired and negotiations are in progress to establish a new cap.35
23. I note this same finding in a recently published study in a peer-reviewed
journal:
“A key result of the new CBAs in football, basketball, and baseball, and the NHL’s current CBA that ends in 2012, is the convergence of player pay toward 50% of total league revenues. NBA players’ salaries came down in their recent CBA from 57% to a range between 49-51% of basketball-related income (see Berri in this issue of this journal). The salary cap in the NFL went from 57% of total revenue (TR) in 2006 to the current level which is capped at 48% in 2012 (Zimbalist, 2010; Singer-Vine, 2011; see Quinn in this issue). Yet, since the cap allows for exceptions, Zimbalist calculated that NFL players actually received about 58.4% of TR in 2006. In the NHL, players currently receive
between 54-57% of hockey-related revenue.”36
35
Noll Report, pp. 101-2, footnotes omitted. 36
Daniel A. Rascher and Timothy D. DeSchriver, “Smooth Operators: Recent Collective Bargaining in Major League Baseball,” in International Journal of Sport Finance (7)2, 2012, p. 200.
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24. After my paper was written, details from the new NFL CBA were
released, and players received 55% of television revenues.37
From 1994-2000, NFL
player compensation was even higher at over 60% each year except for 1997 (when it
was at 57.60%) according to research by Andrew Zimbalist.38
25.
26.
37
Clark Judge, “Lockout Judgements [sic]: Winners, losers, turning points,” CBSSports.com, July 24, 2011. Available at: http://www.cbssports.com/nfl/story/15348620/lockout-judgements-winners-losers-turning-points, accessed April 17, 2013.
38 Andrew Zimbalist, “Reflections on Salary Shares and Salary Caps,” in Journal of
Sports Economics 11(1), 2010. 39
Noll Report, Exhibit 5. 40
Similarly, in 2012-13, over 91% of all NBA players were on rosters for more than 41 games and thus qualified for equal sharing (See player summaries for each team at:
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27. There is plenty of evidence showing that the analogy is appropriate to the
types of market outcomes that exist in professional sports,41
and in fact the relative
http://www.basketball-reference.com/leagues/NBA_2013.html, accessed April 21, 2013).
41 As one further example, Professor Brian Goff recently wrote: ‘Sixty years later [from
the 1950’s], with billion dollar basketball tournament TV contracts and major football programs hauling in $50-$100 million revenues each year, and 100,000 seat stadiums filled to capacity, the difference between these activities and their professional sports counterparts is one of semantics and organizational structure – not basic economics.” Brian Goff, “Organizational Architecture of College Sports Behind the Scandals,”
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value of college athletes as a whole may be higher than the relative value of
professional athletes as a whole.
4.2 THIS RESULT DOES NOT RELY ON A NEGOTIATED AND/OR UNION OUTCOME
28. Defendants experts suggest that they believe Dr. Noll’s conclusion that but
for the restraint, players in aggregate would receive at least 50% of licensing revenues
requires one to assume a negotiated, union outcome. For example. Dr. Rubinfeld
writes: “… a negotiation between a union and the NCAA/conferences/schools might
be very different than unilateral actions by the conferences” and later adds:“Revenue
sharing in professional sports is in part the outcome of a negotiation between the
leagues and players’ unions. ... However, if Professor Noll does hold the opinion that
intercollegiate negotiation would be through a union, he has offered no explanation of
how such a union would come about, or why it would resemble a professional players
union.”42
Dr. Stiroh criticizes Dr. Noll because his video game damages model “is
derived from a royalty arrangement negotiated between a league-wide players
association and EA—not a particular NFL team or division and its players. Dr. Noll
provides no evidence regarding why hypothetical student-athlete collectives at the
school- or conference-level would negotiate the same arrangement as a professional
athlete’s association comprised of all athletes in a league.”43
Dr. Heckman adds that
“Dr. Noll never even explains how the mechanism that would generate NIL group
licensing agreements for student-athletes with 50/50 sharing of broadcasting revenues
The Sports Economist, April 10, 2013. Available at http://thesportseconomist.com/2013/04/10/organizational-architecture-of-college-sports-behind-the-scandals/, accessed April 17, 2013.
42 Rubinfeld ¶¶127-8.
43 Stiroh, ¶88.
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would develop. For example, he does not discuss how collective bargaining would
work in college sports and why this would generate 50/50 sharing of broadcast
revenues.”44
29. Defendants’ assertion that a union negotiation is essential to achieving the
50% sharing we see in the NFL and NBA is incorrect. Goff and Wilson find that “the
proximity [of the union outcome] to a competitive outcome for professional sports in
recent years receives some support from the NFL and NBA negotiations in the summer
and fall of 2011 as well as the 2012 NHL negotiations... In spite of their differences in
football and basketball, players shares have converged toward a nearly identical value
over the past 30 years of bilateral negotiations.”46
Moreover, examples in sports where
owners and players split money in a non-negotiated situation often result in a higher
percentage going to players. For instance, Major League Baseball does not have a
salary cap (although there are luxury taxes and revenue sharing across owners that can
dampen the returns on paying for high-quality players), so that pay is set through
individual player negotiation unconstrained by a negotiated aggregate pool.47
Andrew
Zimbalist calculated that players have received greater than 50% of revenues, as I note:
“In MLB, the percentage of total revenues that players receive has been more volatile over the years, likely because there is no cap to tether
44
Heckman ¶36. 45
See Cox Deposition, p. 117:
46
Brian Goff & Dennis Wilson “Estimating the MRP of College Athletes From Professional Factor Shares” (March 2013 – presented at the Southern Economics Association).
47 There is a negotiated individual player minimum in MLB.
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player salaries directly to league revenue. From a peak of 67% in 2002,
it went down to about 51% in 2007.”48
30. During previous collective bargaining negotiations in 1993-94, MLB
owners made an offer that included a 50% salary cap. The players at the time were
making about 56% of revenues and rejected the offer.49
Canadian Football offers
another data point that shows the 50% figure, is, if anything, low: The 2006-2009
Collective Bargaining Agreement between the CFL and the CFLPA stipulated player
revenue sharing stand at 56% of team revenues.50,51
31. This is consistent with the non-negotiated competition across the major
professional soccer leagues in Europe. Deloitte notes in its annual report on the
financial state of professional soccer in England, “…the Premier League’s key wages to
revenue ratio, which had stood at around 60% for most of the 2000s, has risen sharply
in recent seasons to exceed 70% for the first time.”52
48
Daniel A. Rascher and Timothy D. DeSchriver, “Smooth Operators: Recent Collective Bargaining in Major League Baseball,” in International Journal of Sport Finance (7)2, 2012, p. 201.
49 Daniel A. Rascher and Timothy D. DeSchriver, “Smooth Operators: Recent Collective
Bargaining in Major League Baseball,” in International Journal of Sport Finance (7)2, 2012, p. 186.
50 “CFL, CFLPA Reach New CBA Without Threat of Work Disruption.” Sports Business
Daily. June 5, 2006. Available at: http://www.sportsbusinessdaily.com/Daily/Issues/2006/06/Issue-173/Leagues-Governing-Bodies/CFL-CFLPA-Reach-New-CBA-Without-Threat-Of-Work-Disruption.aspx, accessed April 18, 2013.
51 “CFL launches new era with player partners.” Canadian Football League. June 2, 2006.
Available at: http://cfl.ca/article/cfl_launches_new_era_with_player_partners, accessed April 18, 2013.
52 Foreword to the “Deloitte Annual Review of Football Finance,” May 2012, p. 2.
Available at: http://www.deloitte.com/assets/Dcom-UnitedKingdom/Local%20Assets/Documents/Industries/Sports%20Business%20Group/uk-sbg-annual-football-finance-review-2012-foreword.pdf, accessed April 18, 2013.
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32. Similarly, when looking at the “Big 5” domestic football (i.e., soccer)
leagues (in England, Germany, France, Spain, and Italy), revenue stood at €8.6 billion
with player pay exceeding €5.6 billion in 2010-11.53
Thus, player pay was around 65%
of revenues among the major leagues of European soccer.
33. Arthur Levitt Jr. (former Chairman of the Securities and Exchange
Commission) conducted a study in 2004 of the NHL (prior to the installation of a salary
cap) and concluded that at the time, the players in the NHL received 75% of revenues
which “substantially exceed[ed] such relationships in both the NBA and the NFL as
those relationships are set forth in their collective bargaining agreements.”54
34. Therefore, it is clear that a 50% share is, if anything, a conservative
estimate of the share that comparable major league athletes receive of their leagues’
licensing revenues, nor does this result require a union-based negotiated outcome.
Nevertheless, an important question is whether the differences between the yardstick
leagues and the NCAA, such as those pointed out by Defendants’ experts, would cause
college sports to split those revenues differently. The answer is no – if anything,
53
Highlights to the “Deloitte Annual Review of Football Finance,” May 2012, p. 8. Available at: http://www.deloitte.com/assets/Dcom-UnitedKingdom/Local%20Assets/Documents/Industries/Sports%20Business%20Group/uk-sbg-annual-football-finance-review-2012-highlights.pdf, accessed April 18, 2013.
54 Independent Review of the Combined Financial Results of the National Hockey
League 2002-2003 Season: “The current relationship between League-wide player costs and League-wide revenues is inconsistent with reasonable and sound business practices. Player costs of $1.494 billion or 75% of revenues substantially exceed such relationships in both the NBA and the NFL as those relationships are set forth in their collective bargaining agreements.” A calculation by Forbes Magazine the following year concluded that salaries consumed 66% rather than 75% of league revenue. Paul D. Staudohar. “The Hockey Lockout of 2004-05.” Monthly Labor Review. December 2005. Bureau of Labor Statistics. Available at: http://www.bls.gov/opub/mlr/2005/12/art3full.pdf, accessed April 18, 2013.
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college athletes are worth at least as much and likely more to their sports revenue than
major league athletes. I address this question in the section that follows.
4.3 EVIDENCE THAT COLLEGE PLAYERS’ RELATIVE MARGINAL REVENUE -- A KEY
COMPONENT OF MRP -- IS HIGHER THAN IN COMPARABLE LEAGUES
35. As Dr. Noll, Dr. Rubinfeld, and Dr. Stiroh all point out, there are
numerous MRP studies of athletes in various sports.55
These studies purport to analyze
the incremental gain to the team that individual players create through the combined
marginal revenue and marginal product. An aspect of those studies is to measure the
marginal revenue that comes from how changes in winning impact changes in
revenue.56
Many of the studies use attendance as a de facto proxy for revenue (and a
55
See Noll, pp. 50-1, Stiroh ¶96, and Rubinfeld ¶¶70-73. 56
Defendants’ experts (Rubinfeld ¶¶70-74, Stiroh ¶96) also point to the study by Lane, Nagel, and Netz, which shows that on an annual basis, “40% of men’s basketball players have MRPs that are lower than the full value of a full athletic scholarship.” (Rubinfeld ¶71). The correct conclusion to draw from those studies is not, as Defendants imply, that school after school acts irrationally and “overpays” for athletes worth less to them than their scholarship, but rather that schools recruit high school-aged talent with the understanding that over the course of their college careers, some of the recruits will blossom into stars and others may underperform their potential. Just like an option that ends up out of the money or digging an oil well that turns out to be dry, some athletes won’t live up to their potential, but that does not mean that, ex ante, they were not worth a scholarship. But the MRP studies such as those cited by Defendants’ experts are ex post. They completely miss that schools bring in a recruiting class and rely on the portfolio to sort itself out.
The important point to derive from this is that recruiting is also an ex ante process -- schools try to bring in 25 freshmen and hope many pan out -- where potential can be measured but that potential need not materialize. In fact, it is common practice in college sports to recruit athletes with the expectation that they may “redshirt” in their freshman year, meaning they will not play at all. Even future stars are asked to redshirt in order to develop -- for example Andrew Luck (to whom Dr. Rubinfeld refers as an example of a potential highly paid star) was redshirted in his freshman year. A short-sighted MRP approach would say that in his freshman year, a redshirt like Andrew Luck was not worth his scholarship, but clearly Stanford recognized they would reap future benefits from giving Luck an extra year to mature.
The recruiting process is actually quite similar to the but-for licensing world that Dr. Noll describes. Just as schools don’t know which freshmen will star as seniors, so too
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few studies have used television ratings as a proxy for revenue). While Drs. Rubinfeld
and Stiroh suggest that the MRP evidence on college sports demonstrates the NFL and
NBA are inappropriate as yardstick industries,57
in fact what these studies establish is
that, if anything, the outcomes in the NFL and the NBA understate the value of college
athletes to their teams’ revenues. My own academic works shows that college players
are relatively more valuable to their teams’ success than NFL or NBA athletes.
36. In a comparison of college football and professional football and
separately men’s college basketball and professional basketball that speaks directly to
the question of whether Drs. Rubinfeld and Stiroh’s concerns have any basis in fact, I
and Dr. Chad McEvoy reviewed the academic literature on the impacts of winning on
demand.58
We found that the elasticity of winning-to-attendance in the NFL ranged
would licensees not know which players will end up starring in the Rose Bowl. To continue the Stanford analogy, 2013 Rose Bowl MVP Kevin Hogan started the 2012-13 season third on the QB depth chart. A licensing regime that had licensed the entire Stanford roster at the start of the season is much more efficient than one that would have had to have held negotiations with Hogan mid-way through the season as he emerged as the primary QB.
Instead, what the study by Lane, Nagel, and Netz shows is that, as a group, college football and basketball players are worth a lot more to their schools than their scholarship costs. Specifically, they find that the average college basketball player in D1 is worth over $90,000 per year using data that is over a decade old – much more than their scholarship costs. (Figure 1 in Erin Lane, Juan Nagel, and Janet Netz, “Alternative Approaches to Measuring MRP: Are All Men’s College Basketball Players Exploited?” in Journal of Sports Economics, August 12, 2012, doi: 10.1177/1527002512453144.)
57 See Rubinfeld ¶72: “Moreover, statistical measures, which are likely to vary
substantially from year to year, do not tell a complete story, and the true incremental value that an athlete contributes to a team cannot be reduced to a simple MRP formula.”
58 Daniel A. Rascher and Chad D. McEvoy, “The Impact on Demand from Winning in
College Football and Basketball: Are College Athletes More Valuable than Professional Athletes?” published in the 2012 Proceedings of the Santa Clara Sport Law Symposium (a publication in which the NCAA’s Wally Renfro also published an article). The calculation of elasticity is based on the % change in Y from a 10% change in X.
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from 0.03 to 0.15, while in college football it ranged from 0.23 to 0.41. The
implication is that winning has a greater impact on demand in college football than in
professional football.
37. Similarly, in the NBA, the elasticity of winning-to-attendance ranged from
0.17 to 0.21. For college basketball, once an adjustment was made to an existing study
to account for multiple measures of winning (and thus spreading out the impact of
winning across multiple variables), the elasticity of winning-to-attendance was 0.31-
0.33. Once again, this is consistent with college athletes (through their impact on
winning) having a relatively greater effect on demand than their professional
counterparts.
38. Another measure of demand is television ratings. The scant research that
exists in this area shows that television ratings demand is more sensitive to winning
than live attendance, which is not surprising given the ease with which one can change
channels and watch something else compared to choosing to not attend a sporting event
in person (as well as the fact that the would-be attendance for a sold out game is
unknowable while the audience for a televised sporting event is unconstrained). In fact,
Dr. Scott Tainsky shows that the elasticity of winning to TV ratings for professional
football is about 0.29.59
39. As a further test of Defendants’ experts’ claims that the NFL model is a
poor yardstick for college football, I have taken the Nielsen data made available to me
in this case to extend the research I did in my paper with Chad McEvoy to look at
television ratings. The results of this extension are shown in Exhibit 2, which
demonstrates that the elasticity of winning to ratings for college football shows that
winning in college has more than twice the relative impact on changes in viewership
59
Scott Tainsky, “Television Broadcast Demand for National Football League Contests,” Journal of Sports Economics 11(6), 2010.
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than in the pros. Specifically, the regression result shows that winning is an important
determinant of TV viewership demand and the elasticity for college football is 0.65,
while for the NFL it is 0.29 (Tainsky, 2010).60
Exhibit 2. Impact of Home Team Quality of TV Ratings
40. It is important to recognize that to ensure comparability of these results, I
replicated the specification of the regression analyses to fit those in the peer-reviewed
literature. While other models could be developed, this apples-to-apples comparison
makes it easiest to see that the incremental gain for a college team from winning is
relatively higher than it is for a professional team. This is consistent with the notion
that college athletes are financially important to their teams, and suggests that they are
60
The mean of the dependent variable is 0.097, and for the independent variable, it is 0.610. The variables are defined as Tainsky (2010) defined them in order to conduct an apples-to-apples comparison. Only games that are within a conference are included.
Dependent Variable - Nielsen Ratings (1) (2)coef se
Independent Variables
Home Team Quality 0.103*** 0.0388Away Team Quality 0.0443 0.0366Home Team Tenure 0.313*** 0.0342Away Team Tenure 0.0296 0.0354Income -2.71e-06*** 8.48E-07Multiple Teams -0.0534*** 0.015After Thanksgiving 0.0187 0.0201Primetime 0.00459 0.0138Constant 0.0443 0.0554
Observations 117R-squared 0.576Adjusted R-squared 0.545
Standard errors in parentheses*** p<0.01, ** p<0.05, * p<0.1Source: Collegefootballpoll.com, Bureau of Economic Analysis, ESPN.com, Nielsen Company
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relatively more valuable than their professional counterparts. This literature and
analysis further supports the appropriateness of using the major league 50/50 sharing
system as a reasonable estimate of the value of college athletes to their schools’ ability
to generate revenue.
V. DR. NOLL HAS MODELED A REASONABLE OUTCOME BUT FOR
THE ALLEGED COLLUSION ON CAPPING LICENSING REVENUE
DISTRIBUTION
41. Among Defendants’ experts criticisms of Dr. Noll is that they believe
there are multiple possible but-for licensing frameworks and thus multiple possible
damages models. They criticize Dr. Noll’s choice of one such but-for world and claim
this renders his damages model invalid.
42. As examples, as part of this argument that there are multiple ways to
model the but-for world and the resulting damages, Dr. Rubinfeld writes that Dr. Noll’s
chosen bargaining model, developed by Nobel Prize winner John Nash, “has played an
important role. However, it is not the only plausible bargaining model.”61
43. Dr. Stiroh makes it clear that although she believes that “Many outcomes
could reasonably occur in a but-for world in which schools or conferences compete for
student-athletes and student-athletes earn a share of revenue from game footage and
videogames,”62
she holds Dr. Noll to the higher standard that his but-for world must be
the “most likely” outcome: “Even if the Court were to determine that it was
appropriate to compensate student-athletes for the use of their NILs in college games on
the antitrust theory that Plaintiffs have offered, there is no basis to say that an ex ante
group-wide blanket license would be the most likely economic outcome in a more 61
Rubinfeld, ¶101. 62
Stiroh, ¶35.
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competitive but-for world, or that the group-wide license proposed by Dr. Noll would
make the class whole for any harm allegedly incurred.”63
44. Defendants are wrong in asserting that because it may be difficult to
determine the most reasonable but-for outcome, this is an individualized question. The
questions of whether damages must be based on the most likely or just a reasonable
estimate, and the question of what that likely/reasonable outcome is, are questions one
must answer for all class members equally. None of the experts dispute Dr. Noll’s
market definition,64
which is that there is a single national market for the group
licensing in question. For example, Dr. Stiroh testified: “I have not defined a market
differently from Dr. Noll has for the purposes of this report.”65
Dr. Cox similarly
accepts Dr. Noll’s market definitions.66
Dr. Rubinfeld also
.67
And so when Defendants claim that because Dr.
Noll’s but-for world generates damages that are so high that an uncertain cascade of
unintended consequences and possible market failure will ensue,68
what they are really
63
Stiroh, ¶33. 64
Dr. Rubinfeld at ¶10 writes “While Professor Noll offers a variety of opinions on the merits, I have not been asked to respond to those opinions at this time except to the extent they bear on class certification issues.” Because he does not address market definition in his report, I have assumed that means he feels the issue does not “bear on class certification issues.”
65 Stiroh deposition, p. 110. Dr. Stiroh explained: “I haven't analyzed the market
interactions among schools other than what Dr. Noll refers to as a relevant market for Division I men's basketball and men's football student education, or however he refers to what he calls that market. I take that market as a starting place that given this assertion that that market exists what are then the economic implications.”
66 Cox deposition, p. 91:
67
Rubinfeld deposition (rough), pp. 31, 40. 68
Stiroh ¶34: “The institutions and competitive interactions in this posited but-for world are so fundamentally different from those in the actual world that class-wide impact cannot be asserted.” Rubinfeld ¶185: “In sum, the financial incentives in Professor Noll’s but-for world are so fundamentally different than those in the actual world that
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saying is they think Dr. Noll’s damages number is too high by pointing to the likely
“reshuffling” and market exit of NCAA members, or even the complete collapse of the
licensing market.69
Indeed, in deposition Dr. Stiroh testified that if Dr. Noll’s but-for
world involved a very small quantum of damages, the class conflict concerns she
expressed would evaporate: “I do not think if there was some agreements to say that
there could be a dollar more paid to each student-athlete that it would necessarily cause
-- in order to analyze the impact of a change of that magnitude that you would need to
dismantle all of the institutions.”70
Dr. Stiroh added: “If the dollar amount that students
are able -- that schools are able to offer students changes by the same amount for all
schools, I don't think that changes where individual students go.”71
Dr. Rubinfeld
it would almost surely be the case that substantial rematching between student-athletes and schools, coaches and schools, and schools and conferences would have occurred.” Heckman ¶36: “However, nothing in Dr. Noll’s analysis can be used to reliably forecast the institutional structure that would likely emerge to negotiate the revenue sharing that he envisions in his but-for world, much less predict the outcome of such a negotiation.”
69 For market exit/collapse, see Heckman ¶42: “Some [schools] may choose to exit
Division I competition.” Rubinfeld ¶171: “The loss of half of their licensing revenue each year as would occur in Professor Noll’s but-for world would almost certainly have substantial impacts on how schools structure and fund their athletics programs. ... For some schools, loss of these revenues would likely affect scholarship offerings, sports sponsorship, and even conference alignment.” Dr. Stiroh is the most extreme in her concerns, stating that Dr. Noll’s but-for world is so “fundamentally different from the market structures that currently exist” (¶33) that “the very question of whether (and to what extent) there would have even been economic demand for the NILs of student-athletes in this but-for world would need to be explored and determined.” (¶38). For reshufflings, see previous footnote: Stiroh ¶34, Rubinfeld ¶185, Heckman ¶36, ¶¶40-41.
70 Stiroh deposition, pp. 185-6.
71 Stiroh deposition, pp. 208-9.
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45. Rather than being a dispute over class issues, Defendants’ critique of Dr.
Noll’s forecast of the but-for market structure and the resulting damages really boils
down to the merits question of whether it is reasonable to model a but-for world in
which athletes are likely to get 50% of licensing revenues and whether in that world it
is likely that schools would have an economic incentive to continue their current level
of commitment to FBS football or Division I basketball. As I lay out below, based on
the sports economics literature, the answer to these questions is yes, and the answer
(and method for answering) is common to the class.
5.1 DR. NOLL’S BUT-FOR WORLD IS A REASONABLE REFLECTION OF THE LIKELY
CONSEQUENCE OF ENDING THE ALLEGED COLLUSION
46. Defendants’ claim that there is more than one possible way that the world
could operate absent the Defendants’ alleged misconduct is really not in dispute. It
would be surprising if, after decades of alleged collusion, the market would have only
one possible way of healing from the alleged antitrust injury suffered. Dr. Noll testified
to this, explaining that the but-for world might involve a variety of reasonable
outcomes in which athletes and Defendants negotiate group licenses: Q.· In order for there to be a functioning group licensing entity, there would have to be some transaction between the individual who licenses his name and likeness to the group licensing association, right?
72
Rubinfeld deposition (rough), pp. 105-6.
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A.· No. Q.· No? A.· There -- that's one way to do it, but there are lots of other ways to do it. Q.· And what are … the other ways? A.· There -- part one, you could have a union. Part two, you can have an aggregation entity that -- that acts in -- as an intermediary.· Point three, conferences can have liability for this, and in order to avoid that liability, they do it themselves for their players.· You can have any of those. Q.· None of that exists today, though, right? A.· None of that exists, because it couldn't -- if anybody attempted to do any of those things, the NCAA rules would prevent it. Q.· All right.· So the NCAA rules have prevented the current class members -- or current student-athletes from participating in the group licensing market; is that correct? A.· Yes, they do.· They prevent any kind of licensing agreement
involving current students, yes.73
47. Dr. Noll is quite correct that any of these is a viable outcome, and thus
each could provide a reasonable benchmark for calculating but-for damages. For
example, as discussed above, competition across conferences might look like what we
see in European soccer, where many high-level regionally popular leagues compete
vigorously for soccer players from all regions of Europe. In college sports, this could
take the form of individual conferences establishing rules on how much licensing
revenue to make available to athletes that are recruited and signed by schools within
their conference, and this may be far more likely than a truly no-holds-barred every-
school-for-itself market for talent. Just as we currently see robust competition for the
broad class of talented high school athletes capable of playing FBS football and
Division I basketball, in a but-for world, conferences could compete for talent with
offers that would incorporate a share of licensing revenue going to the athletes. In fact,
inter-conference competition was what my colleague, Andrew Schwarz, and I had in
73
Noll deposition, p. 432.
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mind when we wrote an article in the American Bar Association’s Antitrust magazine
in the Spring 2000 issue on sports.74
We wrote that:
“A conference-based college sports market would most likely become more competitive and competitive balance might be enhanced. Leagues would compete for fans by choosing the wage structure that brought them the best combination of talent and fan appeal…Fans would also likely see higher quality contests as the top athletes might continue to play college sports instead of jumping prematurely to the professional leagues (where often their talent languishes at the end of the bench for the years they would have been playing, and starring, collegiately, and perhaps receiving an education). The end result of this interbrand competition should be a more attractive and more profitable college
sports market.”75
48. In Europe and in MLB, where there is either no union outcome or no
salary cap, we see athletes getting between 50-70% of the revenue streams being
generated. Those are reasonable yardsticks/benchmarks. In an individual sport setting,
the PGA Tour had direct revenues of $461 million in 2010, with prize money totaling
$275.1 million (or just about 60% of revenues) going to players.76
But more aggregate
outcomes, such as Dr. Noll testified to, are also possible, and the history of major
leagues sports’ move from collusively-set (via reserve clauses) to negotiated wage rates
is illustrative of the reasonableness of Dr. Noll’s model.
