Scholars argue that MLB’s antitrust exemption has decreased engagement with baseball for players and fans.
Baseball has a problem.
The 2023 Major League Baseball (MLB) World Series attracted less than half the viewers of the 2016 World Series and the fewest viewers of any World Series in the last 50 years. Meanwhile, youth participation in baseball has declined year over year since the 1990s.
What is causing this decreased interest in America’s national pastime?
Two scholars argue that MLB’s antitrust exemption—which frees the MLB from complying with certain regulations that limit market power—is at least partially to blame.
In a forthcoming article, Marc Edelman of the City University of New York and John T. Holden of Oklahoma State University detail the history of MLB’s antitrust exemption and argue that it has hurt both the game and fans by restricting team mobility and suppressing the number of teams overall. Edelman and Holden conclude that MLB’s antitrust exemption has outlived its usefulness, and by repealing the exemption, the U.S. Congress could force MLB to operate in a competitive market to the benefit of players and fans.
Baseball’s antitrust exemption stems from the U.S. Supreme Court’s decision in Federal Baseball Club v. National League.
In Federal Baseball, Justice Oliver Wendell Holmes referred to baseball games as “purely state affairs.” Therefore, federal antitrust laws—including statutes, such as the Sherman Act, which prevent large companies from engaging in anticompetitive behavioruld not regulate the growing National and American Leagues, the Court reasoned. The Court concluded that profiting from local “human effort and skill” in the sport did not constitute interstate commerce—or the movement of goods and services across state lines—and, so, the federal government had no antitrust jurisdiction over baseball.
Several state supreme courts have since followed the Supreme Court’s example, finding their state antitrust laws are inapplicable to baseball.
Despite the Supreme Court ruling in Radovich v. National Football League that federal antitrust laws did apply to nationally organized football, the Supreme Court reaffirmed Federal Baseball’s holding in the case Flood v. Kuhn in 1972. In this case, the Court argued that baseball’s unique position as an American institution distinguished it from football and other sports.Rather, Congress should decide the fate of MLB’s antitrust exemption, the Court reasoned.
Although Congress placed some pro-competitive restrictions on MLB pertaining to labor negotiations with players through the Curt Flood Act, Congress has opted to keep the antitrust exemption in place.
Edelman and Holden argue that the exemption has three lingering implications.
First, they claim that MLB has used the antitrust exemption to preserve an inefficient geographic distribution of teams.
Under current MLB rules, 23 of MLB’s 30 teams must approve a team’s petition to relocate to a different city. Therefore, the antitrust exemption restrains competition by restricting teams from moving to optimize their fan base, according to Edelman and Holden.
For example, the New York City metropolitan area has more than 19 million people with only two MLB teams. Meanwhile, cities such as Pittsburgh, Cincinnati, Kansas City, Cleveland, and Milwaukee with metropolitan populations below 2.5 million all have teams.
Edelman and Holden argue this inefficient distribution of teams creates an undersupply of teams in large metropolitan areas, driving up ticket prices for fans in those areas.
Second, MLB’s antitrust exemption allows the league to restrict the number of major and minor league teams, according to Edelman and Holden.
In 2020, MLB reduced the number of permitted minor league affiliates for major league teams from six to four, unilaterally eliminating over 40 minor league teams in the process. Not only does this reduction impact the cities which hosted these minor league teams, but Edelman and Holden claim that it affects the baseball market as a whole because it decreases the overall supply of live professional baseball available to fans.
They point out, however, that the United States Court of Appeals for the Second Circuit approved MLB’s elimination of these minor league teams under MLB’s antitrust exemption.
Finally, Edelman and Holden argue that MLB uses its antitrust exemption to engage in anti-competitive broadcasting practices, such as blackout restrictions that restrict fan access to nationally televised games in certain media markets.
Some scholars argue that MLB’s antitrust exemption may promote competitive behavior by MLB as it strategically responds to congressional threats to repeal its antitrust exemption. These scholars claim that whenever MLB acts too anti-competitively, Congress threatens to repeal its antitrust exemption, and baseball responds to this threat.
According to Edelman and Holden, however, this argument ignores that most recent congressional threats to repeal MLB’s antitrust exemption have focused on the league’s support of left-leaning causes, such as LGBTQ+ rights and voting reforms—not on MLB’s anti-competitive behavior.
Concluding that MLB’s antitrust exemption has outlived any historic purpose it might have once served, Edelman and Holden claim that the legal basis for MLB’s antitrust exemption has also disappeared.
The interstate commerce clause empowers Congress to regulate economic activity spanning state lines and serves as the constitutional basis for federal antitrust law. In Federal Baseball, the Supreme Court relied on an outdated theory of the interstate commerce clause, according to Edelman and Holden. The Court focused on the local nature of a baseball game, meaning that no economic activity was crossing state lines.
Edelman and Holden point out, however, that in Wickard v. Filburn, the Supreme Court determined that Congress could regulate even inherently local economic activity because it has the potential to impact the national economy.
Edelman and Holden claim that MLB, having 30 teams in states across the country and generating billions of dollars annually, meets Wickard’s definition of interstate commerce. Therefore, they argue a faithful application of the Court’s interstate commerce jurisprudence requires ruling that professional baseball constitutes interstate commerce and falls under the jurisdiction of federal antitrust laws.
Edelman and Holden conclude that as MLB faces the twin crises of declining viewership and reduced youth participation, revoking its antitrust exemption will go a long way to improve access to baseball for players and fans.
