Mlb’s Anti-Trust Exemption

For over 100 years, big business in America has always had the idea drilled into their heads that monopolies are illegal in this country. Thanks to the Sherman and Clayton Anti-trust acts, any business that operates across state borders, therefore participating in interstate commerce, is subject to anti-trust legislation. Any attempt to control trade and monopolize by a business has been deemed illegal thanks to these acts.

However, one of the country’s biggest businesses, professional baseball, has been exempt from these laws since 1922. That is when the United States Supreme Court ruled in Major League Baseball’s favor in Federal Baseball Club of Baltimore, Inc. v. National Baseball Clubs. This case was about Baltimore, a member of the Federal League, which was the major league back in 1914-1915, who had decided to sue the American and National Leagues, claiming that the Federal League’s inability to sign players was due to anti-trust violations committed by the American and National Leagues. However, that is not how Justice Oliver Wendell Holmes, a huge baseball himself, saw it. In his decision, he stated that even though there was scheduling of games across state lines, those games were intrastate events since the travel from one state to another was, “not the essential thing.” He also wrote that “personal effort, not related to production, is not a subject of commerce” and therefore baseball was not subject to federal regulation (Greenberg, 2002).

At the time of this 1922 ruling, the National and American Leagues were nothing but regulating bodies. They arranged the schedules and set the rules, but the business was entirely local, meaning there was no revenue sharing, radio or television, or any national sponsors such as a licensing contracts.

Thanks to this exemption, along with decades of denials to overrule by various courts, baseball is not only the only sport, but also the only business that has an exemption to the anti-trust laws to the extent to which they do.

There are many aspects to this exemption, but the major issue that keeps coming up right how is the fact that Major League Baseball has the right to veto any attempt by one of their teams to move to a new city. Basically, if the MLB says no to the proposed move, the move does not happen. It’s that simple.

Opposition to the exemption consistently brings up the fact that many things in the world have changed since 1922 and that they do not see why the exemption cannot be changed as well. Truth is, the exemption was not even talked about again by the Supreme Court until 1953, in the case Toolson v. New York Yankees, Inc. In this case, George Toolson, a minor league player in the Yankees farm system, sued over the “reverse clause,” which basically forces the player to remain with one organization. Toolson claimed that it blocked his path into the majors. In this decision, the Supreme Court did not deny that baseball was not interstate commerce, such as it did in the 1922 ruling. Rather, the court ruled that at the time when the Sherman Act was introduced in 1890, Congress did not intend it to include baseball. The court claimed the Sherman Act was more closely directed at the monopolies of the time, such as men like John D. Rockefeller and Andrew Carnegie.

Like I stated before, baseball is the only sport to be lucky enough to have this exemption. Although judges admit that the baseball exemption is flawed, it has been not once overruled. However, exemptions for boxing, basketball, and baseball have been denied in higher courts, as well as hockey and golf being denied in lower courts. In the NFL, there actually was a lawsuit filed by an owner against the NFL claiming violation of anti-trust laws. What happened was that in 1982, Raiders owner Al Davis wanted to move his franchise from Oakland to Los Angeles. However, LA already had the Los Angeles Rams and, therefore, the NFL did not allow the move. Davis filed an anti-trust lawsuit and won, allowing him to move his team to LA. This threat of anti-trust suits actually led to more movement among NFL teams. Since the last MLB team moved in 1971 (Washington Senators became the Texas Rangers), there have been seven NFL moves, seven NBA moves, and nine NHL moves.

However, there has been some recent controversy over the exemption that baseball has. There is currently a bill that has been sponsored by Rep. John Conyers (D-Mich) and Senator Paul Wellstone (D-Minn) entitled the “Fairness in Anti-trust in National Sports (FANS).” This bill, if ever passed by Congress, would strip Major League Baseball of the anti-trust exemption only in regards to MLB’s efforts to control relocation of teams, as well as contraction (the removal of teams from MLB). However, some anti-trust experts say that an anti-trust challenge may actually reveal that baseball