74
“Neither Reasonable nor Necessary: “Amateurism” in Big-Time College Sports,” with Andrew D. Schwarz. In Antitrust (Spring 2000 Special Sports Issue).
75 Rascher & Schwarz, p.55, footnotes omitted.
76 “Total prize money has soared from just over $8m ($36.5m in today's money) in 1974
to $275.1m in 2010… Total direct revenues fell a bit between 2008 and 2010, from $486m to $461m.” “Beyond Tiger,” The Economist, June 9, 2011. Available at: http://www.economist.com/node/18805531, accessed April 18, 2013.
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5.2 THE TRANSITION FROM A RESERVE CLAUSE WORLD TO THE MODERN ERA OF
FREE AGENCY IS ILLUSTRATIVE FOR THE LIKELY ADJUSTMENTS WITHIN THE
BUT-FOR WORLD
49. Throughout Dr. Rubinfeld’s, Dr. Stiroh’s, and Dr. Heckman’s reports,
they make reference to the fact that absent the NCAA’s rules prohibiting negotiation for
NIL rights, the but-for world that would emerge is too complex and uncertain to make
sense of.77
Yet, in the dozens of high-level professional sports leagues around the
world there is not chaos, even in leagues where in earlier generations there were caps
on players’ earnings that have since been overturned by Courts or labor arbitration. In
North America since the 1970s, there have been one-on-one negotiations between
players’ unions and their leagues. In Europe, there is simply competition both within
and across leagues. These professional leagues provide valid yardsticks and the
example of MLB is informative as to how the world would likely evolve once the
alleged anticompetitive restraint is removed. Prior to MLB’s adoption (forced by an
arbitration outcome) of free agency whereby players with a certain minimal number of
years of experience could negotiate with multiple teams in a competitive market, MLB 77
See Rubinfeld, ¶16: “Professor Noll’s but-for world creates a fundamentally new economics of college athletics. College basketball players would earn as much as $1 million in licensing revenue over a four-year career and college football players would earn as much as $250,000 (but both football and basketball players at many schools would earn little to no licensing revenue). This enormous variation both within and between conferences would (as Professor Noll concedes) have led student-athletes, colleges, and conferences to make substantially different decisions in the but-for world, resulting in very different matching (“rematching”) between student-athletes, colleges, and sports.
See also Stiroh at (¶34) “The institutions and competitive interactions in this posited but-
for world are so fundamentally different from those in the actual world that class-wide impact cannot be asserted.”
See also Heckman, ¶¶40,41: Because “In the proposed but-for world, a “re-shuffling” of
student-athletes across colleges may occur,” therefore “Predicting these but-for world outcomes is difficult and fraught with much uncertainty.”
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players earned much less relative to total league-wide revenues than they do now,
growing from approximately 20% of revenues to over 50%, as shown below in Exhibit
3.78
Exhibit 3. Average MLB Payroll as a Percentage of Total Team Revenues
50. As free agency loomed in MLB, there were dire predictions of disaster
similar to the Defendants declarations such as those of Jim Delany or John Welty. For
example, a press release issued jointly by the presidents of the American and National
Leagues predicted, inter alia, that free agency would (a) “totally destroy[] league
78
In a seminal work in sports economics, Gerald Scully found that before free agency introduced a relatively free market for players, players earned approximately 20% of their net marginal revenue product. Gerald Scully, Pay and Performance in Major League Baseball, American Economic Review 64(6), 1974, 915-930.
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competition, (b) the minor leagues “would be destroyed,” (c) “trades would become
impossible,” and most ominously “Professional baseball would simply cease to exist.”79
Instead, since the advent of free agency, player pay has climbed to 50% of total revenue
or more (as Zimbalist pointed out), and yet no MLB teams have left the industry. In
fact, six teams have joined MLB since 1976 when free agency began and league
revenue has boomed even as team payrolls have grown (as shown below in Exhibit 4).
Exhibit 4. Average Player Salary in MLB Compared with Revenue
79
Press Release of National League Pres. Chub Feeney and American League Pres. Joe Cronin, January 1970, quoted in Abraham Iqbal Khan, Curt Flood in the Media: Baseball, Race, and the Demise of the Activist Athlete, 92-93.
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51. Another reasonable outcome that is common in team sports across North
America is one in which the players form a union (or, equivalently for this case which
is focused solely on licensing, a licensing association) that bargains on their behalf.
Given that there is only one major league in the U.S. for a given team sport, that union
typically negotiates with a single league.
Regardless of what the most
likely outcome of the market would be, the analysis and effect are common to the class
members – it is simply a discussion about the equilibrium royalty rate.
52. Besides negotiating on issues related to licensing, the NFLPA and NBPA
also negotiate with their respective leagues on the basic pay structure. Specifically, this
results in a distribution of the aggregate total (which as discussed above has generally
settled on 50% of league revenues) into a portion that all athletes receive (through
league minima and the like) and a portion that stars negotiate over individually. In
essence, this structure also mimics the individual vs. group licensing issues discussed
above, and plays a similar role, allowing stars to receive a greater portion of the total
player value, while recognizing the inherent team element behind stars’ success.
80
Stiroh ¶99.
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53. Comparing NFL salary data provided by Dr. Stiroh for the 2009-10 season
to the minimum pay scale specified in the NFL CBA, if one looks at NFL players
during their first four years (akin to the college football players playing for four years),
the ratio of the minimum pay to the average pay is about 41.8%).81
Across the full
spectrum of NFL players including veterans with four or more years of service, the
player minimum salary comprises 28.7% of all salaries.82
.
54. In the NBA, the minimum salary for players in their first four years is
40.1% of all pay to those players.83
For the league as a whole, this figure is 20.3%.84
The Canadian Football League also offers a good point of comparison. In Canada, the
minimum salary makes up at least 47% of the total compensation to players, which is
pegged at 56% of total revenues. In other words, players share equally, through a
common, minimum salary, in nearly 30% of all revenues.85
Therefore, there is good
81
Using Dr. Stiroh’s NFL player data (2009-10 NFL Salaries), the average pay of players during their first four years was roughly $983 thousand, with a weighted average minimum pay of approximately $410 thousand.
82 Similarly, the average pay of all players in the NFL (according to the data set) was
$1.87 million, with the weighted average minimum pay of $536 thousand. Note that Alex Smith’s (TE for San Diego Chargers) salary data was unavailable.
83 In the NBA, the average pay for players during their first 4 years was $1.76 million
with the weighted average minimum of $707 thousand. See Patricia Bender’s web site (http://www.eskimo.com/~pbender/misc/salaries10.txt, last accessed April 19, 2013) for salary data, http://www.basketball-reference.com/leagues/NBA_2010.html for players’ years in the league; and http://www.nba.com/.element/mp3/2.0/sect/podcastmp3/PDF/CBA101.pdf for minimum pay requirements. Bender’s data has been used in multiple peer-reviewed publications including in the Academy of Management Journal, Applied Economics and Atlantic Economic Journal.
84 Likewise, the average pay for all players was $4.59 million with a weighted average
minimum of $933 thousand. 85
The CFL has a salary cap of $4.4 million and each team has a roster size of between 46 (http://www.cfl.ca/page/cfl_faq) to 53 players. Per the Collective Bargaining
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evidence that in a team-sport system, one reasonable outcome is one where players
dedicate at least one-fifth of their total value to equally shared group licenses (and
about 40% for those players in their first four years in the league), including the sharing
of the players’ share of broadcast licensing through salary, and the remainder is open to
individual negotiation.
55. In MLB, there is a single player minimum (currently at $490,000) across
all players.86
The average salary in 2012 was $3,213,479 when the minimum pay was
$480,000.87
Thus, MLB players all earn an equal amount that is about 15% of the
league average and then negotiate individually for amounts above that.
56. Dr. Noll’s outcomes can also be reasonably understood as a less
restrictive alternative that the NCAA and its members would much prefer to a fully
wide-open competitive market for athletic talent. As described above, I have published
on the viability of such a model, which might come closest to the European model, with
regional conferences in the United States playing the role of national/regional leagues
within the European community. The typical response of leagues in the United States,
when faced with the possibility of a European-style free competition, has been to seek
out the antitrust protection of collective bargaining consistent with Dr. Noll’s but-for
Agreement, the minimum salary per player in 2013 is $45,000, incremented by $1,000 per year for the past four years of the current CBA. Depending on the roster size, the percentage of salary cap that is minimum pay ranges between 47% and 56%. This range is calculated as the salary per team if all players were paid the minimum ($2.07 million or $2.385 million) divided by the $4.4 million salary cap per team (“Frequently Asked Questions about Compensation.” Canadian Football League Database. April 13, 2013. Available at: http://cfldb.ca/faq/compensation/, accessed April 18, 2013).
86 “Frequently Asked Questions,” MLBPlayers.com. Available at:
http://mlb.mlb.com/pa/info/faq.jsp, accessed April 18, 2013. 87
“Average salary hits record $3.2M,” ESPN, December 12, 2012. Available at: http://espn.go.com/mlb/story/_/id/8724285/mlb-average-salary-38-percent-32-million, accessed April 18, 2013.
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world, including athletes splitting 50% of total revenue and equally shared group
licensing pools.
57. My understanding is that Dr. Noll’s damage analysis has been put
forward, not as Plaintiffs’ final damages calculation, but rather to show that there is a
reasonable method for calculating class-wide, formulaic damages and to demonstrate
the feasibility of calculating damages using this methodology. It is clear he has done
this – in my opinion, there are reasonable methods and he has used one such method to
show how the class’s damages would be calculated using that methodology.
Defendants are correct to point out that there are other reasonable models, and they
could generate other quantitative outcomes. It is clear that this is a dispute over which
method to use, and not over whether there exists a method. As Dr. Noll has shown, and
which I corroborate and expand on in this report, there clearly is a class-wide, common,
formulaic method for calculating damages based on sports economics and antitrust
economics, using appropriate comparable league royalty deals as
yardsticks/benchmarks and in which industry norms, such as group licensing and equal
sharing are employed. The rest of the dispute -- which league, which model, what the
form of negotiation should be -- are economic disputes over the resulting outcome, not
questions of whether such a method is possible.
VI. EQUAL SHARING OF GROUP LICENSING REVENUES WILL NOT
LIKELY RESULT IN A MAJOR CHANGE IN THE DISTRIBUTION
OF THE QUALITY OF TALENT ACROSS CONFERENCES OR
CREATE CLASS CONFLICT
58. Dr. Stiroh. Dr. Rubinfeld, Dr. Heckman, and Dr. Cox all claim that the
changes that would ensue if Plaintiffs were to prevail in this case are so dramatic that it
is impossible to know which specific players would have attended which schools and as
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a result, it is impossible to know or estimate how much to compensate each member of
the proposed class. a) Dr. Rubinfeld suggests the possibility that many athletes might
have attended a different school: “Every student-athlete that would have made a different decision in the but-for world would have displaced another student-athlete from the but-for roster. …These decisions would have a cascading effect, partly due to limited team roster sizes and restrictions on the number of available athletic scholarships colleges offer. A student-athlete’s alternative but-for decision in response to altered incentives would bump another student from a roster who might enroll elsewhere, bumping another student, and so on. Furthermore, the re-shuffling of students would impact who would and would not receive athletic scholarships, which would further impact incentives and the choices students would make. Finally, there is also a dynamic component to all of this re-matching, as a change in the roster in one season would
affect the roster in subsequent years.”88
b) Dr. Heckman shares Dr. Rubinfeld’s concern that athletes in college might have found themselves on a different team, but-for the rules preventing the negotiation of group licenses: “In other words, the entire distribution of student-athletes across universities might be very different under a different set of rules, as university
offers and student responses to these offers could both change.”89
c) Dr. Stiroh goes so far as to imagine (without evidence or analysis) the complete collapse of the broadcast of college sports: “Without the NCAA as it exists, the information in the record does not permit one to know, to any degree of economic certainty, what sort of alternative institutions might have arisen, where student-athletes would have attended school given the prospect of varying compensation, what types of athletic competitions might have existed, how such competitions might have been organized and how successful such efforts might have been at the local, regional and national level. This means that the very question of whether (and to what extent) there would have even been economic demand for the NILs of student-athletes in this but-for world would need to
be explored and determined.”90
88
Rubinfeld ¶166. 89
Heckman ¶23. 90
Stiroh ¶38.
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d) Dr. Cox even testified that
6.1 THE DEFENDANTS IMAGINED “RESHUFFLING” IS CONTRADICTED BY THE PEER-
REVIEWED ECONOMIC LITERATURE, INCLUDING THE NOBEL-PRIZE WINNING
COASE THEOREM.
59. While it is true that the current system distorts the competitive outcome,
my analysis below shows that the amount of possible reshuffling is not nearly as
dramatic as Defendants’ speculation would suggest,93
and certainly not enough to
invalidate an analysis such as Dr. Noll’s. This is true because, when the actual facts of
the industry are taken into account, it is clear that athletic talent is already generally
distributed proportionally to team revenue, and thus moving to a system where the
amount of shared licensing that players receive is proportional to licensing revenue
would thus be unlikely to result in any substantial reshuffling. But just as importantly,
Defendants’ hypotheses are out of sync with the established economic literature on this
exact question.
60. When Dr. Rubinfeld imagines his “cascading effect,”94
he points to
nothing in the sports economic literature to indicate that such chaos is likely. Nor does
Dr. Heckman cite to any sports economic study to support his hypothetical world where
“the entire distribution” of college athletes is turned on its head, and similarly Dr.
91
Cox Deposition, p.132. 92
Cox Deposition, p. 77. 93
Stiroh ¶34, Rubinfeld ¶185, Heckman ¶36. 94
Rubinfeld ¶166.
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Stiroh offers no support in the literature for her speculation that the entire industry of
broadcasting college football and men’s basketball might dissolve from the sheer scale
of the changes.95
(Ironically, Dr. Stiroh also offers the contradictory speculation, also
inconsistent with the sports economics literature, that the NCAA rules may not have
any effect whatsoever on the market.96
) Dr. Cox simply offers, without evidence, the
idea that
”97
But these predictions of chaos are actually at odds with the
published, peer-review economic literature specifically on the issues of whether
restraints on player compensation and movement generally change the broad
distribution of talent.
61. This literature was first developed in the context of major league baseball,
which prior to 1973 was subject to the reserve clause, which played an economic role
comparable to the restraints at issue in this case. When MLB’s reserve clause was
replaced with a combination of free agency, arbitration, and a much more limited
reserve clause, competitive balance was not much affected – it actually improved.98
95
Stiroh ¶38: “This means that the very question of whether (and to what extent) there would have even been economic demand for the NILs of student-athletes in this but-for world would need to be explored and determined.”
96 In her deposition at p. 62, Dr. Stiroh testified: “I cannot answer whether there is or isn't
a restraint.” 97
Cox Deposition, p. 77. 98
Spitzer and Hoffman, “A Reply to Consumption Theory, Production Theory, and Ideology in the Coase Theorem,” Southern California Law Review 53, 1980; Cymrot, Cymrot, D. J. (1983) “Migration Trends and Earnings of Free Agents in Major League Baseball, 1976-1979,” Economic Inquiry 21(4), 1983; Besanko and Simon (1985), “Resources Allocation in the Baseball Players Labor Market: An Empirical Investigation,” Review of Business and Economic Research, Fall 1985; Quirk, J., and Fort, R.D. (1992) Pay Dirt: The Business of Professional Team Sports, Princeton University Press: Princeton, N.J.; Fort and Quirk (1995), p. 284, “Cross-
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This was predicted for baseball by Simon Rottenberg all the way back in 1956, twenty
years prior to free agency being adopted, when he stated that “It seems, indeed, to be
true that a market in which freedom is limited by a reserve rule such as that which now
governs the baseball labor market distributes players among teams about as a free
market would,” 99
(known today as the Invariance Principle). This theoretical result
was generalized in the literature by Nobel Prize Winner Ronald Coase.100
I see no
evidence in the reports offered by Drs. Rubinfeld, Stiroh, Cox, or Heckman that would
justify disregarding the published, peer-reviewed economics literature in favor of
Defendants hypothetical concerns.
62. This is especially true given how the natural experiment provided by
baseball proved entirely consistent with the economic literature. Just as Rottenberg’s
and Coase’s theory predicted, when MLB went from the reserve clause for 100% of its
players to free agency for all players with a certain number of years of experience, not
much changed other than players began earning a lot more money. Competitive
balance did not change much (it actually improved slightly, especially as concerns the
Subsidization, Incentives, and Outcomes in Professional Team Sports Leagues.” Journal of Economic Literature XXXIII; Maxcy, J.G., (2002), “Rethinking Restrictions on Player Mobility in Major League Baseball,” Contemporary Economic Policy 20(2); and for sports other than baseball, Fort and Lee, “Structural Change, Competitive Balance, and the Rest of the Major Leagues,” Economic Inquiry 45(3), 2007.
99 Simon Rottenberg, “The Baseball Players' Labor Market,” The Journal of Political
Economy 64(3), 1956, pp242-258, here p.255. Rottenberg also notes at p. 258 that “Markets in which the freedom to buy and sell is constrained by the reserve rule or by the suggested alternatives to it do not promise better results than do markets constructed on the postulate of freedom. It appears that free markets would give as good aggregate results as any other kind of market for industries, like the baseball industry, in which all firms must be nearly equal if each is to prosper. On welfare criteria, of course, the free market is superior to the others, for in such a market each worker receives the full value of his services, and exploitation does not occur.”
100 R. H. Coase, “The Problem of Social Cost,” Journal of Law and Economics, Vol. 3 (Oct., 1960), pp. 1-44.
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dominance of the New York Yankees) in MLB, and the league added six more teams, a
sign of profitability, even though teams had to begin paying more competitive wages
(see Exhibit 5 below). Exhibit 5. Competitive Balance in MLB: Relatively Unchanged Despite Free Agency
World Series Wins by Decade
63. Other sports including Tennis, Rugby Union, and most prominently, the
Olympics, have all made the move to an open market for athletes, despite predictions
that these sports would collapse. And, they all continue to thrive.
6.2 THE FACTS OF COLLEGE SPORTS ARE CONSISTENT WITH THE ECONOMIC
LITERATURE – AND INCONSISTENT WITH DEFENDANTS’ IMAGINED CHAOS
64. The facts of college sports are also wholly consistent with the findings in
the literature. In the system that has developed over the many years of the restraint,
schools and conferences have found many other ways to compete for players. Those
mechanisms (e.g., skilled head and recruiting coaches, fancy physical facilities) have
Team Appeared Won Team Appeared Won Team Appeared Won
Boston Red Sox 2 2 Baltimore Orioles 2 1 Brooklyn/LA Dodgers 5 2
Chicago White Sox 1 1 Boston Red Sox 1 0 Chicago White Sox 1 0
Detroit Tigers 1 0 Cincinnati Reds 1 0 Cleveland Indians 1 0
New York Yankees 2 1 Detroit Tigers 1 1 Milwaukee Braves 2 1
Philadelphia Phillies 2 1 Los Angeles Dodgers 3 2 New York Giants 2 1
San Francisco Giants 2 1 Minnesota Twins 1 0 New York Yankees 8 6
St. Louis Cardinals 3 2 New York Yankees 5 2 Philadelphia Phillies 1 0
Florida Marlins 1 1 Pittsburgh Pirates 1 1
Anaheim Angels 1 1 San Francisco Giants 1 0
Houston Astros 1 0 St. Louis Cardinals 3 2
Colorado Rockies 1 0 New York Mets 1 1
Tampa Bay Rays 1 0
Texas Rangers 2 0
Teams in World Series Teams in World Series Teams in World Series
Most Frequent Team Most Frequent Team Most Frequent Team
Yankees Appearances Yankees Appearances Yankees Appearances
Yankees wins Yankees wins Yankees wins
2002‐2011 1960‐1969 1950‐1959
13 (of 30, 43.3%)
2
New York Yankees
7 (of 16, 43.8%)
8
61
11 (of 24, 45.8%)
5
2
St. Louis Cardinals New York Yankees
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been quite effective in creating a market structure wherein talent and revenue have
already sorted themselves out; a system that allowed schools with more revenue to offer
players a higher royalty for their NIL rights would not likely generate any significant
change in that relationship. As economist Dave Berri notes, if players were paid,
coaches would end up with less money, top teams would still be great, lesser teams
would still be lesser and NCAA wouldn’t look that different.101
65. As one such example, it is informative to see how coaches’ pay and team
revenue generally correlate, as shown in Exhibit 6.
101
Dave Berri, “Would Paying College Players Really Destroy Competitive Balance?” Freakonomics.com, March 15, 2012. Available at: http://www.freakonomics.com/2012/03/15/would-paying-college-players-really-destroy-competitive-balance/, accessed April 18, 2013: “And for the rest of us, we have to wonder how paying the players would change this outcome? Yes, Calipari would end up with less. But it doesn’t seem like the dominance of the top teams would be impacted. Teams like Kentucky, North Carolina, Michigan State, and Syracuse – the number one seeds this year — would still be great. Teams with less money would probably not be as great. And the NCAA – even with paid players – would probably look about the same.”
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Exhibit 6. 2011 Football Coaches Salaries Compared with Football Revenues
66. The same general relationship holds between team revenues and the
quality rating of the athletes they recruit now. As shown in Exhibit 7 below, the total
number of starred players (rivals.com rates the quality of high school football players,
with a higher number of stars implying a better player) that a school recruits in football
is highly correlated (0.77) with the football revenues of that school during 2007-2011.
In other words, athlete talent is already being apportioned across schools by the alleged
constrained market quite similarly to how the free market is apportioning coaching
talent.
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Exhibit 7. Total Number of Quality Stars Compared with Football Revenue
67. Despite dramatic revenue growth (about 8.1% per year since 1985, the
year after the Board of Regents case was decided)102
and dramatic increases in coaches’
pay,103
competitive balance has not changed and the distribution of which schools are at
the top has not either. For example, Dr. David Berri noted that from 1979 to 2011, 12
schools accounted for 54.5% of the Final Four appearances, i.e. 3.5% of the 344 D1
102
In 1985, the mean D1A revenues per school were $6.833 million (Andrew Zimbalist (1999), Unpaid Professionals, p. 160.). In 2010, the FBS median (in 2008, the calculations done by the author switched from mean to median) revenue per school was $48.3 million (Daniel Fulks (2011), Revenues and Expenses, 2004-2010, NCAA Division I Intercollegiate Athletics Programs Report, p. 17). Note, as discussed below, the Fulks data suffers from certain flaws that tend to understate football and basketball revenues.
103 In his Report at page 71, Dr. Noll cites to Clotfelter for the finding that college coaches pay increased seven-fold (after accounting for inflation!) from 1985-96 to 2009-10.
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schools that are eligible to play in the tournament captured over half of the Final Four
berths. This lack of balance is more impressive, given the inherent randomness of a
single elimination tournament, which ought to produce more randomness in the Final
Four teams than if multiple game series were used, as in the NBA.104
Similarly, Peach
found that 50% of the Final Four teams from 1950-2006 were from 13 schools. Fifty
percent of the top 8 finishes in the AP final poll in college football (from 1950-2005)
were from 12 schools. He concludes that there is not much competitive balance in the
NCAA, a notion that is confirmed by additional academic research.105
68. Defendants’ experts’ speculation is also contradicted by statements from
NCAA members and its administrators. Most notably, NCAA President Mark Emmert
has repeatedly stated that the existing level of competitive balance (or imbalance) is the
104
Dave Berri, “Would Paying College Players Really Destroy Competitive Balance?” Freakonomics.com, March 15, 2012. Available at: http://www.freakonomics.com/2012/03/15/would-paying-college-players-really-destroy-competitive-balance/, accessed April 18, 2013
105 Jim Peach (2007), The 2006 Western Social Science Association Presidential Address: “College athletics, universities, and the NCAA,” The Social Science Journal 44. The academic literature finds a lack of competitive balance in college sports. Rod Fort in his widely used textbook notes “Competitive imbalance exists in college sports.” (p. 492 of Sports Economics, 3rd ed. 2005). E. Woodrow Eckard notes “The NCAA regulates college football player recruiting, eligibility, and compensation. The economic theory of cartels suggests that one consequence may be reduced competitive balance. The enforced restrictions inhibit weak teams from improving, and protect strong teams from competition. A “stratification” is implied which should be evident over time as less “churning” in national rankings and conference standings, and fewer schools achieving national prominence. I test this general hypothesis by comparing various competitive balance measures for about 25 years before and after NCAA enforcement began in 1952. The hypothesis is supported by all measures at both the national and conference levels.” (p. 347 of “The NCAA Cartel and Competitive Balance in College Football,” Review of Industrial Organization 13.). Depken and Wilson similarly show that “over time, Division 1-A football has become less balanced…” (p. 209 of Depken and Wilson, “Institutional Change in the NCAA and Competitive Balance in Intercollegiate Football,” in Economics of College Sports, eds. J. Fizel and R. Fort, 2004.
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result of deep, long-standing disparities in investment and is unlikely to change based
on allowing some level of increased payments to athletes:
(a) “'There are a variety of dynamics out there that will continue to drive the
gap between the highest resource schools and the lowest for the
foreseeable future,’ Emmert said. ‘I don't see that trend abating at all.’”106
(b) In his deposition (p. 141): “So one would be hard-pressed to argue that the enthusiasm at Northwestern for football is the same as it is at the University of Alabama. Again, some universities over an extended period of time have chosen for a variety of reasons to focus time, energy, and motivation on -- on specific sports. Football in the South has a very long tradition, and it is -- and it is widely successful. They work very, very hard on it. It is less so in the Ivy leagues.”
