Policy Debate: Should the antitrust exemption for baseball be eliminated?
Issues and Background
If baseball's exemption were lifted, real fans might be able to
afford tickets, and teams would stop holding cities hostage.
Baseball's status in the life of the nation is so pervasive that it would not strain credulity to say the Court can take judicial
notice that baseball is everybody's business. To put it mildly and with restraint, it would be unfortunate indeed if a fine
sport and profession, which brings surcease from daily travail and an escape from the ordinary to most
inhabitants of this land, were to suffer in the least because of undue concentration by any one or any group on commercial
and profit considerations. The game is on higher ground; it behooves every one to keep it there.
~Judge Irving Ben Cooper
In 1901, Napoleon Lajoie attempted to leave his National League team to join a new American
League team. This was in violation of a National League contract that required him to either
play for his original team or not play baseball. This dispute, and others of this sort, were settled in 1903 with the creation
of the National Agreement between the two leagues. This agreement held that the two leagues of
major league baseball constituted a shared monopoly that is jointly operated by all of the
owners. Under this agreement, the owners established rules concerning player contracts and
This monopoly arrangement was challenged in the Federal Baseball case in 1922. This
case was brought by owners of teams in the Federal League (created in 1913 in an ultimately
unsuccessful attempt to provide a third league that would compete with the National and American
Leagues). The U.S. Supreme Court ruled that baseball is a sport subject to state regulations and
not a business subject to
Federal antitrust laws. While the Supreme Court ruled in Toolson (1953) that the decision in the Federal
Baseball case was in error, they held that since the situation had not been altered by Congress
during the intervening 30 years, that it was an issue to be addressed by Congress and not the
In 1972, the player's union challenged baseball's antitrust exemption in the case of
Flood v. Kuhn. Once again, the Supreme Court held that the elimination of baseball's
antitrust exemption should be decided by Congress and not the courts. Since Congress had addressed
this issue on many occasions without taking action, it was held that longstanding Congressional
inaction on this issue was a sign that Congress does not intend for baseball to be subject to
the antitrust laws.
One of the issues that most troubled baseball player advocates is the use of the reserve system.
Under this system, used since the early years of baseball, a player can only play for the team
that initially signed the player. While that contract could be traded to other teams, players were
restricted to negotiating over salary with only one team. This system was weakened
substantially as a result of an arbitrator's
decision in 1975. This decision allowed players to become free agents after one year of involuntary
play for a team. In response to this decision, collective bargaining agreements
created a system in which contracts
allow players to become "free agents" after a specified number of years. Player salaries rose substantially
with the introduction of free agency.
In 1998, Congress passed the Curt Flood Act which revoked baseball's exemption from the antitrust laws in matters dealing with
labor relations. The remainder of the exemption was left intact.
Opponents of the antitrust exemption for baseball argue that this exemption results in higher
ticket prices and provides individual teams with the ability to extort public funding for
the construction (or reconstruction) of baseball stadiums. (For more information on this topic,
you may wish to visit the related debate on public funding of
municipal sports stadiums.) It is suggested that, in the absence of the antitrust exemption,
cities in which baseball is highly valued would be able to attract additional teams. In this
situation, cities would not be as subject to a threat that a team will leave if the city does not
provide a new or rebuilt stadium.
Those who advocate baseball's antitrust exemption, however, argue that major league baseball is able
to exert pressure on teams to stay in their current location. Other leagues are unable to
do this because of the threat of antitrust violations. As evidence of this, they note that
the last relocation of a major league baseball team was in 1971 (when the Washington Senators
moved to Texas).
Proponents of the antitrust exemption also argue that the antitrust exemption allows professional
baseball to maintain a high quality of play by restricting the number of teams allowed to compete
in the major leagues. They often suggest that baseball's monopoly power is significantly limited by
competition for fans with other professional sports and other forms of entertainment. This
competition, it is suggested, helps keep prices relatively low.
At the end of the 2001 baseball season, Major League Baseball announced plans to eliminate
two unprofitable baseball franchises. It was widely believed that the Montreal Expos and the
Minnesota Twins were likely candidates for elimination. This proposal resulted in substantial
criticism of baseball's antitrust exemption. "The Fairness in Antitrust in National Sports
(FANS) Act" was proposed in late 2001 in response to this announced contraction.
This Act would eliminate the antitrust exemption in cases dealing with team relocation or
elimination. The decision to eliminate two teams, however, has been placed on hold.
The debate on the antitrust exemption for baseball is now nearly 80 years old. It is likely to
continue to be a source of contention for some time to come.
Primary Resources and Data
- Major League Baseball
The official web site for Major League Baseball contains information on current issues related to
- ESPN, Baseball
This web site contains links to online ESPN stories and video clips related to baseball.
- USA Today, Baseball
USA Today's online coverage of baseball events and issues is available at this web site.
- Yahoo! Sports, "Major League Baseball"
Yahoo! provides current information and links to current and recent news stories related to baseball on
this web site.
