For a century, Major League Baseball’s golden goose has been its antitrust exemption, a gift from Congress and the Supreme Court that allows it to operate, in essence, as a monopoly.
On May 29, 2022, the exemption will mark its 100th anniversary – though don’t expect MLB to mark such a crucial moment in time with any grand celebrations or fanfare.
No, this has been the league’s hero in the dark, better left unseen and unheard from – at least until politicians periodically find something surrounding MLB with which they disagree and raise non-specific threats to revoke it.
These threats can originate across the political spectrum, be it progressive independent Bernie Sanders taking the league to task for poorly paying minor-leaguers or trimming minor-league franchises, to right-wing Sens. Ted Cruz, Josh Hawley and Mike Lee objecting to MLB revoking its All-Star Game from Atlanta.
A few facts on MLB’s unique exemption, and why it remains a potential political cudgel:
MLB’s antitrust exemption resulted from a 1922 Supreme Court ruling that stated, somewhat incredulously, that the business of Major League Baseball did not constitute “interstate commerce,” thus making it exempt from the Sherman Act, which prevents businesses from conspiring with one another in an effort to thwart competition.
The Supreme Court decision came seven years after the Federal League first filed suit against the major leagues, but the nascent league’s claims of collusion went unheard by the presiding judge, future baseball commissioner Kenesaw Mountain Landis. The Baltimore Terrapins were the only Federal League franchise to press the issue, but an initial victory was overturned and ultimately the Supreme Court ruled against it, with Justice Oliver Wendell Holmes writing that “personal effort, not related to production, is not a subject of commerce.”
Baseball, it determined, was just a game. You wonder if Justice Holmes had any inkling this game would blossom into an $11 billion industry controlled almost entirely by one entity.
Long before the MLB Players’ Association asserted itself as one of the most powerful unions in the country, players had far fewer avenues to seek relief against the major leagues.
More often, that came through the courts, which presided over early attempts by players to achieve free agency and, more broadly, challenge the antitrust exemption. The first was George Earl Toolson, a pitcher for the Newark Bears, the Class AAA affiliate of the New York Yankees, who sought escape from the reserve clause and the ironclad system that binded him to the Yankees.
The three decades from Holmes’ decision to Toolson’s 1953 case against the Yankees only hardened the exemption enjoyed by the league and its franchises; a 7-2 Supreme Court ruling in favor of the Yankees was brief, noting simply that “[t]he business [of baseball] has … been left for thirty years to develop, on the understanding that it was not subject to existing antitrust legislation.”
Baseball’s true reckoning – at least regarding the reserve clause – would come nearly a quarter-century later, after Curt Flood challenged it all the way to the Supreme Court after he was traded from the St. Louis Cardinals to the Philadelphia Phillies in 1969.
Flood sat out the 1970 season, noting famously in his letter to commissioner Bowie Kuhn, “After 12 years in the Major Leagues, I do not feel that I am a piece of property to be bought and sold irrespective of my wishes.” His lawyer argued that the clause violated antitrust laws and 13th Amendment prohibitions against peonage and involuntary servitude.
But Justice Harry Blackmun, in an at times insipidly nostalgic 1972 opinion, reinforced MLB’s antitrust exemption but left an opening that the reserve clause could be resolved through collective bargaining. With future Hall of Famer Marvin Miller now helming the players’ union, that albatross fell three years later in an arbitration ruling.
Other, less prominent challenges to the antitrust clause never made it to the highest court, including a 2018 refusal to hear arguments from a group of baseball scouts claiming MLB clubs were colluding to suppress salaries and from property owners near Wrigley Field who argued that the Chicago Cubs’ expansion plans blocked their coveted – and lucrative – views of the stadium.
It has endured long enough to see both the Model T and the Tesla. Yes, this antitrust exemption is sturdy, thanks largely to court precedents and also good zone defense on baseball’s part.
The league opened a lobbying office in Washington in 2016, and spent at least $1.32 million in the three years that followed, according to Open Secrets. That figure dropped to $1.24 million in 2020, but the short-term issues that arise rarely subside, be it its control over minor leaguers to relations with Cuba.
Yet the ever-present motivation is retaining the antitrust exemption. While spreading your chips across the table may not be a great strategy for craps players, it behooves MLB to cozy up to a wide range of politicians, occasionally throwing some cash at a candidate who runs afoul of its stated values or having to shutter the effort in the wake of unprecedented events.
But the diversified portfolio strategy is generally sound, and the clause sturdy against good-faith efforts to challenge it, and the occasional longshot bid to steal a few headlines.