Another Failed Pickoff Attempt: The Latest Challenge to MajorLeague Baseballâ•Žs Antitrust Exemption

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Volume 41 Issue 1 Article 6

Another Failed Pickoff Attempt: The Latest Challenge to Another Failed Pickoff Attempt: The Latest Challenge to

MajorLeague Baseball’s Antitrust Exemption MajorLeague Baseball’s Antitrust Exemption

Rosby Carr III

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Student Comments

Another Failed Pickoff Attempt: The Latest Challenge to Major

League Baseball’s Antitrust Exemption

ROSBY CARR III

INTRODUCTION

“Baseball has been the national pastime for over one hundred years and

enjoys a unique place in our American heritage. Major league professional

baseball is avidly followed by millions of fans, looked upon with fervor and

pride and provides a special source of inspiration and competitive team

spirit especially for the young.”

Baseball plays an important role in the

fabric of American culture. However, baseball has changed drastically

since the first professional game played back in 1871.

Today professional

baseball is big business in the United States with combined 2012 annual

revenues of $7.5 billion.

Major League Baseball (“MLB”) teams must

weigh the cost and benefits of maintaining an appropriate payroll while



Law Clerk to the Honorable Carol L. Van Horn, President Judge of the 39th Judicial District Court of

Common Pleas Franklin/Fulton Counties, Chambersburg, Pennsylvania; Ohio Northern University, J.D.,

2014 (Magna Cum Laude); Juniata College, B.A. in Political Science, 2010. I would like to thank my

family for all their unwavering support over the years.

1. Flood v. Kuhn, 407 U.S. 258, 266 (1972).

2. Jack F. Williams et. al., Public Financing of Green Cathedrals, 5 A

LB. GOV’T L. REV. 123,

127 (2012).

3. Matt Snyder, Report: MLB Revenues in 2012 Were $7.5 Billion, CBSS

PORTS.COM (Dec. 9,

2012, 3:42 PM) http://www.cbssports.com/mlb/eye-on-baseball/21335810/report-mlb-revenues-in-2012-

were-75-billion.

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172 OHIO NORTHERN UNIVERSITY LAW REVIEW [Vol. 41

remaining competitive on the field.

This is especially true for those that

are considered “small market” teams.

For the last ninety years, baseball continues to receive a special

immunity from the Sherman Act and other federal antitrust laws.

Starting

in 1922, the United States Supreme Court granted baseball an antitrust

exemption.

This allowed MLB to control many facets and activities related

to baseball that other professional sports leagues, such as the National

Football League (“NFL”) and National Basketball Association (“NBA”),

cannot.

Despite being widely criticized by many legal scholars and courts,

neither the Supreme Court nor Congress has eliminated the exemption.

Among other things, the exemption allows MLB and owners of teams

through concerted activity, to place very restrictive requirements on the

ability of a franchise to move to a new city or market.

The Supreme Court

struck down similar restrictions on franchise relocation in other professional

sport leagues, which do not enjoy the benefit of an antitrust exemption.

Part I of this comment provides an overview of the three Supreme Court

cases that established baseball’s antitrust exemption, often called the

“Supreme Court baseball trilogy.”

Further, Part I explores how the Court

has denied expanding the exemption to other professional sports leagues.

Part II outlines the current scope of MLB’s antitrust exemption and the

three standards the lower courts have articulated in attempting to define it.

The majority of lower courts conclude that MLB’s antitrust exemption

applies to any activities that are related to the “business of baseball.”

This

comment argues that this is the wrong standard based on the Supreme Court

baseball trilogy.

Part III explains the latest challenge to MLB’s antitrust exemption as it

applies to franchise relocation.

This challenge centers on the proposed

4. See Adam Holzman, In Baseball, No Competitive Balance Without Financial Balance, YALE

DAILY NEWS (Nov. 3, 2010), http://yaledailynews.com/blog/2010/11/03/holzman-in-baseball-no-

competitive-balance-without-financial-balance/.

5. See id.

6. Fed. Baseball Club of Balt. v. Nat’l League of Prof’l Baseball Clubs, 259 U.S. 200, 208-09

(1922).

7. Id.

8. Id.

9. See Toolson v. New York Yankees, Inc., 101 F. Supp. 93, 94 (S.D. Ca. 1951).

10. See discussion infra Part III.A-B.

11. See discussion infra Part II.D.

12. See discussion infra Part II.A-C.

13. See discussion infra Part II.D.

14. See discussion infra Part III.A-C.

15. See discussion infra Part III.A.

16. See discussion infra Part V.

17. See discussion infra Part IV.

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2014] ANOTHER FAILED PICKOFF ATTEMPT 173

relocation of the Oakland Athletics to the city of San Jose.

Further Part III

provides a close examination of the reasons for the Oakland Athletics’

attempt to move to San Jose, the validity of MLB’s refusal to allow the

move, and how the refusal of the trial court to intervene illustrates the

importance of resolving the conflict in the lower courts as to the current

scope of any antitrust exemption MLB may enjoy.

Part IV provides the

analysis of the latest challenge and argues that the court should have applied

a different standard in interpreting the scope of MLB’s antitrust

exemption.

It also argues that the Supreme Court should review the

exemption and eliminate it because the Court itself recognized the

exemption became outdated, unrealistic, and illogical.

Finally, Part IV

concludes by asserting that the exemption facilitates competitive imbalance

in the MLB, and the exemption needs eliminated in regards to franchise

relocation in order to force MLB to adopt methods similar to that of other

professional sport leagues, such as a salary floor or other salary structures.

II.

THE ESTABLISHMENT OF BASEBALL’S ANTITRUST EXEMPTION:

HE SUPREME COURT BASEBALL TRILOGY

A. Federal Baseball Club of Baltimore, Inc. v. National League of

Professional Baseball Clubs

Over ninety years ago, the Supreme Court first considered the

application of federal antitrust law to baseball in Federal Baseball Club of

Baltimore, Inc. v. National League of Professional Baseball Clubs.

Federal Baseball, a baseball team of the then defunct Federal League

asserted that the American and National League (the two leagues that make

up MLB) were in violation of federal antitrust law, specifically Sections

One and Two of the Sherman Act.

The plaintiff claimed that MLB had

conspired to monopolize the business of baseball by deliberately destroying

the Federal League by buying up many of its constituent clubs and

motivating all the remaining clubs except the plaintiff to leave the league.

The plaintiffs received a judgment in federal district court for $240,000.

18. See discussion infra Part IV.

19. See discussion infra Part IV.

20. See discussion infra Part V.A.

21. See discussion infra Part V.B.

22. See discussion infra Part V.C.

23. Fed. Baseball, 259 U.S. at 207-09.

24. Nat’l League of Prof’l Baseball Clubs v. Fed. Baseball Club of Balt., 269 F. 681, 682-83

(D.C. Cir. 1920).

25. Fed. Baseball, 259 U.S at 207.

26. Nat’l League, 269 F. at 682.

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The Court of Appeals of the District of Columbia reversed and the Supreme

Court granted certiorari.

In a unanimous opinion, the Court held that professional baseball did

not fit within the scope of federal antitrust law and therefore enjoyed an

exemption.

Writing for the Court, “Justice Oliver Wendell Holmes, a

former amateur [professional] baseball player [himself,]”

employed a two-

part analysis.

First, Holmes looked to the method by which MLB

generated most of its revenue at the time of Federal Baseball.

Because a

majority of this revenue in 1922 came from the sale of tickets to a specific

game, Holmes concluded that professional baseball was not interstate in

nature and was a “purely state affair[s].”

Relying on the distinction in

Hooper v. California,

Holmes noted that the fact that players and fans

travel across state lines to different cities to see a game did not make

baseball interstate commerce because the transport itself was “a mere

incident, not the essential thing.”

Second, Holmes held that baseball did

not constitute commerce under the common legal understanding of those

terms at the time, because the “commerce” being sought was the “personal

effort” of the players at the exhibition games, and because it was “no[t]

related to production, [it] is not a subject of commerce.”

It is important to

note that based on the Court’s current interstate commerce jurisprudence

“professional baseball is unquestionably engaged in interstate commerce.”

Nevertheless, this deeply flawed opinion spawned an antitrust exemption

for professional baseball that precluded all antitrust liability until 1972,

and the remnants of which continue to result in unjust limitations on

franchise relocation.