- Major League Baseball History
This web site, provided by Billy Harrelson, contains historical information and statistics related
to major league baseball.
This web site provides current and historical information on teams, players, and ballparks.
- John Skilton, "Baseball Links"
An extensive collection of links to online baseball resources may be found at this site. Links to
news articles may be found here along with statistics and information related to all levels of
- The Baseball Archive, "Minimum & Average Player Salaries 1967-1997"
This web site provides data on minimum and average major league baseball salaries from 1967 to 1997.
- Historic Baseball
This web site provides information on the history of baseball as well as information about the current
- Historic Baseball, "Federal League had brief run, but made lasting impact on MLB"
This page provides a nice summary of the history of the Federal League and the background of the
case that established the antitrust exemption for baseball.
- Federal Club v. National League
This page contains the text of the 1922 U.S. Supreme Court decision creating the antitrust exemption for professional
- Toolson v. New York Yankees
In this 1953 U.S. Supreme Court decision, the Federal Club case was not overturned on the grounds that
there had been no evidence that Congress wished to include baseball under the antitrust laws.
- Flood v. Kuhn
This page contains the text of the 1972 U.S. Supreme Court decision that argued that the Federal Club
decision was erroneous, but chose to not reverse this decision. The rationale for this decision
was that baseball had been exempt for 50 years and Congress had failed to take positive action to
include baseball under the antitrust laws. It was decided that Congress is responsible for
deciding whether to end the antitrust exemption for baseball.
- Radovich v. National Football League
This 1957 U.S. Supreme Court decision held that the antitrust exemption given to baseball did not
apply to professional football.
- Antitrust Division of the U.S. Department of Justice
The Antitrust Division of the U.S. Department of Justice (in cooperation with the Federal Trade Commission) is charged
with investigating possible cases of antitrust violation, analyzing merger applications, conducting studies on competition and
antitrust policy, and prosecuting violations of antitrust law.
- Federal Trade Commission
The Federal Trade Commission (FTC), in cooperation with the Antitrust Division of the Department of Justice, is charged
with enforcing U.S. antitrust laws. This web site contains information on recent antitrust cases, press releases, speeches,
and other information relating to U.S. antitrust policy.
- Bureau of Competition
The Bureau of Competition is the group within the Federal Trade Commission that is charged with
investigating possible violations of U.S. antitrust law. The Bureau of Competition coordinates
its activities with the Antitrust Division of the U.S. Department of Justice.
- The Antitrust Case Browser
Anthony Becker of Saint Olaf College provides this site that contains
summaries of U.S. antitrust cases, U.S. Supreme Court antitrust decisions,
and links to a variety of U.S. and international antitrust related web
sites. In addition, this site contains the complete text of the Sherman
Antitrust Act, and slightly edited and abridged versions of the
Antitrust Act and the Federal
Trade Commission Act.
- U.S. Antitrust Law
This page, provided by the Cornell University Law School, contains the complete text of current U.S. antitrust law.
You may use the search feature on this site to find the specific status of baseball under U.S. antitrust law.
- Antitrust Policy
This site, originally created by Luke Froeb, at Vanderbilt University, provides a wealth of information on U.S. antitrust policy.
Economic analysis, case studies, and news items are provided that deal with mergers, price fixing, vertical restraints, and
other antitrust issues.
- The Baseball Archive, "Congressional Legislation Relating to Baseball's Anti-Trust Exemption"
This web site, provided by The Baseball Archive contains links to 1993-1995 congressional resolutions
related to baseball's antitrust exemption. While these materials are a bit dated, the extensive
collection of links indicate that this topic has received a good deal of Congressional attention.
- Curt Flood Act of 1998
The Curt Flood Act of 1998 ended baseball's antitrust exemption in issues involving labor relations. This
page contains the text of this Act.
- Stadium Financing and Franchise Relocation Act of 1999
The Stadium Financing and Franchise Relocation Act of 1999 provided an expansion of the antitrust
exemption for baseball and football leagues in return for league participation in financing
the cost of new stadiums.
Different Perspectives in the Debate
- Allen Barra, "In Antitrust We Trust"
Allen Barra provides an argument for eliminating the antitrust exemption for baseball in this
May 19, 2000 Salon article. He argues that the current antitrust exemption allows
major league teams to pressure their cities to construct new sports stadiums at public expense.
He suggests that, in the absence of this provision, cities would be able to attract other teams
(including new teams) to fill existing stadiums if the current teams were to depart. Barra argues
that more teams would be created that would provide more services to baseball fans in those
cities in which there is a high level of demand for baseball. He also suggests that the
antitrust exemption has resulted in excessively high admission prices.
- Raymond J. Keating, "The Economic Woes of Pro Sports: Greed or Government?"
In this January 1997 article appearing in Ideas on Liberty, Raymond J. Keating argues that
baseball's antitrust exemption has helped prevent baseball teams from moving from city to city. He
suggests that other professional leagues are subject to antitrust restrictions that prevent them from
interfering with owners who wish to relocate to other cities. Baseball's antitrust exemption, in Keating's
view, allows major league baseball to place more pressure on teams to stay in their current locations.