(c) “I don’t think any of the Butler kids were recruited by, you know, by
Kansas.”107
(d) “So if you’ve got a gap between $40,000 and $150,000, (then) $2,000 isn’t
going to make much of a difference.”108
106
Blair Kerkhoff, “A look at athletic department budget growth at Kansas and Kansas State,” The Wichita Eagle, July 7 2012. Available at: http://www.kansas.com/2012/07/07/2401039/a-look-at-athletic-department.html, accessed April 18, 2013.
107 Seth Wickersham, “Emmert: "Don't lie. Don't steal." ESPN, December 2, 2011. Available at: http://espn.go.com/college-sports/story/_/id/7303903/ncaa-president-mark-emmert-makes-rulebook-changes-offers-stipends-athletes, accessed April 18, 2013.
108 Joseph Duarte, “NCAA's Emmert says legislation won't impact gap between haves, have-nots,” Houston Chronicle, November 3, 2011. Available at: http://www.chron.com/sports/college/article/NCAA-s-Emmert-says-legislation-won-t-impact-gap-2251444.php, accessed April 18, 2013: Emmert says “Well, the gap right now is pretty enormous. If you look at the lowest-resourced conference, they spend about $40,000 per year per student-athlete, for all costs in. The SEC (Southeastern Conference) at the top spends roughly four times that, so (about $150,000) per student. So if you’ve got a gap between $40,000 and $150,000, (then) $2,000 isn’t going to make much of a difference.
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69. “As for the continued separation of the haves and the have nots, that's
economics, Emmert said. ‘We've always had that. The financial differences have
always been there. Some universities have huge competitive advantages [because] of
history and culture and decisions that the university made over decades that are in some
ways insurmountable and you wouldn't want to take them away. … I'm sure Alabama
under Bear Bryant had these stunning competitive advantages … Now to say that the
University of Louisiana-Lafayette and Alabama have huge competitive disadvantages it
didn't look much different 40 years ago. It reinforces some of those inherent advantages
some of those universities have had for a century.’”109
70. Other NCAA officials have also emphasized how little impact NCAA
rules can have on the competitive balance structure within college sports, given the
existing disparities in spending: James F. Barker (president of Clemson University and
chair of an NCAA working group) stated “The playing field is not and has never been
and never will be level…To say the NCAA should try to create a level playing field is
impossible and is not a wise path to take.” 110
As Declarant Todd Petr put it in the video
he cites to in his declaration, “we see that there is a large disparity of budgets, even
within teams that compete on the same field of play.”111
Or as Big XII conference Bob
Bowlsby recently told a student audience: “Would [Plaintiffs’ sought-for injunctive
109
Dennis Dodd, “NCAA president: Conference realignment "a market shakedown",” CBSSports.com, May 31, 2012. Available at: http://www.cbssports.com/collegefootball/blog/dennis-dodd/19217878/ncaa-president-conference-realignment-a-market-shakedown, accessed April 18, 2013.
110 Brad Wolverton, “Boosters Could Pay Coaches Directly Under NCAA Proposal,” Chronicle of Higher Education, August 1, 2012. Available at: http://chronicle.com/blogs/players/boosters-could-pay-coaches-directly-under-ncaa-proposal/30983, accessed April 18, 2013.
111 “NCAA Financials,” youtube.com, October 9, 2012. Available at: http://www.youtube.com/watch?feature=player_detailpage&v=HnAm2lp-ys8#t=495s.
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relief] change the way we do business? Yes,” Bowlsby said. “Does it create an
Armageddon situation? I’m not sure it does.”112
71. Defendants’ experts’ analyses do not take the existing economic and
competitive structure of the sports into account. Dr. Stiroh admitted as much in her
deposition, when she testified “I have not done an analysis of the ways in which
colleges currently compete... I have not done an independent study of the way that
men's basketball and football compete for student-athletes.”113
She goes further,
admitting she does not know what in the actual world the NCAA regulates with regard
to recruiting of Division I men's basketball and football college athletes.”114
72. This lack of understanding of the facts of recruiting and the economics of
the actual market is evident in her testimony -- Dr. Stiroh speculates on hypotheticals
that are far removed from the realities of college sports. For example, Dr. Stiroh (¶82)
claims that athletes who chose to play in the Sun Belt conference would have gone to
play in the Pac-10 conference in the but-for world. She implies that somehow currently
there are many players talented enough to play in one of the nation’s most elite
conferences who simply passed on the opportunity to play in prestigious west coast
institutions and instead picked schools with lower academic and athletic reputations,
who would suddenly realize the mistake of their poor choice if the Pac-10 could have
shown them how valuable they were.
112
Mike Finger, “Bowlsby: Big 12 still not looking to expand,” Houston Chronicle, April 16, 2013. Available at: http://blog.chron.com/longhorns/2013/04/bowlsby-big-12-still-not-looking-to-expand/, accessed April 18, 2013.
113 Stiroh depo, p. 75, 77.
114 Stiroh, deposition p. 134: Q: You do not know as of this date what in the actual world the NCAA regulates with regard to recruiting of Division I men's basketball and 10 football college athletes? (objection omitted) A: I think that’s true
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73. This rests on a misunderstanding of the existing distribution of talent
across conferences. As Mark Emmert put it: “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.”115
Most Sun Belt athletes would
not have played in the Pac-10 conference in the but-for world because the schools in the
Pac-10 conference had no interest in them. Using data from rivals.com, I have
determined that over the five year period from 2007 to 2011, only 20 athletes who
ultimately selected the Sun Belt conference (out of 1,042 in total) received football
scholarship offers from the Pac-10 conference, but chose to attend the Sun Belt
conference (see Exhibit 8). From 2007 to 2008, the Sun Belt had 8 football teams, and
from 2009 to 2011, it had 9 football teams, meaning that 43 teams competed from 2007
to 2011. Thus, on average, every two years less than one player per team was even in a
position to consider a Pac-10 offer instead of a Sun Belt offer, hardly enough for the
question of “reshuffling” to predominate. Moreover, of those twenty players over the
five-year period, seventeen went to high school in states with Sun Belt schools or states
very near Sun Belt schools. In basketball, there was even less room for concern: over
the course of five years there were only nine athletes who chose Sun Belt schools but
also had an offer from a Pac-10 school, an average of approximately 0.14 athletes per
team per year To take this expected small possibility of change on the margin and
imagine it into Defendants’ cascade of possible reallocation requires one to give
preference to speculation over the actual facts of the industry and the teachings of
sports economics.
115
Seth Wickersham, “Emmert: "Don't lie. Don't steal." ESPN, December 2, 2011. Available at: http://espn.go.com/college-sports/story/_/id/7303903/ncaa-president-mark-emmert-makes-rulebook-changes-offers-stipends-athletes, accessed April 18, 2013.
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Exhibit 8. Basketball and Football Commits Going to the Sun Belt,
but Having Received an Offer from the Pac-10 and the Sun Belt
74. Similarly, Dr. Rubinfeld ignores the realities of the rapidly changing
college sports broadcast market when he proposes that some athletes who chose to play
football at USC instead of Alabama might have chosen Alabama over USC in the but-
for world because of the difference in licensing royalty payments in Dr. Noll’s damages
calculations during 2009-2010 .116
This
116
Rubinfeld ¶161a.
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56 DECLARATION OF DR. DANIEL A. RASCHER, Case No. 4:09-cv-1967 CW
analysis fails to take into account the specifics of the college television landscape.
Revenue growth has been astounding in college sports over the past few years,
especially media revenue growth. As Dr. Noll pointed out in his report, total NCAA
and BCS television revenue grew from $374.6 million in 2002 to $800.6 million in
2010, at a compound annual growth rate of 9.95%.117
During that time, each
conference’s license renewal lead to a substantial increase in revenues from the
previous contract. However, because the conferences no longer can collude on
television rights (since the NCAA was found to have violated the antitrust laws in the
Board of Regents case in 1984), each conference negotiates a different TV deal and the
contracts vary in length. As a result, it is often the case that a conference in the first
years of a new contract will often dramatically out-earn a conference in the final years
of an older deal.
75. That is what drives Dr. Rubinfeld’s finding here, where the SEC
(Alabama’s conference) had just signed a lucrative deal and the Pac-10 was at the tail
end of an obsoletely low-revenue deal, and was on the verge of expanding to 12 teams,
signing lucrative television deals, and launching its own network. In any given year,
simply based on these differences in contractual timing, USC and Alabama may show
different results, but in the longer-term the payments from each school will reach a
more common equilibrium. While in 2009-10, the SEC looked substantially richer than
the Pac-10, those deals have already become obsolete: “the SEC missed a big
opportunity several years ago by negotiating longterm deals with ESPN and CBS that
everybody now knows were fairly under-market deals. ‘At the time, they looked like
they were fully-valued deals,’ he [Chris Bevilacqua, a college sports TV consultant
who helped design the Pac-12's media rights deal and negotiated the Rose Bowl's
117
See Noll Report, Exhibit 7.
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57 DECLARATION OF DR. DANIEL A. RASCHER, Case No. 4:09-cv-1967 CW
contract with ESPN] said. ‘But it's fair to say the market accelerated forward and has
changed quite dramatically.’”118
Thus, if one were to compare licensing revenues today
(April 2013) across the two conferences, we can see that four of the other major
conferences have now passed the SEC, at least until they negotiate their next contract
(see Exhibit 9).
Exhibit 9. Conference Television Revenue and Estimated Payouts, 2013.
118
Jon Solomon, “The SEC channel through the eyes of sports media consultants,” AL.com, April 16, 2013. Available at: http://www.al.com/sports/index.ssf/2013/04/the_much-anticipated_sec_chann.html, accessed April 19, 2013.
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76. Even this temporary setback for the SEC is unlikely to last long. As of
April 12, 2013, Forbes magazine reported that the looming deal with ESPN would
“Likely [be] the Most Valuable TV Deal in College Sports.”119
77. Timing issues such as Dr. Rubinfeld brings up are interesting quirks of the
industry, but do not raise issues of “reshuffling” severe enough to upset the established
economic finding that in sports, talent finds its way to where it is most valued.
6.3 DEFENDANTS’ HYPOTHESIZED REDUCTION IN OUTPUT RESTS ON TWO DUBIOUS
ASSUMPTIONS -- THAT MOST SCHOOLS ATTENDED BY CLASS MEMBERS ARE
LOSING MONEY ON FOOTBALL AND BASKETBALL AND THAT THE MARGINAL
ATHLETE AT A SCHOOL PLAYS FOOTBALL OR MEN’S BASKETBALL.
78. As I discuss in detail below, Defendants’ reliance on the data provided by
Todd Petr is inappropriate for analyzing the specifics of the schools and sports in suit.
As a simple matter, shown below, almost every BCS football program shows a profit
and it is those 60-70 schools that generate the vast majority of damages in Dr. Noll’s
analysis, because, of course, they generate the vast majority of licensing revenues.
When Defendants’ experts’ confuse the profitability of the football or basketball
program with the overall cost of other sports, such as when Dr. Stiroh testified that “the
majority [of Division I schools], being the pure numbers, do not make profits.”120
They
fall into an analytical trap that can lead to incorrect conclusions when applied to just the
sports played by the class members.
119
Chris Smith, “SEC, ESPN To Announce SEC Network, Likely The Most Valuable TV Deal In College Sports,” Forbes.com, April 12, 2013. Available at: http://www.forbes.com/sites/chrissmith/2013/04/12/sec-espn-to-announce-sec-network-likely-the-most-valuable-tv-deal-in-college-sports/, accessed April 19, 2013.
120 Stiroh, deposition p. 195.
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59 DECLARATION OF DR. DANIEL A. RASCHER, Case No. 4:09-cv-1967 CW
79. Leaving aside the academic evidence against Mr. Petr’s conclusions,
which I discuss in much greater detail in Section 7 of my report, it is clear from the
empirical evidence that when schools have faced revenue shortfalls or increased
expenses in the past, they have not chosen to cut football or men’s basketball.
80. For example, historically various changes in the NCAA rules have caused
the cost of offering a football player a scholarship to increase. These include the
passage of Title IX (which can potentially121
double the cost of a scholarship to a male
athlete by requiring up to an equal amount of scholarship funding for women athletes),
and the various changes in the treatment of Pell Grants (which had the net effect of
increasing the cost of each grant recipient’s scholarship). However, schools did not
stop providing football and men’s basketball athletes with full scholarships, even as
these changes in Federal law and NCAA rules increased the cost of providing
scholarships.
81. More recently, the United States went through a Great Recession and the
impact on the United States economy,122
including Division I colleges and universities
was dramatic.123
These schools experienced severe cuts in academic departments and
jobs within academia. For example:
(a) “Arizona’s university system cut more than 2,100 positions; consolidated
or eliminated 182 colleges, schools, programs, and departments; and
121
The vast majority of schools attended by Plaintiffs did not provide as much financial aid to female athletes as they did to male athletes, especially among those schools in FBS.
122 For example, from 2007 to 2010, the number of construction firms fell by over 129,500 (from 799,811 firms in 2007 to 670,230 firms in 2010), a 16.2% decrease. See: US Census Bureau. http://www.census.gov/econ/susb/.
123 Kim Clark, “The Great Recession’s Toll on Higher Education,” US News.com, September 10, 2010. Available at: http://www.usnews.com/education/articles/2010/09/10/the-great-recessions-toll-on-higher-education, accessed April 19, 2013.
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closed eight extension campuses (local campuses that facilitate distance
learning).”124
(b) “The University of California laid off 4,200 staff and eliminated or left unfilled another 9,500 positions; instituted a system-wide furlough program, reducing salaries by 4 to 10 percent; consolidated or eliminated more than 180 programs; and cut funding for campus administrative and
academic departments by as much as 35 percent.”125
(c) “Louisiana State University cut majors in German and Latin.”126
“The University System of Louisiana furloughed 727 employees, laid off another 210 staff and faculty members, and cut 217 academic programs. In addition, campuses have reduced library services and cut funding for
athletics, student scholarships, and research.”127
(d) “The University of Colorado system between 2009 and 2011 laid off 339
staff and faculty, even as enrollment grew by 2,100 students.”128
(e) “Since 2007, the University of Nevada-Las Vegas eliminated more than 700 faculty and staff positions, 15 academic programs, and 31 degree
programs.” 129
124
Phil Pliff et al. “Recent Deep State Higher Education Cuts May Harm Students and the Economy for Years to Come.” March 19, 2013. Center on Budget and Policy Priorities. Available at: http://www.cbpp.org/cms/?fa=view&id=3927#_ftn5, accessed April 19, 2013.
125 Phil Pliff et al. “Recent Deep State Higher Education Cuts May Harm Students and the Economy for Years to Come.” March 19, 2013. Center on Budget and Policy Priorities. Available at: http://www.cbpp.org/cms/?fa=view&id=3927#_ftn5, accessed April 19, 2013.
126 Lisa W. Foderaro. “Budget-Cutting Colleges Bid Some Languages Adieu.” The New York Times. December 3, 2010. Available at: http://www.nytimes.com/2010/12/05/education/05languages.html?pagewanted=all, access April 19, 2013.
127 Phil Pliff et al. “Recent Deep State Higher Education Cuts May Harm Students and the Economy for Years to Come.” March 19, 2013. Center on Budget and Policy Priorities. Available at: http://www.cbpp.org/cms/?fa=view&id=3927#_ftn5, accessed April 19, 2013.
128 Phil Pliff et al. “Recent Deep State Higher Education Cuts May Harm Students and the Economy for Years to Come.” March 19, 2013. Center on Budget and Policy Priorities. Available at: http://www.cbpp.org/cms/?fa=view&id=3927#_ftn5, accessed April 19, 2013.
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(f) “The University of New Hampshire eliminated nearly 200 staff positions,
implemented a hiring freeze, and froze staff salaries.” 130
(g) “The University of North Carolina-Chapel Hill eliminated 493 positions, cut 16,000 course seats, increased class sizes, cut its centrally supported computer labs from seven to three, and eliminated two distance education
centers.” 131
(h) “At Florida State University the undergraduate program in art education
and two graduate theater programs are being phased out.”132
(i) “Arizona State University’s four campuses lost 500 jobs, closed 48 programs and imposed 10-to-15-day furloughs this spring. The schools of music, theater, film and design were all incorporated into the existing art
and architecture center.”133
None of these programs cut their Division I basketball programs or their FBS football
program. Overall, despite these budget shortfalls and sever academic cuts, since 2008,
129
Phil Pliff et al. “Recent Deep State Higher Education Cuts May Harm Students and the Economy for Years to Come.” March 19, 2013. Center on Budget and Policy Priorities. Available at: http://www.cbpp.org/cms/?fa=view&id=3927#_ftn5, accessed April 19, 2013.
130 Phil Pliff et al. “Recent Deep State Higher Education Cuts May Harm Students and the Economy for Years to Come.” March 19, 2013. Center on Budget and Policy Priorities. Available at: http://www.cbpp.org/cms/?fa=view&id=3927#_ftn5, accessed April 19, 2013.
131 Phil Pliff et al. “Recent Deep State Higher Education Cuts May Harm Students and the Economy for Years to Come.” March 19, 2013. Center on Budget and Policy Priorities. Available at: http://www.cbpp.org/cms/?fa=view&id=3927#_ftn5, accessed April 19, 2013.
132 Patricia Cohen. “Arts Programs in Academia are Forced to Nip Here, Adjust There.” The New York Times. August 9, 2009. Available at: http://www.nytimes.com/2009/08/10/arts/10cuts.html?pagewanted=all, accessed April 19, 2013.
133 Patricia Cohen. “Arts Programs in Academia are Forced to Nip Here, Adjust There.” The New York Times. August 9, 2009. Available at: http://www.nytimes.com/2009/08/10/arts/10cuts.html?pagewanted=all, accessed April 19, 2013.
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16 schools have entered Division 1 basketball134
and only one (Centenary of Louisiana,
in the wake of Hurricane Katrina)135
has left. In FBS football, no schools have left and
five have entered, with two more slated to join FBS in 2013-14.136
82. For example, in Maryland, the university addressed a Recession-driven
$48 million budget shortfall by “spending down cash reserves, requiring staff to take
unpaid furlough days, squeezing athletics budgets, and leaving lots of unfilled jobs
vacant.”137
The school also raised tuition slightly.138
What they did not do, however,
134
Schools have also added so-called “non-revenue” sports. For example, since 2008, the following schools have added (or will add) Division 1 lacrosse: University of Detroit(2009); Jacksonville University(2010); Mercer University(2011); University of Michigan(2012); High Point University(2013); Marquette University(2013); Boston University(2014); Furman University(2014); Monmouth University(2014); University of Richmond(2014); University of Massachusetts-Lowell(2015).
135 University of New Orleans also planned to move down to Division II after the impact of Katrina but then reversed course. See http://espn.go.com/college-sports/story/_/id/7663053/uno-privateers-decide-remain-ncaa-division-i, accessed April 19, 2013.
136 For Division 1 basketball, the list on new entrants includes UC Davis (2008); Longwood (2008); Northern Colorado (2008); North Dakota St. (2009); South Dakota St. (2009); Kennesaw St. (2010); NJIT (2010); North Florida (2010); Utah Valley (2010); CSU Bakersfield (2011); Central Ark. (2011); Fla. Gulf Coast (2012); N.C. Central (2012); S.C. Upstate (2012); Houston Baptist (2012); Seattle University (2012). The only school that has exited was Centenary of Louisiana (2011). For FBS football Western Kentucky entered in 2009, and Massachusetts, Texas State, Texas San Antonio, and South Alabama entered in 2012. Georgia State and Old Dominion will join in 2013-14.
See http://fs.ncaa.org/Docs/stats/m_basketball_RB/2012/Conference.pdf, 2010 NCAA Division I Football Records. Available at: http://www.ncaa.org/wps/wcm/connect/public/NCAA/Resources/Stats/Football/2010RB-D1.html; Lee Andrew Henderson, “Meet the 5 College Football Programs that Will Join the FBS in 2012 and 2013: A Fan’s Analysis,” Yahoo! Sports, May 1, 2012. Available at: http://sports.yahoo.com/news/meet-5-college-football-programs-join-fbs-2012-164900096.html, accessed April 19, 2013; “Old Dominion Beefing up salaries in preparation for FBS move,” Footballscoop.com, April 10, 2013. Available at: http://footballscoop.com/news/9403-old-dominion-beefing-up-salaries-in-preparation-for-fbs-move, accessed April 19, 2013.
137 Kim Clark, “The Great Recession’s Toll on Higher Education,” US News.com, September 10, 2010. Available at:
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was cut scholarships in football and men’s basketball, even though football was in a
noted financial slump.139
Instead, Maryland recently announced it was leaving the
ACC for the Big Ten, where its football and basketball programs are expected to bring
in $95 million more from 2014-15 through 2020.140
Those increased football and
basketball revenue may prove enough to allow the Terrapins to resume the sports that
were eliminated141
when the budget crisis hit.142
83. While it is unfortunate for the University of Maryland community that
sports other than football and basketball are vulnerable when the list of least-needed
activities is generated for budget cuts, it is notable that Maryland chose to focus on
http://www.usnews.com/education/articles/2010/09/10/the-great-recessions-toll-on-higher-education, accessed April 19, 2013.
138 Kim Clark, “The Great Recession’s Toll on Higher Education,” US News.com, September 10, 2010. Available at: http://www.usnews.com/education/articles/2010/09/10/the-great-recessions-toll-on-higher-education, accessed April 19, 2013.
139 “Football attendance is down more than 31 percent, from a high of 52,426 in 2005 to this season’s average of 36,022. Season-ticket sales declined for six straight years, and one-third of the 63 suites in the $51 million Tyser Tower at Byrd Stadium are unsold.” John Ourand and Michael Smith, “Maryland to Big Ten: League’s more stable revenue streams leads broke Terps to bolt,” Sports Business Journal Sporting News, December 3, 2012. Available at: http://aol.sportingnews.com/ncaa-football/story/2012-12-03/maryland-to-big-ten-athletic-department-budget-deficit-why-maryland-leave-acc, accessed April 19, 2013.
140 John Ourand and Michael Smith, “Maryland to Big Ten: League’s more stable revenue streams leads broke Terps to bolt,” Sports Business Journal Sporting News, December 3, 2012. Available at: http://aol.sportingnews.com/ncaa-football/story/2012-12-03/maryland-to-big-ten-athletic-department-budget-deficit-why-maryland-leave-acc, accessed April 19, 2013.
141 “Men’s and women’s swimming; men’s tennis; women’s water polo; acrobatics and tumbling (formerly known as competitive cheer); and two men’s track programs, cross-country and indoor track and field, were eliminated” Mark Giannotto, “Maryland cuts seven sports on ‘sad day’ in College Park,” July 2, 2012. Available at: http://articles.washingtonpost.com/2012-07-02/sports/35486395_1_athletic-programs-track-program-athletic-director-kevin-anderson, accessed April 19, 2013.
142 Kelyn Soong, “Move to Big Ten Could Bring Back Eliminated Sports,” April 9, 2013. Available at: http://cnsmaryland.org/2013/04/09/move-to-big-ten-could-bring-back-eliminated-sports/, accessed April 19, 2013.
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strengthening football and basketball because those programs serve as profit centers
that can fund other activities. When Defendants and their experts make the assumption
that the marginal impact of revenue reductions will hit the football and men’s
basketball teams, they ignore the reality of college sports and the very recent natural
experiment at Maryland that showed the class members who attend a school in dire
financial straits were not vulnerable to losing scholarships, even in the face of a $48
million shortfall.
84. Defendants’ experts had another natural experiment to draw on, in the
experience of the University of California, Berkeley. Despite massive budget shortfalls
in the state of California as a whole and in the UC system specifically,143
Cal did not
choose to reduce football or basketball scholarships.144
Instead, the school invested in a
“$321 million renovation of Memorial Stadium that opens Sept. 1 and $153 million for
a new multisport training facility.”145
The investment in facilities was designed in part
143
“After the state legislature last year slashed $650 million from the University of California system's previously $3-billion budget, tuition at UC schools rose 17% for in-state students and 5% for nonresident ones, prompting student protests and sit-ins on the Berkeley campus.” Rachel Bachman, “Cal’s Football-Stadium Gamble,” April 20, 2012. Available at: http://online.wsj.com/article/SB10001424052702304432704577350214257041598.html, accessed April 19, 2013.
144 California also originally threatened to cut five sports programs (Joe Drape, “Cal-Berkeley Cuts 5 Athletic Programs,” September 28, 2010. Available at: http://www.nytimes.com/2010/09/29/sports/29cal.html?_r=0, accessed April 19, 2013) but that threat resulted in efforts by alumni with an interest in those sports to raise money to save all but one of the programs (Herb Benenson, “Baseball program will continue at Berkeley,” April 8, 2011. Available at: http://newscenter.berkeley.edu/2011/04/08/baseball-to-continue-at-cal/, accessed April 19, 2013).
145 Rachel Bachman, “Cal’s Football-Stadium Gamble,” April 20, 2012. Available at: http://online.wsj.com/article/SB10001424052702304432704577350214257041598.html, accessed April 19, 2013.
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to increase the Golden Bears’ ability to compete for top recruits.146
The school also
spent an estimated $5.5 million to buy out the contract of their recently unsuccessful
head football coach,147
and hired a new coach at an estimated $1.94 million per year,148
all with the goal of improving the team’s on-field and financial performance, so as to
generate higher profits. As California’s athletic director, Sandy Barbour explained:
“We recognize fully that football success is a key driver in our financial success.”149
85. Defendants’ experts are attempting to apply a very generic economic
analytical template to the question of whether the schools attended by class members
would be likely to reduce consumptions of athlete images. Perhaps in part because they
mistakenly take Defendant NCAA and their declarant Todd Petr at face value, when
they argue that almost no schools make money,150
Defendants simply fail to address the
fact that the marginal athlete in Division I athletic program is not on the FBS football
team or the men’s basketball team, but on another team on campus (and the least
146
“When he hits the recruiting trail this week, Jeff Tedford will be able to tell prospects that his Cal team is going to a bowl game for the eighth time in nine years, that it produced the Pac-12 Conference's defensive player of the year and that incoming freshmen will have at their disposal a glossy new training center and a renovated stadium. That's good ammo for the recruiting wars, especially the upgrade in facilities with the High Performance Center now complete and Memorial Stadium renovations continuing.” John Crumpacker, “Cal’s Tedford has more tools to draw recruits,” SFGate.com, November 29, 2011. Available at: http://www.sfgate.com/sports/article/Cal-s-Jeff-Tedford-has-more-tools-to-draw-recruits-2303058.php, accessed April 19, 2013.
