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Wednesday, April 07, 2021

MLB’S ANTITRUST EXEMPTION EXPLAINED AS REVOCATION BILL LOOMS

MLB’s All-Star Game move has attracted praise in some parts, but derision in others.

“In light of @MLB’s stance to undermine election integrity laws,” Congressman Jeff Duncan (R-South Carolina) tweeted hours after MLB’s announcement, “I have instructed my staff to begin drafting legislation to remove Major League Baseball’s federal antitrust exception.” Senators Mike Lee (R-Utah) and Ted Cruz (R-Texas) tweeted similar sentiments. “Why does @MLB still have antitrust immunity?” Lee asked. “It’s time for the federal government to stop granting special privileges to specific, favored corporations—especially those that punish their political opponents.”

Sportico has learned from Rep. Duncan’s office that formal introduction of the bill, titled the “Teddy Roosevelt Fair Competition and Public Trust Act of 2021,” is expected early next week. The bill will expressly dictate that baseball qualifies as interstate commerce and is therefore subject to federal antitrust law. The bill is named in honor of President Theodore Roosevelt, who was hailed a “trust buster” in the early 20th century for his aggressive use of antitrust law to spur economic competition. Rep. Duncan’s office relays that the bill has already gained 18 co-sponsors and a companion Senate bill, led by Senators Cruz, Lee, Marco Rubio (R-Florida) and Josh Hawley (R-Missouri), is in the works.

MLB’s antitrust exemption empowers the league and its clubs to conspire in ways that might otherwise run afoul of antitrust law. The current version of the exemption allows caps on minor league players’ salaries (also known as wage fixing), denial of clubs opportunities to move to larger markets, and pooling of intellectual property rights, all without worry of antitrust litigation.

MLB has long guarded its exemption, which originated in the 1922 U.S. Supreme Court case Federal Baseball Club v. National League. Writing for the Court, Justice Oliver Wendell Holmes held that baseball games are purely matters of the states where they are played and thus outside the scope of federal antitrust law. Application of such law requires disputes involving interstate commercial activity.

RoyalsRetro (AG#1F) Posted: April 07, 2021 at 03:41 PM | 32 comment(s) Login to Bookmark
  Tags: anti-trust exemption

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   1. The_Ex Posted: April 07, 2021 at 05:23 PM (#6012287)
As far as I understand.....

Baseball lobbies hard and makes political donations

US politics runs on lobbyists and donations

If MLB suggests it might cut back on donations to those who vote for this bill, the bill should just die.

Alternatively, because the republicans are in favor of this, the democrats will vote against.


In short, this bill has no chance of passing, right?
   2. JL72 Posted: April 07, 2021 at 05:26 PM (#6012288)
Alternatively, because the republicans are in favor of this, the democrats will vote against.


IIRC, there were Dems in the past who were interested in removing baseball's antitrust exemption. So not necessarily.

But admittedly, that was before the current political environment.
   3. winnipegwhip Posted: April 07, 2021 at 07:17 PM (#6012307)
There are also 40 districts that lost minor league baseball in the last year thanks to MLB. In addition the minor league teams which survived lost some independence. I am sure some politicians on both sides may remember that.
   4. JRVJ Posted: April 07, 2021 at 07:57 PM (#6012314)
Yeah, this is not happening.
   5. Lowry Seasoning Salt Posted: April 07, 2021 at 08:24 PM (#6012316)
US politics runs on lobbyists and donations


No way that's true. If it were, why would Mitch McConnell tell US CEOs to "stay out of politics"?
   6. "bothsidesism" word 57i66135 Posted: April 07, 2021 at 08:27 PM (#6012318)
Alternatively, because the republicans are in favor of this, the democrats will vote against.
this would be true if politics in america was symmetrical, but that's not how it works.


   7. Srul Itza Posted: April 07, 2021 at 08:35 PM (#6012319)
I don't see the Dems using up one of their "Beat the Filibuster by the Reconciliation Process" cards here, so unless it gets 10 Democratic Senators, then it only takes one to gum up the works.

Are their 10 Dem Senators who would put their name on something Ted Cruz supports?
   8. Jay Seaver Posted: April 07, 2021 at 09:03 PM (#6012323)
No way that's true. If it were, why would Mitch McConnell tell US CEOs to "stay out of politics"?


He was sure to make it clear that this didn't include donations.

Are their 10 Dem Senators who would put their name on something Ted Cruz supports?