27. Fed. Baseball, 259 U.S at 208.

28. Id. at 208-09.

29. Kevin E. Martens, Fair or Foul? The Survival of Small-Market Teams in Major League

Baseball, 4 M

ARQ. SPORTS L.J. 323, 343 (1994).

30. Fed. Baseball, 259 U.S at 208-09.

31. Id.

32. Id.

33. Hooper v. California, 155 U.S. 648 (1895).

34. Fed. Baseball, 259 U.S at 209.

35. Id.

36. Nathaniel Grow, Defining the “Business of Baseball”: A Proposed Framework for

Determining the Scope of Professional Baseball’s Antitrust Exemption, 44 U.C.

DAVIS L. REV. 557, 568

(2010) (citing Flood v. Kuhn, 407 U.S. 258, 282 (1972)).

37. See Flood, 407 U.S. at 285.

38. See Andrew E. Borteck, Note: The Faux Fix: Why a Repeal of Major League Baseball’s

Antitrust Exemption Would Not Solve Its Severe Competitive Balance Problem, 25

CARDOZO L. REV.

1069, 1081-82 (2004).

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2014] ANOTHER FAILED PICKOFF ATTEMPT 175

B. Toolson v. New York Yankees

Until Toolson v. New York Yankees

in 1951, the Supreme Court chose

not to reconsider the MLB’s antitrust exemption.

Toolson dealt with a

direct challenge to MLB’s reserve clause.

The reserve clause was

essentially “a provision included at the time in all baseball player contracts

that precluded players from negotiating future contracts with anyone but

their current employer.”

In Toolson, a baseball player with the New York

Yankees, assigned to one of their minor league teams, subsequently refused

to report.

Based on this refusal the Yankees declared him ineligible,

which prohibited him from playing for any other MLB organization.

The

player brought suit, claiming that the reserve clause violated the Sherman

Act.

In a one paragraph, per curium decision, the Supreme Court affirmed

the decision in Federal Baseball by a 7-2 vote.

Again, the Court held that

federal antitrust laws do not apply to baseball.

In reaching this conclusion,

the Court attempted to shift the burden of addressing whether baseball

should enjoy an antitrust exemption to Congress.

The Court noted that

Congress had proposed no legislation on whether federal antitrust laws

should affect Major League Baseball and that if Congress wanted to

eliminate the exemption they alone retained the duty to do so.

The Court

did not mention its reasoning in Federal Baseball.

Rather, the Court’s

holding relied on the idea that Congress never intended baseball to be

subject to federal antitrust law as demonstrated by the fact that Congress

remained silent on the issue despite the holding in Federal Baseball thirty

years prior.

39. 346 U.S. 356 (1953).

40. See Toolson, 346 U.S. at 357.

41. See Toolson, 346 U.S. at 362 (J. Burton dissenting).

42. Grow, supra note 36, at 561 (citing Ryan T. Dryer, Beyond the Box Score: A Look at

Collective Bargaining Agreements in Professional Sports and Their Effect on Competition, 2008 J.

DISP.

RESOL. 267, 268 (2008); Joshua P. Jones, A Congressional Swing and Miss: The Curt Flood Act, Player

Control, and the National Pastime, 33 G

A. L. REV. 639, 642 (1999); Joseph A. Kohm, Jr., Baseball’s

Antitrust Exemption: It’s Going, Going . . . Gone!, 20 N

OVA L. REV. 1231, 1234-35 (1996)).

43. Toolson, 101 F. Supp. 93.

44. Id.

45. Id.

46. Toolson, 346 U.S. at 357.

47. Id.

48. Id.

49. Id.

50. Id.

51. Toolson, 346 U.S. at 357.

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C. Flood v. Kuhn and The Curt Flood Act

In Flood v. Kuhn,

the Supreme Court issued its final decision to date

on whether MLB is exempt from federal antitrust law.

Unlike the claim in

Toolson, brought by a career minor leaguer,

the claim in Flood was

brought by St. Louis Cardinal star outfielder Curt Flood.

By the end of his

career Flood was a 7-time gold glove winner, a 3-time all-star, and a two-

time World Series champion.

However in 1969, despite Flood’s

outspoken resistance, he was traded from the St. Louis Cardinals to the

Philadelphia Phillies.

Flood refused to play for the Phillies, and asked that

baseball commissioner Bowie Kuhn declare him a free agent.

Not

surprisingly Kuhn declined Flood’s request, citing the reserve clause.

a result, Flood brought a claim alleging that the reserve clause violated

federal and state antitrust law.

Relying on Federal Baseball and Toolson,

the district court granted judgment in favor of Kuhn and the court of appeals

affirmed.

In a majority opinion written by Justice Blackmun, the Supreme Court

affirmed the decision of the court of appeals in a 5-3 vote.

The Flood

Court initially examined the decisions in Federal Baseball and Toolson.

Given changes in the Court’s interstate commerce jurisprudence and the

nature of baseball economics, the Court acknowledged that professional

baseball was now certainly “a business and it is engaged in interstate

commerce.”

This essentially eviscerated the reasoning relied upon in

Federal Baseball.

Further, it noted that subsequent Supreme Court

decisions refused to extend the exemption to other professional sports such

as football, basketball, and boxing, making Federal Baseball and Toolson

an aberration confined to baseball.

Despite stating that the Court itself

previously recognized that the distinction between baseball and other

professional sports was “unrealistic, inconsistent, and illogical,” the Court

52. Flood, 407 U.S. at 259.

53. Id.

54. Grow, supra note 36, at 569.

55. Flood, 407 U.S. 258 at 264.

56. Curt Flood, B

ASEBALL-REFERENCE.COM, http://www.baseball-

reference.com/players/f/floodcu01.shtml (last visited Oct. 15, 2014).

57. Flood, 407 U.S. at 265.

58. Id.

59. Id.

60. Id.at 265-66.

61. Flood v. Kuhn, 443 F.2d 264, 265,-67 (2nd Cir. 1971).

62. See Flood, 407 U.S. at 259-85.

63. See id.at 265-68.

64. Id.at 282.

65. See generally Federal Baseball, 259 U.S. 200.

66. See Flood, 407 U.S. at 282-83.

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2014] ANOTHER FAILED PICKOFF ATTEMPT 177

stated that the aberration is an established one” and had been recognized in

five total Supreme Court decisions for over half a century.

Thus, the

Court concluded that the exemption was entitled to stare decisis.

Additionally, the Court expressed its concern over retroactivity problems

that might result if Federal Baseball was overturned.

The Court again

stressed that Congress, by its positive inaction, had allowed the Supreme

Court decisions creating baseball’s antitrust exemption to stand and this

“clearly evinced a desire not to disapprove [of it] legislatively.”

affirming baseball’s antitrust exemption, the majority concluded “what the

Court said in Federal Baseball in 1922 and what it said in Toolson in 1953,

we say again here in 1972: the remedy, if any is indicated, is for

congressional, and not judicial, action.”

At this point in baseball’s labor history, the players formed a union.

The players, through Major League Baseball Players Association

(“MLBPA”), negotiated for a grievance and arbitration procedure in the

1970 Collective Bargaining Agreement (“CBA”).

Through this process,

the players challenged the reserve clause and, in 1975, Arbitrator Peter Seitz

ruled that the reserve clause, as it had been interpreted, was incorrect and

that it held only for one year and thus created the free agent.

This resulted

in a quick death for the reserve clause, with many other sports leagues soon

following.

Congress opted not to respond to the Court’s decision in Flood

until 1998.

Finally, seventy years after Federal Baseball, Congress

altered baseball’s antitrust exemption through the Curt Flood Act

(“CFA”).

However, the CFA repealed baseball’s antitrust trust exemption

in a narrow and limited way.

Specifically, it only “allow[ed] current

major league players to file antitrust suits against MLB.”

67. Id.at 283.

68. See id.at 282.

69. See id at 283-84.

70. Id.at 284.

71. Flood, 407 U.S. at 285.

72. P

AUL D. STAUDOHAR, PLAYING FOR DOLLARS: LABOR RELATIONS AND THE SPORTS

BUSINESS 27 (3d ed. 1996).

