The Sherman Antitrust exemption for Major League Baseball (MLB) was born over 100 years ago. Over the years, Congress has passed some legislation that allows the players to sue the league under federal antitrust law. However, as it stands today, Major League Baseball still enjoys the exemption from the Sherman Antitrust Act, which allows them to exert full control over labor expenses for Minor League Baseball. Of course, Major League Baseball abuses this power and pays minor league baseball players next to nothing. It appears this monopoly could finally be coming to an end after a contingent of U.S. Senators voiced their support for introducing legislation that would finally repeal the MLB’s antitrust exemption for good. Specifically, Senators Josh Hawley, Ted Cruz, and Mike Lee recently announced a proposal that would terminate this exemption.[i]
For starters, minor league baseball players have no union and are paid according to a scale set by the 30 major league teams.[ii] In 2022, minor leaguers will make a minimum annual salary between $4,800 and $15,400; the U.S. federal poverty guideline for one person in most states in 2022 is $13,590.[iii] But for baseball’s antitrust exemption, the current treatment of Minor League players would be illegal.[iv] Repealing the antitrust exemption would render illegal the entire Minor League Conspiracy — both (1) the owners’ agreement to suppress Minor League player wages and working conditions and (2) the owners’ agreement to artificially limit the number of Minor League teams and in turn the overall number of Minor League players.[v] Furthermore, a federal spending bill in March 2018 included the “Save America’s Pastime Act,” which explicitly exempted minor league baseball players from federal pay protections in the Fair Labor Standards Act, so long as they were paid the equivalent of the federal minimum wage of $7.25 for a 40-hour week, which comes out to about $1,160 per month.[vi] The bill also explicitly said players are only paid for 40 hours of work during the season, irrespective of the number of hours the employee devotes to baseball-related activities, and that players don’t need to be paid for spring training or the off-season.[vii] The Commissioner of Major League Baseball has chimed in on the issue, claiming that without coordinated oversight and decision-making by MLB, more Minor League affiliates will leave their existing communities for a superior player-development environment and that fewer Minor League clubs affiliated with MLB clubs will exist in the future.[viii]
The landmark case on this issue that is cited by every professional sports league finds itself in a Sherman Antitrust case known as Fed. Baseball Club of Baltimore v. Nat’l League of Prof’l Base Ball Clubs. The case was decided in 1922 and is the controlling law on this issue as it pertains to Major League Baseball.[ix] The Federal Baseball Club of Baltimore, Inc. was the sole surviving member of the Federal League of Professional Base Ball Clubs (Federal League Baseball) (Plaintiff), which tried to compete with the two established major leagues—the National League of Professional Base Ball Clubs and the American League of Professional Base Ball Clubs (collectively known as Major League Baseball) (Defendants). The Plaintiff alleged that the Defendants bought up seven of the eight teams in the Federal Baseball League one by one and induced the clubs to leave the Federal Baseball League to join Major League Baseball. Furthermore, the Plaintiff’s allegations include that the President of the Federal Baseball League was in on the conspiracy and acted as a liaison between the two entities to bring the teams over from the Federal Baseball League over to Major League Baseball. The Plaintiff was the sole team that was not invited over to Major League Baseball and subsequently sued the Defendants under the Sherman Antitrust Act claiming major damages. The trial court ruled in favor of the Plaintiff and granted them a verdict of $80,000. The Defendants appealed the decision to the United States Court of Appeals, which reversed the decision. The Court of Appeals reasoned that the business of Major League Baseball was to present baseball games to the public and that such games were purely intrastate matters (rather than interstate commerce) and not within the Sherman Act’s scope. Ultimately, the case reached the Supreme Court after the Plaintiff appealed the decision of the Court of Appeals. The Supreme Court agreed with the Court of Appeals and affirmed the decision in a brief opinion written by Justice Holmes. Specifically, the Supreme Court held that the Sherman Act does not apply to business activity that involves interstate commerce only incidentally, and although Major League Baseball does entail extensive interstate travel that it pays for, such transportation is merely incidental to Major League Baseball games. The Supreme Court famously used a comparison to justify their decision to recognize Major League Baseball as an intrastate matter instead of an interstate matter by stating that “a firm of lawyers sending out a member to argue a case, or the Chautauqua lecture bureau sending out lecturers, does not engage in such commerce because the lawyer or lecturer goes to another State.”[x] With this decision, Major League Baseball was effectively granted an exemption from compliance with the Sherman Antitrust Act that still exists today.
Clearly, the best solution to this problem would be the passing of legislation ending the outdated antitrust exemption and the effective MLB monopoly that exists. The Sherman Act was created to prevent issues like this from arising and giving all the power to a big business. There aren’t any modern examples where a business is just able to downright abuse its employees without them having any recourse. It is time to strike out MLB’s Sherman Antitrust exemption and give the power back to the minor league baseball players.
[i] See Republican Lawmakers Propose Legislation to End MLB’s Antitrust Exemption, Competition Policy Int’l (Mar. 17, 2024) https://www.pymnts.com/cpi_posts/republican-lawmakers-propose-legislation-to-end-mlbs-antitrust-exemption/.
[ii] See Evan Drellich, U.S. Senate requests information on MLB’s antitrust exemption from commissioner Manfred, The Athletic (July 18, 2022) https://theathletic.com/news/us-senate-mlb-antitrust-manfred/czCdXJCAAatD/.
[iii] See Joon Lee, Without antitrust exemption, MLB’s ability to govern working conditions for minor leaguers ‘may not be possible,’ says Rob Manfred, ESPN (July 29, 2022) https://www.espn.com/mlb/story/_/id/34312433/mlb-ability-govern-working-conditions-minor-leaguers-not-possible-says-rob-manfred.
[iv] See Evan Drellich, Advocate group calls for bill shielding minor-league players from MLB’s antitrust exemption, The Athletic (July 7, 2022) https://theathletic.com/news/minor-league-mlb-antitrust-exemption/X0IzbFcWbcDh/.
[v] See id.
[vi] Pat Garofalo, The MLB Makes Millions on Minor Leaguers. It Refuses to Pay Minimum Wage., Talking Poverty (Feb. 14, 2019) https://talkpoverty.org/2019/02/14/mlb-makes-millions-minor-leaguers-refuses-pay-minimum-wage/.
[vii] See id.
[viii] See Joon Lee, Without antitrust exemption, MLB’s ability to govern working conditions for minor leaguers ‘may not be possible,’ says Rob Manfred, ESPN (July 29, 2022) https://www.espn.com/mlb/story/_/id/34312433/mlb-ability-govern-working-conditions-minor-leaguers-not-possible-says-rob-manfred.
[ix] See Fed. Baseball Club of Balt. v. Nat’l League of Prof’l Base Ball Clubs, 259 U.S. 200 (1922) (granting Major League Baseball a federal antitrust exemption).
[x] Id. at 207.
