Running Head: Antitrust in Baseball

Antitrust in Baseball: Federal Baseball’s Lingering Effects on the Game

Alek Timm

Sandra Day O’Connor College of Law

MSLB 512: Professional Sports Law

Professor Joe Garagiola, Jr.

October 26, 2022

Antitrust in Baseball: Federal Baseball’s Lingering Effects on the Game

When James Earl Jones delightfully reminded Kevin Costner in Field of Dreams that the

one constant in American history has been baseball, he likely was speaking on the treasured

history of the game and its apparent concrete place in American culture. Within the sport, much

has changed over time, however, as the modern game’s market share is far from the peak and a

fair share of rule changes and scandals have popped up along the way. Instead, the one true

constant within baseball appears to be the effects of the antitrust exemption granted in Federal

Baseball Club of Baltimore, Inc. v. National League of Professional Baseball Clubs.1 Decided in

1922, it is hard to imagine Justice Oliver Wendell Holmes could have predicted the effects of his

ruling today.

At the time, Holmes viewed baseball games merely as exhibitions under state affairs,

thereby not constituting the element of interstate commerce necessary for the applicability of the

Sherman Antitrust Act of 1890 and Clayton Antitrust Act of 1914. 2 In turn, this would allow

Major League Baseball to eventually monopolize professional baseball and establish a reserve

clause that prevented its players from signing a contract with a new team once already signed.

This was upheld in 1953 under stare decisis in Toolson v. New York Yankees;3 however, the

Supreme Court essentially began to beg Congress to resolve the questionable ruling of Federal

Baseball.4 The exemption that allowed for the reserve system was also upheld by Flood v. Kuhn

as the court clearly stated baseball was interstate commerce but refused to alter past judgment on

the basis that Congress had significant time to end the exemption but had not.5

1
Federal Baseball Club, Inc. v. National League of Professional Baseball Clubs, 259 U.S. 200
2
Federal Baseball Club, Inc. v. National League of Professional Baseball Clubs, 259 U.S. 200
3
Toolson v. New York Yankees, Inc., 1953 U.S. LEXIS 1381
4
Flood v. Kuhn, 407 U.S. at 283-85; Radovich v. National Football League, 352 U.S. at 450-52; Toolson v. National
Football League, 346 U.S. at 357
5
Flood v. Kuhn, 407 U.S. 258, 259
ANTITRUST IN BASEBALL 3

While the Curt Flood Act of 1998 repealed the reserve clause and applied appropriate

antitrust laws to the employment of Major League Baseball players,6 other elements of the

antitrust exemption are still largely enjoyed by the MLB to this day and continue to affect several

business practices within the game. First, the antitrust exemption has recently been applied to

clubs’ stadium construction projects. The exemption has also sparked significant discourse in

determining how Minor League Baseball players should be treated. Lastly, issues in club

relocation/addition have been answered by the precedent set in Federal Baseball.

Modern Effects of Federal Baseball: Stadium Construction

The scope of Federal Baseball is certainly not limited to labor relations with Major

League players. Instead, Right Field Rooftops, LLC v. Chicago Cubs Baseball Club, raised the

question of whether the Chicago Cubs were exempt from antitrust claims while building

additions to Wrigley Field.7 In 2015, Right Field Rooftops, a business collective of several

buildings with rooftop bleachers that originally sold views into Wrigley Field, sued the Chicago

Cubs alleging that the defendant was engaging in anticompetitive behavior by building video

boards that effectively blocked those views and put the rooftops out of business.8

Right Field Rooftops sought a temporary relief order to prevent the Cubs from erecting

these video boards as they would suffer irreparable harm if patrons could no longer see into

Wrigley Field from a rooftop due to the obstructed view.9 The Rooftops contended this

anticompetitive behavior did not fall under the scope of Federal Baseball because of the Curt

Flood Act’s narrowing of the ruling’s application to only the employment of players. However,

the Court interpreted that “the Cubs’ conduct is part and parcel of the ‘business of providing

6
Curt Flood Act of 1998, Pub. L. No. 105-297, § 2, 112 Stat
7
Right Field Rooftops, LLC v. Chi. Cubs Baseball Club, LLC, 870 F.3d 682, 684
8
Right Field Rooftops, LLC v. Chi. Cubs Baseball Club, LLC, 870 F.3d 682, 684
9
Right Field Rooftops, LLC v. Chi. Cubs Baseball Club, LLC, 870 F.3d 682, 688
ANTITRUST IN BASEBALL 4

public baseball games for profit’ that Federal Baseball and its progeny exempted from antitrust

law.”10 This count for attempted monopolization was therefore dismissed as the plaintiff was

unable to show a likelihood for success on the merits because the Cubs’ actions were subject to

the baseball exemption. While originally intended to handle owners being bought out by other

major leagues, Federal Baseball continues to influence business decisions in baseball.

