BASEBALL

BASEBALL

Although certain laws have protected citizens from various forms of monopolistic practices for decades, the legal decisions surrounding “America’s favorite pastime” have allowed it to remain exempt from most forms of government intervention. Through the years, Major League Baseball (MLB) has escaped measures that would have ended its exclusive control over contracts and copyrights and its all-around MONOPOLY on professional U.S. baseball.Meanwhile, as contracts and team expenditures have come to run well into the millions of dollars, many have come to see baseball as less of a sport than a business—and a business that should be regulated. The United States still reveres baseball, but fans, players, and owners all hope that government decisions will save it from labor strikes and a host of other ills. The government, however,
continues to do little other than let baseball
remain a special, nationally protected institution.

The professional growth of baseball—and some of its headaches—followed a natural economic progression.Much of the sport’s origin is shrouded in myth, but it is thought that it got off to its humble start sometime in the nineteenth century. The first organized contest probably happened on June 19, 1846, between two amateur teams: the New York Nine and the Knickerbockers. In 1869, the Cincinnati Red Stockings, a professional team, paved the way for other franchises to come into existence. In 1871, the National Association of Professional Baseball Players was born. The ensuing days belong to
popular remembrance. Abner Doubleday
formed the National League in 1876, and base-
ball has existed somewhere between game and
profitable enterprise ever since.

From its early days, the courts have failed to
see baseball as posing a threat to the laws of
business. The monumental SHERMAN ANTI-
TRUST ACT OF 1890 (15 U.S.C.A. § 1 et seq.)—a
statute prohibiting monopolies—forbids undue
restraint of trade on commerce between states.
In 1920, an appeals court ruled that the fact that
baseball operates on an interstate level was part
of its unobjectionable nature as a sport
(National League of Professional Baseball Clubs v.
Federal Baseball Club of Baltimore, 50 App. D.C.
165, 269 F. 681). It stated, in general reference to
other forms of trade and commerce, that “the
Sherman Anti-Trust Act . . . does not apply,
unless the effect of the act complained of on
interstate commerce is direct, not merely indi-
rect or incidental.” Baseball, the court found, did
not pose a threat to the economy of the world of
sports.

The National League case stemmed from
allegations made by the Federal League’s Balti-
more Terrapins. In the early 1900s, the strug-
gling Federal League had sought to become a
venture of the major leagues and had competed
with other major league franchises. But the
National and American Leagues bought out
many of the Federal teams, sometimes player by
player, with offers they could not refuse. The
Terrapins, one of the last surviving vestiges of
the Federal League, sued the National League.
Representatives of the Terrapins argued that
MLB owners had treated the Terrapins with
scorn, offering them only $50,000 in settlement
for damages incurred by the buyouts. In court,
the Terrapins argued that MLB had violated
ANTITRUST LAWS and had participated in
monopolizing ventures.

The case made it all the way to the U.S.
Supreme Court (National League, 259 U.S. 200,
42 S. Ct. 465, 66 L. Ed. 898 [1922]). In 1922, the
Court made a classic decision. In an opinion
written by Justice OLIVER WENDELL HOLMES JR. ,
the Supreme Court declared baseball to be, first
and foremost, a sport and not a business. In
Holmes’s words, baseball activities were “purely
state affairs.” The decision gave baseball the
unique status of being the only official profes-
sional sports organization to be exempt from
antimonopoly laws. In effect, the decision pro-
tected baseball as a national treasure.
The National League decision was reaffirmed
in 1953 with Toolson v. New York Yankees, 346
U.S. 356, 74 S. Ct. 78, 98 L. Ed. 64. In a brief
statement, the Court ruled against the plaintiff,
minor league player George Toolson. Toolson’s
arguments were based on the complaint that
baseball was a monopoly that offered him unfair
contract deals. The Court said Congress alone
had been given the right to exercise powers that
could break up the structure of baseball’s pro-
fessional organization.

