MLB's Antitrust Status Remains After Almost A Century

Download Audio

One hundred years ago this coming Tuesday, in a federal courthouse in Chicago, Major League Baseball defended itself against the first of many antitrust lawsuits. The claims were brought by the upstart Federal League, and the case was heard by Judge Kenesaw Mountain Landis, the future commissioner of Major League Baseball.

Nathaniel Grow, assistant professor of legal studies at the University of Georgia and the author of "Baseball on Trial: The Origin of Baseball’s Anti-Trust Exemption," joined Bill Littlefield to explain the case.

BL: The Federal League’s complaint against Major League Baseball was 92 pages long,  I’m hoping you can sum up the important issues in 30 seconds or less...

NG: I'll try. Basically the argument was the Federal League had been launching this challenge, trying to create a third Major League alongside the American and National Leagues, and they argued that the American League and National Leagues had effectively monopolized the industry — that the leagues had tied up basically all 10,000-plus professional-caliber players in the country, making it impossible for  any new league to come into existence and challenge their supremacy.

[sidebar title="Raymond Chandler Mystery Provides Baseball History" width="630" align="right"] Only A Game's Doug Tribou shares a bit of hardball history courtesy of legendary mystery writer, Raymond Chandler. [/sidebar]And so they said that under the federal antitrust laws, the Sherman Act, that this was an illegal monopoly, and that this is something the court should address by striking down the baseball monopoly and giving leagues like the Federal League enough of a chance to compete.

BL: Judge Landis was known as a “trust buster” for issuing a then-record $29-million judgment for anti-competitive practices against the Standard Oil Company. But he was also known as a great baseball fan. Did the Federal League’s lawyers not take the latter into account when they brought their suit to Landis’ court?

NG: That's a really good question. The Federal League was based out of Chicago where Judge Landis was located. Throughout Chicago he had this reputation for being a huge baseball fan; he was apparently a particularly rowdy fan of the Chicago Cubs in their championship years back in the early 1900s. So given Landis' stature in the community and the Federal League was largely based out of Chicago, I think that they probably knew about it, and, if anything, they might have thought it would probably help them having a jurist who knew the system and understood the contract terms that they were going to be talking about — that that might give him a little more insight into what they were challenging.

BL: On the first day of the hearing, 10 bailiffs were required as 600 spectators crammed into a courtroom meant to accommodate only about 200. Did they see a good show?

NG: I think they did, although I'm a little biased perhaps. The Federal League launched into its argument about how the Major Leagues had monopolized the industry. In particular, they really focused on the effect that the "baseball trust," as they called it, had on the average player. This reserve clause that was in place at the time — where a player had to renew his contract with the team for the following year — the players didn't have any mobility or freedom. And on the flip side, teams could cut a player with 10 days notice for any reason at all. So you have this weird situation where the player was bound for decades potentially, and the team no more than 10 days. And the Federal League tried to emphasize the negative effect that could have on professional ballplayers in the United States.

BL: When the hearing ended, the press predicted Judge Landis would issue his ruling in as little as three weeks. Did observers have similar views on who would be declared the winner?

[sidebar title="Remembering Bart Giamatti" width="630" align="right"]Bart Giamatti, who passed away 25 years ago last September, served as MLB commissioner from 1988 to 1989.[/sidebar]NG: People were a little bit unsure. Major League Baseball had argued that "We're not actually bound by federal trust law because we aren't commerce, and we're not interstate commerce especially. Therefore the Sherman Act doesn't apply to us in the first place."

At the end of the trial, people were leaning towards the big question being would Judge Landis find he has jurisdiction, and then, if so, he would probably issue a limited ruling in the Federal League's favor, although, you know, not breaking up the entire Major League monopoly.

BL: Judge Landis delayed his ruling for more than a year, by which time the Federal League had dissolved and most of its owners had been compensated by Major League Baseball. By all accounts, Landis wasn’t having trouble deciding which way to rule. So why didn’t he rule?

NG: He determined that if he issued a ruling, that it would be so damaging to baseball, and so damaging to the national pastime, that both sides would end up losing — not just the American and National Leagues, but the Federal League would also come out a loser. He determined that it was within his discretion to withhold a ruling that would injure the national pastime, and so therefore he decided to sit on the case in the hopes that both parties would eventually resolve it themselves, which, of course, they did.

BL: Given the challenge regarding the salaries of minor league ballplayers, and the Oakland A's potential move, maybe this anti-trust exemption is about to fall.  What do you think?

NG: People have been predicting that for a long time, and it hasn't fallen yet. I mean we're more than 90 years into it and still here. It's an interesting time. I mean, usually baseball has maybe one of these challenges every 10 years or so, and now there's the two you mentioned plus the television case, so there's actually three different lawsuits going on. And I'd probably say that it's not going to be overturned any time soon, but I wouldn't be surprised if the court did eventually decide to weigh in on one of these pending cases.

This segment aired on January 17, 2015.


More from Only A Game

Listen Live