“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”
By Ken Reed
In a recent Saint Louis University Law Journal article, Adam Renfro stated:
“That the relationship between MLB and the MLBPA has been overwhelmingly contentious throughout its history can largely be attributed to baseball’s infamous antitrust exemption, which baseball has enjoyed since 1922.”
The fact the Supreme Court gave Major League Baseball an antitrust exemption in 1922 was absurd at the time and is even more so now.
In essence, collusion in baseball is completely legal. It was sanctioned by the Supreme Court of the United States in Federal Baseball Club of Baltimore v. National League et al [259 U.S. 200 (1922)] and continually upheld since then.
G.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 one of three specific areas impacting MLB’s business operations. The other two being the regulation of membership within the league (e.g., expansion, franchise relocation, etc.), and the collective negotiation of national television broadcast rights.
I would add 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. It basically allows baseball owners to exploit fans/taxpayers.
In the infamous 1922 Supreme Court case, Justice Oliver Wendell Holmes claimed 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.
There have been several bills introduced in Congress and many hearings conducted regarding MLB’s antitrust exemption through the years but they all ended without legislation being adopted. The primary reason is baseball’s powerful lobbying efforts.
Representative Emmanuel Cellar, who chaired the 1951 hearings before the Subcommittee on the Study of Monopoly Power of the House of Representatives, concluded:
“I want to say … that I have never known, in my 35 years of experience, of as great a lobby that descended upon the House than the organized baseball lobby …. They came upon Washington like locusts.”
Some believe the antitrust exemption issue is one for the courts, not Congress. The courts, for their part, apparently feel the burden is not on them but on the nation’s legislators. Ultimately, both the U.S. Supreme Court and Congress historically have refused to take the responsibility of making a decision regarding MLB’s long-standing anti-trust exemption.
In Part 2 of this 2-part series, we’ll look at some reasons why MLB might be getting closer to losing its antitrust exemption.
— Ken Reed, Sports Policy Director, League of Fans
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