Updated: Jul 20, 2022
On March 14, 2022, Senator Bernie Sanders introduced the “Save American Baseball Act” to remove the Major League Baseball’s antitrust exemption, which was originally established in 1922 when the United States Supreme Court ruled that antitrust laws did not apply to the MLB in Federal Baseball Club of Baltimore v. National League.
The MLB’s Antitrust Exemption
In Federal Baseball Club, Justice Holmes wrote:
The business is giving exhibitions of baseball, which are purely state affairs. It is true that, in order to attain for these exhibitions the great popularity they have achieved, competitions must be arranged between clubs from different cities and states . . . [however] the transport is mere incident . . . personal effort not related to production is not a subject of commerce.
The MLB’s antitrust exemption has been upheld by the Supreme Court twice since 1922, in 1953 in Toolson v. New York Yankees and in 1972 in Flood v. Kuhn. Congress did slightly narrow the exemption when, in 1998, Congress passed the Curt Flood Act, which stipulated that baseball’s antitrust exemption did not apply to player employment issues and was a major win for the players.
Since Justice Holmes’s opinion in 1922, baseball has ballooned into a billion-dollar industry that includes ample commercial activities crossing state lines, far-surpassing Justice Holmes’s expectations. MLB’s antitrust exemption allows the League and its owners to fix minor league wages, deny opportunities for teams to move markets, and protects intellectual property rights.
A New Future
In December 2020, the MLB eliminated 42 minor league teams to reduce the number of affiliates to 120 teams. The elimination spurred renewed calls to eliminate MLB’s antitrust exemption.
Other leagues do not have a broad exemption. Instead, the NBA, NFL, and NHL are limited to a narrow exemption for certain broadcasting contracts.
As it relates to minor league baseball, removal of the exemption would eliminate wage fixing for minor league players, which has come under scrutiny due to Judge Joseph C. Spero recently ruling that minor league baseball players are year-round employees, and the MLB and minor league teams are joint employers of minor leaguers for the purposes of the Fair Labor Standards Act.
In addition, removing the exemption could allow minor league teams impacted by the elimination of affiliates to pursue antitrust claims.
One of MLB’s biggest benefits from the exemption is that the league can prevent franchises from moving to cities that would compete with other MLB clubs. Thus, by removing the exemption, we could see some teams seeking to move, and the league would be susceptible to antitrust challenges were the league to try to prevent a club from moving cities/markets.
Overall, there are many benefits to removing the exemption, including putting the MLB on par with other professional leagues, eliminating wage fixing for minor league players, and allowing teams to move markets. While there is support for eliminating the broad exemption, it remains to be seen whether the removal can gather enough support in Congress to be signed into law.