Lockout should be the final straw for baseball’s antitrust exemption 

By Ken Reed

Originally published by Troy Media

“Every other sport – like virtually every sort of business – is governed by the antitrust laws.”
– Stuart Banner, author of The Baseball Trust: A History of Baseball’s Antitrust Exemption

The fact that the Supreme Court of the United States gave Major League Baseball an antitrust exemption in 1922 was absurd and is even more so now. And it certainly isn’t in the best interests of baseball or its stakeholders.

As Sen. Bernie Sanders said recently:

“It should be clear to all that these baseball oligarchs have shown that they are far more concerned about increasing their wealth and profits than in strengthening our national pastime.”

In essence, collusion in baseball is completely legal. It was sanctioned by the Supreme Court in Federal Baseball Club of Baltimore v. National League et al. in 1922 and continually upheld since then.

Gerald W. Scully wrote in his book The Business of Major League Baseball (1989) that if baseball was subject to the Sherman Antitrust Act like other businesses, “the methods of transacting with players” would be an area impacting MLB’s business operations.

After imposing a lockout on the players, the owners proceeded to negotiate in bad faith by not even attempting to contact the players’ union for 42 days.

The antitrust exemption allows franchises to squeeze “exorbitant benefits” out of current and potential league cities. For example, free land for stadiums, taxpayer-funded stadiums, and tax breaks that no other business receives. In essence, it allows baseball owners to exploit fans and taxpayers.

In the last couple of years, MLB owners have eliminated over 40 minor league teams, costing hundreds of players their jobs and taking baseball from fans – young and old – in small towns.

In the infamous 1922 Supreme Court case, Justice Oliver Wendell Holmes wrote that MLB was not subject to the antitrust statutes because Major League Baseball was not interstate commerce.

Say what?

Although there was heavy disagreement in the legal community at the time, the ruling has never been overturned in the courts or by Congress.

Some believe the antitrust exemption issue is for the courts to decide, not Congress. The courts, for their part, apparently feel the burden is not on them but on the nation’s legislators. Ultimately, both the Supreme Court and Congress historically have refused to take responsibility for deciding MLB’s long-standing antitrust exemption.

The special treatment MLB receives in its antitrust exemption allows a small group of wealthy owners, who may or may not care about baseball beyond an economic perspective, to control a major cultural practice (indeed one historically called “the national pastime”) as they see fit.

The game’s best interests won’t be the top priority of baseball owners as long as their government-sanctioned cartel is allowed to continue. For businesses owners in other industries, neglecting stakeholder groups’ needs, wants and expectations means eventual death – usually sooner rather than later.

In 1972, the Supreme Court took on the Curt Flood case (Flood v. Kuhn). The court stated what was obvious to so many legal and business observers, specifically that “professional baseball is a business, and it is engaged in interstate commerce.” Nevertheless, the court ultimately upheld baseball’s antitrust exemption.

Ironically, a recent college athletics case might be the impetus for eliminating MLB’s antitrust exemption. In NCAA versus Alston, the Supreme Court reached a 9-0 decision to uphold a ruling by the U.S. Court of Appeals for the Ninth Circuit that struck down NCAA caps on student-athlete academic benefits on antitrust grounds.

In Alston, Justice Neil Gorsuch, writing for the court, addressed MLB’s exemption. He called it “unrealistic, inconsistent, and aberrational.” Gorsuch suggested legislators address the problem with MLB’s antitrust exemption. But he also hinted that the court could decide to abolish its MLB antitrust exemption if legislators continue to pass on the issue.
It sounds like Sanders is ready to take the lead on this.

“We must prevent the greed of baseball’s oligarchs from destroying the game. The best way to do that is to end Major League Baseball’s antitrust exemption and I will be introducing legislation to do just that.”

This year marks the 100th anniversary of baseball’s antitrust exemption. This colossal mistake needs to be fixed. After watching how the owners operated in the recent lockout, the fix can’t come soon enough.

— Ken Reed is sports policy director for League of Fans, a sports reform project. He is the author of The Sports Reformers, Ego vs. Soul in Sports, and How We Can Save Sports.