Modern Effects of Federal Baseball: Minor League Baseball

The antitrust exemption arguably has the strongest lingering effect on Minor League

Baseball players than any other face of the professional game. The ruling in Federal Baseball did

not provide any standard for applicability to minor league players; therefore, it has been left to

courts and statutes to determine if the baseball exemption allows for anticompetitive behavior

here. The first case that addresses this issue is Miranda v. Selig, in which Sergio Miranda et al.

sued Major League Baseball alleging that the Uniform Player Contract (UPC) violates antitrust

laws. Major League Baseball dictates that all clubs utilize the UPC which essentially features a

reserve clause despite this being eliminated in Major League Baseball after the passage of the

Curt Flood Act. 11 While the court agreed this was certainly anticompetitive behavior, judgment

was issued in favor of Major League Baseball. Because Congress explicitly stated that the Curt

Flood Act only applied to the employment of Major League Baseball players, the baseball

exemption still applied to the employment and reserve clause for minor league players.12

The exemption continues to apply to minor league player employment, but traction has

gained in favor of improving labor conditions and employment bargaining. In fact, a party of

minor league players partially successfully sued the Kansas City Royals and Major League

Baseball by arguing violations of the Fair Labor Standards Act instead of the Sherman Antitrust

10
Right Field Rooftops, LLC v. Chi. Cubs Baseball Club, LLC, 870 F.3d 682, 688
11
Miranda v. Selig, 860 F.3d 1237, 1239
12
Miranda v. Selig, 860 F.3d 1237, 1238
ANTITRUST IN BASEBALL 5

Act.13 While the baseball exemption is still codified for minor league players, future questions

surrounding their employment standards are sure to be raised as Federal Baseball will continue

to be examined.

Modern Effects of Federal Baseball: Club Relocation

The baseball antitrust exemption continues to affect the sport by influencing court

decisions in legal disputes surrounding the relocation of Major League Baseball clubs.

Specifically, in 1992 a party led by Vincent Piazza filed suit against Major League Baseball with

claims of anticompetitive behavior. Piazza attempted to purchase the San Francisco Giants and

relocate them to Tampa, Florida but was met with a refusal from all other clubs.14 He claimed

this violated federal antitrust law, but the defendant moved to dismiss citing the baseball

exemption granted by Federal Baseball.15 The court, going against several other interpretations,

ruled that Federal Baseball’s exemption was inapplicable because “it is limited to baseball’s

‘reserve system.’”16 While Piazza still lost the case, the Curt Flood Act would later change the

exemption’s applicability to relocation, as seen in City of San Jose v. Office of the Commissioner

of Baseball.

In this case, the Oakland Athletics attempted to relocate to San Jose after seeing

lackluster attendance numbers in Oakland.17 This was blocked because Major League Baseball

holds a rule that clubs cannot relocate to an area in which a team already operates, and it was

deemed San Jose falls in the operating territory of the San Francisco Giants.18 Oakland did not

receive the three-fourths vote needed to bypass the rule due to an alleged delay by the

13
Senne v. Kan. City Royals Baseball Corp., 2022 U.S. Dist. LEXIS 45932, *176
14
Piazza v. Major League Baseball, 831 F. Supp. 420, 421
15
Piazza v. Major League Baseball, 831 F. Supp. 420, 421
16
Piazza v. Major League Baseball, 831 F. Supp. 420, 421
17
City of San Jose v. Office of the Comm'r of Baseball, 776 F.3d 686, 688
18
City of San Jose v. Office of the Comm'r of Baseball, 776 F.3d 686, 688
ANTITRUST IN BASEBALL 6

Commissioner; therefore, San Jose sued Major League Baseball for anticompetitive behavior to

recover the losses of not having a professional baseball team.19 The Curt Flood Act, however,

“maintained [the antitrust exemption] for franchise relocation.”20 While Piazza produced a

different result, the baseball exemption for relocation purposes was codified and continues to

affect clubs today.

The Future of Federal Baseball

Holmes’ decision in Federal Baseball has had a lasting effect on baseball, particularly in

stadium construction, employment of minor league players, and club relocation. While the

reserve system was struck down and employment provisions of Major League players have been

altered by the Curt Flood Act, the baseball exemption is still a large part of the game. The

exemption, in its present form, uniquely enjoyed by Major League Baseball has faced recent

opposition in Congress. Two pieces of legislation have been introduced to specifically alter the

exemption. Both the Save American Baseball Act and Competition in Professional Baseball Act

have sought to remove the exemption entirely but neither have yet to be passed.2122 As a result,

most aspects of professional baseball continue to deal with the impact of Federal Baseball, a

ruling that many are still puzzled by.

19
City of San Jose v. Office of the Comm'r of Baseball, 776 F.3d 686, 688
20
15 U.S.C.S. § 26b(b)(3)
21
S.3833 - 117th Congress
22
S.1111 - 117th Congress