73. See id. at 28.

74. Id.

75. Id.

76. Grow, supra note 36, at 575.

77. 15 U.S.C. § 26b (2012).

78. See Grow, supra note 36, at 575.

79. Id.

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D. Major League Baseball’s Antitrust Exemption Has Not Been

Extended to Other Sports

As the Supreme Court mentioned in Flood, baseball’s antitrust

exemption has not been extended to other industries or professional sports.

For example, in United States v. Shubert

the Court refused to extend

baseball’s antitrust exemption to a theater company.

The Shubert Court

held that the antitrust exemption established in Federal Baseball applies

only to baseball and nothing more.

The Supreme Court also refused to

extend the exemption to professional boxing.

In Radovich v. National

Football League,

the Supreme Court considered whether the exemption

was available to the NFL.

Despite the fact that professional baseball and

football seem very similar, the Court refused to extend the exemption to the

NFL.

The Radovich Court concluded that Federal Baseball applied only

to professional baseball and would likely be decided differently if it were

brought today.

For similar reasons the Court also refused to extend the

exemption to the NBA in Haywood v. National Basketball Association.

III.

THE SCOPE OF BASEBALL’S ANTITRUST EXEMPTION

Although the aforementioned Supreme Court jurisprudence established

that professional baseball has an exemption from federal antitrust law, it has

done little to define its scope.

Defining this scope has been left up to the

lower courts.

In order to determine if restrictions on franchise relocation

should be subject to baseball’s antitrust exemption, analysis of this scope is

imperative.

The lower courts have articulated three different standards for

defining the scope of baseball’s antitrust exemption.

80. See Flood, 407 U.S. at 282-83.

81. 348 U.S. 222 (1955).

82. Id.at 227-29.

83. Id.at 228.

84. See United States v. Int’l Boxing Club of New York, 348 U.S. 236, 243-44 (1955).

85. 352 U.S. 445 (1957).

86. See id. at 446.

87. Id. at 451-52.

88. Id.

89. 401 U.S. 1204, 1205-06 (1971).

90. Grow, supra note 36, at 580.

91. Id. at 580-81.

92. See discussion infra Part III.

93. See Grow, supra note 36, at 580-81.

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2014] ANOTHER FAILED PICKOFF ATTEMPT 179

A. The “Business of Baseball” is exempt from antitrust law

A majority of lower courts hold that the scope of baseball’s antitrust

exemption protects the “business of baseball.”

Most of these courts have

construed the business of baseball broadly; encompassing almost all

activities associated with both baseball and non-baseball entities.

The first

court to issue an opinion defining the scope of the business of baseball was

the Seventh Circuit Court of Appeals in Charles O. Finley & Co. v. Kuhn.

In Finley, the plaintiff attempted to sidestep dismissal of his antitrust claim

by baseball’s exemption by claiming that Flood had limited the exemption

to protect only baseball’s reserve clause.

The Seventh Circuit rejected this

argument, contending that the Supreme Court baseball trilogy did not

specifically limit the exemption to any particular facet of baseball, but

rather to the business of baseball as a whole.

The court did note that the

exemption may not apply to all activities, such as those with only an

attenuated relationship to the business of baseball.

Two other courts, the Eleventh Circuit Court of Appeals and the Eastern

District of Louisiana, have also found that the exemption applies to the

business of baseball.

100

Although neither was specific about the limits of

the exemption, the Eleventh Circuit concluded that it applied to activities

that play an “integral part [to] the business of baseball.”

101

In Minnesota

Twins Partnership v. State,

102

the Supreme Court of Minnesota concluded

that the sale and relocation of a baseball franchise was “an integral part of

the business of professional baseball” and therefore was protected by the

exemption.

103

However, other courts have held that the exemption is not

unlimited, and may not apply to some dealings with teams and third

parties.

104

Despite the “business of baseball” being the majority approach in

defining the exemption’s scope, the lower courts have been too vague in

specifying exactly what this entails in order to promulgate a workable

standard for future courts.

105

94. Id. at 581.

95. Id.

96. 569 F.2d 527 (7th Cir. 1978).

97. Id. at 540.

98. Id. at 541.

99. Id. at 541 n. 51.

100. See Prof’l Baseball Sch. & Clubs, Inc. v. Kuhn, 693 F.2d 1085, 1085-86 (11th Cir. 1982); see

also New Orleans Pelicans Baseball, Inc. v. Nat’l Ass’n of Prof’l Baseball Leagues, Inc., CIV. A. 93-

253, 1994 WL 631144, 8-9 (E.D. La. Mar. 1, 1994).

101. See Prof’l Baseball Sch., 693 F.3d. at 1086.

102. 592 N.W.2d 847 (Minn. 1999).

103. See id. at 856.

104. See Major League Baseball v. Crist, 331 F.3d 1177, 1183 (11th Cir. 2003).

105. See Grow, supra note 36, at 580-85.

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180 OHIO NORTHERN UNIVERSITY LAW REVIEW [Vol. 41

B. The Exemption Applies Only to the Reserve Clause

A few courts have taken the approach that baseball’s antitrust

exemption applies only to the reserve clause.

106

Because the reserve clause

was eliminated by the 1970 CBA, these courts concluded that the exemption

is essentially obsolete.

107

This standard was first articulated by the Eastern

District of Pennsylvania in Piazza v. Major League Baseball.

108

In Piazza,

an investment group led by Vincent Piazza

109

and Vincent Trendi attempted

to purchase and move the Giants from San Francisco to Tampa Bay,

Florida.

110

Despite having the highest bid of $115 million, the MLB

rejected the proposed sale based on issues that arose after it did a

background check of the two businessmen.

111

Instead, the Giants were sold

to a group that kept the team in San Francisco.

112

Piazza and Triendi

brought suit against MLB, alleging violations of the Sherman Act.

113

response, MLB filed a motion to dismiss based on its antitrust exemption.

114

In an unexpected twist, the court denied the motion, finding that MLB’s

antitrust exemption did not apply because it was limited solely to the

reserve clause.

115

The court reached this conclusion by examining the

Supreme Court baseball trilogy and finding that, in each case, the factual

context involved the reserve clause.

116

Further, the court found that Flood

had “stripped [both] Federal Baseball and Toolson [of] any precedential

value.”

117

The court then analyzed Flood and found it clear that the

decision intended to limit the exemption only to the reserve clause based on

numerous references to the clause in the decision.

118

The Supreme Court of Florida followed the reasoning of Piazza just two

years later in Buttersworth v. National League of Professional Baseball

Clubs.

119

The court in Buttersworth agreed with Piazza in all major aspects,

including that Flood had dealt a serious blow to the precedential value of

106. Id. at 585.

107. Id. at 585-86.

108. 831 F. Supp. 420 (E.D. Pa. 1993).

109. Vincent Piazza was the father of former all-star slugging catcher Mike Piazza. See Vincent

Piazza, T

HE GAZETTE (Sept. 30, 2013),

http://www.montrealgazette.com/sports/Vincent+Piazza+left+father+former+York+Mets+catcher+Mike

+Piazza+weeps+speaks+during+ceremony+inducting+into+Mets+Hall+Fame+Sunday+Sept+2013+Yor

k+Piazza+wife+Alicia+right+consoles+Piazza+father/8979542/story.html.

110. See Piazza, 831 F. Supp. at 422.

111. Id. 422-23.

112. Id. at 423.

113. Id. at 423-24.

114. Id. at 424, 433.

115. Piazza, 831 F. Supp at 421.

116. Id. at 435.

117. Id. at 436.

118. Id. at 437.

119. 644 So. 2d 1021 (Fla. 1994).

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2014] ANOTHER FAILED PICKOFF ATTEMPT 181

both Federal Baseball and Toolson.

120

One year later, the Second District

Court of Appeals of Florida also held that MLB’s antitrust exemption was

limited to the reserve clause in Morsani v. Major League Baseball.

121

The

decision in Piazza and the two Florida cases that followed it “ha[ve] been

quite controversial.”

122

This comment asserts that the decision in Piazza

was correctly decided and that the court in City of San Jose should have

followed it for the reasons discussed in Part IV below.

123

C. “Unique Characteristics and Needs” Standard for the Exemption

Two courts have taken the approach that MLB’s antitrust exemption

protects activities somewhere between the “business of baseball” and just

the reserve clause.