147 “Jeff Tedford’s Buyout Details,” Californiagoldenblogs.com, February 14, 2013. Available at: http://www.californiagoldenblogs.com/2013/2/4/3952812/jeff-tedfords-buyout-details, accessed April 19, 2013.
148 “Cal, coach Sonny Dykes finalize deal,” ESPN.com, March 1, 2013. Available at: http://espn.go.com/college-football/story/_/id/9006323/california-golden-bears-sonny-dykes-finalize-97m-five-year-deal, accessed April 19, 2013.
149 Rachel Bachman, “Cal’s Football-Stadium Gamble,” April 20, 2012. Available at: http://online.wsj.com/article/SB10001424052702304432704577350214257041598.html, accessed April 19, 2013.
150 See Heckman, ¶41.Stiroh Deposition, pp. 192-3.
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important expenditure category on campus may not even be in athletics, but elsewhere).
Misapplying economic theory under the contrary assumption helps generate
Defendants’ concern about a future with many fewer opportunities for class members to
play their sports at their schools, but because it rests on this critical, false assumption,
there is little or no factual substance to their hypothetical concern.
86. Defendants’ analysis of the marginal athlete also misses the point that the
specific costs in question are not actually marginal costs. The compensation of the
football or basketball teams is a fixed cost, not amenable to marginal cost analysis. A
standard aspect of sports economics is that athlete compensation is a fixed cost in the
short run, rather than a variable cost.151
The implication is that if those fixed costs rose
(by the amount of damages), the optimal economic response would be to continue
managing operations in the same way, i.e., continue playing 12 football games per year
with 85 fully-funded scholarship athletes. Changes in fixed costs simply lower profits,
but don’t change operating decisions (except the decision to stay in business which
depends critically on the profitability of the organizations, which I discuss in detail
below). However, if the funding for those increased athlete costs is re-allocated from
other areas within the athletics department, such as coaches’ salaries or reductions in
monuments to recruiting, then profits won’t even change, but simply appear to come
from different sources than before. As empirical proof, coaches’ pay is also a fixed
cost and, as we have seen it rise dramatically in recent years, teams are not playing
fewer games or dropping out of D1, nor are they hiring fewer coaches.
87. A related error the Defendants make is to confuse the fact that the
damages for the class as a whole are potentially large, with the question of whether
151
See Rodney Fort’s textbook “Sports Economics,” 2nd edition, pp. 96-98. “In the sports team production process, short-run fixed inputs include the player roster, the stadium, other contracted personnel such as the front office general manages and on-field managers and coaches, insurance coverage, and loans to cover investments.” (p. 96)
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some small-revenue school would find the costs prohibitive. Defendants point to
several conferences that receive low licensing revenues from particular sources, but
they fail to mention that low revenue contracts generate low damages in Dr. Noll’s
model. As one example, Dr. Rubinfeld points to the fact that “The revenue received by
the Horizon League under these [broadcast and streaming] contracts does not fully
cover the associated production costs incurred by the conference.” 152
In Dr. Noll’s
damages model, a school with contracts that generate negligible conference
broadcasting licensing revenue will have negligible damages from those contracts,
while schools with substantial revenues will bear a greater share of the damages. In the
particular example of the Horizon League, it is difficult to see how the existence of a
small conference contract that generates $8,000 of damages is relevant to a league that
pays its coaches hundreds of thousands of dollars.153
Moreover, the Horizon League
actually received a windfall of millions of additional television licensing revenue when
one of its then-members, Butler, reached the national championship two years in a row.
That atypical infusion of revenue, which comes with little associated costs, would
generate higher damages in Dr. Noll’s model, but again those damages only accrue
152
Rubinfeld ¶55. Dr. Rubinfeld doesn’t mention that the Horizon League’s Form 990 lists conference television revenue for 2009-2010 as $160,000 and thus in Dr. Noll’s model this revenue would result in $80,000 in damages across the ten teams in the conference that year. See Horizon Form 990 2009-10. In deposition,
153
Ray McCallum, the head coach of Horizon League member Detroit, earned $341,775 in 2012-12, according to USA Today (http://usatoday30.usatoday.com/sports/college/mensbasketball/story/2012-03-28/ncaa-coaches-salary-database/53827374/1, accessed April 31, 2013). Brad Stevens, the coach of then-member Butler, is believed to have earned $620,828 in 2010 and earned an addition $170,000 in bonuses for the success of his Butler team. See Steve Berkowitz, “Butler’s Brad Stevens made nearly $1.2 million in 2011,” USA Today, February 5, 2013. Available at: http://www.usatoday.com/story/sports/ncaab/atlantic10/2013/02/05/brad-stevens-butler-salary-compensation/1893505/, accessed April 21, 2013.
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because of the emergence of a profitable revenue source – one that would dry up were
the Horizon League to give up men’s Division I basketball. There is no credible
economic evidence (Mr. Delany’s declaration to the contrary) that schools would
engage in the economically irrational decision to kill the golden goose that is FBS
football or Division I men’s basketball merely because its eggs might turn to silver in
the but-for world. Dr. Rubinfeld testified
.154
88. Defendants’ misapplication of economic theory to the facts of the industry
appears to start with the false premise that most of the class member’s sports are
money-losers. In turn, this error appears to rest critically on the Declaration of Todd
Petr and the NCAA accounting analysis that undergirds it. Therefore, in the next
section, I address the known economic flaws in the research and spell out the actual
peer-reviewed economics on the question of whether FBS football and Division I
basketball programs earn profits.
154
“
See Rubinfeld
deposition (rough), p. 121.
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VII. CONTRARY TO THE DECLARATION OF TODD PETR, COLLEGE
FOOTBALL AND BASKETBALL ARE HIGHLY FINANCIALLY
VALUABLE TO THEIR UNIVERSITIES. DEFENDANTS’ EXPERTS
RELIANCE ON THAT DECLARATION AS A MEASURE OF THE
ECONOMIC VALUE OF COLLEGE FOOTBALL AND
BASKETBALL IS MISGUIDED
89. Defendants put forward a Declaration from Todd Petr in which he claims,
inter alia, that “NCAA member schools spent $11.7 billion in expenses over the course of the 2010-11 season on athletic program endeavors, but generated only $6.4 billion in revenue directly from athletics, including the monetization of television and other broadcast rights. The athletic expenses were a small percentage of the total higher
education expenses incurred by NCAA member schools.”155
90. Defendants’ expert Heckman echoes this concern. For example, Dr.
Heckman writes: “As I understand from reports on finances of NCAA Division I athletic programs, most lose money. According to Todd Petr, Director of Research for the NCAA, across all NCAA member athletic programs, athletic-related expenses exceeded athletic-generated revenues by a substantial margin -- “$11.7 billion in expenses over the course of the 2010-11, while generating $6.4 billion in revenue from athletics, including the monetization of
television and other broadcast rights.” 156
91. Dr. Heckman also relies on Mr. Petr’s Declaration for his assertion that “in
the prior year, only 23 of over 1,000 institutions in the NCAA saw athletics-generated
revenue exceeding athletic program expenditures.”157
Based on this reliance on Mr.
Petr’s claims, Dr. Heckman goes on to conclude that this “could result in a range of
155
Petr, ¶3. 156
Heckman, ¶41. 157
Heckman, ¶41.
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different responses by colleges, including reduced investments by some colleges in
their athletic programs” and that this “would result in asymmetric harm to proposed
class members.” 158
Dr. Rubinfeld makes a similar assertion: “in Professor Noll’s but-
for world … [w]hile many top-tier schools may have still remained substantially
profitable, other schools closer to the margin may have decided to leave Division I
athletics.”159
92. Mr. Petr’s Declaration (and the studies on which it is based, discussed
below) suffers from substantial flaws that make it ill-suited for analysis of FBS college
football and Division I men’s college basketball. There is a strong academic literature
that college football and men’s college basketball are profitable for the majority of the
schools whose athletes are in the class in this litigation.
93. Although no mention is made of this in Mr. Petr’s declaration, it is
important to recognize that Mr. Petr is not actually the author of the analysis he
presents in his Declaration and in the video to which he links.160
That work is actually
undertaken by Professor Daniel Fulks.161
The analysis is not published in peer-
reviewed journals, rather it is released by the NCAA itself, without the benefit of the
peer-review process, and based on Dr. Fulks’ acknowledgements, was reviewed only
by his wife and employees of Defendant NCAA.162
By itself, this does not make it
incorrect, but it is important to recognize that no neutral third-party review has
158
Heckman, ¶41. 159
Rubinfeld, ¶175. 160
If one reviews the video carefully, Ms. Bracken acknowledges the analyses “are written by Professor Dan Fulks of Transylvania University.” See http://www.youtube.com/watch?feature=player_embedded&v=HnAm2lp-ys8#t=25s.
161 Dr. Fulks does not indicate whether he is paid to perform this analysis.
162 2004-2011 - Revenues & Expenses, NCAA Division I Intercollegiate Athletics Programs Report, p.3. Available at: http://www.ncaapublications.com/productdownloads/D12011REVEXP.pdf.
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occurred. This makes the fact that the Defendants refused to put Mr. Petr up for
deposition and also refused Plaintiffs’ request for the data underlying his analyses more
troubling. Importantly, it is my understanding the Defendants’ economic experts were
also denied the ability to review and verify Mr. Petr’s underlying data.
94. In essence, the Petr declaration is simply the NCAA’s unverified choice of
how to present its numbers. As Dr. Heckman testified in deposition: “So there is just
generally a theory of bargaining where people would actually be somewhat strategic in
release of information and use that to their advantage in the bargaining situation,”163
and he further analogizes the situation to one of buying a used car, explaining:
“The same is true of buying a car or buying a used car particularly, I think. You get all kinds of release of information and it's studied too. You know, a lot of economists are studying this question about when do you honestly reveal information and when do you inflate and when do you -- when do you strategically lie even to
produce an outcome that's favorable to yourself.”164
95. As I discuss below, systematic decisions have been made in the
methodology to obscure the profitability of major college football and men’s basketball
programs, a fact well discussed in the peer-reviewed literature. Uncritical reliance on
the NCAA’s numbers is inappropriate, and from Defendants’ experts’ materials
considered lists, I can see no evidence that anything like a critical assessment of the
applicability (or accuracy) of Mr. Petr’s Declaration or the underlying Fulks’ analyses
to the specifics of the two sports in suit here.
96. Despite the lack of production of the underlying data, in my masters-level
class at the University of San Francisco, I teach a unit on the problems inherent in the
NCAA’s studies, and so I am familiar with the flaws from which Mr. Petr’s report
suffers that make it misleading for an analysis of the true financial costs and benefits of
163
Heckman Deposition, pp. 111-2. 164
Heckman Deposition, p. 112.
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athletics at NCAA universities, and specifically for determining the profits of FBS
football and Division I basketball programs. Once these flaws are corrected, they
reveal that on a purely monetary basis, college football at FBS schools and college
basketball at Division I schools show high profits. Moreover, nothing in Mr. Petr’s
analysis captures the strong positive contributions of the sports in suit to the universities
at which those sports are played, which add further to the economic benefits that should
be attributed to FBS football and Division I basketball.
97. Defendants’ experts’ reliance on Mr. Petr’s declaration and the underlying
studies that support it demonstrates a lack of understanding of the relevant sports
economics literature and result in false conclusions about the likely competitive
responses to a relaxation of the alleged anticompetitive restraints in suit. Specifically,
the literature supports the idea that not only are the NCAA’s numbers inaccurate, they
are intentionally so: “Keeping awareness of the rent [i.e., super-competitive profits] flow low, permits either certain athletic or other university officials discretion over use of the flows. As a result, the most common practice over many decades has been to minimize or diminish apparent surpluses. In fact, the supposed losses have been a means for university presidents to pursue ‘cost containment’ measures designed to reduce the ability of athletic departments to spend the
rents within their unit.”165
There is no economic basis to rely on Mr. Petr’s Declaration or Dr. Fulks’s work for an
assessment of the true health of the relevant college football and basketball programs
and/or the ability of those programs to thrive in a market where players’ NIL licenses
are bargained for competitively.
165
Brian Goff & Dennis Wilson “Estimating the MRP of College Athletes From Professional Factor Shares” (March 2013 – presented at the Southern Economics Association), p.17.
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7.1 MR. PETR’S NUMBERS SUFFER FROM MANY FLAWS THAT RESULT IN A
MISLEADING PICTURE OF THE FINANCIAL HEALTH OF FBS FOOTBALL AND
DIVISION I BASKETBALL
98. There are a number of reasons that the Petr Declaration’s assertions are
misleading. First, when Dr. Fulks performs the analysis to which Mr. Petr refers, he
makes certain one-way adjustments that reduce revenue, without any countervailing
adjustments for known items that would increase revenue or reduce expenses.166
In
addition, Mr. Petr selectively aggregates across all three NCAA Divisions (with
thousands of colleges and universities), and across all sports within the athletic
department, which tends to hide the profitability of major colleges’ football and men’s
basketball programs. Very specifically, the quotation from Mr. Petr’s Declaration that
Dr. Heckman relied upon for his conclusion that the schools in suit might cease to play
sports actually refers to all one thousand-plus NCAA members, and to all NCAA
sports, rather than to just the FBS football programs at the 124 schools attended by the
166
Dr. Fulks defines “allocated revenues, which include direct institutional support, indirect institutional support, student fees and direct governmental support” and distinguishes those from the other categories of revenue, which in aggregate he refers to as “net generated revenues after excluding allocated revenues.” Those generated revenues include “Generated revenues are produced by the athletics department and include ticket sales, radio and television receipts, alumni contributions, guarantees, royalties, NCAA distributions and other revenue sources that are not dependent upon institutional entities outside the athletics department.” In trying to get a stand-alone view of the athletics departments, Dr. Fulks neglects to account for the media coverage and public relations benefits that athletics brings to universities (typically well over 50% of coverage of a university relates to athletics (see discussion of this elsewhere)). He also does not account for the possibility that concessions, merchandise, parking and other revenue that is attributable to athletics is accounted for in other divisions of campus. Based on my review of Dr. Fulks’s work, he performs no upward adjustments for any of the known understatements of revenue nor any downward adjustment of known overstatement of expenses. See section 7.2 below for a more detailed discussion. 2004-2011 - Revenues & Expenses, NCAA Division I Intercollegiate Athletics Programs Report, p. 7 and 9. Available at:http://www.ncaapublications.com/productdownloads/D12011REVEXP.pdf.
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class and the Division I basketball programs at the 347 schools attended by the class.
Dr. Rubinfeld makes a similar error, when he points to the behavior of FCS football
programs such as Hofstra and Northeastern, as if that is relevant for FBS football.167
The class does not include athletes who played FCS football and using FCS as an
example for how FBS would behave is similar to using AAA (minor league) baseball as
representative of Major League Baseball.168
99. Second, athletics departments operate within non-profit universities, thus
there is less of an incentive (and mechanism) to show a profit. In fact, there are no
equity holders watching over revenues and expenses in order to produce profits and
dividend payments. Thus, this can often lead to a use-it-or-lose-it budget management
process.169
As a result, concluding that because schools end up spending all their
money in the actual world that they would have no money to pay royalties in the but-for
world represents a misapprehension of the impact of the non-profit status on
profitability.
100. Third, on a university campus there are often significant related-party
transactions (RPT’s) and cross-subsidies. These mask the true underlying economics of
athletics departments and causes Mr. Petr’s Declaration and Dr. Fulks’s analysis to fail
to understate substantial sources of profit. In a recent study, Goff and Wilson conclude
that “athletic ‘deficits’” reflect the accounting practices of universities or the flow of
167
Rubinfeld report, ¶176. 168
It is also important to remember that the Sports Broadcasting Act prohibits NFL football from being broadcast on college football Saturdays (and also Friday nights) from the beginning of September through the middle of December. This gives college football a wide-open television window. But FCS is not insulated from competition from FBS in the same way, and as a result (like AAA baseball), almost no FCS football is broadcast nationally, whereas dozens of FBS games are aired each week.
169 See a discussion of Bowen’s Revenue Theory of Cost applied to higher education in section 7.4 below.
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revenues back into expenses rather than the inability of revenues to meet costs...Within
athletic departments it can flow into salaries for athletic staff (coaches, athletic
directors, support personnel) or into facilities. Beyond the athletic department, it can
appear in the general revenue fund as a transfer for grants-in-aid or be embedded in any
number of intra-university transactions between athletic accounts and other
accounts.”170
As shown in Exhibit 10 below, there are many possible instances when
the revenues listed in an athletics budget are under-valued compared to their true
impact and expenses over-valued. For example, in Borland et al.’s study of Western
Kentucky University, they found that concessions revenues from athletics events were
credited to the Food Service budget, rather than athletics.171
170
Brian Goff & Dennis Wilson “Estimating the MRP of College Athletes From Professional Factor Shares” (March 2013 – presented at the Southern Economics Association), p. 17.
171 Melvin V. Borland, Brian L. Goff, and Robert W. Pulsinelli, “College Athletics: Financial Burden or Boon?” Advances in the Economics of Sport, Volume 1, pp. 217-218.
Univ. of Arizona shows $0 in sports camp revenues and expenses (NCAA Accounting Submissions, 2010) and notes on its web site that they are not an official function of the university (http://www.arizonawildcats.com/camps/ariz-camps.html). It appears that athletics does not charge rent for the sports camps. If Dr. Fulks is trying to create stand-alone entities for comparison’s sake, these are the sorts of issues that arise and make his data less useful.
At George Mason University, “Program sales, concession, novelty sales, and parking” for 2010 is listed at $3573, yet the teams have their own on-campus facilities to play in. In fact, GMU spent $10.5 million upgrading its basketball arena, including four new concessions stands (https://gazette.gmu.edu/articles/11547, accessed on April 19, 2013). Additionally, there is evidence that GMU was paid a fee (4$ million over 5 years) in exchange for concessions rights on campus (https://gazette.gmu.edu/articles/1853, accessed April 19, 2013). Thus, it seems as if GMU’s athletics concessions revenues are booked elsewhere on campus and aren’t fully realized on the athletics financials.
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Exhibit 10. An example of Possible Related-Party Transactions
Revenues under-valued Expenses over-valued Concessions Sports Camps Licensing Merchandise (book store) Parking
GIA Food (40% of listed cost) Books (80% of wholesale) Room (may be very low cost if not excess demand) Tuition (no out-of-pocket cost unless blocks full-paying non-athlete student) Gold-plating (use it or lose it)
Revenues not listed Athletic donations directly to tuition Marketing arm of University Applicants (Flutie Effect…double digit % increases) Enrollment Freshmen quality (increase in GPA & SAT) Retention/Graduation (few studies, but positive effects) Higher tuition (capacity-constrained schools) Diversity Donations (total donations up) Media coverage (WKU 90%, Northwestern
70%., 87% of BCS schools’ coverage is sports; 38% of elite non-football schools’ coverage is sports Recent: USF 56%, St. Mary’s $9MM in Sweet 16 coverage, Butler claims over $600MM; TAMU claims over $37MM)
Expenses not listed Cleaning & security for events Capital costs Student services and compliance costs for ‘specific athletic related work’ (Registrar office, Admissions, Financial Aid, & Data Services)
Sources: Howell and Rascher “An Analysis and Assessment of Intercollegiate Athletics at the University of San Francisco” (June 27, 2011); Publicity Value Report for St. Mary’s College of California by Cission (undated); http://www.butlersports.com/sports/m-baskbl/2010-11/releases/040111aab; http://tamutimes.tamu.edu/2013/01/18/study-end-of-football-season-produced-37-million-in-media-exposure-for-texas-am/; Clotfelter, “Big-Time Sports in American Universities (2011), p. 60; Borland, Goff, and Pulsinelli, “College Athletics: Financial Burden or Boon?” Advances in the Economics of Sport, Volume 1; http://www.uwsa.edu/audit/textbookcosts.pdf.
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7.2 THE PUBLISHED ECONOMIC LITERATURE IS CLEAR THAT SCHOOLS’ PROFIT AND
LOSS STATEMENTS TEND TO UNDERSTATE PROFITS.
101. Outside of studies published by or at the commission of the NCAA, the
academic literature generally finds that the schools’ financial statements understate,
rather than overstate, the profits of the athletic department as a whole and especially the
football and basketball teams.172
A case study conducted nearly two decades ago is one
of the best analyses of the costs and benefits of intercollegiate athletics for a single
university. Borland, Goff, and Pulsinelli (1992) investigated athletics at Western
Kentucky University (WKU) because the school was considering major changes to its
athletics department.173
It found that many significant related-party transactions
between university departments masked the true underlying economic values and costs
of the athletics department. As some examples, concessions revenues were understated
and the cost of providing food and tuition grants (athletic scholarships) were overstated.
In the end, the study shows that what appeared to be a $1.5 million loss to WKU from
having athletics was only a $330,000 loss when adjusting for the related-party
transactions and actually a gain of more than $5 million after accounting for the
enrollment impact of athletics. As the saying goes, “athletics are the front porch of the
university.”174
Yet, the athletics department doesn’t get credited for its marketing and
PR work on behalf of the university.
172
See my report with Jeremy Howell titled “An Analysis and Assessment of Intercollegiate Athletics at the University of San Francisco” (June 27, 2011).
173 Borland, M.V., Goff, B.L. and Pulsinelli, R.W. (1992). “College Athletics: Financial Burden or Boom?” Advances in the Economics of Sports, Volume 1, pp. 215-235.
174 See for example, Utah State athletic director, Scott Barnes, quoted in Time Magazine as saying “Athletics are the front porch of the university. It's not the most important room in the house, but it is the most visible.” Quotes of the Day, Time.com, June 1, 2009. Available at: http://www.time.com/time/quotes/0,26174,1902132,00.html, accessed April 19, 2013.
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102. Today, Western Kentucky University (WKU) has enjoyed many benefits
of the decision not to cancel their “money-losing” program. The school has moved to
the highest ranks of the NCAA, Division I-FBS. Just this month, WKU announced
they were leaving the Sun Belt conference for the more prestigious Conference USA
and its more lucrative television revenues.175
Imagine the negative consequences that
could have come from misinterpreting their financial results and essentially falling
victim to accounting that insufficiently demonstrated the benefits of sports to the WKU
community.
103. A study by Skousen and Condie (1988) showed that when Utah State
University (which has submitted a Declaration in this case176
and whose athletic
director is quoted above) reported a loss of $700,000 per year in the late 1980s, it
actually experienced a gain of $366,000 once the related-party transactions were
accounted for.177
This profit would have been higher still, but the study did not adjust
for merchandise sales attributable to athletics that had been credited to other
departments.
104. In another study, Goff (2000) notes large (accounting) losses at big-time
programs are muddled by the non-profit status of universities and related accounting
practices. He states that “At most universities, all or some of, merchandise sales,
concession revenues, parking receipts, and related revenues, are attributed to the
general fund or to a non-athletic unit of the university. Such revenues can be
175
“Western Kentucky to Join Conference USA in 2014 – Hilltoppers Hold Rich Tradition of Success,” ConferenceUSA.com, April 1, 2013. Available at: http://www.conferenceusa.com/genrel/040113aac.html, accessed April 19, 2013.
176 Declaration of Stan L. Albrecht in Support of the NCAA’s Class Certification Opposition Brief.
177 Clifford R. Skousen and Frank A. Condie, “Evaluating A Sports Program: Goalposts Vs. Test Tubes,” Management Accounting; Nov 1988; 70, 5; ABI/INFORM Global pp. 43-49.
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substantial.”178
He also notes that universities are clamoring to join D1, that athletics
department revenues are extremely high and growing (today at above $100 million per
year for some schools). Specifically, he shows that 70% of universities in major
conferences have revenues greater than expenses for the entire athletic department.
Citing Sheehan (1996), Goff makes adjustments to that data and shows that only 10%
of the 109 athletic departments (not just the two sports in suit) in the study (D1-A, the
older name for FBS) lost money.
105. My own study done with Jeremy Howell of the University of San
Francisco, a school with no football program and a modest basketball program,
concluded that the losses on the books were overstated by millions of dollars.179
Similarly, ESPN also took a look at the details of the University of Nebraska-Omaha
and concluded that even Division II football and wrestling were more profitable than
the Fulks method for college sports accounting would indicate.180
7.3 MR. PETR’S DECLARATION’S LACK OF FOCUS ON THE SPORTS IN SUIT AT THE
SCHOOLS IN SUIT MISSTATES THE RELEVANT ECONOMIC REALITY AND LEADS TO
INCORRECT CONCLUSIONS ABOUT THE BUT-FOR WORLD
106. Mr. Petr’s Declaration makes broad statements about the entire NCAA
(rather than just FBS football and Division I basketball) and even when it does focus on
Division I, it makes statements about the entire athletic department. This is the
incorrect focus which distorts the relevant economic conclusions about but-for conduct
of the schools attended related to the sports played by class members. (One might ask 178
Brian Goff, ‘Effects of University Athletics on the University: A Review and Extension of Empirical Assessment,” Journal of Sport Management 14 (2000), p. 87.
179 See my report with Jeremy Howell titled “An Analysis and Assessment of Intercollegiate Athletics at the University of San Francisco” (June 27, 2011).
180 Paula Lavigne, “Wrestling with the truth in Nebraska,” ESPN, May 11, 2011. Available at: http://sports.espn.go.com/espn/otl/news/story?id=6488960, accessed April 19, 2013.
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Dr. Fulks, why stop aggregating at the borders of the athletics departments – why not
include the Economics department or the rest of the university). The reason this is
important for Dr. Noll’s analysis is that the but-for world he has structured centers
damages on those schools with lucrative FBS football and Division I basketball
licensing revenues. Leaving aside the obvious fact that schools in D-II and D-III don’t
belong in this analysis because their students are not part of the class, even for low-
revenue schools whose athletes are in the class, their low-revenue status ensures that
damages will also be quite low. Based on my review of Dr. Noll’s current calculations,
approximately 70% of the damages claimed focus on the six conferences. As I show
below, 90% of the schools in these six conferences had football revenues in excess of
expenses and in aggregate generated over $1 billion in football profits.
