“The future ain’t what it used to be”: Why Major League Baseball’s 1922 Antitrust Exemption No Longer Fits the Modern Game or the Modern Law

Blog Post | 111 KY. L. J. ONLINE | October 16, 2022

“The future ain’t what it used to be” : Why Major League Baseball’s 1922 Antitrust Exemption No Longer Fits the Modern Game or the Modern Law

By: Jacob Baird, Staff Editor, Vol. 111

The Current Problem with Minor League Pay

A minor league baseball player drafted outside of the first three rounds of the annual First-Year Player Draft has at best, a 35% chance of making it to the major leagues.[1]  During the years in which a player must wade through the muck of minor league baseball, many are only compensated around $400 a week.[2] Although minor leaguers must attend mandatory spring training sessions, off-season workouts, and instructional leagues, these players are only paid during the active months of their respective leagues.[3] At most, these seasons span 5 months.[4] Thus, minor leaguers are often left making less than the federal poverty threshold.[5]

Fortunately, this number is set to rise. Given the recent $185 million settlement paid out by Major League Baseball (“the League”) in Senne v. Office of the Commissioner, minor leaguers will enjoy some form of a bonus, although it is not yet clear how these funds will be distributed amongst the players.[6] Further, minor leaguers have just recently agreed to unionize, allowing them to enter into a collective bargaining agreement with the League.[7] Given the League’s famed history of being a hard bargain when it comes to collective bargaining agreements,[8] it is uncertain how much minor leaguers’ pay will increase.

The future of minor league pay remains anything but certain, and as it stands, such pay is also far from being considered fair. How is this so? In 1922, the League was granted an antitrust exemption in Fed. Baseball Club, Inc. v. Nat'l League of Prof'l Baseball Clubs.[9] Now considered an “aberration confined to baseball,”[10] by the highest court in the country, this blog post argues that it is time for Federal Baseball to breathe its last.

How We Got Here

In 1922 when Federal Baseball was decided, sixteen major league teams, ranging from New York City to Detroit to Cincinnati, traveled across state lines to play one another.[11] With the first televised World Series game still twenty-five years away[12], the Court in Federal Baseball took no issue with finding that “the business [of] giving exhibitions of baseball [were] . . . purely state affairs.”[13] The Court reasoned that the transport of teams and fans across state lines was incidental to the business itself.[14] Thus, the Court found that the League was not subject to the interstate commerce powers of Congress.[15] Accordingly, the League was not brought under the umbrella of entities prone to regulation by Congress under the Sherman Antitrust Act.[16] Passed by Congress in 1890, the goal of the Sherman Antitrust Act was to promote competition and prohibit the restraint of trade.[17]

With a judicially sanctioned antitrust exemption in their favor, the League became free to take advantage of its minor leaguers through unfair compensation arrangements.[18] And Major League Baseball has done so, as they have continuously settled cases so as to not give courts the chance to disturb their exemption. [19]

The Game Has Changed

Not only has Major League Baseball enjoyed tremendous growth since 1922, but so has minor league baseball. Today, the number of fans following and media outlets covering minor league baseball has grown exponentially. At the beginning of each season, fans are eager to see their favorite teams “Top Prospects” lists be released.[20] To accommodate the increased following, Major League Baseball provides streaming options for games at MiLB.com, which can be viewed in any state.[21] There are even podcasts dedicated entirely to covering the minor league system.[22] The common factor amongst all these new platforms is their reach across state lines.

The Law Has Also Changed

In 1953, the Supreme Court finally granted certiorari to a case challenging the validity of Federal Baseball.[23] Unfortunately, the Court essentially punted on addressing the issue by holding that “if there are evils in [major league baseball] which now warrant application to it of the antitrust laws it should be by legislation.”[24]

In 1972, the Court in Flood v. Kuhn again revisited the issue of the League’s judicially sanctioned antitrust exemption.[25] Although the Court considered the “advent of radio and television” when it was contemplating whether Major League Baseball was then engaged in interstate commerce, such widespread media was deemed to be an unworthy reason to alter Federal Baseball’s holding.[26]  The Court in Flood agreed with Toolson that action to correct any inconsistency created by Federal Baseball should be dealt with in Congress.[27]

Yet, in 1995 we saw a shift in the jurisprudence of the Court regarding Congress’ power to regulate interstate commerce. In United States v. Lopez, the Court identified three broad arenas in which Congress may exercise its commerce power.[28] According to the Court, “Congress may regulate the use of the channels of interstate commerce . . . the instrumentalities of interstate commerce, or persons or things in interstate commerce, even though the threat may come only from intrastate activities . . . [and] those activities having a substantial relation to interstate commerce.”[29]

With Lopez as authoritative law, the narrow reading of Congress’ commerce powers discussed in Federal Baseball has certainly been expanded.

A Solution

In light of the recent change in both the game of baseball and the law, an overturning of Federal Baseball would be both warranted and legally supported. The rationale for Federal Baseball has simply become obsolete in light of the growth of the game of baseball and this Nation’s recent jurisprudence regarding Congress’ power to regulate interstate commerce.