124

These courts have defined the scope of the exemption

to protect only baseball’s “unique characteristics and needs.”

125

In 1982,

the Southern District of New York first articulated this standard, concluding

that the exemption did not extend to activities that dealt with only

enhancing commercial success of MLB but instead activities that were

integral to the league, clubs, and players.

126

The case, Henderson

Broadcasting Corp. v. Houston Sports Ass’n. Inc.,

127

involved a radio

station’s claim that the Houston Astros cancelling a contract and giving it to

another radio station violated federal antitrust laws.

128

The Astros’ attempt

to shield itself through baseball’s antitrust exemption was struck down

because the court concluded that radio broadcasting was not part of baseball

in the way players, teams, and the reserve clause are.

129

In 1992, Postema v.

National League of Professional Baseball Clubs,

130

adopted a similar

reasoning, holding that umpire employment relations was not an essential

part of baseball and therefore was not protected by the exemption.

131

Thus,

these two courts have concluded that the exemption protects more than

simply the reserve clause but only the unique characteristics and needs of

baseball.

132

120. Id. at 1025.

121. 663 So. 2d 653 (Fla. Dist. Ct. App. 1995).

122. See Grow, supra note 36, at 589.

123. See infra Part V.

124. Grow, supra note 36, at 589.

125. Id. (citing Flood, 407 U.S. at 282).

126. Henderson Broad. Corp. v. Houston Sports Ass’n, Inc., 541 F. Supp. 263, 265 (S.D. Tex.

1982).

127. Id.

128. Id. at 264.

129. Id.

130. 99 F. Supp. 1475 (S.D.N.Y. 1992)

131. Postema v. Nat’l League of Prof’l Baseball Clubs, 799 F. Supp. 1475, 1489 (S.D.N.Y. 1992).

132. Grow, supra note 36, at 589.

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182 OHIO NORTHERN UNIVERSITY LAW REVIEW [Vol. 41

IV.

THE LATEST CHALLENGE TO BASEBALL’S ANTITRUST EXEMPTION:

CITY OF SAN JOSE V. OFFICE OF COMMISSIONER OF BASEBALL

The latest challenge to MLB’s antitrust exemption has once again arisen

over whether it protects restriction on franchise relocation.

133

On June 18,

2013, the City of San Jose brought suit against the Office of the

Commissioner of Baseball and Allan Huber “Bud” Selig (collectively,

“MLB”).

134

The suit claimed that MLB had violated the Sherman Act,

Cartwright Act, and state tort and unfair competition laws by refusing to

approve the Oakland Athletics (“the A’s”) proposed relocation from

Oakland to San Jose.

135

MLB moved to dismiss the claim based on

baseball’s antitrust exemption asserting that franchise relocation falls under

the “business of baseball.”

136

The A’s are an American League baseball team and are located in

Oakland, California.

137

The club was founded in 1901 as the Philadelphia

A’s.

138

They won an impressive five World Series through 1930.

139

This

was tied for the most of any team during that time period.

140

The club

moved to Kansas City in 1955.

141

Thirteen years later, the A’s moved from

Kansas City to Oakland.

142

The A’s won three straight World Series from

1972-74 and were also dominant in the 1990s, capturing three American

League Pennants and the 1989 World Series.

143

Despite being a perennial

playoff contender from 2000-2013, the A’s have not returned to the World

Series since 1990.

144

Because of an outdated stadium and dwindling attendance, the A’s

began negotiating with the city of San Jose and various interest groups

associated with it in 2004 about the possibility of relocation.

145

Despite

support from San Jose, MLB and Bud Selig delayed approving the A’s

relocation for over four years.

146

There is little dispute that MLB intended

to reject the A’s relocation request.

147

This is largely due to the fact that

133. See City of San José v. Office of Comm’r of Baseball, C-13-02787 RMW, 2013 WL 5609346

(N.D. Cal. Oct. 11, 2013) at 1-2.

134. Id. at 2.

135. Id.

136. Id.

137. Id. at *3.

138. City of San José, 2013 WL 5609346 at *3.

139. World Series Winners, H

ISTORIC BASEBALL,

http://www.historicbaseball.com/wseries/WS_winners.html (last visited Oct. 15, 2014).

140. Id.

141. City of San José, 2013 WL 5609346 at *3.

142. Id.

143. Id.

144. Id. at *8.

145. Id.

146. City of San José, 2013 WL 5609346 at 14.

147. Id. at 3.

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2014] ANOTHER FAILED PICKOFF ATTEMPT 183

San Jose falls within the San Francisco Giants operating territory according

to the MLB constitution.

148

Under the MLB constitution, the A’s relocation

to San Jose would require approval by three-fourths of MLB clubs.

149

The

San Francisco Giants have openly expressed their disapproval of the A’s

relocating into their operating territory and given this, it is extremely

unlikely the A’s would be able to obtain the three-fourths majority approval

necessary for relocation.

150

As a result, the city of San Jose brought suit

against MLB, alleging

that the territorial rights restrictions in the ML Constitution and

MLB’s failure to act on the territorial dispute restrains competition

in the bay area baseball market, perpetuates the Giants’ monopoly

over the [Santa Clara]market, and creates anticompetitive effects

that lead to consumer harm in violation of federal and state antitrust

laws.

151

On October 11, 2013, the Northern District of California granted

MLB’s motion to dismiss San Jose’s federal and state antitrust claims.

152

The court began its analysis by reviewing the Supreme Court’s baseball

trilogy and the scope of the exemption as defined by the circuit courts post

Flood.

153

The court acknowledged that many courts have found the

exemption to be illogical and that given the current interstate nature of

baseball today it makes little sense.

154

Despite correctly recognizing that the

exemption is essentially an “aberration” confined to baseball, the court

refused to limit the exemption only to the reserve clause.

155

Instead the

court adopted the “business of baseball” majority approach in determining

what activities the exemption protects.

156

Because franchise relocation is

clearly within the business of baseball, the court had little trouble deciding

that the exemption applied.

157

Further, the court explained that even if it

applied the “unique characteristics and needs” test articulated in Henderson

and Postema, that franchise relocation was integral to the league’s structure

and thus still falls within the exemption.

158

Finally, the court acknowledged

148. Id.

149. Id.

150. Id.

151. Id. at *4.

152. City of San José, 2013 WL 5609346 at *2.

153. Id. at *2.

154. Id. at *5..

155. Id. at *10.

156. Id. at *11.

157. City of San José, 2013 WL 5609346 at *11.

158. Id.

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184 OHIO NORTHERN UNIVERSITY LAW REVIEW [Vol. 41

Piazza, but expressly refused to follow it.

159

Like so many other lower

courts, the court refused to remedy such an inconsistent and irrational

doctrine, and instead shifted the burden of doing so to Congress.

160

ANALYSIS - WHY THE DECISION IN CITY OF SAN JOSE WAS IMPROPER

AND

WHY THE SUPREME COURT SHOULD ELIMINATE MLB’S ANTITRUST

EXEMPTION FOR GOOD

This comment argues that the decision in City of San Jose was

improper. The court in City of San Jose should have abandoned the

majority approach concluding that baseball’s antitrust exemption applies to

the “business of baseball.”

161

Instead, it should have relied on the approach

articulated in Piazza, which limited the scope of the exemption to only the

reserve clause.

162

Next, this comment asserts that the decision should be

accepted for review, and the Supreme Court should eliminate baseball’s

antitrust exemption. To start, the exemption is outdated and illogical.

163

Despite the fact that other professional sports, for all essential purposes are

the same as baseball, they have not been extended the same antitrust

exemption.

164

This is a reason the exemption has been one of the most

widely criticized judicially created doctrines in recent memory.

165

Second,

restrictions on franchise relocation provided for by baseball’s antitrust

exemption create competitive imbalance for smaller market teams looking

to generate additional local revenue by moving to larger or more profitable

cities or markets.

166

Further, because of the shield to antitrust law provided

to it by its exemption, MLB has no incentive to try superior solutions to

solve competitive imbalance problems that other professional sports have

been forced to take such as payroll floors, better revenue sharing, or a more

effective salary structure.

