On March 7, two basketball players from Brown University brought an antitrust suit against the eight Ivy League schools. The Ivy League is the only Division I conference that does not permit its members to offer athletic scholarships — and not without good reason. The plaintiffs claim that the eight Ivy institutions are engaging in an anticompetitive restraint of trade by price fixing the value of the athletes’ services at zero. They filed the claim on behalf of the 8,000 athletes in the Ivy League.
They allege that the “universities’ restrictions on competition for their collegiate athletes are no different, as a matter of law, than the restrictions formerly imposed by the NCAA on athletic scholarships that the Supreme Court unanimously struck down as an antitrust violation in NCAA v. Alston.”
It is clear that if the Ivy League is viewed simply through a commercial lens, then there is horizontal collusion. It is not clear, however, if the Ivy League should be viewed undimensionally. Nor is it clear, even if there is horizontal collusion, that the Ivy League has market power to make its restraint of trade anticompetitive.
College athletes who attend Ivy League schools, after all, have a choice. There are 343 universities in Division I that do offer athletic scholarships. If it is more important to a prospective athlete to receive an athletic scholarship than to attend an Ivy, then the athlete has a plethora of options — many of which are at elite educational institutions, such as Stanford University, Duke University, and the University of California, Los Angeles, to name a few.
The plaintiffs assert that their case is “no different” than the Alston case in which the Supreme Court struck down certain restraints imposed by the National Collegiate Athletic Association on the amount of financial support that institutions could grant to their athletes on educationally -tethered benefits. While there are similarities in the two cases, there is also at least one crucial difference: NCAA rules apply to all NCAA schools. When the NCAA had a rule that prohibited athletes from receiving name, image, and likeness income, no college athletes within the NCAA system of approximately 1,100 schools were allowed to receive publicity rights payments.
Since 1956, under NCAA rules, US universities have been allowed to offer athletes scholarships unrelated to need, covering tuition, room and board, fees, mandatory books, and “laundry money.” When the NCAA split into divisions in the 1970s, schools in Division I and II decided to allow the granting of athletic scholarships, but Division III decided against this practice. By the reasoning of the Ivy League plaintiffs, Division III conferences would also be in violation of the Sherman Act.
The Ivy League has proscribed athletic scholarships since its inception in 1954. Instead, the Ivies have long adhered to a policy of basing student aid on need, not on merit (athletic or otherwise). Today, the Ivies boast the most generous financial aid benefits in the country. For example, consider Princeton University. In 2001, it was the first university to convert all aid to grants (as opposed to loans). Now, an undergrad from a family with a household income below $100,000 qualifies for a full-ride, need-based scholarship; 1,500 Princeton undergrads (more than 25 percent of enrollment) benefit from this policy. Students from families with incomes under $180,000 qualify for some degree of financial aid. Eighty-three percent of Princeton seniors graduate debt free and those with debt have an average of only $9,600 at graduation.
The Ivies also have enjoyed the highest graduation rate, 96 percent, of any athletic conference in the country. When high school athletes choose to go to an Ivy rather than another Division I school, they are selecting not only a top-notch experience in the classroom, but also a much higher likelihood of graduation. The trade-off is that they do not get an athletic scholarship. A substantial percentage, however, do receive a need-based scholarship.
In Division I, only 47 percent of men’s basketball players, 65 percent of football players, and 59 percent of women’s basketball players graduate in six years, according to the Federal Graduation Rate metric. Do the Ivies really have their priorities wrong?
To be sure, there are lots of arcane legal issues that the plaintiffs in this case allege. Like most antitrust cases, the issues are complex and take a long time in the court system to sort themselves out. It is fashionable these days in discussions about college sports to assert athlete exploitation and to call for compensation. It makes sense to remember, however, that college is supposed to be about education. Students’ intellectual and medical needs must receive top priority.
Andrew Zimbalist has published many books on college sports; his latest is “Whither College Sports: Amateurism, Athlete Safety and Academic Integrity.”