Antitrust and Baseball

Context in which these issues arise

• Ways to evade or limit MLB’s monopoly power– Labor law and collective bargaining

agreements– Contract law doctrines– Antitrust doctrines

Review of Organized Baseball’s Structure in the 20th Century

• Major League Constitution

• National Agreement

• Professional Baseball Agreement

• The “Basic Agreement” (CBA)

Common Law Issues: Lajoie• Background

– In 1900, hit .346 w/ 92 RBIs in 102 games for Phillies– in 1901, jumped to the then-crosstown Athletics, led

lg w/ .422 avg, .635 slg., 14 HR, and 125 RBIs

• While NL sal cap max of $2500, AL agreed w/ player ass’n to no cap, 10-day termination by either side, ban on farming w/o player consent, health benefits, and arb clause

/2 Lajoie

• Pa S Ct, reversing trial judge, granted injunction against Lajoie's performing for A's, using std that his services "require special knowledge, skill and ability” and “the same service could not easily be obtained from others" [95] rather than trial court's std that he was "impossible to replace"– key to equity is can’t really ascertain money damages from harm– Lajoie’s absence weakened Phils on-field and lowered

attendance

• Note can’t order Lajoie to play for Phils, but can bar him from playing for A’s

Remedies: Specific Performance or Money Damages

• sports lg. rules amount to grant of specific performance right to clubs

• Ulen: very hard to establish $ harm to Phils; if A’s value Lajoie more, then can buy Phils off

• problem is not that Lajoie can’t be replaced by Phils– prob is replacement is risky and likely not to be as

good, ex ante– injunction problematic when Lajoie is uniquely

valuable to Athletics, so Phils can extort

/3 Lajoie

• How can the Phillies’ damages for loss of Lajoie’s services be measured?

• Why can’t replacement services be obtained from others?

Chase and Federal League “War”

• Suit by White Sox to bar Chase from playing for Buffalo Buffeds

• Mutuality of Obligation

• Common law monopoly

• Limited value of precedent

Background to Federal Baseball

• Fairly clear under modern antitrust standards that AL and NL had illegally monopolized baseball

• Following bench trial, Judge KM Landis sat on case for 11 months

• In dire straits, Fed owners settle– $600,000 cash– Chi and StL owners can buy Cubs, Browns

• Reject bid by Balt owner to buy Cards and move• Jury verdict for plaintiff overturned by SCt on commerce

grounds: like Chase, SCt finds that player's services, not related to production of goods, aren't i-st comm

Flood v Kuhn• Stated reasons for decision:1) CONG AWARENESS AND 30 YRS INACTION:2) BASEBALL DEVELOPED RELYING ON

IMMUNITY3) RETROACTIVITY PROBS W/ OVERRULING

FED BASEBALL:

4) REMEDY SHD BE LEGISLATIVE

/2 Flood

• Is there anything unique about baseball? About sports in general?

• Do the 4 Toolson/Flood arguments persuade you?

Application of State Antitrust Law

• Flood’s 2 theories:– Uniformity essential– Undue burden on interstate commerce

• Imagine MLB trying to comply with different states’ applying different antitrust laws

Scope of the Baseball Exemption

• What falls within the scope of the “business of baseball”?– MLB concedes: doesn’t cover CBS

purchase of Yankees– Lower courts say exemption covers:

• Umpires• Minor Leagues• Losses from Baseball Strike

– BUT NOT• Concessions• Broadcasting• Baseball cards

/2 Scope

• Is Franchise location more like the exempt or non-exempt activities