Athletic Scholarships and Antitrust

Imagine for a moment that MIT has gotten wind of an off-the-charts outstanding high school math genius—a shoo-in to win the Field Prize, a leading contender to solve whatever centuries-old unsolved problem is in favor—and MIT is desperate to make sure she chooses MIT over, say, CalTech. To lock her in, they offer her a $250,000 signing bonus.

We know this isn’t about to happen, not as long as MIT has a business office. But if it did, it’s perfectly clear that, while MIT might be crazy as loons to make the offer, nobody could claim they were violating an agreement with the National Mathematical Genius Association (NMGA) to limit the awards to math jocks. Nor would the FBI become involved in investigating the offer, or the young woman’s moral character be impugned because she considered accepting the money.

Compare that example with the stories about Auburn’s star quarterback Cam Newton. It’s suggested—we have no idea with what credibility—that members of his family explored getting a signing bonus for him to play football for Mississippi State University. According to The New York Times, the FBI is investigating, and both the young man and Auburn University could be subject to sanctions depending on what is learned. And the moral character of a young man who would dare to seek compensation in exchange for highly valuable services is questioned. The NCAA (not the NMGA) is on the case.

Why does the second matter call for national attention and governmental investigation, while the first does not? Indeed, if MIT, CalTech, RPI, and other tech-oriented schools actually entered into an NCAA-type agreement to regulate scholarship offers to mathematicians, they would risk a knock on the door from the Justice Department for possible antitrust investigation. The NCAA and the nation’s football (and basketball) powers have no such fear because Congress and the courts have made clear that agreements to regulate athletic scholarships are not to be construed as violations of the antitrust laws. Meanwhile, the NFL and the NBA, by designing rules that prevent athletes from making the direct jump from high school to the pro game, ensure that their developing players will go unpaid through their training period, dodging expenses that major league baseball, whose teams maintain extensive farm systems, hasn’t avoided.

After considerable thought, we have been able to come up with only one persuasive explanation of the favoritism shown in allowing colleges to agree on limits to athletic merit awards, in contrast to non-athletic merit awards, where the free market is supposed to reign: the people who make, interpret, and enforce the laws in the U.S. really, really like high-end (dare we say semi-pro) college athletics.

It makes much more sense to permit colleges to agree to limit all academic grant awards to the level of financial need (currently legally doubtful) than to authorize a ceiling on payments to their revenue-generating gridiron stars (entirely and assuredly legal).  The former has considerable potential to put money where it’s needed, namely with students who need help to afford college; the latter most obviously has the potential to put the money in university athletic departments and coaches’ salaries, where the social value is at best hard to spot.

Here’s something that would help. Eliminate all rules that block athletes from playing professional sports right out of high school. (Currently the NFL bars recruiting players until they are two-and-a-half years past high school graduation; for the NBA, it’s one year. You may recall an interlude when NBA players could go right from high school—remember Kevin Garnett, Kobe Bryant, LeBron James. Although things seem to have worked out OK for them and others who went that route, the NBA moved quickly to make sure they got that window shut.) If Cam Newton or anybody else wants to get paid to play football, why make him put in time in college first? The craft he wants to practice doesn’t require a college education. Perhaps no NFL team would think Cam or another great high school player was ready to move up. That’s fine, but there needn’t be a rule against some team deciding otherwise.

Of course, we might think Cam or another young player would be wise to invest in college, but let’s tell him that and let him decide. After all, we might think it’s a good idea for budding TV stars to enroll in college rather than joining a sitcom, but the Justice Department would be sure to look into a decision by the major networks to agree that nobody could get paid to sign with them unless they put in some college time first.

The agreements that the NFL and the NBA have entered into with the NCAA to forbid the direct route from high school to U. S. professional sports are in the most literal sense conspiracies in restraint of trade. If we got rid of them, athletes who wanted to get money now for their skills (and their willingness to put their bodies and their craniums at risk) would be free to go the professional route. Eliminating such agreements would be unambiguously bad for university athletic departments’ bottom lines and coaches’ salaries, and unambiguously bad for professional teams (who might find themselves creating their own minor leagues and actually paying the players in training to learn the game). Whether it would be bad for the players themselves to go into their trade instead of going to college first is, we suggest, a decision best left up to them, just as it now for musicians and construction workers and TV actors.

Indeed, in our ideal world, we would like to see current policies reversed: Let universities compete openly and aboveboard for the services of their revenue-producing athletes, while permitting a wide range of colleges to make enforceable agreements to manage their award of need-based grants and academic merit scholarships. We will explain our attraction to the latter policy in an ensuing blog post.