I would not be shocked to see some stand up, say that this does not go far enough, and offer up amendments to give the law more sweeping anti-trust powers, to the point where its sponsors freak out about the possibility of it actually passing and withdraw their support.
   9. Mayor Blomberg Posted: April 07, 2021 at 09:34 PM (#6012328)
Do we need more independent leagues, which is all you'd see?
   10. Walt Davis Posted: April 07, 2021 at 11:13 PM (#6012337)
I'm not sure history turns out much different if we re-ran it without the anti-trust exemption. On the one hand, football, basketball and hockey all saw major rival leagues so we might have seen a viable MLB rival emerge around the same time. On the other hand, those other leagues essentially achieved expansion via mergers while MLB expanded on its own (plus all the franchise moves of the 50s). So sure, maybe the American Baseball League forms early enough for a team in NY, one on the west coast, grabs Seattle, KC, Minneapolis, Atlanta, etc. before MLB does, and so on. In the absence of the exemption, that probably results in a merger and, give or take, the same 24-26 team MLB we ended up with anyway. We might have had 3 leagues with 8 teams each and no divisions until the 90s expansion but that's probably about it. Maybe some of the top AAA cities -- Montreal, Indy, Louisville, Charlotte -- would have survived the ABL/MLB merger although the Colonels, Squires, Cougars didn't survive the ABA/NBA merger.

Since those mergers, only football has seen anything resembling a legit rival league. The WFL made it through two seasons, the USFL three.
   11. Walt Davis Posted: April 08, 2021 at 01:26 AM (#6012342)
Huh, also the long-standing minor leagues. Would folks in 1950s Minneapolis, Atlanta, etc. rather have had a rival "major league" baseball team or stuck with their AAA team (and hope to someday get an MLB expansion team)? I'm not sure but the AFL and ABA didn't have those problems although I suppose the WHA may have had some along those lines.

I guess the counter-argument is that MLB might have had to expand/relocate much earlier if not for the exemption but that's assuming a rival league could have arisen in the immediate post-war period. If no exemption, I suppose by definition it's harder for MLB to run roughshod over established PCL teams in LA and SF (same argument I just made) but there's nothing they could have done to stop MLB from trying. Those two plus the surprising Milw were the crown jewels of 50s relocation. The new league would have had to get into Milw before 53 but I suppose if they had while also taking SF and LA before 53, the new league could have been a success. But seems to me we still pretty much end up where we are.
   12. Zonk Can Sell Culture Posted: April 08, 2021 at 06:48 AM (#6012345)
Are their 10 Dem Senators who would put their name on something Ted Cruz supports?


Are there 10 Republican Senators who would?

Ted Cruz is not well-liked...

NSFW audio clip in the tweet here... I pre-ordered Boehner's book - the publicity tour clip releases are an absolute hoot, so while I'm sure 90% of it is traditional DC memoir self-back-patting, the 10% of fun is probably enough to make it worth reading.

I'm assuming they cleaned up the audio book, but or I'd have ordered it. Who wouldn't enjoy an audio book that sprinkles occasional "PS Ted Cruz.... Go #### yourself."
   13. Starring Bradley Scotchman as RMc Posted: April 08, 2021 at 07:17 AM (#6012346)
the Colonels, Squires, Cougars didn't survive the ABA/NBA merger.

Not the (Carolina) Cougars, but the Spirits of St. Louis. By not getting an NBA franchise, however, the Spirits owners have done extraordinarily well, per Wiki:

The NBA placated John Y. Brown, owner of the Kentucky Colonels, by giving him a $3.3 million settlement in exchange for shutting his team down. (Brown later used much of that money to buy the Buffalo Braves of the NBA.) But the owners of the Spirits, the brothers Ozzie and Daniel Silna, struck a prescient deal to acquire future television money from the teams that joined the NBA, a 1/7 share from each franchise (or nearly 2% of the entire NBA's TV money), in perpetuity. (The deal allocated 45% for each of the Silnas and 10% for their lawyer Donald Scupak, who brokered the deal. Ozzie died in 2016.) With network TV deals becoming more and more lucrative, the deal has made the Silnas wealthy, earning them $186 million as of 2008, according to the Cleveland Plain Dealer, and $255 million as of 2012 according to The New York Times. (The NBA nearly succeeded in buying out the Silnas in 1982 by offering $5 million over eight years, but negotiations stalled when the siblings demanded $8 million over five.) On June 27, 2007, it was extended for another eight years, ensuring another $100 million+ windfall for the Silnas. In 2014, the Silnas reached agreement with the NBA to greatly reduce the perpetual payments and take a lump sum of $500 million. In the last few years before the lump sum agreement, the Silnas were receiving $14.57 million a year, despite being owners of a team that hasn't played a game in over 40 years. (The Silnas will, however, still be receiving a now much smaller portion of the television revenue through a new partnership with the former ABA teams the Nets, Nuggets, Pacers and Spurs.)