107. Even within the set of schools attended by class members, the Petr
Declaration distorts the relevant economic picture by offering up statistics about the
entire athletic department rather than just the two sports in suit. To illustrate this, I
looked at public data submitted by the then-66 members of the six major conferences in
2010-11, and found that 61 out of those 66 FBS programs showed profits from the
football programs in 2010-11, i.e., over 90% of the schools in those conferences turned
a profit (see Exhibit 11). Moreover, the total profit of those 61 schools that were in the
black was over $1 billion (an average of $18.0 million per school), compared to total
losses among those showing a loss of less than $8 million (or $2.6 million per school).
It is important to note that this data does not include the often very large non-program
specific revenue that is likely attributable to the major revenue sports. For example, at
The Ohio State University (TOSU), “Contributions” in 2010 totaled $27.3 million to
athletics, with Football being shown to have generated only $152 thousand and Men’s
Basketball garnering $49 thousand. Instead, the “Not Allocated by Gender”
contributions were $26.9 million. It is hard to believe that 99% of the donations to
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athletics were non-program specific. For instance, if half of those donations were
driven by football, then TOSU’s football revenue should be over $73 million instead of
$61 million.181
Exhibit 11. Football Revenue and Expenses for FBS Programs in Major Conferences
School Football Revenue
Football Expenses
Football Profits
The University of Texas at Austin $95,749,684 $24,507,352 $71,242,332 Pennsylvania State University-Main Campus $72,747,734 $19,519,288 $53,228,446 University of Georgia $74,888,175 $22,036,338 $52,851,837 Louisiana State University and Agricultural & Mechanical College $68,510,141 $21,492,741 $47,017,400 University of Michigan-Ann Arbor $70,300,676 $23,552,233 $46,748,443 University of Florida $72,807,236 $26,263,539 $46,543,697 The University of Alabama $76,801,800 $31,580,059 $45,221,741 University of Notre Dame $68,782,560 $25,164,887 $43,617,673 The University of Tennessee $56,831,514 $19,135,650 $37,695,864 Auburn University $76,227,804 $39,069,676 $37,158,128 University of Arkansas $61,131,707 $24,059,193 $37,072,514 University of Oklahoma Norman Campus $58,811,324 $23,191,402 $35,619,922 University of Nebraska-Lincoln $54,712,406 $20,147,302 $34,565,104 Texas A & M University-College Station $45,414,074 $15,560,216 $29,853,858 Michigan State University $45,040,778 $17,420,499 $27,620,279 Ohio State University-Main Campus $60,837,342 $34,373,844 $26,463,498 University of Iowa $44,506,832 $20,510,807 $23,996,025 University of South Carolina-Columbia $45,464,058 $22,482,479 $22,981,579 University of Kentucky $34,020,276 $14,352,110 $19,668,166 University of Wisconsin-Madison $43,296,599 $23,662,925 $19,633,674 Oklahoma State University-Main Campus $33,213,396 $13,787,271 $19,426,125 University of Washington-Seattle Campus $39,405,237 $21,306,380 $18,098,857 Florida State University $35,870,789 $18,689,809 $17,180,980
181
NCAA Accounting Submission for The Ohio State University (reporting year, 2010).
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School Football Revenue
Football Expenses
Football Profits
University of Illinois at Urbana-Champaign $28,079,694 $12,910,507 $15,169,187 Virginia Polytechnic Institute and State University $35,083,799 $20,009,657 $15,074,142 Clemson University $31,730,042 $17,992,943 $13,737,099 University of Minnesota-Twin Cities $30,524,945 $16,985,182 $13,539,763 University of Southern California $31,148,724 $19,423,723 $11,725,001 University of North Carolina at Chapel Hill $26,385,760 $15,050,721 $11,335,039 Arizona State University $27,842,879 $16,564,598 $11,278,281 Mississippi State University $22,575,985 $11,766,024 $10,809,961 Texas Tech University $26,569,287 $15,788,943 $10,780,344 University of Mississippi Main Campus $28,515,471 $17,764,174 $10,751,297 North Carolina State University at Raleigh $21,856,742 $11,329,718 $10,527,024 University of Louisville $25,658,653 $15,582,161 $10,076,492 University of Colorado Boulder $25,955,136 $16,308,544 $9,646,592 University of Oregon $27,713,278 $18,198,476 $9,514,802 Oregon State University $21,690,794 $12,282,221 $9,408,573 Iowa State University $21,862,535 $12,513,317 $9,349,218 Kansas State University $19,731,620 $10,867,052 $8,864,568 Northwestern University $28,198,769 $19,430,675 $8,768,094 Indiana University-Bloomington $24,230,741 $16,112,930 $8,117,811 University of Arizona $25,448,212 $17,965,169 $7,483,043 Georgia Institute of Technology-Main Campus $22,557,020 $15,463,243 $7,093,777 University of California-Berkeley $24,328,784 $17,398,649 $6,930,135 West Virginia University $19,960,732 $13,230,226 $6,730,506 Vanderbilt University $22,455,110 $16,507,997 $5,947,113 Purdue University-Main Campus $18,359,413 $12,420,742 $5,938,671 University of California-Los Angeles $23,017,910 $17,913,658 $5,104,252 University of South Florida-Main Campus $17,017,821 $12,657,523 $4,360,298 University of Missouri-Columbia $24,694,807 $20,806,778 $3,888,029 Stanford University $19,521,092 $15,888,069 $3,633,023 Washington State University $12,741,698 $9,193,553 $3,548,145 Duke University $18,243,589 $14,837,825 $3,405,764 Syracuse University $18,783,752 $16,420,281 $2,363,471 University of Cincinnati-Main Campus $13,357,060 $11,148,347 $2,208,713
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School Football Revenue
Football Expenses
Football Profits
University of Maryland-College Park $13,886,493 $11,689,128 $2,197,365 Boston College $20,529,424 $18,603,243 $1,926,181 University of Miami $26,205,317 $24,414,086 $1,791,231 Baylor University $15,031,956 $14,577,044 $454,912 University of Virginia-Main Campus $16,775,871 $16,739,587 $36,284 University of Pittsburgh-Pittsburgh Campus $21,312,076 $21,312,076 $0 Rutgers University-New Brunswick $19,217,487 $19,217,487 $0 University of Connecticut $17,528,602 $17,901,730 ($373,128)University of Kansas $9,525,773 $13,095,945 ($3,570,172)Wake Forest University $9,433,418 $13,225,460 ($3,792,042) Profitable Programs 61Money Losing Programs 3Break-Even Programs 2
108. To get from 90% of the major football schools earning a billion dollars of
profit to over $5 billion in losses requires a series of accounting adjustments that
obscure, rather than illuminate, the economic truth about the sports in suit.
109. As discussed above, first, it should be noted that to get to his $5.3 billion
loss, Mr. Petr lumps into his calculation the more than 900 schools that are not in FBS
football (of which over 700 are not even Division I schools) and thus are not relevant to
the analysis of the class’s impact of damages. I estimate that by itself, including the
702 Division-II and Division III schools in his calculations adds something like $2
billion in losses to his figures.182
In a paper on the NCAA website that Dr. Fulks
182
There are 154 D-II programs with football, with median net generated revenue of -$4.2 million, and 134 D-II programs without football, with median net generated revenues of -$3.4 million. In aggregate, this yields an estimated loss of $1.1 billion from D-II. For D-III, there are 230 programs with football and a median expense of $2.9 million, plus another 183 D-III programs without football, with median expenses of $1.4 million. In aggregate, this yields an estimated loss of $910 million from D-III. In total, this sums to just over $2.0 billion. Note also that Fulks’s data has different numbers of programs for D-II without football (132) and D-III with (63) and
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published in 2004, he explained why it is important not to mix the apples of Division I-
A (i.e., FBS) with the nearly one thousand oranges of other NCAA schools:
Does the financial arms race exist? Maybe, maybe not. There is no question that there are excesses that result from recruiting wars and misplaced priorities. But lest we judge too quickly, we should remember that we are really talking about a relatively few schools. There are more than 1,100 institutions in the NCAA, 117 of which are in Division I-A. Of those I-A schools that report operating deficits, more than 60 percent report less than a $1-million loss. Indeed, it takes Kentucky about 10 days to spend the equivalent of
a full year's budget at Division III Transylvania across town.183
110. Next, it is important to recognize that Mr. Petr’s Declaration does not
provide specific information about the football or men’s basketball programs, which are
the subject of this litigation, but rather focuses on the athletic department as a whole. I
discuss in great detail below why this is a misleading way to look at the profitability of
the programs in suit, but put simply there are strong incentives for athletic departments
to spend their profits from football and men’s basketball on other budget items.
Separate from the issue of whether those programs are run efficiently or are gold-
plated, it makes sense for schools to spend some amount of money on sports outside the
framework of this case -- just as Division II and Division III schools do. In the video to
which Mr. Petr links in his declaration, his colleague Nicole Bracken (Associate
Director of Research at the NCAA) states, “In some sense, one could argue that this
$10 million is the value that these institutions have placed on having a Division I
athletic program.”184
Or as Dr. Stiroh testified: “the schools or their representatives
without (236) football. Using Fulks’s counts yields an estimated $1.6 billion loss across Divisions II and III.
183 Daniel L. Fulks, “Arms race debate open to interpretation,” Apr 12, 2004, available at http://fs.ncaa.org/Docs/NCAANewsArchive/2004/Editorial/arms%2Brace%2Bdebate%2Bopen%2Bto%2Binterpretation%2B-%2B4-12-04.html, accessed April 19, 2013.
184 http://www.youtube.com/watch?feature=player_detailpage&v=HnAm2lp-ys8#t=288s
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value sports programs because of the contributions they think it make to a student's
life.”185
Dr. Fulks explained: “… if college athletics, with all its intrinsic values, is
worth having as a part of American academia, then it is worth paying for.”186
This
captures the idea that, completely independently of whether a school is, or is not,
profitable in its football and basketball program, schools are inclined to spend money
on other sports, just as they do on other non-revenue generating campus activities.187
But rather than justify the alleged behavior, this demonstrates that even without super-
competitive profits, schools are likely to continue their programs. The fact that the
fruits of allegedly anticompetitive conduct are currently dissipated throughout the rest
of the athletic department or university is not material to the question of what the but-
for royalty rate for athlete NIL licensing would be. Looking at the athletic department
as a whole can tell you that the money may have been spent, but that doesn’t mean it
185
Stiroh deposition, pp. 193-4. 186
Daniel L. Fulks, “Arms race debate open to interpretation,” Apr 12, 2004, available at http://fs.ncaa.org/Docs/NCAANewsArchive/2004/Editorial/arms%2Brace%2Bdebate%2Bopen%2Bto%2Binterpretation%2B-%2B4-12-04.html, accessed April 19, 2013.
187 And in DII and DIII, where there are not substantial revenues in any of the sports, many schools offer more than just a handful of sports, but instead a full range of sports teams in their athletics departments. According to the NCAA, in 2011 the average Division II program with football had 409 athletes and the median program spent $12,400 per athlete. For Division II programs without football, the average program had 251 athletes and the median program spent 14,500 per athlete -- all without the benefit of lucrative licensing revenues. (see 2004-2011 – Revenues & Expenses – NCAA Division II Intercollegiate Athletics Programs Report,” p.13. Available at: http://www.ncaapublications.com/productdownloads/D22011REVEXP.pdf.) In fact, there are more Division II and Division III lacrosse teams than there are in Division I, despite the lack of football and basketball profits in those lower Divisions. See Andy Schwarz, “Excuses, Not Reasons: 13 Myths About (Not) Paying College Athletes,” published in the 2011 Proceedings of the Santa Clara Sport Law Symposium, footnote 38. Available at: https://docs.google.com/file/d/0BxM4wdtZ5uI-OWFhNGE1ZTItZTllYS00YmVlLTk0YmItYTM4ZDUyY2MwNTE2/edit?hl=en_US.
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wasn’t earned or that those non-football and non-basketball expenses would influence
the but-for market for football and basketball NIL rights.
111. For example, above I presented the raw EADA data for football programs
at the 66 BCS AQ schools as of 2010-11. Had I looked at the reported total athletic
spending for those schools rather than just football, over $750 million in total profit
would appear to have vanished – those 66 schools showed a total athletic department
profit (per EADA) of just under $350 million. That “missing” $750 million reflects
choices that schools make as to how to spend their football profits, rather than
indicating an absence of football profits.188
7.4 BASIC INDUSTRIAL ORGANIZATION ECONOMICS ARGUES THAT COLLEGE
FOOTBALL AND BASKETBALL ARE VERY PROFITABLE
112. It ought not to be surprising that when economists have been able to look
inside the numbers at a particular university, they have found that the football and
basketball programs tend to be more profitable than the school’s profit and loss would
indicate. As Dr. Stiroh testified in deposition, “the market interactions and economic
analysis is based on an assumption of rational responses to economic stimuli.”189
In
that model economists expect unprofitable firms to exit markets and firms that do not
anticipate a reasonable probability of profits not to enter the market. Industrial
Organization teaches that the profitability of an industry can often be inferred from the
behavior of the participants in the market, especially with respect to tendency to enter
or exit a market.
188
Consistent with Ms. Bracken’s statement, the reduction in profit is approximately $10 million per school-- what she described as “value that these institutions have placed on having a Division I athletic program.”
189 Stiroh deposition, p. 151.
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(a) “Microeconomic theory predicts that profit-maximizing firms will enter an industry if the net present value of expected profits, appropriately adjusted
for risk, is positive.”190
(b) “The simplest model-one you learned in microeconomics-is that potential entrants look at the current economic profits of incumbents and enter if
those profits are positive,”191
(c) “Some economists have developed more complex models of the formation of expectations. Highfield and Smiley hypothesized that potential entrants look not just at the level of current profits but also at the trend in profits over recent years. Falling profits may discourage entry even in an industry
in which incumbents' current profits are high.”192
113. Put simply – a market in which all but a dozen or two programs out of
340-plus are losing money does not experience the sort of entry we have seen in
Division I sports since the Board of Regents case ended the NCAA’s television cartel in
1984. In fact, since 1984, 80 schools have entered (or re-entered) Division I with a
basketball program, while 15 have left. Over the same time period, 23 schools have
entered or re-entered FBS football, while six have left. No school has left FBS football
since 1996, while 14 have joined in that time period, and three more are scheduled to
begin in the next few years.193
In 2007 the NCAA instituted a moratorium preventing
schools from jumping up into D1 showing that there was excess demand. Following
the end of the moratorium in September 2011, four then-current members of the FCS
190
Don E. Waldman and Elizabeth J. Jensen, “Industrial Organization – Theory and Practice,” p. 116.
191 Don E. Waldman and Elizabeth J. Jensen, “Industrial Organization – Theory and Practice,” p. 117.
192 Don E. Waldman and Elizabeth J. Jensen, “Industrial Organization – Theory and Practice,” p. 117.
193 Tony Barnhart, “Conference shuffle creating room for upstarts to make jump to FBS,” CBSSports.com, May 21, 2012. Available at: http://www.cbssports.com/collegefootball/story/19112305/conference-shuffle-creating-room-for-upstarts-to-make-jump-to-fbs, accessed April 19, 2013.
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(UNC Charlotte, Georgia State, Old Dominion, and Texas-San Antonio, Georgia
Southern, and Appalachian State) announced that they would transition to the FBS.194
One can assume that all of these schools are acting irrationally, but the more likely
inference is that when they evaluate the full set of costs and benefits of joining Division
I or FBS, they have made a rational decision that the higher tiers are more lucrative on
a total benefit basis. Among the factors schools consider are “money and prestige.
There is simply more of both in the bottom half of the FBS than in the top half of the
FCS.”195
While the costs of participating in FBS are higher, “there are also more
revenue streams in the FBS because the conference shares the money made from bowl
games, TV packages and the NCAA basketball tournament.”196
114. As shown in the Exhibit 10 above, gold-plating is listed as an unwarranted
expense that essentially causes athletics departments’ expenses to chase revenues
resulting in near zero profits. This is consistent with Bowen’s Revenue Theory of Cost.
As noted by Powell, Gilleland, and Pearson (2012), “Bowen (1980) wrote the most
widely recognized publication on costs in higher education. He suggested that spending
by higher education institutions is driven by the Revenue Theory of Cost and proposed
that educational costs per student are driven by the amount of revenue available
(Bowen, 1980). In other words, institutions raise as much revenue as possible and
194
Dennis Dodd, “Sun Belt will grow by four in 2013,” CBSSports.com, March 25, 2013. Available at: http://www.cbssports.com/collegefootball/blog/dennis-dodd/21949121, accessed April 23, 2013.
195 Tony Barnhart, “Conference shuffle creating room for upstarts to make jump to FBS,” CBSSports.com, May 21, 2012. Available at: http://www.cbssports.com/collegefootball/story/19112305/conference-shuffle-creating-room-for-upstarts-to-make-jump-to-fbs, accessed April 19, 2013.
196 Tony Barnhart, “Conference shuffle creating room for upstarts to make jump to FBS,” CBSSports.com, May 21, 2012. Available at: http://www.cbssports.com/collegefootball/story/19112305/conference-shuffle-creating-room-for-upstarts-to-make-jump-to-fbs, accessed April 19, 2013.
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spend as much revenue as they have available.”197
Martin (2009) refers to this as the
revenue to cost spiral.198
Former NCAA President Myles Brand stated as much in his
State of the Association199
Speech in 2006 at the NCAA Convention, “Universities
attempt to maximize their revenues and redistribute those resources according to their
educational mission. Universities are nonprofit corporations, and as such, they do not
generate profits for private owners or shareholders. But they do have an obligation to
generate significant amounts of revenue to pursue their mission.”
115. Some gold-plating is driven simply by Bowen’s theory that schools will
spend money if they have it. Another aspect of gold-plating, which drives up the costs
of the sports in suit, is the inefficient substitution of competition through facilities in
lieu of competition through licensing royalties. Program after program spends millions
of dollars on training facilities in the name of recruiting. For example (bold emphasis
added):
197
Brett A. Powell, Diane Suitt Gilleland, and L. Carolyn Pearson, “Expenditures, Efficiency, and Effectiveness in U.S. Undergraduate Higher Education: A National Benchmark Model,” Journal of Higher Education, Vol. 83 No. 1 (January/February 2012), p. 105.
198 Robert E. Martin, “Revenue to cost spiral in higher education”, The John W. Pope Center for Higher Education Policy, July 2009.
199 Further, he notes “It is critical to note that those areas that generate revenue are not necessarily the ones that spend it. As an old philosophy professor, I recognized the fact that my department expended more revenue than it generated through student enrollment. I was well aware that the graduate program depended not only on undergraduate tuition, but also on monies generated by other areas, such as service courses in English, math and the social sciences. The basic business plan for the university is one of massive redistribution of revenues on the basis of the institution’s mission and strategic directions.” (See “Brand charts course for collegiate model’s next century,” NCAA News Archive – 2006, January 16, 2006. Available at: http://fs.ncaa.org/Docs/NCAANewsArchive/2006/Association-wide/brand%2Bcharts%2Bcourse%2Bfor%2Bcollegiate%2Bmodel_s%2Bnext%2Bcentury%2B-%2B1-16-06%2Bncaa%2Bnews.html, accessed April 23, 2013).
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(a) “McKay Center Gives USC ‘Huge’ Recruiting Edge.”200
(b) Baylor: “Along with the impact it will have on the experience of current Baylor athletes, the new complex will help boost recruiting efforts, McCaw says. ‘It's going to be a spectacular, well-equipped complex that will showcase our athletic programs and compare very favorably to facilities at other Big 12 schools. I can't wait to show it to recruits’."201
(c) Texas: “Provide sufficient personnel and facilities to conduct regular season home athletics events and championship events that encourage spectator attendance, assist in the recruiting of prospective student-athletes, and attract potential donors.”202
(d) West Virginia: “For recruiting purposes it is essential that our facilities exceed the expectations of prospective student-athletes and compare favorably to other schools in the BIG 12 and the nation. As always, maintaining facilities and strategically planning for the future is an ongoing process.”203
(e) Nebraska: “As part of the $8.7 million renovation of the West Stadium, $1.8 million was designated for updating Nebraska's historical displays in Memorial Stadium. These updates enhance the game day environment for fans at Memorial Stadium and assist the Huskers' recruiting efforts for future student-athletes.”204
(f) Kansas State: “this facility will provide a showcase for our coaches to recruit the best and brightest student-athletes in the country,
200
Michael Lev, “McKay Center Gives USC ‘Huge’ Recruiting Edge,” Orange County Register, August 22, 2012. Available at: http://www.ocregister.com/sports/usc-369193-center-mckay.html, accessed April 19, 2013.
201 “Home Field Advantage.” Baylor Magazine. April 27, 2007. Available at: http://www.baylor.edu/alumni/magazine/0503/news.php?action=story&story=45614, accessed April 19, 2013.
202 “The University of Texas Mission Statement.” Texassports.com. 2012. Available at: http://www.texassports.com/school-bio/mission-statement.html, accessed April 19, 2013.
203 “Current Projects.” Mountaineer Athletic Club. Available at: http://www.mountaineerathleticclub.com/page.cfm?storyid=103, accessed April 19, 2013.
204 “Nebraska Student Life Complex.” Available at: http://www.huskers.com/ViewArticle.dbml?DB_OEM_ID=100&ATCLID=1513079, accessed April 19, 2013.
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complementing our incredible game day atmosphere, ideal college town and world-class university experience.”205
(g) Syracuse: “‘The renovations to our facility will directly impact the accomplishments of our football program, as well as provide an enormous positive effect on our recruiting endeavors,’ Marrone [Syracuse Coach] said in a statement.”206
(h) Alabama: “Through generous private support, we now have some of the finest facilities in the country. These facilities provide Alabama Athletics with a recruiting tool to attract elite student-athletes from around the world to compete for the University of Alabama.”207
(i) Wisconsin: “While these facilities have had a positive impact on our athletic program, a number of our sports remain at a competitive and recruiting disadvantage due to inadequate athletic facilities as compared with our peer institutions.”208
(j) Colorado State: “In 1998, Colorado State enhanced its weight room and built an academic center as part of the McGraw Athletic Center project, but these facilities no longer meet the needs of its expanded student-athlete base, nor do they allow the Rams to compete for top-quality recruits.”209
(k) Iowa State: “Sukup Basketball Complex | Men's and Women's Basketball: The 29,000 square-foot facility, located less than three miles from campus in west Ames, is without a doubt one of the finest of its kind nationally.
205
“Why Build? Reasons for the Facility.” K-State Basketball Training Facility. Available at: http://www.kstatesports.com/trainingfacility/why.html, accessed April 19, 2013.
206 Anderson, Andrea. “Syracuse, Louisville improving facilities.” ESPN, April 23, 2012. Available at: http://espn.go.com/blog/bigeast/post/_/id/32171/syracuse-louisville-improving-facilities, accessed April 19, 2013.
207 Moore, Mal. “A Letter from Mal Moore.” Crimson TIDE Foundation. Available at: http://www.rolltide.com/sports/crimson-tide-foundation/spec-rel/ctf-body.html, accessed April 19, 2013.
208 “Our Need.” University of Wisconsin Student Athlete Performance Center. Available at: http://www.uwbadgers.com/sapc/, accessed April 19, 2013.
209 “Academic and Training Center.” Rams Football 2012. Available at: http://grfx.cstv.com/photos/schools/csu/sports/m-footbl/auto_pdf/2012-13/misc_non_event/2012FBmg-section1.pdf, accessed April 19, 2013.
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Erected at a cost of $8 million, the facility offers all of the amenities a program needs to attract top recruits.”210
116. Since the schools cannot compete for athletes with financial offers, they
engage in non-price competition: “It is part of what many athletic directors, experts and
the Knight Foundation's Commission on Intercollegiate Athletics call a growing facility
‘arms race.’ Chris Kennedy, senior associate athletic director at Duke, said the
nationwide boom in facility construction is not good for college athletics, but is
necessary to attract recruits and give athletes the tools necessary to succeed.”211
117. Professor Andrew Zimbalist noted:
“The cartel members found new ways to compete and new leaks were opened. Special athletic housing was supposedly abolished, but athletes can still reside in special dormitories as long as 50 percent plus one of the residents are not athletes. The other dwellers can be married graduate students, administrators, faculty, or others.” “The new recruiting showpieces have become mammoth training complexes, led by the University of Georgia’s $12 million Heritage Hall opened in 1987. The University of Tennessee followed with its own $10 million state-of-the-art sports complex, featuring an ultra-modern weight room, indoor practice field, medical facilities, carpeted suites with private bathrooms and cable television, and electronic surveillance. Football and basketball players can no longer live by themselves full-time in these complexes, but they can share them, or spend a night there before a
game (or go to a local hotel) and eat an occasional meal there.”212
210
Sukup Basketball Complex | Men’s and Women’s Basketball. Available at: http://www.cyclones.com/ViewArticle.dbml?DB_OEM_ID=10700&ATCLID=3761589, accessed April 19, 2013.
211 Lees, Kevin, “Recruitment competition spurs facilities ‘arms race’,” The Chronicle, September 5, 2001. Available at: http://dukechronicle.com/article/recruitment-competition-spurs-facilities-arms-race, accessed April 19, 2013.
212 Andrew Zimbalist, “Unpaid Professionals,” p. 44 (1999).
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118. Even the NCAA’s leadership listed the “Arms race” among schools at its
2011 NCAA Presidential Retreat as a threat. It’s only solution to clamping down on
this competition to recruit athletes was to “Determine if there is a solution that does not
violate antitrust.” 213
119. As discussed above, it is clear that the athletics departments financials
themselves only tell part of the story, and that the football and basketball programs
make more money than Mr. Petr’s claims (about Dr. Fulks’s numbers) would
indicate.214
But above and beyond the direct sports profit, these programs generate
monetary and non-monetary benefits for the university as a whole, which provides a
further reason for why schools value and continue to fund sports programs.