The controversial issue in Tool son was base-
ball’s reserve clause. This clause stood as the ear-
liest symbol of the sport’s underlying business
nature. It stated that once a player had accepted
a contract to play for a certain team, the player
was bound to serve that team for one year and
must enter into a new contract with the same
team “for the succeeding season at a salary to be determined by the parties to such contract.” It was agreed that if a player violated the reserve
clause, the athlete would be guilty of “contract
jumping” and would be ineligible to serve in any
club of the leagues until formally reinstated.
The reserve clause guaranteed players little
more than an income. Players attacked it. In the
1970s, Curtis C. Flood, center fielder for the St.
Louis Cardinals, brought charges against Bowie
K. Kuhn, acting commissioner of baseball. The
issue was a player’s FREE AGENCY, which Flood
had requested and Kuhn had denied. Free
agency is the freedom to negotiate a contract
with any team, basically a release from the
reserve clause. Taking his case to the Supreme
Court, Flood argued that the reserve clause
unfairly prevented him from striking deals with
other teams that would pay him more for his
services. The Supreme Court decided on June
19, 1972, that it did not have the authority to act
(Flood v. Kuhn, 407 U.S. 258, 92 S. Ct. 2099, 32 L.
Ed. 2d 728). Only baseball’s acting commissioner
could designate free agency.
Player discontent, as a reaction to the decision,
set the stage for more free agency bids, and
ARBITRATION between players and owners
began in 1973. In January 1976, Andy Messersmith’s
success in obtaining free agency ushered
in a new era of high stakes: players could now
dictate certain terms of employment, and hence
came the dawn of multimillion-dollar contracts.
Money was also at issue in a case related to
another aspect of the game. After more than a
century of professional play, in 1986, televised
broadcasts of baseball and the COPYRIGHT laws
surrounding them came into question. Players
felt that the terms of their employment did not
include their performances for television audiences.
They insisted that the telecasts and the
profits being derived from them were being
made without their consent. In Baltimore Orioles
v. Major League Baseball Players Ass’n, 805
F.2d 663 (7th Cir. 1986), major league clubs
sought a DECLARATORY JUDGMENT that they
possessed an exclusive right to broadcast games.
The major league players argued that their performances
were not copyrightable works
because they lacked sufficient artistic merit.
Refusing to cut into the control of MLB over the
airwaves, the federal appellate court ruled that
the telecasts were indeed copyrightable works
and that clubs were entitled to the revenues
derived from them.
Throughout these cases, decisions about the
economy of baseball have been left to the players
and owners. For this reason, baseball has been
referred to as an anomaly in relation to the
nation’s antitrust laws, and its exemption has
been called “an aberration confined to baseball”
(Flood). The push for congressional action to
eliminate this exemption reached a fever pitch
with the baseball players’ strike of 1994–95. The
strike left many in baseball, including fans,
disenfranchised. Senator Howard M. Metzenbaum,
an Ohio Democrat who headed the subcommittee
on antitrust laws, led the fight to
remove the antitrust exemption from baseball.
However, the 234-day strike ended in an agreement
between owners and players, in which
owners promised to pay “luxury taxes” on clubs
with high payrolls. Congress was spared the
necessity of acting.
Local communities, however, faced the possibility
of losing their MLB franchises as the economics
of baseball changed dramatically in the
late 1990s. Major market teams, many of them
now owned by corporations rather than wealthy
individuals, drove up player payrolls. This hurt
smaller market teams and teams owned by individuals
who either lacked resources or the desire
to match salaries. The Minnesota Twins, unable
to secure a new, publicly funded baseball stadium,
threatened to move to another state in
1997. The state of Minnesota sought unsuccessfully
to probe the team’s finances and that of MLB, but in the end the Twins could not secure
a sale or move of the team.
Unable to stem rising costs, the baseball
league proposed contracting two teams before
the 2002 season.Under contraction, MLB would
buy out the owners and distribute the players to
other teams through a draft. The league argued
that contraction would strengthen the financial
well-being of the sport. The owners, however,
needed to move quickly if contraction was to
happen before the 2002 season.
The Montreal Expos and the Minnesota
Twins were rumored to be the teams selected for
contraction. In Minnesota, the operators of the
Metrodome, where the Twins play their home
games, sued the Twins and MLB, asking a state
court to order the Twins to play the 2002 season.
They sought to either win on the merits or delay
contraction for a year. The judge issued a preliminary
injunction and the Twins appealed,
arguing that they did have an obligation to pay
the rent for the season, but they could choose
whether or not to play the season. The Minnesota
Court of Appeals, in Metropolitan Sports
Facilities Commission v. Minnesota Twins Partnership,
638 N.W.2d 214 (2002), upheld the
INJUNCTION, which meant that contraction
became impossible for the 2002 season. The
baseball league later abandoned the concept of
contraction, at least for the near future.
FURTHER READINGS
Burk, Robert F. 1994. Never Just a Game. Chapel Hill, N.C.:
Univ. of North Carolina Press.
Helyar, John. 1994. Lords of the Realm. New York: Villard
Books.
Kovaleff, Theodore P. 1994. The Antitrust Impulse. New York:
Sharpe.
Lewis, Michael. 2003. Moneyball: The Art of Winning an
Unfair Game. New York: Norton.
Sands, Jack, and Peter Gammons. 1993. Coming Apart at the
Seams. New York: Macmillan.
U.S. Congress Subcommittee on Economic and Commercial
Law. 1993–94. Baseball’s Antitrust Exemption: Hearing
before the Subcommittee on Economic and Commercial
Law. Washington, D.C.: U.S. Government Printing
Office.
Zimbalist, Andrew S. 1992. Baseball and Billions: A Probing
Look Inside the Big Business of Our National Pastime.
New York: Basic Books.
Zimbalist, Andrew S., and Bob Costas. 2003. May the Best
Team Win: Baseball Economics and Public Policy.Washington,
D.C.: Brookings Institution.
CROSS-REFERENCES
Sports Law.