An overturning of Federal Baseball is a necessary step the Court must take to bring Major League Baseball within the scope of Congress's Commerce Clause power and therefore the Sherman Antitrust Act. Although the Courts in both Toolson and Flood would leave it to Congress to make such a determination, this is a far too passive take on the responsibility of the judiciary. Anytime a legitimate case or controversy is before a judicial body, as declared by Chief Justice John Marshall, “[i]t is emphatically the province and duty of the judicial department to say what the law is.”[30] 

Thus, the ball is now in the proverbial field of the Supreme Court.

[1] Richard T. Karcher, The Chances of a Drafted Baseball Player Making the Major Leagues: A Quantitative Study, Baseball Rsch. J., Spring 2017, at 52, 52.

[2] Ben Walker & Jake Seiner, MLB raises salaries for minor leaguers in 2021, AP News (Feb. 14, 2020), https://apnews.com/article/1512f5a4cf9a65f16a2641244e0c00fd.

[3] Matthew Durham, Minor League Compensation and the Save America’s Pastime Act of 2018, Nev. Law., Aug. 2018, at 17, 17.

[4] Id.

[5] Id.

[6] Maury Brown, With $185 Million Settlement With Minor Leaguers, MLB Continues Battle To Save Antitrust Exemption, Forbes (Jul 16, 2022, 2:25 PM), https://www.forbes.com/sites/maurybrown/2022/07/16/with-185m-settlement-between-mlb-and-minor-leaguers-league-continues-battle-to-save-antitrust-exemption/?sh=4ec5a0d72c9a.

[7] Tim Brown, MLB Will Voluntarily Recognize Unionization Efforts of Minor Leaguers, Wall St. J. (Sept. 9, 2022 6:50 PM), https://www.wsj.com/articles/mlb-minor-league-players-union-mlbpa-11662763573?mod=sports_major_2_pos5.

[8] See Jules Posner, MLBPA Faces Tough Negotiation Process With Rob Manfred At The Helm, Forbes (Jan 26, 2022, 9:00 AM), https://www.forbes.com/sites/julesposner/2022/01/26/mlbpa-faces-tough-negotiation-process-with-rob-manfred-at-the-helm/?sh=52186764555e (discussing current MLB Commissioner’s notoriety and history of driving a hard bargain during labor negotiations with baseball players).

[9] Fed. Baseball Club, Inc. v. Nat'l League of Prof'l Baseball Clubs, 259 U.S. 200, 208 (1922) [hereinafter Federal Baseball].

[10] Flood v. Kuhn, 407 U.S. 258, 281 (1972).

[11]  See 1922 Standings, https://www.mlb.com/standings/league/1922 (last visited Sept. 21, 2022) (showing the teams in existence at the time).

[12] The History of Television, Cornell, https://www.cs.cornell.edu/~pjs54/Teaching/AutomaticLifestyle-S02/Projects/Vlku/history.html#:~:text=the%20late%2090s.-,From%20its%20lowly%20start%20at%20an%20RCA%20research%20lab%2C%20to,delivering%20images%20to%20a%20screen.&text=The%20first%20%22television%22%20system%20broadcast,Farnsworth%20on%20September%207th%2C%201927 (last visited Sept. 21, 2022).

[13] Federal Baseball, 259 U.S. at 208.

[14] Id.

[15] Id. at 209.

[16] Id. (affirming the decision from the Court of Appeals that held that the League was not within the Sherman Act).

[17] Claudia G. Catalano, Annotation, Application of Federal Antitrust Laws to Professional Sports, 79 A.L.R. Fed. 2d 1, 2 (2022).

[18]  Andrew P. Osborn, Down to Their Last Strike: How the MLB Antitrust Exemption has Hurt Minor League Players’ Salaries and Why It is up to Them to Fight Back, J. Corp. L., 261, 275 (explaining that outside the context of baseball, “employees would have the opportunity to sue potential employers for unfair restraint of competition under the Sherman Act.”).

[19] Brown, supra note 7.

[20] Johnathan Mayo, 2022 Top 100 Prospects list unveiled (Mar. 18, 2022), https://www.mlb.com/news/top-100-prospects-list-mlb-pipeline-2022.

[21] Live Stream Baseball Games, https://www.milb.com/live-stream-games (last visited Sept. 14, 2022).

[22] Farm to Fame, New prospect rankings & prospect trade recap, Jomboy Media (Mar. 23, 2022), https://podcasts.apple.com/us/podcast/54-new-prospect-rankings-prospect-trade-recap/id1560985639?i=1000554950552.

[23] Toolson v. N.Y. Yankees, Inc., 346 U.S. 356, 356 (1953).

[24] Id.

[25] Flood v. Kuhn, 407 U.S. 258, 269 (1972).

[26] Id. at 283.

[27] Id. at 284.

[28] U.S. v. Lopez, 514 U.S. 549, 558-59 (1995).

[29] Id.

[30] Marbury v. Madison, 5 U.S. 137, 177 (1803).