Baseball's Antitrust Exemption

Since the early 1900s, baseball has enjoyed an exemption from the federal antitrust laws. These laws prevent monopolies, but require that the product or service be within interstate commerce in order for the federal laws to apply. Early cases stated baseball was not interstate commerce and thus defined baseball out of the antitrust laws. Later cases did acknowledge that baseball was engaged in interstate commerce, but refused to overturn the previous decisions that had allowed baseball to enjoy the exemption from antitrust laws.

Although I'm sure you're not all familiar with the legal history (or possibly even the exemption), I bet most baseball fans have heard about Curt Flood's case. After being traded from the Cardinals to the Phillies in 1970 and refused to report to his new club. For those who don't know, the reserve clause allowed club owners the exclusive right to the men on its 40-man roster. In recent years, free agency has been allowed after 6 years of Major League service, but this wasn't always the case. Flood's refusal to report to the Phillies meant that he couldn't play in MLB at all. Accordingly, he brought a case against MLB asserting that the reserve clause violated the antitrust laws because it allowed clubs to have a monopoly over individual player's. At this point in time, players were starting to resent the reserve clause and their lack of control over their own careers. Although the Supreme Court once again refused to overturn their previous decisions defining baseball out of the reach of federal antitrust laws, Flood's name would later be used for the Curt Flood Act of 1998, which partially repealed the exemption.

The Curt Flood Act of 1998 is often heralded as a major movement towards the end of baseball's exemption. However, a closer look reveals something else. First, the Act only clarifies the applicability of antitrust laws to players on the Major League level. This means that minor league players and clubs, broadcasting rights, etc. are all still under the antitrust exemption. The most interesting thing about the passage of the Act are the circumstances surrounding the passage. For decades prior to 1998, many had lobbied to have the exemption repealed and MLB has always lobbied for it to remain. It is important to note that the passage of the Act was not really a victory won by those who have opposed the exemption, but an effort spear-headed by MLB. After the 1994 strike, the 1996 Collective Bargaining Agreement included an agreement by MLB to pursue legislative action in the form eventually accomplished by the Curt Flood Act. What's important to understand is that MLB is a very powerful lobbying machine. Not only are they the only professional sport with a Political Action Commitee, but club owners are among some of the biggest contributors to political campaigns. It is my personal opinion that the Curt Flood Act would have never been passed without MLB's support.

That being said, I also have an opinion on why Congress continues to allow MLB to keep the exemption (with the exception of those things covered by the Curt Flood Act). I think holding the threat of repealing the exemption over baseball's head allows Congress to assert power over MLB that it wouldn't otherwise have. A great example of this is using the threat of repeal to force MLB to compel player testimony in the hearings on steroid use. By allowing most of the exemption to remain, Congress is able to keep a hand on the reigns of MLB. For this reason, I don't think there will ever be a full repeal of baseball's antitrust exemption.

I may do another post later about how the exemption that remains affects baseball if there's enough reader interest. If you have any questions about the legal side of things, feel free to leave a comment or shoot me an email.