167

159. Id. at *10.

160. See id.

161. Id. at *11.

162. See generally Piazza, 831 F. Supp. 420.

163. See City of San José, 2013 WL 5609346 at *5.

164. See discussion infra Part II.4.

165. See, e.g., Robert G. Berger, After the Strikes: A Reexamination of Professional Baseball’s

Exemption from the Antitrust Laws, 45 U.

PITT. L. REV. 209, 209 (1983); H. Ward Classen, Three Strikes

and You’re Out: An Investigation of Professional Baseball’s Antitrust Exemption, 21 A

KRON L. REV.

369, 369 (1988); Connie Mack & Richard M. Blau, The Need for Fair Play: Repealing the Federal

Baseball Antitrust Exemption, 45

FLA. L. REV. 201, 204 (1993); Brittany Van Roo, One Trilogy That

Should Go Without A Sequel: Why the Baseball Antitrust Exemption Should Be Repealed, 21 M

ARQ.

SPORTS L. REV. 381, 381 (2010).

166. See discussion infra Part IV.C.

167. See discussion infra Part V.C.

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2014] ANOTHER FAILED PICKOFF ATTEMPT 185

A. The Court in City of San Jose Should Have Applied Piazza

The court in City of San Jose and the majority of other courts have

defined the scope of baseball’s antitrust exemption as applying to the

“business of baseball.”

168

This comment argues that the court in City of San

Jose should have adopted the minority approach articulated in Piazza.

169

Although some commentators have criticized Piazza,

170

this comment

argues that it provides the correct standard for determining the scope of

baseball’s antitrust exemption.

In Piazza, the Eastern District of Pennsylvania concluded that MLB’s

antitrust exemption was limited solely to baseball’s reserve clause.

171

Two

additional courts have since agreed with the reasoning of Piazza.

172

Critics

first attack Piazza by alleging that it misinterpreted Flood.

173

These critics

assert that Judge John Padova relied too much on four references to the

reserve clause cited in Flood.

174

This is simply untrue. Although the court

mentioned the significance of these references, its decision did not rest

solely on them.

175

Rather the court correctly asserted that Flood “stripped

from Federal Baseball and Toolson any precedential value th[e]se cases

may have [had] beyond the particular facts there involved, i.e., the reserve

clause.”

176

In reviewing Flood, the Piazza court noted that unlike Toolson,

the Supreme Court made it clear that the reasoning in Federal Baseball, that

baseball was not engaged in interstate commerce, was no longer applicable

because the economics of baseball had changed very significantly since

1922.

177

It is clear baseball is now engaged in interstate commerce and thus

Flood “entirely undercut [any of] the precedential value” that the reasoning

in Federal Baseball had relied upon.

178

With Federal Baseball’s precedential value all but eviscerated, the court

in Piazza then examined why Toolson had followed Federal Baseball.

179

Three of the four reasons articulated dealt with the desire to leave remedy to

Congress and their perceived awareness of the problem since 1922 and its

fear of the consequences of retroactivity.

180

However, the fourth reason

168. See City of San José, 2013 WL 5609346 at *32-33; see also Finley, 569 F.2d at 541.

169. See Piazza, 831 F. Supp. at 438.

170. Grow, supra note 36, at 593-95.

171. Piazza, 831 F. Supp. at 436.

172. Buttersworth, 644 So. 2d at 1022; Morsani, 663 So. 2d at 654.

173. Grow, supra note 36, at 593-95.

174. Id.

175. See Piazza, 831 F. Supp. at 438.

176. Id. at 436.

177. Id. at 435-36.

178. Id. at 436.

179. Id.

180. Piazza, 831 F. Supp. at 436.

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186 OHIO NORTHERN UNIVERSITY LAW REVIEW [Vol. 41

articulated in Toolson for following Federal Baseball was “[t]he fact that

baseball was left alone to develop for that period upon the understanding

that the reserve system was not subject to existing antitrust laws.”

181

Based

on this reason it is clear that the Flood Court viewed both cases before it as

being limited to the reserve system and not the game generally.

182

Indeed,

nowhere in either Federal Baseball or Toolson does it explicitly state that

the exemption applies to the business of baseball generally. Instead, both

cases involved issues at least largely related to baseball’s reserve clause as

was also the case in Flood.

183

The court in Piazza also correctly identified the implications of

Toolson. The decision by the Supreme Court in Toolson was a one

paragraph, per curium decision.

184

Thus, the Supreme Court had little room

to articulate any new standard for the scope of the exemption and refrained

from doing so.

185

Some commentators have claimed that “Toolson had

fundamentally altered the basis for baseball’s antitrust exemption.”

186

This

interpretation incorrectly reads Toolson. Although Toolson never

mentioned baseball’s status as interstate commerce, which was the

foundation for Federal Baseball

187

and expressly rejected by Flood,

188

still affirmed the decision in Federal Baseball “so far as that decision

determines that Congress had no intention of including the business of

baseball within the scope of the federal antitrust laws.”

189

However, this

sentence merely extends an additional rationale for the Toolson decision.

190

It neither indicates that Toolson did not rely on Federal Baseball; nor was it

not a decision based on stare decisis.

191

In fact, less than two years after

Toolson, the Supreme Court stated in Shubert that “Toolson was a narrow

application of the rule of stare decisis.”

192

Since Toolson is therefore a

decision based on stare decisis, lower courts, until Flood, were bound by

the rule articulated in Federal Baseball.

193

That rule stated “that the

business of baseball [was] not interstate commerce and [did not fall under]

the Sherman Act.”

194

As a result, “baseball’s reserve system is exempt from

181. Id.

182. Id.

183. Id.

184. See Toolson, 346 U.S. at 356-57.

185. Piazza, 831 F. Supp. at 435-36.

186. Grow, supra note 36, at 596.

187. See Federal Baseball, 259 U.S. at 208-09.

188. Flood, 407 U.S. at 282.

189. Toolson, 346 U.S. at 357.

190. See Piazza, 831 F. Supp. at 436.

191. Id.

192. Shubert, 348 U.S. at 230.

193. Piazza, 831 F. Supp. at 438.

194. Id.

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2014] ANOTHER FAILED PICKOFF ATTEMPT 187

[federal] antitrust laws.”

195

Piazza correctly asserted that Flood invalidated

Federal Baseball’s reasoning regarding interstate commerce and instead

adopted the approach that baseball’s antitrust exemption applied only to the

reserve clause.

196

The importance of the references made regarding the reserve system in

Flood can also not be overstated.

197

The court in Piazza correctly

highlighted this.

198

The Court in Flood even begins its opinion by stating

“[f]or the third time in 50 years the Court is asked specifically to rule that

professional baseball’s reserve system is within the reach of the federal

antitrust laws.”

199

Clearly the Flood Court believed it was being asked to

specifically make a decision on baseball’s reserve clause and not other

activities related to the business of baseball.

200

In its reasoning, the Flood

court stated in its second sentence that “[w]ith its reserve system enjoying

exemption from the federal antitrust laws, baseball is, in a very distinct

sense, an exception and an anomaly. Federal Baseball and Toolson have

become an aberration confined to baseball.”

201

The Court also specifically

references the reserve clause additional times.

202

However, as the court in

Piazza correctly points out, nowhere in any of the Supreme Court Trilogy

cases does it specifically rule that the business of baseball is not within the

reach of antitrust law.

203

Piazza was therefore correct in asserting that the

Supreme Court reads Federal Baseball and Toolson as reserve clause

cases.

204

Unlike other courts, Piazza correctly articulated the scope of

baseball’s antitrust exemption to being solely limited to the reserve

clause.

205

Because the reserve clause was eliminated in 1976, the

exemption is essentially obsolete and should not be used to restrict activities

such as franchise relocation.

206

B. The Exemption is Unrealistic, Inconsistent, and Illogical

This comment further asserts that MLB’s antitrust exemption should be

eliminated because it is “unrealistic, inconsistent and illogical.”

207

Although the exemption may have had some validity when it was originally

195. Id.

196. Id.

197. See Flood, 407 U.S. at 259, 282, 285.

198. See Piazza, 831 F. Supp. at 436, 438.

199. Flood, 407 U.S. at 259.

200. Id.

201. Id. at 282.

202. Id. at 282, 285.

203. Piazza, 831 F. Supp. at 439.

204. Id. at 435-36.

205. Id. at 438.

206. See S

TAUDOHAR, supra note 72, at 35.