120. The academic studies find many other benefits from college football and
men’s basketball that Dr. Fulks’s adjustments (which form the basis of Mr. Petr’s
Declaration) fail to take into account. These include (a) the effect of college athletics
on student applications and enrollment,215
(b) the effect of college athletics on
213
NCAAPROD00236836-45, here 40. 214
This reminds me of the famous quote from Paul Beeston, former MLB COO, that “Under generally accepted accounting principles, I can turn a $4 million profit into a $2 million loss and get every national accounting firm to agree with me.” See May the Best Team Win: Baseball Economics and Public Policy, 2003, by Andrew Zimbalist, pp. 56-57.
215 See McEvoy , Chad, “The impact of elite individual athletic performance on university applicants for admission in NCAA Division IA football,” The Sport Journal 9.1 (2006); Coonan, Dan, “Athletics,” (2010); Mixon Jr, Franklin G., and Yu Hsing, “The determinants of out-of-state enrollments in higher education: A tobit analysis,” Economics of Education Review 13.4 (1994): 329-335; Mixon Jr, Franklin G., and Rand W. Ressler, “An empirical note on the impact of college athletics on tuition revenues,” Applied Economics Letters 2.10 (1995): 383-387; Chressanthis, George A., and Paul W. Grimes, “Intercollegiate sports success and first-year student enrollment demand,” Sociology of Sport Journal 10.3 (1993): 286-300; Toma, J. Douglas, and Michael E. Cross, “Intercollegiate athletics and student college choice: Exploring the impact of championship seasons on undergraduate applications,” Research in Higher Education 39.6 (1998): 633-661; McEvoy, Chad, “The relationship between dramatic changes in team performance and undergraduate
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donations,216
(c) the effect of college athletics on student academic standards, retention
and graduation,217
and (d) the effect of college athletics on brand and perception.218
For
admissions applications,” The SMART Journal 2.1, (2005): 17; Pope, Devin G., and Jaren C. Pope, “Understanding College Application Decisions: Why College Sports Success Matters,” (2008); Pope, Devin G., and Jaren C. Pope, "The Impact of College Sports Success on the Quantity and Quality of Student Applications," Southern Economic Journal 75.3 (2009); Johnston, Timothy C, “Who And What Influences Choice Of University? Student And University Perceptions,” American Journal of Business Education 3.10 (2010).
216 See Stinson, Jeffrey L., and Dennis R. Howard, “Scoreboards vs. mortarboards: major donor behavior and intercollegiate athletics,” Sport Marketing Quarterly 13.3 (2004): 129-140; Stinson, J, “Athletic Giving and Academic Giving: Exploring the Value of SPLIT Donors,” Unpublished manuscript, (2009); Stinson, Jeffrey L., and Dennis R. Howard, “Winning does matter: Patterns in private giving to athletic and academic programs at NCAA Division I-AA and I-AAA institutions,” Sport Management Review 11.1 (2008): 1-20; Baade, Robert A., and Jeffrey O. Sundberg, “Fourth down and gold to go? Assessing the link between athletics and alumni giving," Social Science Quarterly 77.4 (1996): 789-803; Rhoads, Thomas A., and Shelby Gerking, “Educational contributions, academic quality, and athletic success,” Contemporary Economic Policy 18.2 (2000): 248-258; Tucker, Irvin B, “A reexamination of the effect of big-time football and basketball success on graduation rates and alumni giving rates,” Economics of Education Review 23.6 (2004): 655-661; Humphreys, Brad R., and Michael Mondello, “Intercollegiate athletic success and donations at NCAA Division I institutions,” Journal of Sport Management 21.2 (2007): 265; Stinson, Jeffrey L., and Dennis R. Howard, “Athletic success and private giving to athletic and academic programs at NCAA institutions,” Journal of Sport Management 21.2 (2007): 235-264; Meer, Jonathan, and Harvey S. Rosen, “The impact of athletic performance on alumni giving: An analysis of microdata,” Economics of Education Review 28.3 (2008): 287-294; Daniel F. Mahony, Funk, James M. Gladden, and Daniel Carl, “Examining athletic donors at NCAA Division I institutions,” (2003): 9-27; Gladden, James M., Daniel F. Mahony, and Artemisia Apostolopoulou, “Toward a better understanding of college athletic donors: what are the primary motives?" Sport Marketing Quarterly 14.1 (2005): 18-30.
217 See Tucker, Irvin B, “Big-Time Pigskin Success Is There an Advertising Effect?" Journal of Sports Economics 6.2 (2005): 222-229; Smith, D. Randall, “College Football and Student Quality: An Advertising Effect or Culture and Tradition?" American Journal of Economics and Sociology 68.2 (2009): 553-579; Pope, Devin G., and Jaren C. Pope, "The Impact of College Sports Success on the Quantity and Quality of Student Applications," Southern Economic Journal 75.3 (2009); Tucker, Irvin B., and L. Ted Amato, “A reinvestigation of the relationship between big-time basketball success and average SAT scores,” Journal of Sports
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each of these, there is academic literature that argues that college sports, particularly the
sports in suit, generate positive benefits to the university that do not appear on the
athletic departments profit and loss statements. Defendants’ reliance on Mr. Petr’s
Declaration misses these benefits entirely.
7.5 NCAA MEMBERS THEMSELVES HAVE EXPRESSED MANY OF THESE SAME
EXPLANATIONS OF THEIR PROGRAMS PROFITABILITY, OUTSIDE OF THIS
LITIGATION
121. The belief in the overall benefit of NCAA athletics to university
development is widely held by many university executives. During his 17-year tenure
at Kansas State University, University President Jon Wefald has seen his college
Economics 7.4 (2006): 428-440; McCormick, R.E., and Tinsley, M, “Athletics and Academics: a Model of University Contributions,” in Sportometrics (edited by Goff, B.L., and Tollison, R.D.) 193-204, College Station. TX: Texas A&M University Press (1990); Bremmer, Dale S., and Randall G. Kesselring, “The advertising effect of university athletic success: A reappraisal of the evidence," The Quarterly Review of Economics and Finance 33.4 (1993): 409-421; Mixon, Franklin G., and Len J. Trevino, “From kickoff to commencement: the positive role of intercollegiate athletics in higher education,” Economics of Education Review 24.1 (2005): 97-102; Le Crom, Carrie L., et al, “Factors contributing to student athlete retention,” Journal of Issues in Intercollegiate Athletics 14.24 (2009): 14; Tucker, Irvin B, “A reexamination of the effect of big-time football and basketball success on graduation rates and alumni giving rates,” Economics of Education Review 23.6 (2004): 655-661.
218 See Roy, Donald P., Timothy R. Graeff, and Susan K. Harmon, “Repositioning a university through NCAA Division IA football membership,” Journal of Sport Management 22.1 (2008): 11-29; Goff, Brian, and R. A. Wolfe, “Effects of university athletics on the university: A review and extension of empirical assessment,” Journal of Sport Management14.2 (2000): 85-104; Goff, Brian, “Effects of University Athletics on the University: A Review and Extension of Empirical Assessment,” in The business of sports (edited by Rosner, Scott, and Kenneth Shropshire), Jones & Bartlett Learning, 2011; Clotfelter, Charles T, Big-time sports in American universities, Cambridge University Press, 2011; Goidel, Robert Kirby, and John Maxwell Hamilton, “Strengthening Higher Education Through Gridiron Success? Public Perceptions of the Impact of National Football Championships on Academic Quality,” Social science quarterly 87.4 (2006): 851-862.
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football team grow from the ranks of the worst in D1 to a perennial top-10 powerhouse.
As he put it: “When I got here, there was a sense of futility…If the old administration had stayed on here for three more years, I think football would have been dropped. We would have no marching band, and we'd be at about 12,000 students today” (quoted in Mandel, 2003, Para 15-16). By 2003, Kansas State's enrollment had increased from about 13,000 in 1986 to 23,000, its fundraising had gone from $7 million a year to $83 million and the city of Manhattan's economy had grown exponentially (Mandel, 2003).
Dr. Stiroh testified that Butler switched conferences for the purpose of “recruiting
students,” and notes that it was “not for economic reasons.”219
Yet, recruiting students
is an example of one of the many reasons (both financial and non-financial) that
athletics departments are valuable to their universities that does not show up on the
financial statements of the athletics department.
122. When interviewed by Seattle University’s 2007 Athletic Alignment Study
Task Force (AASTF), a report to determine whether the University should move from
DII to DI, a senior Portland University administrator stated: “Because of the success of
our soccer teams, we have received literally hundreds of thousands of dollars in free
publicity. In addition, when the press covers sports we are often on the first or second
page of the sports section. The other local private schools barely get mentioned, or if
so on the back page.”220
In 2007 Seattle University’s Board of Trustees approved the
219
Stiroh deposition, pp. 209-10. Despite Dr. Stiroh’s testimony that Butler made the move to the Atlantic-10 for non-economic reasons, it should be noted that the Atlantic-10 contract is estimated to generate $5 million per season (“New Atlantic 10 Television Contract Shows Big East Basketball Schools Aren’t Going Anywhere,” Bigeastcoastbias.com, October 3, 2012. Available at: http://www.bigeastcoastbias.com/2012/10/3/3448664/new-atlantic-10-television-contract-shows-big-east-basketball-schools, accessed April 19, 2013) whereas I understand that the Horizon League reported television revenues in 2008-09 and 2009-10 of $160,000.
220 See my report with Jeremy Howell titled “An Analysis and Assessment of Intercollegiate Athletics at the University of San Francisco” (June 27, 2011), p. 32.
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decision to apply to the NCAA for D1 status. Similarly for Gonzaga University in
regards to increases in applications, the university President said, “Without trying to get
too precise, because we don't have the quantitative data to support it, you'd have to say
that certainly well over 50% of the application rise” is due to public relations. “And
that PR is attributable in great part to basketball.”221
123. A recent study conducted on behalf of St. Mary’s College of California
investigated the overall media coverage and publicity value of its successful run into
the Sweet 16 of the NCAA's Men's Basketball Tournament during the 2009-2010
season. The study focused on print, Internet, and broadcast articles from March 1, 2010
to April 1, 2010. Over 12 million people were reached from the 2512 articles (542
print, 583 broadcast, and 1387 Internet) with 98% being from the Internet. The total
publicity value was about $9.3 million with an average of $3,697 per article. Fifty-two
% (52%) came from broadcast, 32% Internet, and 16% print.222
124. As part of a report for my university (USF), I took a sample of articles
from January 1, 2009 through December 31, 2009 on SFgate.com that yielded 333
articles related to USF.223
The result was that 57% of the articles were Athletics-
related.
221
Ron Lieber, “Score! Gonzaga University was struggling financially. Then it started winning basketball games.” WallStreetJournal.com, March 15. 2004. Available at: http://online.wsj.com/article/0,,SB107902127016752673,00.html , accessed April 19, 2013.
222 Publicity Value Report created for St. Mary’s College of California by Cission (undated).
223 The sampling technique used “University of San Francisco” and “USF” separately and then each article was analyzed to determine that it was relevant (e.g., not the University of South Florida). After removing certain items, such as announcements about funerals taking place at St. Ignatius Church, a final set of articles were analyzed for content to determine whether they were Athletics-related or not.
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125. Studies by schools with recent athletic success further support this idea.
After its first of its two appearances in the NCAA National Championship game in
basketball in 2010, Butler University estimated it had “resulted in $639,273,881.82 in
publicity value for the University.”224
Texas A&M found that when its star
quarterback, Johnny Manziel, won the Heisman trophy, the school garnered “$37
million in media exposure for Texas A&M.”225
126. The numbers produced by the NCAA, as summarized in Mr. Petr’s
Declaration, paint a distorted picture of the profitability of college football and men’s
college basketball. Indeed, the fact that most schools admit they rely on the profits
from those sports to support other sports and campus activities should make clear these
two sports are profitable at the FBS or Division I level. To the extent that any
Defendant opinion with respect to class certification takes as its starting point that
“most” of the schools in FBS football or Division I basketball lose money in those
sports, that opinion rests on a very distorted picture with little relationship to the true,
profitable state of these two sports. Taking the Petr Declaration at face value without
bringing a critical economic eye to the validity of Dr. Fulks’s analysis causes one to
completely miss the fact that on a purely monetary basis, the sports in suit at schools in
suit that account for the vast majority of Dr. Noll’s damages show high profits, and the
schools and sports not in suit account for a great deal of the losses in Dr. Fulks’s work
that is the basis for Mr. Petr’s Declaration. Moreover, nothing in Dr. Fulks’s analysis
captures the strong positive contributions of the sports in suit to the Universities at
224
“Butler Reaps Publicity Value From Final Four Run,” Butlersports.com, April 1, 2011. Available at: http://www.butlersports.com/sports/m-baskbl/2010-11/releases/040111aab, accessed April 19, 2013.
225 “Study: End of Football Season Produced $37 Million in Media Exposure for Texas A&M,” Tamu Times, January 18, 2013. Available at: http://tamutimes.tamu.edu/2013/01/18/study-end-of-football-season-produced-37-million-in-media-exposure-for-texas-am/, accessed April 19, 2013.
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which those sports are played. There is no economic basis to rely on Mr. Petr’s
Declaration or Dr. Fulks’s work for an assessment of the true health of the relevant
college football and basketball programs and/or the ability of those programs to thrive
in a but-for world where players’ group NIL licenses are bargained for competitively.226
226
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Appendix A
DECLARATION OF DR. DANIEL A. RASCHER, Case No. 4:09-cv-1967 CW
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DANIEL A. RASCHER, PH.D.
EDUCATION
B.A., Economics, University of California at San Diego.
Ph.D., Economics, University of California at Berkeley. Dissertation Title, Organization and Outcomes: A Study of the Sports Industry
Accredited Valuation Analyst (AVA) by the National Association of Certified Valuation Analysts
PRESENT POSITIONS
University of San Francisco Director of Academic Programs for the Sport Management Program, 2002-current
Professor of Sport Management, 2010-current
Associate Professor of Sport Management, 2005-2010
Assistant Professor of Sport Management, 2000-2005
Adjunct Professor of Sport Management, 1999-2000
M.A. Course – Economics and Finance for Sport Management
M.A. Course – Master’s Project in Sport Management
M.A. Course – Sport Business Research Methods
IE Business School (Madrid, Spain), Visiting Professor, 2010-current
Institute of Sports Law and Ethics (Santa Clara University). Board Member, 2011-current
SportsEconomics, LLC (www.sportseconomics.com) Founder and President, 1998-current
Performed economic analysis for sports industry clients including multiple projects involving the NFL, NBA, NASCAR, NCAA, NHRA, NHL, MLS, AHL, professional cycling, media companies, sports commissions and government agencies, event management, B2B enterprises, and IHRSA. Specialized in industrial organization, antitrust, valuations, market research, labor issues, financial modeling, strategy, economic impact, and feasibility research.
OSKR, LLC (www.oskr.com) Co-Founder and Partner, 2008-current
Performed economic analysis for clients involved in sports and other industries, including insurance, technology, and consumer products.
PREVIOUS ACADEMIC EXPERIENCE
UNIVERSITY OF MASSACHUSETTS AT AMHERST, Sport Management Department Assistant Professor, 1997-1998
M.S. Courses—Principles of Sport Business Management, Applied Sport Business Management
B.S. Courses—Sport Business Finance, Sports Economics
UNIVERSITY OF CALIFORNIA AT BERKELEY, Department of Economics Teaching Assistant
DECLARATION OF DR. DANIEL A. RASCHER, Case No. 4:09-cv-1967 CW
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2
Economic Principles & Intermediate Microeconomics.
PREVIOUS CONSULTING EXPERIENCE
LECG, LLC Affiliate, 2003-2007; Principal, 2000-2003; Senior Economist, 1998-2000
Performed economic analysis for sports industry clients including multiple projects involving the NFL, MLB, NBA, NHL, PGA, Formula One racing, CART, and Premier League Football (soccer). Specialized in industrial organization, antitrust, M&As, valuations, and damages analysis.
Provided testimony for cases involving sports industry clients, including damages analysis and liability.
40% of work is related to antitrust litigation, 20% is IP and breach of contract damages litigation, 20% is merger related, and 20% is management consulting.
60% of work involves the sports and entertainment industries, 15% involves technology, and 25% is in other industries including agriculture, transportation, and energy.
UNIVERSITY OF CALIFORNIA AT BERKELEY, Competitive Semiconductor Manufacturing Program Visiting Scholar, Institute of Industrial Relations, 1998-2000
Research Fellow, 1995-1997
Funded by the Alfred P. Sloan Foundation, the CSM study is an interdisciplinary project that analyzes the determinants of high performance in semiconductor manufacturing.
Research on HR, training, small sample analyses and generalizability of case study results.
NATIONAL ECONOMIC RESEARCH ASSOCIATES, Summer 1994; January-August 1995 Research Assistant
Research on the energy industry, on transmission pricing, and on the economic damages of contract breaches.
QUANTUM CONSULTING, 1992-1994 Research Assistant
Developed a model and a software package using spline techniques to weather-normalize energy usage, allowing the PUC to evaluate regulation policies.
HONORS AND AWARDS
Research Fellow of the North American Society for Sport Management, 2009.
College of Arts & Sciences Collective Achievement Award, 2009
Innovation Award Winner (for the innovative use of technology in teaching), 2004. From the Center for Instruction and Technology, University of San Francisco.
Alfred P. Sloan Foundation Research Grant for the Study of Human Resource Systems, 1995-1997.
Newton-Booth Fellowship for graduate study at University of California at Berkeley, 1990-1991.
DECLARATION OF DR. DANIEL A. RASCHER, Case No. 4:09-cv-1967 CW
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3
PEER-REVIEWED JOURNAL ARTICLES
“The Antitrust Implications of “Paperless Ticketing” on Secondary Markets,” with Andrew D. Schwarz. In Journal of Competition Law and Economics (forthcoming). “An Examination of Underlying Consumer Demand and Sport Pricing Using Secondary Market Data” with Joris Drayer and Chad McEvoy. In Sport Management Review, Vol. 15, No. 4, November 2012. “Financial Risk Management: The Role of a New Stadium in Minimizing the Variation in Franchise Revenues” with Matt Brown, Mark Nagel, and Chad McEvoy. In Journal of Sports Economics, Vol. 13, No. 3, August 2012. “Factors Affecting the Price of Luxury Suites in Major North American Sports Facilities” with Tim DeSchriver and Steve Shapiro. In Journal of Sport Management, Vol. 26, No. 3, May 2012. “Free Ride, Take it Easy: An Empirical Analysis of Adverse Incentives Caused by Revenue Sharing” with Matthew Brown, Mark Nagel, and Chad McEvoy. In Journal of Sport Management, Vol. 25, No. 5, September 2011. “Simulation in Sport Finance,” with Joris Drayer. Simulation & Gaming: An Interdisciplinary Journal of Theory, Practice, and Research Vol. 41, No. 2, April 2010. “Where did National Hockey League Fans go During the 2004-2005 Lockout?: An Analysis of Economic Competition Between Leagues,” with Matthew Brown, Mark Nagel, and Chad McEvoy. In International Journal of Sport Management and Marketing, Vol. 5, Nos. 1, 2, January 2009. “The Effects of Roster Turnover on Demand in the National Basketball Association,” with Steve Shapiro, Alan Morse, and Chad McEvoy. In International Journal of Sport Finance, Vol. 3, No. 1, February 2008. “Variable Ticket Pricing in Major League Baseball” with Chad McEvoy, Mark Nagel, and Matthew Brown. In Journal of Sport Management, Vol. 21, No. 3, July 2007. “Do Fans Want Close Contests?: A Test of the Uncertainty of Outcome Hypothesis in the National Basketball Association” with John Paul Solmes. In International Journal of Sport Finance, Vol. 3, No. 2, August 2007. “The Use of Simulation Technology in Sport Finance Courses: The Case of the Oakland A’s Baseball Business Simulator” with Joris Drayer. In Sport Management Education Journal Vol. 1, No. 1, May 2007.
“Washington “Redskins” – Disparaging Term or Valuable Tradition?: Legal and Economic Issues Concerning Harjo v. Pro-Football, Inc.” with Mark Nagel. In Fordham Intellectual Property, Media, and Entertainment Law Journal, Vol. XVII, No. 3, Spring 2007.
“Treatment of Travel Expenses by Golf Course Patrons: Sunk or Bundled Costs and the First and Third Laws of Demand,” with Matthew Brown, Chad McEvoy, and Mark Nagel. In International Journal of Sport Finance, Vol. 2, No. 1, February 2007.
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“Major League Baseball Anti-Trust Immunity: Examining the Legal and Financial Implications of Relocation Rules” with Mark Nagel, Matthew Brown, and Chad McEvoy. In Entertainment and Sports Law Journal, Vol. 4, No. 3, December 2006. “The Use of Public Funds for Private Benefit: An Examination of the Relationship between Public Stadium Funding and Ticket Prices in the National Football League” with Matthew Brown and Wesley Ward. In International Journal of Sport Finance, Vol. 1, No. 2, June 2006. “An Analysis of Expansion and Relocation Sites for Major League Soccer” with Matthew Baehr, Jason Wolfe, and Steven Frohwerk. In International Journal of Sport Management, Vol. 7, No. 1, January 2006. “Revenue and Wealth Maximization in the National Football League: The Impact of Stadia” with Matthew Brown, Mark Nagel, and Chad McEvoy. In Sport Marketing Quarterly, Vol. 13, No. 4, December 2004. “NBA Expansion and Relocation: A Viability Study of Various Cities” with Heather Rascher. In Journal of Sport Management, Vol. 18, No. 3, July 2004.
“Does Bat Day Make Cents?: The Effect of Promotions on the Demand for Baseball,” with Mark McDonald. In Journal of Sport Management, Vol. 14, No. 1, January 2000. “The NBA, Exit Discrimination, and Career Earnings,” with Ha Hoang. In Industrial Relations, Vol. 38, No. 1, January 1999.
BOOKS
“Financial Management in the Sport Industry” with Matthew Brown and Mark Nagel. Holcomb Hathaway, Inc., June 2010. A textbook.
BOOK CHAPTERS
“Illustrations of Price Discrimination in Baseball” with Andrew D. Schwarz in L. Kahane and S. Shmanske eds., Economics Through Sports, Oxford: Oxford University Press, (2012). “The Expanding Global Consumer Market for American Sports: The World Baseball Classic” with Mark Nagel, Chad McEvoy, and Matt Brown in G. Mildner, and C. Santo, eds., Sport and Public Policy, Champaign, IL: Human Kinetics, 2010. “Franchise Relocations, Expansions, and Mergers in Professional Sports Leagues.” In B. Humphreys, and D. Howard, eds., The Business of Sports, pp. 67-106. Westport, CT: Praeger, 2008. “Collective Bargaining in Sport” with M. Nagel, M. Brown, and C. McEvoy. In Encyclopedia of World Sport, pp.335-339. Great Barrington, MA: Berkshire Publishing, 2005. “The Role of Stadia in the USA: Wealth Maximization in the National Football League” with Matthew Brown and Mark Nagel in G. Trosien & M. Dinkel (eds.), Grenzen Des Sportkonsums (Frontiers of Sport Commerce), Heidelberg, Germany: SRH Learnlife AG, 2003.
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“A Test of the Optimal Positive Production Network Externality in Major League Baseball,” in E. Gustafson and L. Hadley, eds., Sports Economics: Current Research, 1999. Praeger Press. “A Model of a Professional Sports League,” in W. Hendricks (ed.), Advances in the Economics of Sport, vol. 2. June 1997, JAI Press, Inc.
BOOK REVIEWS
“Review of: Much More Than a Game: Players, Owners, and American Baseball Since 1921”, by Robert F. Burk in Journal of Economic Literature, Vol. 40(3), September 2002, pp. 949-951.
NON-PEER REVIEWED ARTICLES
“The Impact on Demand from Winning in College Football and Basketball: Are College Athletes More Valuable than Professional Athletes?” with Chad McEvoy. In Selected Proceedings of the Santa Clara University Sports Law Symposium, September 2012.
“Smooth Operators: Recent Collective Bargaining in Major League Baseball” with Tim DeSchriver, 2012. In International Journal of Sport Finance, 7(2). “The Economics of Competitive Balance on the Field and in the Courts” in Selected Proceedings of the Santa Clara University Sports Law Symposium, 2011. “5 Themes from 50 Economic Impact Studies” in SportsEconomics Perspectives, Issue 5, 2010. “What is the Value of Control of a Sports Enterprise?: Controlling Interest Premiums in Sports Valuations” in SportsEconomics Perspectives, Issue 4, April 2008. “Executive Interview: Charlie Faas, Executive Vice President and CFO of Silicon Valley Sports and Entertainment.” in International Journal of Sport Finance, Vol. 2, No. 2, June 2007. “Executive Interview: Dan Champeau, Managing Director, and Chad Lewis, Analyst with Fitch.” in International Journal of Sport Finance, Vol. 2, No. 1, February 2007. “Executive Interview: Dennis Wilcox, Principal with Climaco, Lefkowitz, Peca, Wilcox & Garofoli Co., L.P.A.” in International Journal of Sport Finance, Vol. 1, No. 4, November 2006. “Executive Interview: Randy Vataha, Founder of Game Plan, LLC” with Dennis Howard in International Journal of Sport Finance, Vol. 1, No. 2, June 2006.
“Executive Interview: Mitchell H. Ziets, President and CEO of MZ Sports, LLC” in International Journal of Sport Finance, Vol. 1, No. 1, February 2006. “The Oakland Baseball Simworld: Enabling Students to Simulate the Management of a Baseball Organization” in Journal of Sports Economics, Vol. 6, No. 3, August 2005.
“Examining the Viability of Various Cities for NBA Expansion or Relocation” with Heather Rascher in SportsEconomics Perspectives, Issue 2, April 2002.
