Major League Baseball is the highest level that baseball reaches in America, but the MLB is more than just the professional level of the sport, it is also a business entity. The MLB has a long standing history of maintaining exclusive control over Minor and Major league professional baseball. The Major League Baseball organization was given an exemption from antitrust standards just over a century ago, which permanently altered the fate of professional baseball in America. Antitrust statues are used to prevent monopolistic practices and encourage competition for entities in the United States. On May 29, 1922, the US Supreme Court ruled on the case of Federal Baseball Club of Baltimore v National League of Professional Baseball Clubs and decided that professional baseball was exempt from Anti-Trust Acts because the operations did not qualify as interstate commerce (Levitt, 1922). The evolution and growth of the MLB since 1922 has been severely altered due to the Antitrust Exemption, and with recent legal questions about the NCAA and other historical sports cases, the question of whether the MLB should maintain its exemption has come to the forefront. No other sports league is exempt from antitrust, and in July of 2022 the Senate Judiciary Committee set up public hearings to address the MLB Commissioner about concerns regarding the antitrust exemption’s necessity.
To understand the MLB’s antitrust exemptions and the implications, there must be knowledge of the Sherman Anti-Trust Act of 1890. The act was written to bust up the numerous Trusts monopolizing markets during the 1870’s. The act declared illegal, “Any combination ‘in the form of trust or otherwise that was in restraint of trade or commerce among the several states, or with foreign nations’” (Sherman Anti-Trust Act, 1890). The act outlaws three primary business practices, the first is the conspiracy of two or more people to restrain trade, the second is the attempt to create an unlawful monopoly or monopolize, and the third is practicing price-fixing (Sherman Anti-Trust Act, 1890).
In 1922 the US Supreme Court heard the case of Federal Baseball v National League, and they granted professional baseball an Antitrust exemption. Regardless of the travel across state lines, the US Supreme Court decided that the travel was not a sufficient operation to entail interstate commerce, meaning that professional baseball was not under the federal antitrust scope (Levitt, 1922). When determining the nature of organized baseball, Justice Holmes said, “The fact that the appellants produce baseball games as a source of profit, large or small, cannot change the character of the game. They are still sport, not trade,” (Levitt, 1922). Holmes’s conclusion was the key to determining whether baseball was interstate commerce or not. These decisions later saw the merging of major and minor baseball leagues to form the MLB which has held a monopoly over the sport ever since. Fast forwarding, in 1951 the Antitrust exemption was upheld in Toolson v New York Yankees, when the United States District Court in San Diego California dismissed the case on grounds of lacking subject matter jurisdiction (Edmond, 1951). The judge, Harrison, determined that the US Supreme Court had already determined this matter regarding Sherman Antitrust Acts. He affirmed, under the doctrine of Stare Decisis, that federal antitrust scope did not oversee “organized baseball” (Edmond, 1951). Accusations and lawsuits regarding monopolistic control and anticompetitive practices by the MLB have appeared numerous times since these two opinions.
The monopolistic control of the MLB was challenged in 1971, by Curt Flood, when he sued MLB for its reserve system restricting his ability to play professional baseball (Congress.gov, 1998). The original suit amounted to nothing, but in 1998 the Curt Flood Act was created when congress decided “…the antitrust laws apply to the conduct…of persons in the business of organized professional major league baseball relating to or affecting employment of major league baseball players to play baseball at the major league level,” (Congress.gov, 1998). This act narrowed the scope of the MLB antitrust exemption, but it only changed the authority in reference to major league players. Curt Flood may not have won his ability to negotiate his contract, but he improved the negotiation rights and decreased the absolute power of the MLB for future generations of professional players.
The recent case of Alston v. NCAA (2021) brought attention to the MLB’s antitrust exemption (Harvard Law Review, 2021). The attention was based on the anomaly of the MLB as the only professional sports league to not be restrained by antitrust. Following the case, in 2022 the Senate Judiciary Committee sent a letter addressing the MLB Commissioner about concerns regarding the antitrust exemption that mostly related to the treatment of minor league baseball players (Drellich, 2022). The Curt Flood Act of 1998 left minor league players vulnerable, and since its implementation there have been instances claiming MLB abuses this exemption. The MLB Commissioner, Rob Manfred, addressed the senate committee in a 17 page letter in July. Manfred’s response mainly focused on the lives of minor league players that had been improved due to the baseball antitrust exemption. Manfred commented on minor league baseball’s success being dependent on MLB’s antitrust exemption, alluding that a change in this exemption would mean removing the ability of the MLB to financially support minor league operations. Senator Dick Durban’s response to the commissioner’s letter stated the committee’s inquiry was justified because it sought, “To make sure MLB is stepping up to the plate when it comes to fair treatment of players and communities,” (Associated Press, 2022). The Senate Judiciary was said to be planning hearings to address concerns regarding minor league players after receiving the MLB commissioner’s letter.
With the recent attention on baseball’s Antitrust Exemption, the question many fans are curious about is what will happen to the Major League Baseball organization without its monopolistic abilities. For years differing opinions on MLB’s antitrust exemption and the results of change have been debated. Those who support the exemption, from both within the industry and outside of it, speculate that if the MLB was made subject to antitrust regulation it could collapse American baseball. Predicted effects include the potential end of the minor league, the MLB’s loss of the geographic control, elimination of standardized minor league pay, or removal of the control over minor league team size and composition (Abrams et al., 2022). Whereas those who believe that repealing antitrust would result in pro-competition practices offer similar outcomes as benefits rather than failures. These beliefs include that antitrust regulation would improve minor league business practices, including team controls and competitive minor league pay, the shift would also allow changes to geographic presence. Interpretation on the impact of a change to the antitrust exemption has created a wide spectrum of potential outcomes. For example, Commissioner Manfred suggests that nothing other than MLB’s exclusive broadcast rights would change (Drellich, 2022). The consensus of these predictions is that if the antitrust exemption truly is holding back the MLB rather than propping up the system, then a more competitive baseball industry with improved standards would emerge from the application of antitrust regulation.