He argues that all professional sports leagues should be given an antitrust exemption.
- Raymond J. Keating, "We Wuz Robbed!: The Subsidized Stadium Scam"
Raymond J. Keating argues, in this March-April 1997 Policy Review article, that new stadium
construction is generally unprofitable to municipalities. He argues, as in the article listed above,
that baseball's antitrust exemption should be extended to other sports leagues to help
curtail the threat of franchise relocation.
- Roger G. Noll and Andrew Zimbalist, "Are New Stadiums Worth the Cost?"
Roger G. Noll and Andrew Zimbalist discuss the causes and consequences of the rise in new stadium construction
in this online article. They argue that the monopoly power for professional sports leagues
allows them to maintain fewer professional teams than there are large cities capable of supporting
such teams. This allows teams to play one city against another in attempting to
acquire public financing for new sports stadiums. Noll and Keating, though also note that
baseball, because of its antitrust exemption, is better able to restrict team movements than
other professional sports. They suggest that a good solution is to "break up existing leagues
into competing business entities."
- Jerome Ellig, "Superstars as Slaves"
Jerome Ellig, in this online article, argues that baseball player complaints against the antitrust
exemption of baseball are misguided. He notes that the baseball market is essentially a bilateral
monopoly in which the player union bargains with major league baseball to set the basic terms and conditions
of the contract. Ellig suggests that players voluntarily accept this market relationship when they
choose a career in professional baseball. He argues that demands for more immediate free agency
represent attempts by players to get a larger share of the pie.
- Mark Thornton, "Bring in the Scabs"
Mark Thornton discusses the effect of baseball's antitrust exemption in this February 1995 Free
Market article. He argues that baseball's antitrust exemption allows major league baseball
to maintain a high quality of play. Thornton suggests that by maintaining this supply restriction,
major league baseball "maintains standards and attempts to offer its customers the best possible game."
He argues that competition comes from other baseball leagues, other sports, and other entertainment activities.
- Gregg Fields, "Teddy Roosevelt, Meet John Henry"
In this September 20, 1999 Miami Herald article, Gregg Fields discusses the demands for
a new stadium for the Florida Marlins. He argues that such demands receive serious consideration
as a result of baseball's antitrust exemption that allows major league baseball to restrict the number
- John J. Siegfried, "Sports Player Drafts and Reserve Systems"
John J. Siegfried discusses the effect of the reserve system in this online Cato Journal article.
He argues that the player drafts and reserve systems do not result in maintaining a competitive balance
among teams. He suggests, though, that it is efficient to provide better players and more
resources to teams in markets that more highly value winning.
- CNN/Sports Illustrated, "Baseball Antitrust Quotes"
This website contains an entertaining list of quotes dating back to 1881 concerning the "losses" that are received by baseball
team owners. It is suggested that the losses are the result of accounting practices and are not indicative of economic losses.
- Darren Rovell, "Economists: Baseball's Debts Misleading"
This July 21, 2001 ESPN online article summarizes a study that suggests that professional baseball teams
tend to structure their accounts in such a way that it falsely appears that they are not profitable.
It is suggested that this is accomplished by owners paying themselves consulting fees and, in the case
of teams that are owned by media companies (such as the Cubs, Braves, and Dodgers), paying less
than the market value for broadcast rights. Further evidence of the profitability of major league
baseball teams is the increasing price of baseball franchises over time. If teams were unprofitable, it
would be expected that their market value would decrease.
- Dan Peltier, "Statement before the Senate Judiciary Committee"
In this June 17, 1997 statement, Dan Peltier describes the pay, working conditions, and incentives
facing minor league baseball players. He argues that professional baseball players in the minor leagues
receive low pay, low benefits, and face limited prospects for promotion to the major leagues. Peltier
argues that baseball's monopoly power in the major leagues provides teams with excessive bargaining
power relative to the players. He argues for a weakening of baseball's exemption from antitrust.
- John Conyers, Jr., Paul Wellstone, Tom Harkin, Mark Dayton, Betty McCollum, Martin Olav Sabo,
James P. Moran, and Earl Pomeroy, "Make Baseball Play by the Same Rules as Other Professional Sports
and Businesses Before Baseball Eliminates 2 Teams"
This letter asks for additional
cosponsors for the "Fairness in Antitrust in National Sports (FANS) Act of 2001." Under this Act
baseball's antitrust exemption would be limited for decisions on team elimination or relocations.
It is argued that baseball's antitrust exemption has resulted in "the perpetuation of a closed, cartelized industry...."
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- Darren Rovell, "Baseball's antitrust exemption: Q & A"
Darren Rovell addresses questions associated with baseball's antitrust exemption and team relocation
in this December 9, 2001 ESPN online article. He provides a history of baseball's antitrust
exemption and notes that it is not clear that MLB would be exempt from an antitrust suit if it
attempted to prevent a team relocation. Rovell also discusses the proposed
"Fairness in Antitrust in National Sports (FANS)" bill.