The college sports world was rocked this summer by two momentous events, forever changing the collegiate athletic landscape.
In June, the Supreme Court unanimously ruled in NCAA v. Alston that the NCAA violated antitrust laws by restricting athletic scholarships for Division 1 football and basketball student athletes. Shortly thereafter, the NCAA allowed all college athletes, both men and women, to collect endorsement monies for their “names, images and likenesses” (NIL) while still in college. The NCAA surely acted not only because of the Supreme Court’s decision, but because laws granting athletes NIL rights were going into effect anyway in eight states on July 1, with more lined up to do so in the future.
The Ivy League has joined only half of this revolution, however. The League issued a statement immediately endorsing the NIL policy, unleashing Ivy athletes to earn endorsement money and Ivy athletic departments to help them. But when it comes to financial aid for athletes, the Ivy League, the only major conference not to permit athletic scholarships, still lives in the dark ages. Moreover, unlike the League, other prestigious, academically selective private schools like Duke, Stanford, and Vanderbilt have long offered full athletic scholarships to student athletes.
What accounts for the Ivies’ exception? First, for over 30 years, the Ivy schools literally fixed financial aid awards for specific admittees, a practice that was outlawed in a consent decree the schools signed with the Justice Department (DOJ) in 1991. Three years later, Congress wrote an antitrust exemption into law for all schools adhering to need-blind admissions policies after the Justice Department (in negotiations led by one of us, Litan) settled with the remaining defendant in the aid-fixing case, MIT. That settlement arose after a federal appellate court said that the trial court should have given more attention to MIT’s defense that fixing aid was necessary to ensure that all students would get their full need-based awards.
This exemption, however, expires at the end of September 2022. The Ivy League should let it. The only defense of the exemption — that Ivy schools in the 90s had only one fixed pot of money that would be depleted unfairly if schools “bid for students” — rings hollow today.
Ivy League endowments have grown enormously since the early 1990s. As of the first quarter 2020, endowments among Ivy schools averaged $17 billion, with Harvard’s the most at $40 billion and Brown’s $4 billion the lowest. Penn’s stood just short of $15 billion. Ivy school endowments have also long earned far more than the 5% minimum they are required to distribute each year. In short, if allowed to do so, the Ivy schools have ample resources to compete for all the students they want.
With the antitrust exemption gone, the Ivy’s long standing practice of barring aid untethered to need for any purpose would likely violate antitrust laws. The 1991 DOJ consent decree did not allow it. To be sure, the Supreme Court in NCAA v. Alston did not address whether any individual athletic conference can limit or even ban athletic scholarships, in particular, because the plaintiffs did not press the issue at the trial court level. But as we have elaborated more fully elsewhere, under the Supreme Court’s reasoning in the Alston case, no individual conference should be able to do what the NCAA cannot. It’s only a matter of time until the Court gets the chance to make this clear.
Indeed, in his concurring opinion, Justice Kavanaugh argued to allow schools to effectively offer salaries to college athletes. As he pithily stated, “the NCAA is not above the law.” If that’s true for the NCAA, it has to be true for the Ivy League. At a minimum, once the antitrust exemption is gone, why would any Ivy school rationally run the risk of being sued by continuing to agree, implicitly or overtly, on even a policy that limits financial aid for any students, athletes, or otherwise?
Letting the antitrust exemption expire would be good not just for athletes, but for all students with special skills or accomplishments (in music, drama, and so on) whom the schools would like to attract with more generous financial aid awards. As it is now, students from middle class families, especially students of color, have trouble affording an Ivy education because even need-based aid still leaves many owing $10,000 or more per year. Faced with costs like this, we know that every year the Ivies, including Penn, lose star athletic recruits who would choose an Ivy first but are compelled by their families’ financial circumstances to settle for other schools that offer full rides.
We are so passionate about all this because the highlight of our Penn experience in our four years, 1968-72, centered on Penn basketball: Cotler as a player and Litan as freshman manager and then super-fan. The freshman team was 21-0 and ranked second nationally (when freshmen couldn’t play varsity). The varsity team the next three years had a combined 99-6 record (41-1 in the Ivy League) and went to the Elite 8 twice. Three of its members were picked in the NBA draft, one (Corky Calhoun) later was an NBA champion with the Portland Trailblazers and another, Bob Morse, became one of the greatest players in European professional basketball history.
The Palestra was packed at 9,000 and rocking every game. The campus atmosphere during basketball season was electric. During the Penn team’s March Madness run in 1972, more Penn students traveled to the tournament's sites than go to Penn homes now on a regular basis! If Penn were allowed to offer athletic scholarships, the magic we were lucky to experience could all happen again for Penn students now and for all those who follow.
Our educated guess is that in a competitive environment, few or no Ivy schools would choose to focus on football, the most expensive college sport. Rather, the best bang-for-the-buck sport is basketball, which is far less costly, and could easily turn a profit for the school. This outcome is especially assured if one were to count the increased alumni contributions that would follow from the greatly enhanced nationwide exposure Penn would get from regular deep NCAA tournament runs. For those readers of this column who care most about Penn’s financial bottom line: an NCAA tournament-quality Penn basketball team would make money for the university!
To those who fear that other Ivies with richer endowments than Penn would always field more competitive teams, we have two responses.
One is that no other school has an iconic venue like the Palestra for its home court. The other is that no other school is situated in a basketball-crazy city like Philly, where Big Five teams have long had great programs, and one, Villanova, has won the NCAA championship three times. Penn already has a national brand in business, law, medicine, and scores of other disciplines. Yet it is still surprising in how many places Penn is confused with Penn State, and how many more don’t even know about Penn.
While we love basketball, all students will special talents beyond athletics would benefit greatly if the Ivy League followed the antitrust laws and allowed its schools to compete for them.
ALAN COTLER is a 1972 Wharton graduate, has an MBA from Wharton and his J.D. from Georgetown. He currently works as a trial lawyer. He was the point guard on the 1971-72 Penn basketball team, coached by Hall of Fame Coach Chuck Daly and assistant coach Rollie Massimino that was 25-3 and ranked third in the country.
ROBERT LITAN, an economist and lawyer, is currently a partner at Korein Tillery, based in St. Louis and Chicago, specializing in large case antitrust litigation (plaintiffs’). He, too, is 1972 Wharton graduate and earned his J.D. and PhD (Economics) degrees from Yale. You can contact Alan at email@example.com and Robert at firstname.lastname@example.org.
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