Baseball deserves to lose its antitrust immunity

When Major League Baseball decided to move the mid-season All-Star Game out of Atlanta to protest a new Georgia law that restricts voting, Rep. Jeff Duncan, RS.C., quickly tweeted an idea on how to reciprocate:

“In light of @ MLB’s stance to undermine electoral integrity laws, I have instructed my staff to begin drafting legislation to remove Major League Baseball’s federal exceptions.”

Other Republicans, including Sens. Mike Lee from Utah and Marco Rubio from Florida, agreed. “Why does @MLB still have antitrust immunity?” Lee asked.

You know what? That’s a good question. Congress should get rid of it, not as an act of revenge, but because it has survived its usefulness. In fact, it never had any legitimate benefit; The antitrust exemption, which no other professional sport has, is such a meaningless thing that exists in law.

When that happens, the origin of the baseball exemption from the antitrust law is not the result of a congressional act. It happened because, almost a hundred years ago, with baseball already incredibly popular, the baseball-loving Supreme Court wanted to help the owners of the National and American League teams sniff out a starting competitor.

The logic-challenged view, given in 1922 by the great justice Oliver Wendell Holmes, said that baseball was exempt from the Sherman Antitrust Act because it did not constitute trade between states. Seriously. Remember all interstate travel, radio broadcasts across state lines, player trades and so on. Holmes declared that because baseball matches were played in one place – a stadium – baseball was “local at the beginning and end.” Over the years, the perception has been called “intentionally ignorant”, “remarkably myopic” and “an embarrassment to Holmes researchers.”

Today, the exception has no effect on the relationship between major league players and owners; if it went away, the smartest tab would not notice any difference. But over the years, it has had detrimental effects on other aspects of the baseball business. In more modern times, even the court itself has acknowledged the absurdity of the exception – although it has consistently and inexplicably refused to reverse it, to the detriment of plaintiffs who had legitimate antitrust claims against Major League Baseball.

The most important such recognition came in 1972, when the court handed down its ruling in Flood v. Kuhn. Flom was, of course, Curt Flood, the great St. Louis Cardinals outfielder, who sued baseball after being traded to the Philadelphia Phillies. For decades, baseball had employed something called the reserve clause, which bound a player to a team for as long as the team wanted and prevented free agency. Flood argued that the reserve clause constituted a collaboration and thus was a violation of US antitrust law. (His complaint even compared the reserve clause to slavery.)

In a 5-3 decision, the court ruled in favor of baseball, mainly because of the existence of the exception, which the author of the statement, Harry Blackmun, acknowledged was problematic. Blackmun described it as “an established discrepancy”, writing: “If there is an inconsistency or illogicality in all this, it is an inconsistency and illogicality of long-standing status that must be remedied by Congress and not by this court.” In other words, the court did not want to set a precedent that was then 50 years old, even though everyone knew that the original ruling was illogical.

Flood’s brave action – he was blackballed after taking the suit – helped empower Major League Baseball players to demand free agency, something they achieved a few years later. Thus the irony: Despite the antitrust exemption, baseball became the first professional sport that allowed unlimited free agency, which would cost the owners millions upon millions of dollars. The exception could not stop the players from rebelling – and winning.

What does the exception for baseball do today? To put it bluntly, it allows baseball teams to cooperate in ways that would be illegal if some other entities did so. Do you remember when a handful of big technology companies had secret agreements not to poach each other’s talent? This resulted in an investigation by the Ministry of Justice and a case brought by some former employees that the companies paid for 415 million dollars.

Baseball? In 2017, minor league players sued Major League Baseball, saying the teams collaborated to suppress pay. (Smaller league salaries are notoriously low.) The case was rejected due to the exemption. In 2018, the Supreme Court refused to deal with a case brought by two big victory scouts who claimed that their salaries were artificially low because the teams had an informal agreement not to poke other teams’ scouts. The exception won again. Recently renewed the baseball minor league system, to the detriment of a number of teams. Can smaller league owners sue? Sure, but they will not win – thanks to the exception.

So yes, Sen. Lee, the antitrust exemption should go. It’s not just an anachronism, it’s a perversion of the antitrust law, a tool that baseball uses for the primary purpose of cooperating. You do not need revenge as a motive. Do it because it’s too late. Major League Baseball should play by the rules, just like everyone else.

Joe Nocera is a columnist from Bloomberg Opinion who covers the business. He has written business columns for Esquire, GQ and the New York Times, and is a former editorial director of Fortune. His latest project is the Bloomberg Wondery podcast “The Shrink Next Door.”

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