Why Baseball’s Antitrust Exemption Isn’t A Strong Negotiating Tool For MiLB

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When looking at what leverage Minor League Baseball has in its negotiations with MLB, there’s plenty of speculation MiLB could look to have Congress eliminate MLB’s antitrust exemption.

The theory is that threatening baseball’s antitrust exemption—which was established in a 1922 Supreme Court ruling—would force MLB to consider backing off its attempts to reduce the number of minor league teams.

Unlike all other sports with professional leagues in the U.S., baseball does not have to follow antitrust laws that govern player contracts, franchise movement and media contracts. The Supreme Court ruling said that baseball was a sport, not a business.

In 1998, the Curt Flood Act was passed by Congress and signed into law. The law gives MLB players the same rights under antitrust laws as professional athletes in other sports, but it also explicitly laid out that antitrust law does not apply to other aspects of baseball, including franchise relocation, the operations of the minor leagues and broadcast negotiations.

In other sports, teams have relocated without the assent of the league—most notably the Raiders moved from Oakland to Los Angeles against the wishes of the NFL and the San Diego Clippers moved to Los Angeles without permission from the NBA. If the NFL or NBA acts in a way that is viewed as anticompetitive, the league runs the risk of being sued.

So the antitrust exemption is unique to baseball, and logically MLB would fear any attempts to have it taken away by Congress.

What that assumption misses is the fact that MiLB benefits as much, if not more, from the antitrust exemption as MLB. And because of that, MiLB is very unlikely to push for changes to the current law.

The argument can quite clearly be made that removing the antitrust exemption would cause more potential harm to MiLB than MLB.

For MLB, losing the antitrust exemption would put the league in the same position as the NFL, NBA or NHL. Those leagues have survived and thrived without the exemption. Franchise movement happens more often in those leagues than MLB, and it’s possible a team stuck in a poor stadium situation may try to move to a more appealing city, even if it is in another team’s territory.

Oakland’s stadium quagmire would quickly be eliminated. Eventually New York might end up with a third team if baseball lost the antitrust exemption. But overall, the general operations of the league would likely be only mildly affected by the removal of the antitrust exemption.

Related: See MiLB’s latest letter to Rob Manfred, and MLB’s response to Pat O’Conner. 

For MiLB, such a decision would potentially carry much larger ramifications. While MLB players contracts, free agency and other rights are part of a collectively bargained agreement between the owners and players, non-40 man roster players in MiLB are not part of any union.

Their contract rights are dictated by MLB, something possible because of the antitrust exemption. Without that exemption, such restrictions would be subject to lawsuits on unfair restraint of trade. There’s the possibility the current structure of how MiLB works—with players who are contracted to and paid by MLB teams, but play for MiLB teams—would be wiped away with the loss of the antitrust exemption.

To be allowed to retain contract rights to minor leaguers, both the NBA and NHL have included the minor leagues in their collectively bargained agreements with their players’ unions. Without the antitrust exemption, the current structure where MLB owns the contractual rights to players and then sends them to minor league teams would be legally tenuous.

It would likely require a new agreement where minor league players agree to such a system (and the draft) in return for concessions in a collectively bargained agreement. Such a system very possibly would lead to the kind of reductions in the size of the minors that MiLB is currently fighting to prevent. Or it would require MiLB teams to contract with and pay their own players, as they did in the early part of the 20th century.

The restrictions on franchise movement imposed by the antitrust exemption also significantly benefit MiLB’s current structure. MiLB has strict territorial rules that limit where MiLB franchises can be located. Such rules ensure that no team can encroach on another’s territory, and those territorial boundaries are quite expansive.

Without the antitrust exemption, there could be movement of teams to better markets that are currently out of bounds. Such moves would likely benefit some communities and franchises, but at the expense of other cities (who would lose teams) and also to franchises who would see their value cut by having to share their market with other MiLB teams.