San Jose Challenges Major League Baseball Antitrust Exemption for Blocking Oakland Team Move

Thursday, June 20, 2013

San Jose has sued (pdf) Major League Baseball (MLB), claiming a “blatant conspiracy” to prevent the Oakland Athletics from moving to their city. If a small group of millionaires and billionaires—acting in concert under a longstanding monopolistic exemption from most antitrust laws—is a conspiracy, well, this may be one.

Baseball was given the exemption in 1922 by the U.S. Supreme Court, which ruled that the sport was not interstate commerce and outside the antitrust law’s reach unless Congress specifically decided otherwise. Lawmakers did that in 1998, ending baseball’s exemption for labor issues, 26 years after former baseball player Curt Flood lost his fight in the Supreme Court to do it. But opened the door to free agency and changed the sport forever.    

San Jose’s lawsuit confronts the exemption—the “dark side to this storied institution”— head-on. “Baseball is big business in the United States with combined 2012 annual revenues of $7.5 billion,” the suit argues. “Whereas baseball may have started as a local affair, modern baseball is squarely within the realm of interstate commerce.”

The lawsuit is the culmination of a four-year effort to lure the Oakland franchise. MLB did not want the move and invoked a league rule that gave the San Francisco Giants territorial rights to the San Jose area in 1990. Each of the 30 franchises has veto power over a club moving into its operating territory.

Although the Giants picked up the territorial concession when they were thinking of moving their own club there, they built what is now AT&T Park in 2000 and have long regarded San Jose as a key market.

As is often the case when sports franchises change cities, a new stadium is being offered in the suitor’s town. The Athletics have not been happy in their aged (1966) Oakland stadium for years. A few days ago, a plumbing problem generated this headline: Raw Sewage on Clubhouse Level Creates Postgame Chaos. Disgusting as that was and as hot to trot as the Athletics are, owner Lew Wolff said in a statement he did not favor suing MLB.  

Only one team in baseball has moved in the past 41 years. (The Montreal Expos moved to Washington and became the Nationals.)  And MLB hasn’t awarded any new franchises since the Tampa Bay Devil Rays and Arizona Diamondbacks in 1998. But a threat to its antitrust status, even if it ultimately failed in the courts, is still a threat to its way of life.  

After MLB won the Curt Flood case in 1972, attorney Marvin Miller and the players union were sufficiently strengthened to bargain for binding arbitration on labor grievances. In 1976, arbitrator Peter Seitz ruled pitchers Andy Messersmith and Dave McNally could be free agents when their contracts ran out and baseball was never the same.

–Ken Broder


To Learn More:

San Jose Sues MLB over Stalled Oakland A's Move (by John Woolfolk, San Jose Mercury News)

San Jose, Seeking Stadium, Tests Baseball's Antitrust Exemption (by Chris Marshall, Courthouse News Service)

San Jose Sues Over Baseball's Weird Business Geography (by Ira Boudway, BloombergBusinessweek)

Lawsuit against the Commissioner of Baseball (City of San Jose (plaintiffs), U.S. District Court for the Northern District of California) (pdf)

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