207. Radovich, 352 U.S. at 451-52.

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188 OHIO NORTHERN UNIVERSITY LAW REVIEW [Vol. 41

created in 1922 by Federal Baseball, it is now almost certainly outdated.

208

Numerous legal commentators have been highly critical of the judicially

created exemption over the last ninety years.

209

Despite refusing to abolish the doctrine, the Supreme Court has been

continually critical of the exemption.

210

Just four years after Toolson, the

Court acknowledged in Radovich that extending an antitrust exemption to

baseball and not other professional sports was “unrealistic, inconsistent, or

illogical.”

211

Further, the Court indicated that if Federal Baseball were

decided today rather than 1922, it would likely be decided far differently.

212

In Flood, the Court acknowledged the Second Circuit’s claim, in Salerno v.

American League of Professional Baseball Clubs,

213

that Federal Baseball

was not one of Justice Holmes’ “happiest days” and that “the rationale of

Toolson is extremely dubious.”

214

The Second Circuit further indicated that

because of the flawed reasoning of Federal Baseball and Toolson, it would

not be the least bit surprised if the Supreme Court decided to overrule

them.

215

The Court in Flood also concluded that the exemption was without

a doubt “an aberration confined to baseball.”

216

Despite acknowledging

there was no practical reason baseball should be an aberration, the Court

refused to eliminate the exemption because it was an “established

aberration.”

217

The principle reason the Supreme Court has articulated for continuing

to recognize baseball’s antitrust exemption is that it is entitled to stare

decisis and that Congress has failed to abolish the doctrine through

legislation.

218

Additionally, because the CFA only repealed baseball’s

antitrust exemption in a narrow limited way, one might assume that

Congress expressly agrees with Federal Baseball that MLB should be

afforded an exemption for the “business of baseball.”

219

This reasoning is

flawed for numerous reasons. To begin, MLB’s antitrust exemption was

judicially created.

220

It was not implemented through prior legislation that

Congress has decided not to repeal.

221

Instead, MLB’s antitrust exemption

208. See Classen, supra note 165, at 387.

209. Id.

210. See Flood, 407 U.S. at 283-84; Radovich, 353 U.S. at 452; Shubert, 348 U.S. at 229-30.

211. Radovich, 352 U.S. at 451-52.

212. Id. at 452.

213. 429 F.2d 1003 (1970).

214. Flood, 407 U.S. at 268 n.9 (quoting Salerno, 429 F.2d at 1005).

215. Salerno, 429 F.2d at 1005.

216. Flood, 407 U.S. at 282.

217. Id.

218. See Mack, supra note 165, at 205-06.

219. See Grow, supra note 36, at 575-76.

220. Mack, supra note 165, at 205.

221. Id.

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2014] ANOTHER FAILED PICKOFF ATTEMPT 189

is the consequence of the flawed reasoning of Federal Baseball and

Toolson, reasoning which the Supreme Court itself acknowledges is

“unrealistic, inconsistent, [and] illogical.”

222

Simply because MLB has been

able to persuade legislators from abolishing the special status it receives

each time Congress has considered eliminating the exemption, does not

make the doctrine any less flawed.

223

The exemption allows MLB to

regulate franchise relocation in a way that would be a violation of federal

antitrust law in almost any other context.

224

The Supreme Court has recognized that simply because Congress fails

to act on an enormous decision, the Court is not absolved from reexamining

its own precedent.

225

One of the reasons for this is because Congress may

be unaware of the problem.

226

In this context, the CFA illustrates that

Congress is clearly aware of the issues regarding baseball’s antitrust

exemption.

227

However, there are multiple other reasons aside from

doctrinal acceptance that better explain why Congress has not eliminated

the exemption.

228

Some of these reasons may include “disapproval of the

decision by a congressional majority that might have been roadblocked (sic)

by a minority; devotion of congressional attention to higher priorities; or

strategic maneuvering by a congressional majority to exchange its support

for curative legislation in return for other political promises.”

229

Therefore,

just because Congress has not abolished the exemption does not provide

conclusive proof of congressional doctrinal acceptance.

230

This comment agrees with commentators who have stated that the

reason MLB’s antitrust exemption still exists is because “neither Congress

nor the Supreme Court wants to make the first move.”

231

However, the

Supreme Court created this problem and has openly recognized its

mistake.

232

Therefore, it should be the one that gives MLB’s antitrust

exemption the quick death it deserves.

233

Further, the Court can eliminate

the doctrine simply by eventually granting review of City of San José and

delivering a concise opinion overruling its prior baseball trilogy and

222. Radovich, 352 U.S. at 451-52.

223. See Mack, supra note 165, at 206.

224. Mack, supra note 165, at 206.

225. Helvering v. Hallock, 309 U.S. 106, 119 (1940).

226. Morgen A. Sullivan, “A Derelict in the Stream of the Law”: Overruling Baseball’s Antitrust

Exemption, 48

DUKE L.J. 1265, 1276-77 (1999).

227. 15 U.S.C. § 26(b); see also Sullivan, supra note 226, at 1277.

228. Sullivan, supra note 226, at 1277-79.

229. Id. at 1278.

230. Id. at 1279.

231. Van Roo, supra note 165, at 393.

232. See Radovich, 352 U.S. at 451-52.

233. See Sullivan, supra note 226, at 1304.

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190 OHIO NORTHERN UNIVERSITY LAW REVIEW [Vol. 41

abolishing the exemption once and for all.

234

This is a much quicker and

practical alternative to eliminating a flawed legal doctrine than asking a

bogged down and partisan Congress to do so.

235

C. The Exemption Creates Competitive Imbalance

Although some commentators have argued that the repeal of baseball’s

antitrust exemption would not result in more competitive balance,

236

this

comment disagrees. Although revenue sharing has certainly helped many of

baseball’s smaller market teams compete,

237

the restrictions on franchise

relocation aided by baseball’s antitrust exemption continue to place some

teams at a competitive disadvantage.

238

The A’s and their failed attempt to

successfully relocate to San José is a perfect example of this.

239

“Oakland is

part of a three-city media market,” which includes San Francisco and San

José.

240

However, Oakland is by far the poorest.

241

Because MLB’s

territorial rights are protected by its antitrust exemption, the A’s are unable

to move to a city that is technically within their own media market.

242

From 2004-2009, the A’s saw their attendance steadily decrease to

become one of the lowest in all of major league baseball.

243

Despite a small

rise in attendance from 2010-2012, the A’s still ranked twenty-ninth,

thirtieth, and twenty-seventh in attendance for those years, respectively.

244

In the 2013 season, the A’s were twenty-third in attendance despite a record

of 96-66, tied for third best in all of MLB.

245

According to an A’s

spokesperson “[the A’s] have exhausted their options in Oakland after years

of trying to increase attendance.”

246

Furthermore, the A’s opening day

234. See John Becker, Comment, Stepping Up to the Plate: Can the City of San José Overcome

Baseball’s Antitrust Exemption?, 21 J

EFFERY S. MOORAD SPORTS L.J. 431, 433-34 (2014).

235. See Sullivan, supra note 226, at 1304.

236. See, e.g., Bortek, supra note 38, at 1108.

237. See Justin R. Hunt, Note, To Share or Not to Share: Revenue Sharing Structures in

Professional Sports, 13 T

EX. REV. ENT. & SPORTS L. 139, 165, 169 (2012).

238. See Matt Trueblood, Power Ranking All 30 MLB Teams by Market Size, B

LEACHER REPORT

(Jan. 13, 2012), http://bleacherreport.com/articles/961412-mlb-power-rankings-all-30-mlb-teams-by-

market-size/page/4.

239. See City of San José, at **2, 11.

240. Trueblood, supra note 238.

241. Id.

242. M

AJOR LEAGUE BASEBALL CONST. art. V, § 2(b)(3) (1921).

243. Rob Neyer, A’s attendance Continues Spiral Down, ESPN.

COM (May 5, 2010, 6:49 PM),

http://espn.go.com/blog/ sweetspot/post/_/id/3480/as-attendance-continues-spiral-down.

244. MLB Attendance Report – 2010-2012, ESPN.

COM,

http://espn.go.com/mlb/attendance/_/year/2012 (last visited Oct. 15, 2014).

