In Baseball We Trust
BY GRACE PORTELANCE
Competitive markets and baseball are two things that are quintessentially American—though not everyone loves them, they occupy a huge cultural space in our society. However, these two cultural staples have historically been at odds – since the inception of anti-trust laws, baseball has enjoyed a strange and unique exemption.
In fact, one could argue that Major League Baseball is the only true monopoly in the history of our country. Despite this gross violation of our economic identity as Americans, nobody seems to care. America’s favorite pastime doesn’t adhere to America’s favorite rules.
Anti-trust laws came into existence in the late 1800s, during a time when big business flourished to the detriment of competition. In essence, these laws characterized the Progressive Era, in which actions that could lead to excessive market control were limited. While the government addressed smaller issues such as collusion and cartelization, arguably the harshest penalties – including the breaking up of businesses, fines, and jail time –were levied against those who attempted to monopolize a market . Teddy Roosevelt, who was nicknamed a “trust buster”, argued to Congress that “Once it is realized that business monopoly in America paralyzes the system of free enterprise on which it is grafted, and is as fatal to those who manipulate it as to the people who suffer beneath its impositions, action by the government to eliminate these artificial restraints will be welcomed by industry throughout the nation”.
If monopolies are so un-American, how can one exist in baseball?
The structure of Major League Baseball is most fascinating in that it hardly differs from any other professional sport, yet is allowed to operate outside of the restrictions all other industries face. The reasoning behind this exemption is clear but inane—the courts have repeatedly ruled that baseball is a game, not a business, and therefore does not count as interstate commerce. However, even those who know nothing about baseball can see that baseball is definitely a business, at least as much as any other professional sport. There are billions of dollars in play, broadcast and merchandise deals, and clear interstate business activity. Seeing baseball as nothing but a game has created an entirely different set of rules, rules that do not just violate anti-monopoly ideals, but actively detract from the game. Because of the existence of the monopoly, teams within the league are allowed to be very restrictive: a team cannot be created without approval from existing teams, nor can an existing team move to a more lucrative home without league approval. Further, no new league can be created to compete with Major League Baseball. This provides a huge limitation to the evolution and improvement of baseball; after all, if competition leads to creation, then monopoly leads to stagnation. The MLB is a largely unchallenged, unregulated monopoly, and no one is doing anything about it.
The government’s reaction to the obvious baseball monopoly is best characterized as a lack of willingness from either Congress or the courts to take action. While both seem to be well aware of the existence of the monopoly (the violation of anti-trust laws in baseball has been brought to the federal stage a handful of times in the 20th century), these branches of government seem comfortable only to chip away at monopoly power, not actually prevent it. In 1953, the case Toolson vs. New York challenged the reserve clause in the MLB, which preceded free agency as a system of dealing with players after contracts expire. Though the reserve system, in which teams had complete control over players after their contracts end, was eventually abolished, in this specific case the courts refused to reverse baseball’s anti-trust exemption and notably passed the ball to Congress, with the majority opinion stating, “If there are evils in this field which now warrant application of it to the antitrust laws, it should be by legislation.” Congress did not take action, and from then on the exemption has stood, largely unchallenged for the past 30 years.
In the case of Major League Baseball, the courts and Congress have accepted precedent and refused to revisit the corporate status of baseball, despite the fact that over time it has become clearer and clearer that baseball is not just a game, but a huge, monopolizing business. It is time that baseball doesn’t just follow the rules that every other corporation must follow, but also follows the rules that every professional sport must adhere to. Baseball is a game, but it is also a business, and should be treated as such both to promote consistency in application of our most fundamental business laws, and to allow the game to flourish in a truly free market.