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“Following a Dollar: the economic impact of a sports event is greater than the sum of its parts” by Nola Agha in SportsTravel Magazine, Vol. 6, No. 10, November/December 2002. Heather Rascher and Daniel Rascher contributed to the article. “Real Impact: understanding the basics of economic impact generated by sports events” in SportsTravel Magazine, Vol. 6, No. 7, July/August 2002. Reprinted in four regional sports commission newsletters. “What is the Size of the Sports Industry?,” in SportsEconomics Perspectives, Issue 1, August 2001. “Neither Reasonable nor Necessary: “Amateurism” in Big-Time College Sports”, with Andrew D. Schwarz. In Antitrust (Spring 2000 Special Sports Issue).
“What Brings Fans to the Ballpark?,” with Nola Agha in FoxSportsBiz.com, Spring 2000.
RE-PUBLICATIONS
Republication of “Do Fans Want Close Contests? A Test of the Uncertainty of Outcome Hypothesis in the National Basketball Association”, with John Paul G. Solmes in Recent Developments in the Economics of Sport, ed. Wladimir Andreff; The International Library of Critical Writings in Economics, 2011, Elgar Pub., United Kingdom. Republication of “What Brings Fans to the Ballpark?,” with Nola Agha in Brilliant Results 2005. Republication of “What is the Size of the Sports Industry?,” in Brilliant Results 2005.
Republication of “Neither Reasonable nor Necessary: “Amateurism” in Big-Time College Sports”, with Andrew D. Schwarz in The Economics of Sport, Vol. I, ed. Andrew Zimbalist; The International Library of Critical Writings in Economics 135, 2001, Elgar, Northampton, MA.
PEER-REVIEWED JOURNAL ARTICLES UNDER REVIEW
“Paperless Ticketing” and its Impact on the Secondary Market: An Economic Analysis with Antitrust Implications” with Andy Schwarz. 2011. Submitted to Harvard Journal of Sports and Entertainment Law.
MONOGRAPHS
“The Effect of Human Resource Systems on Fab Performance,” with Clair Brown, in C. Brown (ed.), The Competitive Semiconductor Manufacturing Human Resources Project: Final Report, 1997. “Inter-industry Comparisons: Lessons from the Semiconductor Industry,” with Rene Kamita, in C. Brown (ed.), The Competitive Semiconductor Manufacturing Human Resources Project: Final Report, 1997. “Problem-Solving Structures; A Case Study of Two U.S. Semiconductor Fabs,” in C. Brown (ed.), The Competitive Semiconductor Manufacturing Human Resources Project: Final Report, 1997.
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“Transferability of Case Study Research: An Example from the Semiconductor Industry,” with Clair Brown, in C. Brown (ed.), The Competitive Semiconductor Manufacturing Human Resources Project: 2nd Interim Report, 1996. “Headcount and Turnover,” in C. Brown (ed.), The Competitive Semiconductor Manufacturing Human Resources Project: 2nd Interim Report, 1996. “Training,” with Jumbi Edulbehram in C. Brown (ed.), The Competitive Semiconductor Manufacturing Human Resources Project: 2nd Interim Report, 1996.
REPORTS
“Economic Impact of the 2012 NBA All-Star Game and Related Events on Orange County, Florida,” with Richard Irwin and Heather Rascher. A report for the Orlando Magic. 2012. “Economic Impact of the 2011 Meineke Car Care Bowl on the City of Houston,” with Richard Irwin and Heather Rascher. A report for the Houston Texans. 2012. “Economic Impact of the West Coast Conference Men’s Basketball Tournament,” with Heather Rascher. A report for the West Coast Conference. 2012. “Economic Impact of the 2011 Valero Alamo Bowl on the City of San Antonio,” with Richard Irwin and Heather Rascher. A report for the Alamo Bowl Foundation. 2012. “AAU Junior Olympic Games 2012: A Forecast of Economic & Fiscal Impact,” with Richard Irwin. A report for the Harris County-Houston Sports Authority. 2011. “Economic Impact of the 2010 Valero Alamo Bowl on the City of San Antonio,” with Richard Irwin and Heather Rascher. A report for the Alamo Bowl Foundation. 2011. “Economic impact study of organized youth camps in Western North Carolina (Buncome, Jackson, Henderson, and Transylvania Counties),” with Harrolle, M. G., Rich, S. R., Rascher, D., Xu, S., King, M., & Supak, S. Report prepared for the North Carolina Youth Camp Association. 2011. “Findings from a Survey of Cal Football Fans”. For UCB’s Intercollegiate Athletics Department. 2010. “Washington State vs. Notre Dame: Economic & Fiscal Impact Analysis on San Antonio MSA,” with Richard Irwin for the Alamo Bowl Foundation. 2010. “2008 San Antonio Rock N’ Roll Marathon Economic & Fiscal Impact Analysis,” with Richard Irwin. 2009.
“2008 NCAA Men’s Final Four Economic & Fiscal Impact Analysis,” with Richard Irwin. A report for the San Antonio Sports Foundation. 2008. “Analysis of the Economic & Fiscal Impact of the Nike Women’s Marathon in San Francisco,” with Heather Rascher. A report for Nike, Inc. 2008. “Reply Report of Daniel A. Rascher in the Matter of Adderley et al. v. NFLPA.” 2008. An expert report in Federal Court.
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“Expert Report of Daniel A. Rascher in the Matter of Adderley et al. v. NFLPA.” 2008. An expert report in Federal Court. “Economic Impact of the 2008 Amgen Tour of California on the Host Cities,” with Heather Rascher. A report for AEG Cycling, LLC. 2008. “Economic Impact of the 2008 Valero Alamo Bowl on the City of San Antonio,” with Dick Irwin and Heather Rascher. A report for the Alamo Bowl Foundation. 2008. “Economic Impact of the Dr. Pepper Big 12 Championship on the City of San Antonio,” with Dick Irwin and Heather Rascher. A report for the Alamo Bowl Foundation. 2008. “Economic Impact of HP Pavilion and Sharks Ice on the City of San Jose,” with Heather Rascher. A report for the City of San Jose. 2007. “An Analysis of Luxury Suite/Club Seat Ticket Pricing at Red Bull Park,” with Tim DeSchriver. A report for the New York Red Bulls. 2007 “Economic Impact Forecast of the 2008 NCAA Men’s Final Four,” with Dick Irwin and Heather Rascher. A report for the San Antonio Sports Foundation. 2007. “An Analysis of the Salary System in Major League Soccer – Improving the Quality of Play,” with Tim DeSchriver. A report for the New York Red Bulls. 2007 “Economic Impact Analysis of a New Major League Soccer Stadium in the City of San Jose,” with Heather Rascher. A report for the City of San Jose. 2007. “Economic Impact Analysis of the 2007 Amgen Tour of California,” with Heather Rascher. A report for AEG. 2007. “The Economic Impact of Six Sports and Cultural Events on the City of San Jose,” with Heather Rascher. A report for the City of San Jose. 2006. “The Economic Impact of NHRA’s O’Reilly Raceway Park on the Local Community,” with Heather Rascher. A report for the NHRA. 2006.
“Rebuttal in Regards to Financial Valuation of Major League Soccer”. An Expert Report for Alan I. Rothenberg. 2006.
“Financial Valuation of Major League Soccer”. An Expert Report for Alan I. Rothenberg. 2006. “Economic Impact Analysis of the 2006 Amgen Tour of California,” with Heather Rascher. A report for AEG. 2006. “Setanta Sports Market Research Report – A Secondary Study,” with Heather Rascher and ADC Partners. 2006. A report for Setanta Sports, Inc. “Economic Impact of 2005 NCAA Women’s Final Four Volleyball Tournament,” with Richard Irwin. 2005. A report for the San Antonio Sports Foundation.
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“Setanta Sports Market Research Report – A Primary Study,” with ADC Partners. 2005. A report for Setanta Sports, Inc. “Study of the Economic and Fiscal Impacts for Texas Stadium and a New Cowboys Stadium,” with Turnkey Sports. 2004. A report for the City of Irving, TX. “Economic Impact of 2004 NCAA Men’s Final Four Basketball Tournament,” with Richard Irwin. 2004. A report for the San Antonio Sports Foundation.
“2004 NCAA Men’s Final Four: Forecast of Economic & Fiscal Impact,” with Richard Irwin. 2003. A report for the State Comptroller of Texas. “Oral Testimony Regarding California State Senate Bill 193, Student Athletes’ Bill of Rights”. 2003. Testimony to the California State Senate Subcommittee on Entertainment. “Economic Impact Analysis” in Turnkey Sports, LLC (ed.), Phase 2 Analysis of a Sacramento Sports & Entertainment District, 2003. A report for the City of Sacramento, The Sacramento Kings basketball franchise, and Union Pacific Railroad. “Economic and Fiscal Impact Analysis” in Goal Group (ed.), Analysis of a New Sports and Entertainment District in Sacramento, 2002. A report for the City of Sacramento, The Sacramento Kings basketball franchise, and Union Pacific Railroad. “Economic Impact Analysis: The Economic Effects of the Kentucky ThoroughBlades on the Lexington Metropolitan Area, 1996-2000,” with Nola Agha. 2001. A report for the Kentucky ThoroughBlades hockey franchise. “Sports Events Contain an Element of Financial Risk that can be Hedged Using a Futures Market”. 2001. A report for GSX, PLC. “Valuation of the Common Shares of the Cincinnati Bengals, Inc. held by the Brown Family Irrevocable Grantor Trust and Related Option to Acquire Additional Shares,” with Mukesh Bajaj. 2000. A report for the United States Internal Revenue Service. “Expert Report of Daniel A. Rascher In the Matter of Paul Stankowski and Bugle Boy Industries, Inc.” 2000. An expert report for the American Arbitration Association. “Forecasting the Economic Benefits of the 2007 Pan Am Games,” with Richard Irwin. 1998. A report for the San Antonio Sports Foundation and the City of San Antonio. “The Economic Benefit of the 1998 Men’s Final Four Basketball Tournament on the San Antonio Community,” with Richard Irwin. 1998. A report for the San Antonio Sports Foundation and the NCAA.
“Analysis of Musco/ECF Merger,” with Gordon C. Rausser. 1998. A report for the United States Department of Justice.
WORKING PAPERS
“Competitive Balance in Sports: “Peculiar Economics” over the last Quarter Century,” with Andrew D. Schwarz. 2013.
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“The Practical Use of Variable Ticket Pricing in Major League Baseball” with Chad McEvoy, Matt Brown, and Mark Nagel. 2012. “Will the Oakland A's Relocation to San Jose Harm the Sharks – A Case Study of Competition Across Professional Sports Teams” with Chad McEvoy, Matt Brown, and Mark Nagel. 2011. “Counting Local Residents in Economic Impact Analysis: New Findings from Sporting Events” with Richard Irwin. 2008. “Perverse Incentives with the NCAA Basketball Tournament Seeding Process” with Matthew Brown, Chad McEvoy, and Mark Nagel. 2006. “Do the Giants Compete with the A’s: The Degree of Competition Between Teams” with Matthew Brown, Chad McEvoy and Mark Nagel. 2006.
“Forecasting Model of Airport Economic Impacts” with Alan Rozzi and Christopher Gillis. 2004.
“Psychic Impact of Professional Sports: A Case Study of a City Without Major Professional Sports” with Matthew Brown, Mark Nagel, and Chad McEvoy. 2003. “The Use of New Technology and Human Resource Systems in Improving Semiconductor Manufacturing Performance”, with Clair Brown and Greg Pinnsoneault, Working Paper, University of California at Berkeley, 1999.
CONFERENCE PRESENTATIONS
“Sports Economics, Analytics, and Decision Making: 8 Examples.” Invited speaker at the IEG Sports Analytics Innovation Summit, 2012 Panel member for “Financial Issues in Intercollegiate Sports.” Presented at the Santa Clara University Sports Law Symposium, 2012. “What's in a Name?: Does the Amount and Source of Public Financing Impact Team Names?” with Nola Agha and Matt Brown. Presented at Western Economics Association International, July 2012. “When Can Economic Impact be Positive? Twelve conditions that explain why smaller sports have bigger impacts” with Nola Agha. Presented at Western Economics Association International, July 2012. “Reflections on the MLB Collective Bargaining Agreement.” Part of a symposium on the Economics of Labor-Management Relations in Sports Today at Western Economics Association International, July 2012. “The Economics of Competitive Balance on the Field and in the Courts.” Presented at the Santa Clara University Sports Law Symposium, 2011. “ ‘Paperless Ticketing’ and its Impact on the Secondary Market: An Economic Analysis with Antitrust Implications” with Andy Schwarz. Presented at International Association of Venue Managers, July 2011.
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“ ‘Paperless Ticketing’ and its Impact on the Secondary Market: An Economic Analysis with Antitrust Implications” with Andy Schwarz. Presented at TicketSummit, July 2011. “ ‘Paperless Ticketing’ and its Impact on the Secondary Market: An Economic Analysis with Antitrust Implications” with Andy Schwarz. Presented at Western Economics Association International, July 2011. “Financial Risk Management: The Role of a New Stadium in Minimizing the Variation in Franchise Revenues” with Matt Brown, Chad McEvoy, and Mark Nagel. Presented at Western Economics Association International, July 2011. “A Panel Study of Factors Affecting Attendance at Major League Soccer Contests: 2007-2010” with Tim DeSchriver. Presented at the Sport Marketing Association IX conference in New Orleans, October 2010. “The NCAA and the Prisoner’s Dilemma”. Presented at the Sports Law Symposium at the University of Santa Clara Law School, September 2010. “Financial Risk Management: The Role of a New Stadium in Minimizing the Variation in Franchise Revenues” with Matt Brown, Chad McEvoy, and Mark Nagel. Presented at North American Society for Sport Management, May 2010. “An Analysis of the Value of Intercollegiate Athletics to its University: Methods”. Presented at the Scholarly Conference on College Sport, April 2010. “Demand, Consumer Surplus, and Pricing Inefficiency in the NFL: A Case Study of the Secondary Ticket Market Using StubHub” with Joris Drayer and Chad McEvoy. Presented at North American Society for Sport Management, May 2009. “Luxury Suite Pricing in North American Sports Facilities” with Tim DeSchriver. Presented at North American Society for Sport Management, May 2009. “A Smorgasbord of Lessons Learned from Economic Impact Studies” Presented at North American Society for Sport Management, June 2008. “Globalization and Sport Finance: What is True and What is Myth?” with Mark Nagel and Ross Booth. Presented at the Sport Management Association of Australia and New Zealand, November 2007. “Exploring the Myth that a Better Seed in the NCAA Men’s Basketball Tournament results in an ex ante Higher Payout” with Mark Nagel, Matt Brown, and Chad McEvoy. Presented at the Sport Management Association of Australia and New Zealand, November 2007. “Oakland A’s Baseball Simulator” with Joris Drayer. Presented at North American Society for Sport Management, June 2007. “Teaching Sport Financial Management: A Symposium” with Timothy DeSchriver, Matthew Brown, and Michael Mondello. Presented at North American Society for Sport Management, June 2007.
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“The Economics of the Sports Industry,” presented to the MBA Program at the Haas School of Business, U.C. Berkeley, January 2007. “Practical Strategies for Variable Ticket Pricing in Professional Sports” with Chad McEvoy, Matt Brown, and Mark Nagel. Presented at Sport Marketing Association IV, November 2006. “Do the Giants Compete with the A’s: The Degree of Competition Between Teams”, presented at Western Economic Association International, July 2006. “Taking the Gown to Town: Research and Consulting for the Sport Industry.” Invited presentation at the Past President’s Workshop, North American Society for Sport Management, June 2006. “Do the Giants Compete with the A’s: The Degree of Competition Between Teams”, presented at North American Society for Sport Management, June 2006.
“Measuring Sponsorship Return on Investment: A Need for Quantitative Analysis” with Matt Brown, Mark Nagel, and Chad McEvoy. Presented at Sport Marketing Association III, November 2005. “The Use of Economic Impact Analysis for Marketing Purposes” with Dick Irwin and Matt Brown. Presented at Sport Marketing Association III, November 2005.
“Is Free Riding a Problem in Sports Leagues?: Adverse Incentives Caused by Revenue Sharing” with Mark Nagel, Chad McEvoy, and Matt Brown. Presented at Western Economic Association International, July 2005.
“Public Funds for Private Benefit: Equity Issues in Sport Stadia Funding and the Question of Who Really Pays,” with Matt Brown and Mark Nagel. Presented at North American Society for Sport Management, June 2005.
“Is Free Riding a Problem in Sports Leagues?: Adverse Incentives Caused by Revenue Sharing” with Mark Nagel, Chad McEvoy, and Matt Brown. Presented at North American Society for Sport Management, June 2005.
“Is Free Riding a Problem in Sports Leagues?: Adverse Incentives Caused by Revenue Sharing” with Mark Nagel, Chad McEvoy, and Matt Brown. Accepted by Sport Management Association of Australia and New Zealand, Nov. 2004. “Redskins: Legal, Financial, and Policy Issues relative to Harjo v. Pro-Football, Inc.” with Richard Southall, Matt Brown, and Mark Nagel. Presented at North American Society for the Sociology of Sport, Nov. 2004. “An Analysis of Distance Traveled and Tourism Economic Impact: A Test of the Alchian-Allen Theorem” with Matt Brown, Mark Nagel, and Chad McEvoy. Presented at Sport Marketing Association II conference, Nov. 2004. “Is Free Riding a Problem in Sports Leagues?: Adverse Incentives Caused by Revenue Sharing” with Mark Nagel, Chad McEvoy, and Matt Brown. Presented at Sport Marketing Association II conference, Nov. 2004.
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“Beyond The Economic Impact Study: Examining Economic Impact Data for Support of the Third Law of Demand” with Matthew Brown, Mark Nagel, and Chad McEvoy. Presented at North American Society for Sport Management, 2004. “Optimal Variable Ticket Pricing in Major League Baseball” with Mark Nagel, Chad McEvoy, and Matthew Brown. Presented at North American Society for Sport Management, 2004. “Clarett v. NFL: Age Eligibility Rules and Antitrust Law in Professional Sports” with Chad McEvoy, Mark Nagel, and Matt Brown. Presented at Sport and Recreation Law Association, 2004. “Variable Pricing in Baseball: Or, What Economists Would Just Call ‘Pricing’,” presented at Western Economic Association International, 2003. “The Impact of Stadia on Wealth Maximization in the National Football League: To Build or Renovate?” with Matthew Brown, Mark Nagel, and Chad McEvoy. Presented at North American Society for Sport Management, 2003. “Major League Baseball’s Antitrust Immunity: Examining the Financial Implications of Relocation Rules,” with Matthew Brown and Mark Nagel. Presented at Society for the Study of the Legal Aspects of Sport and Physical Activity, 2003.
Invited as panel discussant on methods for valuing sports franchises at Franchise Valuation Forum, New York, NY 2002 (presented by SportsBusiness Journal). Conference cancelled. “Locational Choice in the NBA: An Examination of Potential Cities for Expansion or Relocation,” presented at North American Society for Sport Management, 2002. Panel discussant on the effects of the economy on the business of sports at Sports Facilities and Franchises Forum, Dallas, TX 2002 (presented by SportsBusiness Journal). “Psychic Impact Findings in Sports,” presented at Sport Management Association of Australia and New Zealand, 2001. “Locational Choice in the NBA: An Examination of Potential Cities for Expansion or Relocation” presented at Sport Management Association of Australia and New Zealand, 2001. “Psychic Impact as a Decision Making Criterion,” presented at the North American Society for Sport Management, 2000. “Economic Impact Methods,” presented at the North American Society for Sport Management, 2000. “Valuation of Naming Rights,” presented at the Sports Finance Forum, 2000. “ ‘Amateurism’ in Big-Time College Sports,” presented at the Western Economic Association International, 1999. “Does Bat Day Make Cents?: The Effect of Promotions on the Demand for Baseball,” with Mark McDonald. Presented at the 17th Annual Consumer Psychology Conference, 1998.
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“A Test of the Optimal Positive Production Network Externality in Major League Baseball,” presented at the North American Society for Sport Management Conference, 1998. “A Test of the Optimal Positive Production Network Externality in Major League Baseball,” presented at the Western Economic Association International, 1998. “The NBA, Exit Discrimination, and Career Earnings,” presented at the Western Economic Association International, 1997.
“Sports Salary Determination,” presented at the International Atlantic Economic Society Conference, 1997.
“A Model of a Professional Sports League,” presented at the International Atlantic Economic Society Conference, 1996. “Transferability of Case Study Research: An Example from the Semiconductor Industry,” presented at the American Society of Training and Development Conference, 1996.
INVITED SPEAKING ENGAGEMENTS
“Using Contract Law to Tackle the Coaching Carousel – Commentary.” Presented at University of San Francisco, Sports & Entertainment Law Association, 2013. “ ‘Paperless Ticketing’ and its Impact on the Secondary Market: An Economic Analysis with Antitrust Implications” with Andy Schwarz. Presented at U.C. Berkeley, Boalt Law School’s Sports and Entertainment Law Society, 2011. “Financial Valuation of Sports Assets,” presented at the Sport Management Today Video Conference Series at the IE Business School, 2011 “Financial Valuation of Sports Assets,” presented to the Sport Management Department at the University of Northern Denmark, 2011. “Economic Impact in Sports,” presented to the Sport Management Department at the University of Northern Denmark, 2011. “The Economics of the Sports Industry,” presented to the Sports Business Association at U.C. Irvine, 2011. “Is Free Riding a Problem in Sports Leagues?: Adverse Incentives Caused by Revenue Sharing” with Mark Nagel, Chad McEvoy, and Matt Brown. Presented at the Economics Lecture Series at Sonoma State University Business School, April 2010. “Economics for Antitrust Lawyers: Application to Class Certification” presented to Lieff Cabraser Heimann & Bernstein for Continuing Legal Education (CLE) units. November 2009. “Economics for Antitrust Lawyers: Market Structure and Economic Modeling” presented to Lieff Cabraser Heimann & Bernstein for Continuing Legal Education (CLE) units. October 2009. “Sports Stadium Financing in Today’s Economy” presented to the Rotary Club of San Jose, May 2009.
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“The Economic Impact of Liberty Bowl Memorial Stadium,” presented at the University of Memphis, Issues in College Sports lecture series (invited panelist), March 2007. “The Economics of the Sports Industry,” presented to the MBA Program at the Haas School of Business, U.C. Berkeley, January 2007. “Stadium Financing – Dallas Cowboys Case,” presented to the MBA Program at the Graduate School of Business, Stanford University, 2006. “Various Topics in Sports Economics,” presented at the Wednesday Workshop on Economics Research, California State University, East Bay, 2005.
“Stadium Financing – Dallas Cowboys Case,” presented to the MBA Program at the Graduate School of Business, Stanford University, 2005. “The Economics of the Sports Industry,” presented to the MBA Program at the Haas School of Business, U.C. Berkeley, 2005.
“The Economic Impact of General Aviation Airports: An Econometric Model,” presented at Niche Ventures Spring Meeting, 2004.
“The Economics of the Sports Industry,” presented to the MBA Program at the Haas School of Business, U.C. Berkeley, 2004. “The Economics of the Sports Industry,” presented to the MBA Program at the Haas School of Business, U.C. Berkeley, 2003.
“The Use of New Technology and Human Resource Systems in Improving Semiconductor Manufacturing Performance,” with Clair Brown and Greg Pinsonneault. Presented at The Wharton School, University of Pennsylvania, 1999.
EDITORIAL BOARDS OF PEER-REVIEWED JOURNALS
Case Studies in Sport Management, 2011 – present (founding member) International Journal of Sport Finance, 2006 – present (founding member) International Journal of Sport Management and Marketing, 2011-present Journal of Quantitative Analysis in Sports, 2005 – present (founding member) Journal of Sport Management, 2003 – present Associate Editor, 2010 – 2012 Sport Management Review, 2001 – 2008
REFEREE FOR PEER-REVIEWED JOURNALS & GRANTING AGENCIES
American Behavioral Scientist, 2008 Case Studies in Sport Management, 2012 Contemporary Economic Policy, 2004 Eastern Economic Journal, 2010 Economic Inquiry, 2008, 2010, 2011
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European Sport Management Quarterly, 2012 Industrial Relations, 1993, 2000, 2000, 2001, 2013 International Journal of Sport Communication, 2011 International Journal of Sport Finance, 2005, 2006a, 2006b, 2006c, 2007a, 2007b, 2008a, 2008b,
2010, 2011, 2012 International Journal of Sport Management and Marketing, 2005, 2010 International Review for the Sociology of Sport, 2012 Journal of Industrial Economics, 1997 Journal of Sport Management, 2001, 2002, 2003a, 2003b, 2004a, 2004b, 2004c, 2004d, 2004e,
2005a, 2005b, 2005c, 2005d, 2006a, 2006b, 2006c, 2006d, 2006e, 2006f, 2006g, 2006h, 2006i, 2007a, 2007b, 2007c, 2007d, 2008a, 2008b, 2008c, 2008d, 2009a, 2009b, 2009c, 2009d, 2009e, 2009f, 2009g, 2010a, 2010b, 2010c, 2010d, 2011a, 2011b, 2013
Journal of Sports Economics, 2003, 2007, 2008a, 2008b, 2009, 2010, 2011, 2012a, 2012b Journal of Venue and Event Management, 2012 Journal of the Quantitative Analysis of Sports, 2005, 2006a, 2006b, 2007 Perceptual and Motor Skills, 2009 Review of Industrial Organization, 2012, 2013 Southern Economic Journal, 2001, 2007a, 2007b Sport, Business and Management: An International Journal, 2011, 2012, 2013 Sport Management Review, 2002a, 2002b, 2003a, 2003b, 2003c, 2003d, 2004a, 2004b, 2004c,
2006a, 2006b, 2006c, 2007a, 2007b, 2007c, 2010a, 2010b, 2011 External review of $250,000 grant proposal for the Social Sciences and Humanities Research Council of Canada, 2008
PROFESSIONAL AFFILIATIONS (CURRENT AND PREVIOUS)
American Bar Association American Economic Association National Association of Certified Valuation Analysts North American Society for Sport Management North American Association of Sports Economists Sport and Recreation Law Association Sport Marketing Association Sports Lawyers Association Western Economic Association International
TESTIMONY
Prepared expert report in federal case involving defamation of character in the boxing industry (Pacquiao v. Mayweather Jr. et al.). 2012. Provided deposition testimony and prepared expert report regarding an alleged sponsorship breach of contract in motorsports (Vici Racing, LLC v. T-Mobile USA, Inc.). 2012. Prepared expert witness testimony on trade secrets case involving the sports consulting industry (Sport Management Research Institute v. Keehn). 2011.