245. MLB Attendance Report – 2013, ESPN.

COM, http://espn.go.com/mlb/attendance/_/year/2013

(last visited Oct. 15, 2014); MLB Standings – 2013, ESPN.

COM,

http://espn.go.com/mlb/standings/_/year/2013 (last visited Oct. 15, 2014).

246. Compl. ¶ 53, City of San José, 2013 WL 5609346.

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2014] ANOTHER FAILED PICKOFF ATTEMPT 191

payroll mirrors their low attendance.

247

The A’s have ranked as one of the

lowest spending teams in the league over the last four seasons.

248

Last

season the A’s total payroll was $60,664,500, which ranked

twenty-seventh

out of the thirty major league teams.

249

This is far from what some of the

richest MLB teams spent, such as the New York Yankees ($228,835,490)

and the 2013 World Series Champions, the Boston Red Sox

($150,655,500).

250

Even more concerning is the fact that the A’s bay-area

rival, the San Francisco Giants, ranked sixth in the league with a payroll of

$140,264,334.

251

This was more than double the A’s payroll for 2013.

252

Not surprisingly, when a team has both low attendance and payroll, they

often struggle to have success on the field. However, from 2000 to 2013,

the A’s were one of baseball’s few anomalies to this trend. In fact, over this

time period the A’s made the playoffs seven times.

253

In addition, they had

nine winning seasons and the sixth best regular season record in the league

over that time.

254

The A’s actually had more playoff appearances and

regular season wins over this fourteen-season period than their higher-

spending bay area rival the Giants.

255

How have the A’s managed to be so

successful despite maintaining such a smaller payroll than other successful

franchises such as the New York Yankees, Boston Red Sox, Philadelphia

Phillies, or Los Angeles Dodgers? Much of this credit is due to their

superstar general manager Billy Beane.

256

Since taking over the A’s general

manager position in 1997,

257

Beane has been one of baseball’s most

successful general managers while maintaining a minuscule payroll.

258

has been called “an innovative visionary in a field clogged with myopic

247. See Cot’s Baseball Contracts, BASEBALL PROSPECTUS,

https://www.baseballprospectus.com/compensation/cots/ al-west/oakland-athletics/ (last visited Oct 4.

2013).

248. See Major League Baseball Team Payrolls 1998-2014, S

TEVETHEUMP.COM,

http://www.stevetheump.com/Payrolls.htm (last visited Sept. 15, 2014).

249. 2013 Team Payrolls, CBSS

PORTS.COM, http://www.cbssports.com/mlb/salaries (last visited

Sept. 15, 2014).

250. Id.

251. Id.

252. See id.

253. Oakland Athletics Team History & Encyclopedia, B

ASEBALL-REFERENCE.COM,

http://www.baseball-reference.com/teams/OAK/ (last visited Oct. 10 2013).

254. Id.

255. Id.; San Francisco Giants: Team History & Encyclopedia, B

ASEBALL-REFERENCE.COM,

http://www.baseball-reference.com/teams/SFG/ (last visited Oct. 10, 2013).

256. Richard H. Thaler & Cass R. Sunstein, Market Efficiency and Rationality: The Peculiar Case

of Baseball, 102 M

ICH. L. REV. 1390, 1390-91 (2004).

257. Billy Beane Biography, B

IOGRAPHY.COM, http://www.biography.com/people/billy-beane-

20839943#synopsis (last visited Oct. 15, 2014).

258. Thaler, supra note 256, at 1390-92.

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traditionalists.”

259

Unlike many before him, Beane stressed the importance

of a new wave of advanced baseball statistics invented by self-educated Bill

James.

260

He placed greater emphasis on statistics such as a player’s on-base

percentage and defensive contribution.

261

Further, he spoke out openly

against many longstanding baseball practices, such as bunting.

262

He openly

recruited players who had been cast off from other teams and routinely

shied away from overpaying players with large contracts.

263

Beane has been

so successful that in 2003, a book was published about his success by

Michael Lewis.

264

In 2011, the book was turned into a film starring Brad

Pitt as Beane that was nominated for six academy awards, including Best

Picture.

265

With this background in mind, one might jump to the conclusion that

the A’s “moneyball” approach is direct evidence that high attendance and

payroll are not indicative of producing a championship caliber baseball

team. Almost all commentators recognize that having a high team salary

does not necessarily translate into on the field success; after all, some of the

highest paying teams miss the playoffs each season.

266

However, there does

appear to be a correlation between having a higher payroll and winning.

267

Although small market teams such as the A’s, Tampa Bay Rays, and

Minnesota Twins have been successful recently, the vast majority of teams

in the lower one-third of the league in opening day payrolls have not.

268

Most concerning for the A’s is the trend that teams with lower payrolls

struggle once they get into the playoffs.

269

As mentioned, the A’s have been

to playoffs seven times in the last fourteen seasons.

270

However, their

regular season success has not translated in the playoffs and they have been

259. Adam Sternbergh, Billy Beane of ‘Moneyball’ Has Given Up on His Own Hollywood Ending,

N.Y.

TIMES (Sept. 21, 2011), http://www.nytimes.com/2011/09/25/magazine/for-billy-beane-winning-

isnt-everything.html?pagewanted=all&_r=0.

260. Id..

261. Thaler, supra note 256, at 1392-93.

262. Id. at 1391.

263. Id. at 1394.

264. Sternbergh, supra note 259; See generally M

ICHAEL LEWIS, MONEYBALL: THE ART OF

WINNING AN UNFAIR GAME (2003).

265. Jeremy Potter, Note, Legal Education and Moneyball: The Art of Winning the Assessment

Game, 11 C

ONN. PUB. INT. L.J. 327, 331 n.24 (2012); Patrick Dorsey, ‘Moneyball’ has 6 Noms,

Including Picture, Actor, ESPN.

COM (Jan. 24, 2011), http://espn.go.com/espn/page2/index?id=7496683.

266. Dan Lependorf, How Are Wins, Attendance and Payroll All Related?, H

ARDBALL TIMES

(Feb. 02, 2012), http://www.hardballtimes.com/main/article/how-are-wins-attendance-and-payroll-all-

related/.

267. See Kevin Wells, Does Money Really Buy World Series Titles?, W

ASH. TIMES (Feb. 1, 2013),

http://communities.washingtontimes.com/neighborhood/wells-baseball/2013/feb/1/does-money-really-

buy-world-series-titles/ .

268. Id.

269. Id.

270. Oakland Athletics Team History & Encyclopedia, supra note 253.

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eliminated six times in first round, the American League Division Series

(“ALDS”).

271

In 2006, the lone time they made it past the first round, the

Detroit Tigers quickly swept them in four games in the American League

Championship Series (“ALCS”).

272

Another successful small market team,

the Minnesota Twins, have also struggled in the playoffs after sustaining

continued success in the regular season.

273

Similar to the A’s, the Twins

have been to the playoffs six times since 2000.

274

Five of those times they

have been eliminated in the ALDS (with a combined record of 2-15 in those

series).

275

They advanced to the ALCS just once and were eliminated by the

Anaheim Angels in five games.

276

The only other small market team to

make the playoffs at least four times since 2000 is the Tampa Bay Rays.

277

In 2008, the underdog Rays reached the World Series in the franchises’ first

playoff appearance before falling 4-1 to the Philadelphia Phillies.

278

In their

last three postseason appearances, the Rays have been eliminated in the

ALDS.

279

Combined, these three small market teams played in twenty-one

playoff series between 2000 and 2013, winning four and losing

seventeen.

280

In this same time period, the New York Yankees, the team

with typically the highest payroll,

281

has won thirteen postseason series and

two World Series.

282

Despite having less playoff appearances and regular

season wins than the A’s during this time period, the San Francisco Giants

have won two World Series Titles.

283

There is an even stronger correlation

between payroll and winning World Series title.

284

“Seventeen of the last

271. Id.

272. 2006 ALCS: Detroit Tigers Over Oakland Athletics, B

ASEBALL-REFERENCE.COM,

http://www.baseball-reference.com/postseason/2006_ALCS.shtml (last visited Sept. 15, 2014).

