Ain't nobody's business
Why antitrust exemption is important to baseball ownersPosted: Wednesday December 05, 2001 8:19 PM
Updated: Wednesday December 05, 2001 8:56 PM
NEW YORK (AP) -- Unlike other sports, baseball can block franchise moves and sales because of a unique antitrust exemption created by the U.S. Supreme Court in 1922.
Baltimore, the last team remaining from the Federal League that operated in 1914-15, sued major league owners, claiming they violated the Sherman Antitrust Act. In a decision that was surprising even in its day, Justice Oliver Wendell Holmes ruled baseball was not interstate commerce but exhibitions exempt from antitrust laws.
That ruling, upheld by the Supreme Court in a 1953 case involving Yankees farmhand George Toolson and in the 1972 Curt Flood decision, allows owners to control their markets without being subject to restraint-of-trade lawsuits.
The exemption was altered slightly in 1998, when Congress passed a law saying major league labor relations were subject to antitrust laws. That has only limited effect, however, because the Supreme Court ruled in 1996 (Brown vs. Pro Football Inc.) that unionized employees cannot file antitrust suits, meaning the players' association would have to decertify before players could challenge owners on antitrust grounds.
The Supreme Court hasn't reviewed the exemption since the Flood case, and it has been punctured since then in Florida and Pennsylvania
The Florida Supreme Court, in a 5-1 decision in 1994, ruled the antitrust exemption applies only to the reserve system, not the overall business of the sport. That ruling enabled state Attorney General Bob Butterworth to investigate whether National League owners conspired in 1992 to keep the San Francisco Giants from moving to St. Petersburg, Fla.
The case became moot the following year when baseball owners voted to create the Tampa Bay Devil Rays.
In 1993, U.S. District Judge John R. Padova ruled in Philadelphia that the exemption didn't apply to a case involving two potential limited partners of Devil Rays owner Vince Naimoli.
Vince Piazza -- catcher Mike Piazza's father -- and Vincent Tirendi were dropped from Naimoli's group after Fred Kuhlmann of the St. Louis Cardinals, then head of baseball's ownership committee, said they failed background checks.
Baseball owners cited the antitrust exemption in an unsuccessful motion to dismiss the case. Baseball later settled the case for about $6 million.
Without the exemption, there has been rampant movement in other sports, especially after the NFL was defeated in court by Raiders owner Al Davis, who successfully moved his team from Oakland to Los Angeles after the 1981 season.
Since the last baseball relocation, when the expansion Washington Senators became the Texas Rangers after the 1971 season, there have been seven NFL moves, seven NBA moves and nine NHL moves.
Other sports have only a limited exemption from antitrust laws, one that applies specifically to broadcasting. The Sports Broadcasting Act of 1961 allowed teams to pool their national broadcast rights to sell to networks. It was enacted just three months after a federal judge in Philadelphia ruled for the Justice Department in its suit against the NFL, finding the league's contract with CBS violated antitrust laws.