Had St. Louis actually received an NBA team in 1976, it might have played a few years before folding/moving; by making this deal, they've literally made a billion dollars off the NBA. Wow.
   14. Zonk Can Sell Culture Posted: April 08, 2021 at 09:14 AM (#6012352)
FTR - I support the antitrust exemption revocation.... it's an anachronism, MLB functions as a cartel nowadays anyway rather than some hallowed American institution, the latest flashpoint is a silly reason to pull the trigger; I'd be more stinkeye towards the stadium extortion racket.

But, the reality seems to be that it wouldn't change much... maybe some frivolous suits or similar things like the USFL/NFL suit that awarded $1 in damages...

So, revoke away... but I don't personally care enough to advocate for it or fight against it.
   15. Tom Nawrocki Posted: April 08, 2021 at 09:39 AM (#6012355)
On the one hand, football, basketball and hockey all saw major rival leagues so we might have seen a viable MLB rival emerge around the same time. On the other hand, those other leagues essentially achieved expansion via mergers while MLB expanded on its own (plus all the franchise moves of the 50s).


This isn't entirely true. The first MLB expansion was spurred on by the announcement of the Continental League in 1959, whose primary purpose was to put another team in New York after the departure of the Giants and Dodgers. There were serious people involved with this, including Branch Rickey, Jack Kent Cooke, Joan Payson and Bob Howsam.

MLB responded not only by announcing expansion plans, but by offering the New York NL franchise to the ownership group that had been planning to start a team in the Continental League. MLB surely would have expanded on its own at some point, but the Continental League probably pushed the process ahead by several years.
   16. McCoy Posted: April 08, 2021 at 09:42 AM (#6012356)
All a revocation would do is gut the minors. Acting like the NFL isn't going to hurt MLB. Is it hurting the NFL?
   17. RoyalsRetro (AG#1F) Posted: April 08, 2021 at 10:10 AM (#6012358)
All a revocation would do is gut the minors.


Talk me through that. My sense is you are right, but I am not sure why.

The fact that MLB bullied the minor leagues into its terms and services is probably an argument for why they shouldn't have an exemption to control all of baseball in theory, but I do wonder what the practical effect of repealing the exemption would be.
   18. McCoy Posted: April 08, 2021 at 10:22 AM (#6012359)
The national agreement goes away. MLB can't control who is and isn't in the minors and what happens there. If they do somebody will sue them. MLB will probably have a developmental league and that's about it.
   19. RoyalsRetro (AG#1F) Posted: April 08, 2021 at 10:51 AM (#6012364)
Could they not still come to contractual agreements with clubs individually? I think the exemption just removes the leverage to do it collectively.
   20. jmurph Posted: April 08, 2021 at 11:02 AM (#6012365)
Could they not still come to contractual agreements with clubs individually? I think the exemption just removes the leverage to do it collectively.

Yeah we need one of this site's many, many lawyers to explain this one for the rest of us rubes: aren't the things that make sports weird compared to normal work (player trades, baseball's minor league system, etc.) mostly collectively bargained? Is there any reason those things would necessarily go away absent the antitrust exemption?
   21. The Yankee Clapper Posted: April 08, 2021 at 01:56 PM (#6012385)
Writing for the Court, Justice Oliver Wendell Holmes held that baseball games are purely matters of the states where they are played and thus outside the scope of federal antitrust law.
Not his best work, but better than Harry Blackmun, and it was a unanimous decision anyways.
   22. Walt Davis Posted: April 08, 2021 at 05:34 PM (#6012436)
#15 ... thanks for the info. But it doesn't negate my point. Arguably without the exemption, the CBL gets off the ground ... and puts a team in NY, Hou, Mpls, Denver, Toronto, Atlanta, Dallas and Buffalo (which obviously moves quickly). They were already applying to be part of MLB not a rival to it (presumably due to the anti-trust exemption) but even if MLB didn't accept them, there's likely a later merger with the result being teams pretty much exactly where we currently have teams. The AFL, ABA and WHA were the main mechanisms by which the NFL, NBA and NHL expanded; in an alternate universe, the CBL is how MLB would have expanded.

It's also to my point ... by the time the CBL announces in 1959, it's kinda too late. MLB is already in SF, LA, Milw, KC and Balt. That did open the NY opportunity for a rival league which the CBL quickly jumped on and MLB immediately co-opted. Maybe if the CBL had announced in 53 (SF, LA, Denv, Sea, Dallas, Hou, Mpls ... and Atlanta which we all know is actually in the west) then they might have been onto a viable idea.

