It's nearly Opening Day and we’re excited by the call of, “play ball” and the sound of the “crack of the bat.” This year we also hear about a NFL owner’s lockout and a possible player’s strike in basketball. Recently, the NFL players have been pushing the courts to overturn the NFL's anti-trust exemption.
Which raises the question: what’s so special about Major League Baseball that it gets an exemption from federal anti-trust law and other professional sports don’t?
Under the Sports Broadcasting Act of 1961 the professional football, baseball, hockey and basketball leagues are able negotiate as single unit for broadcasting rights. The individual teams are considered a “single unit” (i.e. "the league") for the limited purposes of broadcasting contracts with network and cable companies. This exemption does not relate to labor relation issues, such as the current situation in the NFL.It goes back to 1922 and we have Mr. Justice Oliver Wendell Holmes to thank. In 1903 the American and the National Baseball Leagues merged to form the Major Baseball League.
Everybody was happy until some guys in Baltimore wanted a franchise. The then current owners did not want another franchise and were not too enamored with the city of Baltimore. A couple said that Baltimore wouldn’t even make a good minor league franchise site.
Obviously, the Baltimore guys didn’t take too kindly to that and they sued.
The suit found its way to the Supreme Court which ruled, in a decision by Justice Holmes, that baseball was a “game” and not a subject of commerce under the Constitution’s interstate commerce clause. He wrote: “… personal effort, not related to production, is not the subject of commerce…” and therefore baseball was not subject to the anti-trust laws.
Fast forward about 30 years. In 1953 a player by the name of George Earl Toolson sued the New York Yankees over the reserve clause, which basically bound a player to the team that drafted him. Toolson contested the clause saying it was a restraint of trade and therefore violated federal anti-trust laws. The Supreme Court ruled that there was no violation, citing its 1922 decision. The Court also said that if they were wrong, it was up to Congress to change the law. The Court concluded that since Congress had done nothing since the 1922 ruling, they were not about to do anything.
Starring in baseball's other foray into the American legal system is Curt Flood. Flood was traded to the Philadelphia Phillies in 1969, after having played in the majors for 12 years. He didn’t want to uproot his family or lose his business interests in St. Louis. Again the Supreme Court upheld the reserve clause in a 1972 ruling. Rather than go to Philadelphia, Flood retired – a loss to the game.
In 1975 Andy Messersmith took the reserve clause to arbitration and won. The final chapter in the story was 1998 when the owners and players’ association jointly lobbied Congress to amend the law to say that the “exemption” didn’t apply to player/employment issues. However, it would continue to apply to all other aspects of baseball.
What is the likelihood of Congress ending baseball’s exemption and making it subject to the anti-trust laws like the NFL, NBA etc.? Given the current Congress ... none.