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Provided deposition testimony on the value of a minor league baseball team and related damages from an alleged breach of a facility lease permit (Long Beach Armada v. City of Long Beach). 2011. Provided deposition testimony on the value of athlete endorsements in a breach of contract case involving an NBA player and a charter school business in an arbitration proceeding (D Wade’s Place v. Dwyane Wade). 2010. Provided deposition testimony on the value of athlete endorsements in a breach of contract case involving an NBA player and a restaurant investment in a state court proceeding (Rodberg v. Dwyane Wade). 2010. Prepared two reports and provided deposition and arbitration testimony regarding damages related to how media coverage has impacted an NFL team’s brand (Kiffin v. Raiders). 2009.
Prepared expert report, rebuttal report, gave deposition and trial testimony in federal court (Adderley et al. v NFLPA and NFLPI). 2008. Public testimony on economic impact of a Major League Soccer stadium in San Jose to the San Jose City Council. 2008. Public testimony on economic impact of six sports and cultural events in San Jose to the San Jose City Council. 2007. Prepared expert report, rebuttal report, and testified at arbitration hearing on the financial valuation of Major League Soccer (Rothenberg v. Major League Soccer, LLC). 2006. Named expert witness for a Major League Baseball club to analyze a punitive damages claim from an injury at a baseball game (Bueno v. Rangers). 2006.
Prepared expert testimony on liability and damages related to the operations of a minor baseball league on behalf of the league’s owner (Don Altman et al., v. Jeffrey Mallet, et al.). Case was settled prior to deposition. 2004.
Public testimony on economic impact of an existing and new professional football stadium in Irving, TX to the Irving City Council (two council meetings). 2004. Testimony on college athletics regarding Senate Bill 193 to the California State Senate Subcommittee on Entertainment. 2003. Public testimony on economic impact of a downtown entertainment district in Sacramento to the Sacramento City Council (two council meetings). 2003. Determination of IP valuation and damages from a clothing endorsement alleged breach of contract for PGA Tour player (Stankowski v. Bugle Boy). Submitted expert report. Case was settled prior to deposition. 2000.
Deposition testimony in breach of contract matter concerning damages analysis in the auto racing industry (Parente v. Della Penna Racing). 2000.
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Appendix B
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Documents ReviewedAppendix B
Legal FilingsDeclaration Nathan O. Hatch In Support of The NCAA's Class Certification Opposition Brief, March 14, 2013Declaration of Alan J. Cox Regarding Class Certification, March 14, 2013Declaration of Christopher J. Massaro In Support Of The NCAA's Class Certification Opposition Brief, March 14, 2013Declaration of Derek Van Der Merwe In Support of The NCAA's Class Certification Opposition Brief, March 14, 2013Declaration of Guy Ben-Ishai, Ph.D. In Support of Opposition to Plaintiffs' Motion for Class Certification, March 14, 2013Declaration of Herbet Carter In Support of the NCAA's Class Certification Opposition Brief, March 14, 2013Declaration of J. Douglas Elgin In Support of The NCAA's Class Certification Opposition Brief, March 12, 2013
Declaration of James E. Delany in Support of the NCAA's Class Certification Opposition Brief, March 14, 2013Declaration of John Swofford In Support of The NCAA's Class Certification Opposition Brief, March 14, 2013Declaration of John Welty In Support of The NCAA's Class Certification Opposition Brief, March 12, 2013 Declaration of Jonathan B. LeCrone Ins Support of The NCAA's Class Certification Brief, March 12, 2013Declaration of Keith Gordon, February 26, 2013Declaration of Kevin Lennon, March 14, 2013Declaration of Kimberly K. Kefalas In Support of The NCAA's Class Certification Opposition Brief, March 14, 2013Declaration of Lauren J. Stiroh, Ph.D. and Dirk Van Leeuwen, March 14, 2013Declaration of Mark Lewis, March 14, 2013Declaration of Mark Womack In Support of The NCAA's Class Certification Opposition Brief, March 11, 2013Declaration of PAC-12 Commissioner Larry Scott In Support of The NCAA's Class Certification Opposition Brief, March 14, 2013Declaration of Patrick T. Harker In Support of The NCAA's Class Certification Opposition Brief, March 13, 2013Declaration of Robert J. Wierenga In Support of Opposition to Class Certification, March 14, 2013Declaration of Ronald Klempner, March 5, 2013Declaration of Stan L. Albrecht in Support of the NCAA’s Class Certification Opposition Brief, March 12, 2013
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Legal Filings (continued)Declaration of Suzanne Wahl In Support of Opposition to Class Certification, March 14, 2013Declaration of The University of Texas at Austin in Support of The NCAA's Class Certification Opposition Brief, March 13, 2013Declaration of Todd Petr In Support of the NCAA's Class Certification Opposition Brief, March 12, 2013Declaration Timothy P. White In Support of The NCAA's Class Certification Opposition Brief, March 13, 2013Declaratoin of The Big Twelve Conference, Inc. In Support of The NCAA's Class Certification Opposition Brief, March 14, 2013Electronic Arts Inc.’s and Collegiate Licensing Company’s Opposition to Plaintiffs’ Motion for Class Certification, March 14, 2013NCAA's Opposition to Motion For Class Certification, March 14, 2013Proposed Order Denying Antitrust Plaintiffs' Motion For Class Certification, March 14, 2013
Expert ReportsCorrections and Amendments to Expert Report on Class Certification of Roger G. Noll Expert Report of Daniel A. Rascher of May 23, 2008 Expert Report of Daniel L. Rubinfeld Regarding Class Certification, March 14, 2013Expert Report of James J. Heckman In re: NCAA Student-Athlete Name and Likeness Licensing Litigation, March 14, 2013Expert Report of Lauren J. Stiroh, Ph.D. In re: NCAA Student-Athlete Name & Likeness Licensing Litigation, March 14, 2013Expert Report on Class Certification of Roger G. Noll, August 31, 2012
DepositionsAlan J. Cox, Ph.D., April 5, 2013Daniel L. Rubinfeld, April 23, 2013James J. Heckman, March 29, 2013Lauren J. Stiroh, Ph.D., April 3, 2013Roger G. Noll, Ph.D., February 27, 2013
AgreementsNFL Collective Bargaining Agreement 2006 - 2012, NFL Players Association, Between The NFL Management Council and The NFL Players Association, March 8, 2006
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Data & Reports"The Sonny Dykes Era Begins." Lousiana Tech 2010 Spring Media Guide. Available at: http://grfx.cstv.com/photos/schools/latc/sports/m-footbl/auto_pdf/ 2010SpringFBGuide.pdf, last accessed April 23, 2013
“Academic and Training Center.” Rams Football 2012 Available at: http://grfx.cstv.com/photos/schools/csu/sports/m-footbl/auto_pdf/2012- 13/misc_non_event/2012FBmg-section1.pdf, last accessed April 19, 2013
2004-11 NCAA Revenues and Expenses of Division I Intercollegiate Athletics Programs Report. Available at: http://www.ncaapublications.com/productdownloads/D12011REVEXP.pdf., last accessed April 17, 2013
2004-11 NCAA Revenues and Expenses of Division II Intercollegiate Athletics Programs Report. Available at: http://www.ncaapublications.com/productdownloads/D22011REVEXP.pdf, last accessed April 23, 2013
2004-11 NCAA Revenues and Expenses of Division III Intercollegiate Athletics Programs Report. Available at http://www.ncaapublications.com/productdownloads/D32011REVEXP.pdf., last accessed April 17, 2013
2007-2012 EADA data obtained from: http://ope.ed.gov/athletics/GetDownloadFile.aspxArkansas State University 2009 Football Media Guide. Available at: http://www.astateredwolves.com/pdf5/638170.pdf, last accessed April 23, 2013CBA 101 Highlights of the Collective Bargaining Agreement Between the National Basketball Association (NBA) and the National Basketball Players Association (NBPA), Prepared by the NBA, August 2010. Available at: http://www.nba.com/.element/mp3/2.0/sect/podcastmp3/PDF/CBA101.pdf
Current year's statistics used in analysis of home team quality obtained from: http://www.cfbstats.com/2008/team/index.htmlForeword to the “Deloitte Annual Review of Football Finance,” May 2012, p. 2. Available at: http://www.deloitte.com/assets/DcomUnitedKingdom/Local% 20Assets/Documents/Industries/Sports%20Business%20Group/uk-sbg-annual- football-finance-review-2012-foreword.pdf, last accessed April 18, 2013
Highlights to the “Deloitte Annual Review of Football Finance,” May 2012, p. 8. Available at: http://www.deloitte.com/assets/DcomUnitedKingdom/Local%20 Assets/Documents/Industries/Sports%20Business%20Group/uk-sbg-annual- football-finance-review-2012-highlights.pdf, last accessed April 18, 2013
Horizon League Inc. Form 990 2008-09Horizon League Inc. Form 990 2009-10http://www.rodneyfort.com/SportsData/MLB/MLBIncomeExpense/MLB%20 Finances02.xls, last accessed April 23, 2013Levitt Jr., Arthur. Independent Review of the Combined Financial Results of The National Hockey League 2002-2003 Season. February 5, 2004.MLB Finances02 - Rodneyfort.xls
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Data & Reports (continued)MLB World Series Winners. ESPN . Available at: http://espn.go.com/mlb/worldseries/history/winners, access April 23, 2013MLBCombined83-93 - Rodneyfort.xlsMLBRevProf - SABR.xlsMLBSalMinMedAve - Rodneyfort.xlsNCAA 2011 Division I, II, and III Conference Standings. Available at: http://fs.ncaa.org/Docs/stats/m_basketball_RB/2012/Conference.pdf, last accessed April 23, 2013
NCAA Accounting Submission for The Ohio State University (reporting year, 2010).Prior year's statistics used in analysis of home team quality obtained from: http://espn.go.com/college-football/standings/_/year/2007Publicity Value Report created for St. Mary’s College of California by Cission (undated).Quality Stars Compared with Football Revenues and Sunbelt Commits analyses relies on same data used in Dr. Noll's original report and obtained from Rivals.com
Rodney Fort’s Sports Business Data, “MLBCombined83-93.xls”. Downloaded from: https://umich.box.com/s/41707f0b2619c0107b8b/1/320021709/2560860229/1, last accessed April 18, 2013
Rodney Fort’s Sports Business Data, “MLBSalMinMedAve.xls”. Downloaded from: https://umich.box.com/s/41707f0b2619c0107b8b/2/320021745/2560862247/1, last accessed April 18, 2013
Articles & Literature"Brand charts course for collegiate model's next century." NCAA 16 Jan 2006. Available at: http://fs.ncaa.org/Docs/NCAANewsArchive/2006/Association- wide/brand%2Bcharts%2Bcourse%2Bfor%2Bcollegiate%2Bmodel_s%2Bnext%2 Bcentury%2B-%2B1-16-06%2Bncaa%2Bnews.html, last accessed April 23, 2013
"Textbook Costs in Higher Education." University of Wisconsin System Office of Operations Review and Audit Program Review, April 2007.“Average salary hits record $3.2M.” ESPN.com 07 Dec 2012. Available at: http://espn.go.com/mlb/story/_/id/8724285/mlb-average-salary-38-percent- 32-million, last accessed April 18, 2013
“Beyond Tiger.” The Economist 09 June 2011. Availabe at: http://www.economist.com/node/18805531, last accessed April 18, 2013“Business of Baseball Downloadable Data and Documents,” Society for American Baseball Research . Downloaded from: http://roadsidephotos.sabr.org/baseball/MLBRevProf.xls, last accessed April 18, 2013
“Butler Reaps Publicity Value From Final Four Run.” Butlersports.com 01 Apr 2011. Available at: http://www.butlersports.com/sports/m-baskbl/2010-11/releases/ 040111aab, last accessed April 19, 2013
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Articles & Literature (continued)“Cal, coach Sonny Dykes finalize deal.” ESPN.com 01 Mar 2013 Available at: http://espn.go.com/college-football/story/_/id/9006323/california-golden-bears- sonny-dykes-finalize-97m-five-year-deal, last accessed April 19, 2013
“CFL, CFLPA Reach New CBA Without Threat of Work Disruption.” Sports Business Daily 05 June 2006. Available at: http://www.sportsbusinessdaily.com/ Daily/Issues/2006/06/Issue-173/Leagues-Governing-Bodies/CFL-CFLPA- Reach-New-CBA-Without-Threat-Of-Work-Disruption.aspx, last accessed April 18, 2013
“Frequently Asked Questions about Compensation.” Canadian Football League Database 13 Apr 2013. Available at: http://cfldb.ca/faq/compensation/, last accessed April 18, 2013
“Home Field Advantage.” Baylor Magazine 27 Apr 2007 . Available at: http://www.baylor.edu/alumni/magazine/0503/news.php?action=story& story=45614, last accessed April 19, 2013
“Study: End of Football Season Produced $37 Million in Media Exposure for Texas A&M.” Tamu Times 18 Jan 2013 Available at: http://tamutimes.tamu.edu/2013/ 01/18/study-end-of-football-season-produced-37-million-in-media-exposure- for-texas-am/,last accessed April 19, 2013
“Why Build? Reasons for the Facility.” K-State Basketball Training Facility. Available at: http://www.kstatesports.com/trainingfacility/why.html, last accessed April 19, 2013
Andelson, Andrea. “Syracuse, Louisville improving facilities.” ESPN.com 23 Apr 2012. Available at: http://espn.go.com/blog/bigeast/post/_/id/32171/syracuse- louisville-improving-facilities, last accessed April 19, 2013
Andrews, Dave. "Patriot Center Gets Facelift." The Mason Gazette 21 Feb 2008. Available at: https://gazette.gmu.edu/articles/11547, last accessed April 23, 2013
Baade, Robert A., and Jeffrey O. Sundberg. "Fourth Down and Gold to Go? Assessing the Link between Athletics and Alumni Giving*." Social Science Quarterly 77.4 (Dec 1996): 789-803.
Bachman, Rachel. “Cal’s Football-Stadium Gamble.” The Wall Street Journal 20 Apr 2012. Available at: http://online.wsj.com/article/SB1000142405270230443 2704577350214257041598.html, last accessed April 19, 2013
Barnett, Zach. “Old Dominion Beefing up salaries in preparation for FBS move.” Footballscoop.com 10 Apr 2013 Available at: http://footballscoop.com/news/ 9403-old-dominion-beefing-up-salaries-in-preparation-for-fbs-move, last accessed April 19, 2013
Barnhart, Tony. “Conference shuffle creating room for upstarts to make jump to FBS.” CBSSports.com 21 May 2012. Available at:http://www.cbssports.com/ collegefootball/story/19112305/conference-shuffle-creating-room-for- upstarts-to-make-jump-to-fbs, last accessed April 19, 2013
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Articles & Literature (continued)Benenson, Herb. “Baseball program will continue at Berkeley.” Intercollegiate Athletics 08 Apr 2011. Available at: http://newscenter.berkeley.edu/2011/04/ 08/baseball-to-continue-at-cal/, last accessed April 19, 2013
Berkowitz, Steve. "Butler's Brad Stevens made nearly $1.2 million in 2011." USA Today Sports 05 Feb 2013 Available at: http://www.usatoday.com/story/ sports/ncaab/atlantic10/2013/02/05/brad-stevens-butler-salary- compensation/1893505/, last accessed April 21, 2013
Berkowitz, Steve. "SEC revenue set to jump 50% with playoff, new TV deals." USA Today Sports 16 Jan 2013 Available at: http://www.usatoday.com/story/sports/ college/2013/01/16/sec-conference-money-increases/1836389/, last accessed April 21, 2013
Bernreuter, Hugh. "Massachusetts football will join Mid-American Conference in 2012." Michigan Live 19 Apr 2011. Available at: http://www.mlive.com/ chippewas/index.ssf/2011/04/massachusetts_football_will_jo.html, last accessed April 23, 2013
Berri, Dave. “Would Paying College Players Really Destroy Competitive Balance?” Freakonomics.com 15 Mar 2012. Available at: http://www.freakonomics.com/ 2012/03/15/would-paying-college-players-really-destroy-competitive-balance/, last accessed April 18, 2013
Besanko, David A., and Daniel Simon. “Resource Allocation in the Baseball Players' Labor Market: An Empirical Investigation.” Review of Business and Economic Research 21:1(Fall 1985): 71-84.
Borland, Melvin V., Brian L. Goff, and Robert W. Pulsinelli. “College Athletics: Financial Burden or Boon?” Advances in the Economics of Sport Vol. 1(1992): 215-235.
Bowen, Howard R. The costs of higher education. San Francisco: Jossey-Bass, 1980.Bremmer, Dale S., and Randall G. Kesselring. "The Advertising Effect of University Athletic Success: A Reappraisal fo the Evidence." The Quarterly Review of Economics and Finance 33.4 (Winter 1993): 409-421.
Chressanthis, George A., and Paul W. Grimes. "Intercollegiate Sports Success and First-Year Student Enrollment Demand." Sociology of Sport Journal 10 (1993): 286-300.
Clark, Kim. “The Great Recession’s Toll on Higher Education.” USNews.com 10 Sep 2010. Available at: http://www.usnews.com/education/articles/ 2010/09/10/the-great-recessions-toll-on-higher-education, last accessed April 19, 2013
Clotfelter, Charles T. Big-Time Sports in American Universities. New York: Cambridge University Press, 2011.Coase, R. H. "The Problem of Social Cost." The Journal of Law and Economics Vol. 3 (Oct 1960): 1-44.Cohen, Patricia. “Arts Programs in Academia are Forced to Nip Here, Adjust There.” The New York Times 09 Aug 2009. Available at: http://www.nytimes.com/ 2009/08/10/arts/10cuts.html?pagewanted=all, last accessed April 19, 2013
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Articles & Literature (continued)Coonan, Dan. "Athletics." 2010.Cox, Kelley L. “Jeff Tedford’s Buyout Details.” California Golden Blogs 14 Feb 2013 Available at: http://www.californiagoldenblogs.com/2013/2/4/3952812/ jeff-tedfords- buyout-details, last accessed April 19, 2013
Crumpacker, John. “Cal’s Jeff Tedford has more tools to draw recruits.” SFGate.com 29 Nov 2011. Available at: http://www.sfgate.com/sports/article/Cal-s-Jeff- Tedford-has-more-tools-to-draw-recruits-2303058.php, last accessed April 19, 2013
Cymrot, Donald J. "Migration Trends and Earnings of Free Agents in Major League Baseball, 1976-1979." Economic Inquiry Vol. XXI (Oct 1983): 545-556.Cymrot, Donald J. “Migration Trends and Earnings of Free Agents in Major League Baseball, 1976-1979.” Economic Inquiry 21.4 (Oct 1983):545-556.Depken and Wilson. “Institutional Change in the NCAA and Competitive Balance in Intercollegiate Football.” Economics of College Sports Eds. John Fizel and Rodney D. Fort, 2004.
Dodd, Dennis. “NCAA president: Conference realignment 'a market shakedown.'” CBSSports.com 31 May 2012. Available at: http://www.cbssports.com/ collegefootball/blog/dennis-dodd/19217878/ncaa-president-conference- realignment-a-market-shakedown, last accessed April 18, 2013
Dodd, Dennis."Old Big East has new deal with CBS." CBSSports.com 26 Mar 2013. Available at: http://www.cbssports.com/collegebasketball/blog/eye-on-college- basketball/21953673/new-big-east-deal-worth-3-million-per-year, last accessed March 27, 2013
Dodd, Dennis."Sun Belt will grow by four in 2014." CBSSports.com 25 Mar 2013. Available at: http://www.cbssports.com/collegefootball/blog/dennis-dodd/21949121, last accessed April 23, 2013
Drape, Joe. "Cal-Berkeley Cuts 5 Athletic Program." The New York Time s 28 Sep 2010. Available at: http://www.nytimes.com/2010/09/29/sports/29cal.html ?_r=0, last accessed April 19, 2013
Duarte, Joseph. “NCAA's Emmert says legislation won't impact gap between haves, have-nots.” Houston Chronicle 03 Nov 2011. Available at: http://www.chron. com/sports/college/article/NCAA-s-Emmert-says-legislation-won-t-impact-gap- 2251444.php, last accessed April 18, 2013
Eckard, E. Woodrow. “The NCAA Cartel and Competitive Balance in College Football.” Review of Industrial Organization 13.3 (1998): 347-369.Ellingwood, Ken. "Morris Brown College Loses Accreditation Bid." Los Angeles Times 08 Apr 2003. Available at: http://articles.latimes.com/print/2003/apr/08/nation/na- morris8, last accessed April 23, 2013
Finger, Mike. “Bowlsby: Big 12 still not looking to expand.” Houston Chronicle 16 Apr 2013 Available at: http://blog.chron.com/longhorns/2013/04/bowlsby- big-12-still-not-looking-to-expand/, last accessed April 18, 2013
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Articles & Literature (continued)Foderaro, Lisa W. “Budget-Cutting Colleges Bid Some Languages Adieu.” The New York Times 03 Dec 2010. Available at: http://www.nytimes.com/2010/12/05/ education/05languages.html?pagewanted=all, last accessed April 19, 2013
Fort, Rodney and James Quirk. “Cross-Subsidization, Incentives, and Outcomes in Professional Team Sports Leagues.” Journal of Economic Literature 33.3 (Sep 1995): 1265-1299.
Fort, Rodney and Young Hoon Lee. “Structural Change, Competitive Balance, and the Rest of the Major Leagues.” Economic Inquiry 45.3 (July 2007): 519-532.Fort, Rodney D. Sports Economics 2nd Edition. Upper Saddle River: Pearson Prentice Hall, 2006.Fulks, Daniel L. “Arms race debate open to interpretation.” NCAA 12 Apr 2004. Available at: http://fs.ncaa.org/Docs/NCAANewsArchive/2004/ Editorial/arms%2Brace%2Bdebate%2Bopen%2Bto%2Binterpretation%2B-% 2B4-12-04.html, last accessed April 19, 2013
Giannotto, Mark. “Maryland cuts seven sports on ‘sad day’ in College Park.” Washington Post 02 July 2012. Available at: http://articles.washingtonpost.com/ 2012-07-02/sports/35486395_1_athletic-programs-track-program-athletic- director-kevin-anderson, last accessed April 19, 2013
Gladden, James M., Daniel F. Mahony and Artemisia Apostolopoulou. "Toward a BetterUnderstanding of College Athletic Donors: What Are the Primary Motives?" Sport Marketing Quarterly 14(2005): 18-30.
Goff, Brian and Dennis Wilson. “Estimating the MRP of Collegiate Athletes From Professional Factor Shares*” Western Kentucky University Department of Economics(March 2013 – presented at the Southern Economics Association).
Goff, Brian. "Effects of University Athletics on the University: A Review and Extension of Empirical Assessment.” Journal of Sport Management 14 (2000): 85-104.
Goff, Brian. "Effects of University Athletics on The Univserity: A Review and Extension of Empirical Assessment." The Business of Sports . Ed. Scott R. Rosner and Kenneth L. Shropshire. Sudbury: Jones and Bartlett Publishers, 2004. 540-550.
Goff, Brian. “Organizational Architecture of College Sports Behind the Scandals.” The Sports Economist 10 Apr 2013 Available at http://thesportseconomist. com/2013/04/10/organizational-architecture-of-college-sports-behind-the-scandals/, last accessed April 17, 2013
Goidel, Robert Kirby and John Maxwell Hamilton. "Strengthening Higher Education Through Gridiron Success? Public Perceptions of the Impact of National Football Championships on Academic Quality." Social Science Quarterly 87.4 (Dec 2006): 851-862.
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Articles & Literature (continued)Grimsley, Will. “Steinbrenner Resentful of ‘Mr. Moneybags’ Image.” Ocala Star- Banner 22 Mar 1977. Available at: http://news.google.com/ newspapers?id=s6VPAAAAIBAJ&sjid=9gUEAAAAIBAJ&dq=steinbrenner% 20dead%20set%20against%20free%20agency&pg=4054%2C5248352, last accessed April 18, 2013
Haupert, Michael. "The Economic History of Major League Baseball." EH.Net Encyclopedia , edited by Robert Whaples 03 Dec 2007. Available at: http://eh.net/encyclopedia/article/haupert.mlb, last accessed April 21, 2013
Hawkins, Stephen. "Big 12 reaches $2.6B deal with ESPN, Fox Sports." Yahoo! Sports 07 Sep 2012. Available at: http://sports.yahoo.com/news/big-12-reaches-2-6b- 142033162--spt.html, last accessed April 23, 2013
Henderson, Lee Andrew. “Meet the 5 College Football Programs that Will Join the FBS in 2012 and 2013: A Fan’s Analysis.” Yahoo! Sports 01 May 2012. Available at: http://sports.yahoo.com/news/meet-5-college-football-programs- join-fbs-2012-164900096.html, last accessed April 19, 2013
Hiestand, Michael. "$3.6 billion in TV money for ACC a good sign for SEC, Big 12." USA Today 09 May 2012. Available at: http://usatoday30.usatoday.com/ sports/story/2012-05-09/36-billion-in-TV-money-for-ACC-a-good- sign-for-SEC-Big-12/54866774/1, accessed March 27, 2013
Humphreys, Brad R., and Michael Mondello. "Intercollegiate Athletic Success and Donations at NCAA Division I Institutions." Journal of Sport Management 21(2007): 265-280.
Johnston, Timothy C. "Who and What Influences Choice of University? Student and University Perceptions." American Journal of Business Education 3.10 (Oct 2010): 15-24.
Judge, Clark. “Lockout Judgements: Winners, losers, turning points.” CBSSports. com 14 July 2011. Available at: http://www.cbssports.com/nfl/story/15348620/ lockout-judgements-winners-losers-turning-points, last accessed April 17, 2013
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Bates Stamped DocumentsNBA 004NCAAPROD00236836 - 845NFLP_0101 - 0487
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