Day 5 of the O’Bannon trial was about money. How big of an empire is the NCAA in terms of its revenues? An economist and the plaintiffs’ expert witness Dan Rascher said that from the 69 conference teams in the league there was a $1.3 billion surplus and about $6.4 billion of total broadcast revenues in Division 1 from 2005 to 2011. Moreover, no other sporting event produces more advertising revenues than the league’s basketball tournament in the U.S.
Rascher continued that during the 2012-2013 season, college teams like Texas, Alabama, Michigan, Florida, Georgia, Auburn, Notre Dame and LSU had more revenues from their football and basketball games than an NHL team on average. Further, he testified that a win by a college basketball or football team increases demand: new applicants to the school and TV viewership. Rascher simply laid out a basic economic principle, the higher the demand, the higher the revenues.
Then he turned to the heart of this trial when he testified that the players are the ones that drive home the win. The underlying force behind the increased demand is their participation in the game. Rascher noted that donations of up to $300 million to Texas A&M rushed in primarily because of a star quarterback Johnny Manziel despite his suspension in 2013 for allegedly selling his autographs. Moreover, “TV ratings shot up” as fans continued to cheer for the team and Manziel even after the suspension. Rascher’s example was laid out to undermine the NCAA’s argument that compensating the players would kill the popularity of college football and basketball.
In addition, Rascher argued that all the financial data including the ones from Equity in Athletics Data is understated because the numbers fail to capture revenues from other sources such as licensing, merchandise, and media coverage. Citing a report by an economist Brian Goff, Rascher said only 10% of the schools in Division I lose money.
In sum, Rascher argued that the schools are not likely to pull out of Division I and forego billions of dollars because they have to pay the players.
While the plaintiffs witnesses testified during the first five days of the trial, the NCAA would probably start its direct testimony as early as June 16.
O’Bannon v. NCAA, day five: Dan Rascher and the big business of college football