How Buffalo ever got confused with a "major-league" city is beyond me yet they could have had a team in all 4 major sports by the end of the 60s.
   23. McCoy Posted: April 08, 2021 at 05:47 PM (#6012441)
Being exempt didn't protect baseball from competitors.
   24. McCoy Posted: April 08, 2021 at 05:49 PM (#6012442)
Jeff Bezos if he wanted to could fund a competing league and make a go of it. MLB couldn't stop him from doing so.

Hell, that is how the AL became a major league. The Cleveland guy was I think a rich grocery store owner or cafeteria owner who bankrolled the league before he lost it all in the teens.
   25. Tom Nawrocki Posted: April 08, 2021 at 05:49 PM (#6012443)
The AFL, ABA and WHA were the main mechanisms by which the NFL, NBA and NHL expanded; in an alternate universe, the CBL is how MLB would have expanded.


It strikes me that the NFL's response to the AFL and MLB's response to the CL were exactly the same. The NFL offered a franchise to the AFL group that wanted to put a team in Minneapolis, and put a team in Dallas, where the founder of the AFL had his team. MLB offered a franchise to the CL group that wanted to put a team in New York, and put a team in Houston (another CL city). The difference is that the CL promptly folded, while the AFL soldiered on.

It never occurred to me till just now that the initial AL expansion in 1961 was into two cities that already had teams in 1960.
   26. RoyalsRetro (AG#1F) Posted: April 08, 2021 at 06:03 PM (#6012448)

How Buffalo ever got confused with a "major-league" city is beyond me yet they could have had a team in all 4 major sports by the end of the 60s.


In 1960, Buffalo was the 18th largest metro area in the country, about the same size as Cincinnati, Milwaukee, Hosuton, and Kansas City.

I do remember as late as 1989, it was assumed that Buffalo would soon have a MLB team.
   27. Best Dressed Chicken in Town Posted: April 08, 2021 at 08:28 PM (#6012504)
I think in the 1980s-90s the Buffalo Bisons AAA team would regularly draw a million fans a year. That's well after Buffalo's population had declined from its mid-century peak. Not sure what they've drawn in recent seasons.
   28. McCoy Posted: April 08, 2021 at 08:31 PM (#6012506)
   29. The Yankee Clapper Posted: April 09, 2021 at 03:41 PM (#6012613)
Looks like Buffalo may be a Major League city again in 2021: Buffalo Bisons To Begin Season In Trenton, NJ To Allow Upgrade of Sahlen Field For MLB Games:
The Buffalo Bisons today announced that they will begin the 2021 Triple-A season in Trenton, NJ (at the home of the Trenton Thunder), while the Bisons and Toronto Blue Jays complete a joint renovation project to prepare Sahlen Field for Major League regular season games. The Bisons Home Opener is scheduled for Tuesday, May 4 against the Worcester Red Sox.
. . .
The main upgrades include:

Moving the bullpens off the field and behind the outfield walls
New batting cages built beyond right field
New weight room and renovated clubhouse facilities
LED light bulb replacements plus two additional temporary lighting poles
Could be a problem if Governor Cuomo attempts to distract attention from his political troubles by using eminent domain to seize the Blue Jays to shore up his standing in Western NY.
   30. Hank Gillette Posted: April 09, 2021 at 11:27 PM (#6012657)
How Buffalo ever got confused with a "major-league" city is beyond me yet they could have had a team in all 4 major sports by the end of the 60s.
Buffalo was the 8th largest city in the country in 1900, 10th in 1910, 11th in 1920, 13th in 1930, and 14th in 1940. The question to me is why they never had a MLB team early in the 20th Century.
   31. McCoy Posted: April 10, 2021 at 09:20 AM (#6012661)
Because it's Buffalo
   32. Pat Rapper's Delight (as quoted on MLB Network) Posted: April 10, 2021 at 12:19 PM (#6012674)
Buffalo was the 8th largest city in the country in 1900, 10th in 1910, 11th in 1920, 13th in 1930, and 14th in 1940. The question to me is why they never had a MLB team early in the 20th Century.

Buffalo did have a team in the Federal League for its entire run from 1914 through 1915. League attendance data is incomplete at Retrosheet, but for the games they do have, Buffalo was 8th out of 9 total franchises in average attendance.

Team          Att   Win%
Newark       9324   .526
Chicago      5260   .565
Baltimore    4791   .425
St
Louis    4145   .489
Brooklyn     3213   .480
Indianapolis 3009   .575
Kansas City  2867   .487
Buffalo      2824   .508
Pittsburgh   2701   .495 

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