Supreme Court Calls Out Baseball's Antitrust Exemption In NCAA Ruling — College Baseball, MLB Draft, Prospects

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Baseball’s antitrust exemption has long meant that baseball stands alone among the major United States professional sports. But a new Supreme Court ruling gave some indications that the precedent on which baseball’s perceived antitrust exemption exists may be on shakier legal ground than previously indicated.

The NBA, NFL and NHL are subject to antitrust laws. The NCAA was informed on Monday in a unanimous 9-0 ruling that it is also subject to Federal antitrust laws.

But baseball stands out as the exception. Ever since “Federal Baseball Club of Baltimore, Inc. v. National League of Professional Baseball Clubs” in 1922, baseball has been seen as exempt from many of the provisions of Federal antitrust laws.

But in its ruling in NCAA v. Alston released on June 21, the Supreme Court said:

To be sure, this Court once dallied with something that looks a bit like an antitrust exemption for professional baseball. In Federal Baseball Club of Baltimore, Inc. v. National League of Professional Baseball Clubs, 259 U. S. 200 (1922), the Court reasoned that “exhibitions” of “base ball” did not implicate the Sherman Act because they did not involve interstate trade or commerce—even though teams regularly crossed state lines (as they do today) to make money and enhance their commercial success. Id., at 208–209. But this Court has refused to extend Federal Baseball’s reasoning to other sports leagues—and has even acknowledged criticisms of the decision as “‘unrealistic’” and “‘inconsistent’” and “aberration[al].” Flood v. Kuhn, 407 U. S. 258, 282 (1972) (quoting Radovich v. National Football League, 352 U. S. 445, 452 (1957)); see also Brief for Advocates for Minor Leaguers as Amicus Curiae 5, n. 3 (gathering criticisms).

That by itself doesn’t indicate that the antitrust exemption is going away—in Flood v. Kuhn, the court used those adjectives to describe the Federal Baseball Club decision without overturning it. But the fact that all nine justices signed on to an opinion that described the ruling as a dalliance that “looks a bit like an antitrust exemption” was notable.

Justice Neil Gorsuch, writing for the court, also noted elsewhere in the ruling that:

Whether an antitrust violation exists necessarily depends on a careful analysis of market realities . . . If those market realities change, so may the legal analysis.

The ruling by which baseball has been seen to be exempt from much of U.S. antitrust legislation was handed down in 1922. If the Supreme Court determines that the market realities have changed, it has indicated it can change its legal analysis.

The Supreme Court also cited the amicus brief submitted by the Advocates for Minor Leaguers. “Friends of the court” briefs are not often cited, and to do so when the information provided within only echoed what the court had already cited from previous Supreme Court opinions was even more notable.

“I think that today’s opinion signals that the current composition of the Supreme Court has a significant skepticism about baseball’s antitrust exemption. I read their segment of the opinion about the antitrust opinion as an invitation to litigants to raise the issue in front of the court,” said Harry Marino, Executive Director of Advocates for Minor Leaguers.

So what would a challenge to baseball’s antitrust exemption mean if it did ever succeed? As noted above, the other professional sports leagues in the U.S. operate with few issues despite not having an antitrust exemption. Because of collective bargaining between players’ unions and leagues, leagues can impose salary caps, drafts and other collective actions that could be construed as anti-competitive. But in those cases, the players and the owners collectively bargained to set those rules. Leagues without an antitrust exemption do have trouble limiting franchise movement (something Al Davis made apparent when he moved the NFL’s Raiders from Oakland to Los Angeles).

The status of minor league franchise movement and minor league salaries/contracts would also be subjected to legal debate if the antitrust exemption was removed.