The Economist explains
OPENING DAY, which this year falls on April 1st, is a holiday for America’s baseball faithful. It heralds a new season and signals that summer is just around the corner. Compared with other sports, baseball can seem quaint. The game is slow and filled with old-timey rituals, such as singing “Take Me Out to the Ball Game” during the seventh-inning stretch. But Major League Baseball (MLB), the sport’s professional league, is a modern commercial behemoth that raked in $10.7bn in 2019. Yet where other professional sports leagues have had to reckon with some competition—America’s National Football League (NFL) has seen off recent challenges from the United States Football League, the Arena Football League and others—MLB hasn’t had a rival in more than 100 years. Why?
In the early 20th century America had three professional baseball leagues (as well as the Negro Leagues, in which black athletes played while baseball was segregated), all with variations on the same name: the Federal League of Professional Base Ball Players, the National League of Professional Base Ball Clubs (NL) and the American League of Professional Base Ball Clubs (AL). The leagues regularly stole each other’s players and competed for fans in cities that had more than one team. The NL and AL learned to co-exist in 1903 when their best teams played each other in the very first World Series. The two organisations would not legally merge until 2000, but the roots of Major League Baseball were formed.
The NL and AL did not, however, play nice with the upstart Federal League when it formed in 1913. Players defected to the Federal League to evade the “reserve clause”, which bound NL and AL players to the teams that signed them indefinitely, giving them no choice in whether they were traded and keeping salaries low. The foundation of the Federal League created a market for players and drove up wages. But it didn’t last. The NL and AL bought out the owners of many Federal League teams after the 1915 season, in effect absorbing the organisation. In 1922 the Federal Baseball Club of Baltimore, Maryland—the only team that hadn’t been bought, merged or declared bankrupt—sued the NL and AL under the Sherman Antitrust Act, which bans monopolistic business practices. The Baltimore club accused the two organisations of conspiring to buy out Federal League teams and luring others to join their ranks.
The case was appealed to the Supreme Court, which unanimously ruled that baseball was neither trade nor commerce, and therefore not subject to the antitrust law. Writing for the court, Justice Oliver Wendell Holmes argued that baseball was purely a state affair, and the routine travel of players across state lines “is a mere incident, not the essential thing.” Much to the dismay of other professional sports leagues, this odd exemption from antitrust law stopped with MLB. The Supreme Court has since allowed antitrust suits against other organisations, such as the NFL, to proceed.
MLB’s antitrust exemption gave it unprecedented power over its teams and players, and set the tone for a century of thorny baseball labour disputes. The decision essentially rubber-stamped the reserve clause and gave existing teams monopolies over their home markets. Only two teams have moved cities in the past 50 years. The decision also empowered MLB to create a minor-league system of promising young players, who are paid paltry rates during the season and not at all in the off-season.
There have been attempts to chip away at MLB’s monopoly over the years. African-American players were often at the forefront of such efforts. Negro League teams never had a reserve system. After MLB was integrated in the mid-20th century black stars, such as Jackie Robinson, spoke in favour of giving players more power. Curt Flood, a black player for the St Louis Cardinals, filed an antitrust suit against the MLB commissioner when he was traded to another team without warning. In 1972 the Supreme Court upheld its previous ruling and Flood lost, but he managed to stir the pot. In his dissent, Justice William Douglas called the 1922 decision “a derelict in the stream of the law that we, its creator, should remove”. The creation of a union helped athletes secure a collective-bargaining agreement in 1968, which established minimum pay, among other things. Congress also passed a law in 1998—the Curt Flood Act—which allowed MLB players to bring antitrust suits against the league. The act may seem like a victory for organised labour, but it did nothing to curb MLB’s control over the minor leagues, team ownership and location, intellectual property or broadcasting rights. A series of strikes and work stoppages has disrupted several seasons since 1970.
It is not hard to imagine what a more competitive league would look like with reform. Much as in the NFL, flailing baseball teams would move cities to capture big media markets and upstart leagues might try to woo MLB’s huge (albeit shrinking) fanbase, perhaps by shortening the game. As things stand, though, the current collective-bargaining agreement is due to expire after this season. Yet another work stoppage could be on deck. The optimism that comes with Opening Day may not last long.