273. See Minnesota Twins Team History & Encyclopedia, B

ASEBALL-REFERENCE.COM,

http://www.baseball-reference.com/teams/MIN/ (last visited Oct. 15, 2014).

274. Id.

275. Id.

276. Sports Reference LLC, 2002 ALCS: Anaheim Angels Over Minnesota Twins, B

ASEBALL-

EFERENCE.COM, http://www.baseball-reference.com/postseason/2002_ALCS.shtml (last visited Sept.

15, 2014).

277. Tampa Bay Rays Team History & Encyclopedia, B

ASEBALL-REFERENCE.COM,

http://www.baseball-reference.com/teams/TBD/ (last visited Sept. 15, 2014).

278. 2008 World Series: Philadelphia Phillies over Tampa Bay Rays,

BASEBALL-

EFERENCE.COM, http://www.baseball-reference.com/postseason/2002_ALCS.shtml (last visited Sept.

15, 2014).

279. Tampa Bay Rays Team History & Encyclopedia, supra note 277.

280. See Oakland Athletics Team History & Encyclopedia, supra note 253; Minnesota Twins

Team History & Encyclopedia, supra note 273; Tampa Bay Rays Team History & Encyclopedia, supra

note 277.

281. Sternbergh, supra note 259.

282. New York Yankees Team History & Encyclopedia, B

ASEBALL-REFERENCE.COM,

http://www.baseball-reference.com/teams/NYY/ (last visited Sept. 15, 2013).

283. San Francisco Giants Team History, supra note 255; Oakland Athletics Team History &

Encyclopedia, supra note 253.

284. Wells, supra note 267.

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194 OHIO NORTHERN UNIVERSITY LAW REVIEW [Vol. 41

eighteen World Series winners have had a payroll in the top fifteen” of the

league.

285

The only team outside the top fifteen in payroll to win the World

Series in the last eighteen years was the 1997 Florida Marlins, who ranked

25th out of 28 teams.

286

This research and data suggests multiple things relevant to a team’s

payroll, attendance, and the impact MLB’s antitrust exemption has. First,

although some small market teams such as the A’s have had recent success,

the majority have struggled.

287

Next, even the small market teams who have

had regular season success have struggled in the playoffs and only the 1997

Florida Marlins have managed to win a World Series.

288

One reason small market teams tend to have lower payrolls is poor

attendance. Despite being in the “same” three-city media market, the Giants

2013 average home game attendance of 41,584 nearly doubled that of the

A’s 22,337.

289

According to a 2010 census, the Giants’ territory includes

4.2 million people; the A’s territory 2.6 million.

290

The lower a team’s

attendance, the lower their gate receipts tend to be. Gate receipts refer to

the amount of money brought in through ticket sales and can also mean

tickets sold through the venue only (clubs seats).

291

Even with the MLB

implementing revenue sharing to benefit small market teams,

292

these gate

receipts still make up a large portion of a team’s ability to increase its

payroll.

293

In 2013 the Giants had gate receipts of $129 million (the Giants

had a record of 76-82 and missed the playoffs).

294

In comparison the A’s

gate receipts were just $39 million.

295

Therefore, the Giants grossed $90

million more than the A’s by playing in San Francisco instead of Oakland.

The A’s proposed move to San Jose would undisputedly help to alleviate

this discrepancy between gate receipts for two teams in the same three-city

media market.

296

However, MLB’s antitrust exemption and constitution

285. Id.

286. Id.

287. See id.

288. Id.; see also Oakland Athletics Team History & Encyclopedia, supra note 253; Minnesota

Twins Team History & Encyclopedia, supra note 273; Tampa Bay Rays Team History & Encyclopedia,

supra note 277.

289. MLB Attendance Report- 2013, supra note 245.

290. City of San José, 2013 WL 5609346, at *3.

291. Gate Receipts, S

PORTINGCHARTS.COM, http://www.sportingcharts.com/dictionary/mlb/gate-

receipts.aspx (last visited Sept. 15, 2013).

292. Hunt, supra note 237, at 160-61.

293. See Lependorf, supra note 266.

294. Forbes MLB Team Valuations List: San Francisco Giants, F

ORBES.COM,

http://www.forbes.com/teams/san-francisco-giants/ (last visited Sept. 20, 2014).

295. Forbes MLB Team Valuations List: Oakland Athletics, F

ORBES.COM,

http://www.forbes.com/teams/oakland-athletics/ (last visited Sept. 20, 2014).

296. See Trueblood, supra note 238.

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2014] ANOTHER FAILED PICKOFF ATTEMPT 195

currently blocks any legitimate chance of this.

297

Moving to San Jose

would not only allow the A’s to play in a wealthier city, but would also

provide them with a new stadium.

298

Currently the A’s play in the Coliseum,

which is widely considered one of the worst MLB stadiums in the league.

299

They are the only MLB team that is forced to share their stadium with an

NFL team.

300

New and appealing stadiums have been found to have a direct

impact on improving attendance.

301

By employing its outdated antitrust exemption, MLB has blatantly

restricted the A’s ability to relocate and increase its attendance and gate

receipts. Last season, MLB essentially facilitated one team in a three city

media market, the Giants, to make nearly four times more in gate receipts

than their bay side counterparts, the A’s.

302

This is even more alarming

considering that the A’s were one of the best teams in baseball last season

while the Giants missed the playoffs.

303

This comment has highlighted the

recent struggle that successful small market teams have encountered in the

playoffs. How might have the A’s fortune been different in the playoffs the

last 14 years if they had been able to add another $10 or $20 million a year

in payroll through increases in gate receipts? Of the nearly $168 million in

gate receipts for 2013 between the two teams, the Giants were responsible

for almost 80%.

304

If a successful move to San Jose and a new stadium

helped the A’s reduce that number to even 66% in favor of the Giants, the

A’s would recoup slightly over $57 million in gate receipts.

305

That would

be nearly $20 million in additional revenue than the A’s received in gate

receipts for 2013.

306

Although this would reduce the amount they were

awarded in revenue sharing,

307

it would still result in a significant increase

in revenue that they could use to acquire an additional player or two to

make a playoff push. However, because MLB’s antitrust exemption allows

MLB to restrict franchise relocation, small market teams that suffer from

attendance problems, such as the A’s or Rays, are unable to relocate to more

profitable cities with new superior stadiums.

308

As a result, these teams are

297. MAJOR LEAGUE BASEBALL CONST. art. V, § 2(b)(3) (1921).

298. See Trueblood, supra note 238.

299. Orly Rios Jr., The 5 Worst Stadiums in All of Major League Baseball,

LEACHERREPORT.COM, http://bleacherreport.com/articles/589884-the-five-worst-stadiums-in-all-of-

major-league-baseball/page/2 (last visited Sept. 15, 2014).

300. Trueblood, supra note 240.

301. Dennis Coates & Brad R. Humphreys, Novelty Effects of New Facilities on Attendance at

Professional Sporting Events. 23 C

ONTEMP. ECON. POL’Y. 436, 452 (2005).

302. Oakland Athletics, supra note 295; San Francisco Giants, supra note 294.

303. MLB Standings- 2013, supra note 245.

304. Oakland Athletics, supra note 295; San Francisco Giants, supra note 294.

305. Oakland Athletics, supra note 295; San Francisco Giants, supra note 294.

306. Oakland Athletics, supra note 295.

307. See generally, Hunt, supra note 237.

308. M

AJOR LEAGUE BASEBALL CONST. art. V, § 2(b)(3) (1921).

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very dependent on revenue sharing and are restricted in their ability to

relocate to increase their gate receipts, which could provide them with the

additional revenue necessary to add key pieces that they might need to help

win a World Series.

Other professional sports leagues have been forced to implement

alternative solutions to maintain a competitive balance, because the

Supreme Court has expressly refused to extend the antitrust exemption.

309

Unlike MLB, the NFL, National Hockey League, and NBA have a salary

floor in addition to a salary cap.

310

A salary or payroll floor requires all

franchises to spend a certain percentage of the salary cap per year.

311

Rather

than using this model, MLB has what is known as a luxury tax.

312

The

luxury tax or “competitive balance tax” essentially taxes teams that “exceed

a certain salary threshold.”

313

However, this is not a “hard” salary cap, or “a

definitive maximum each franchise may spend on player payroll in a single

year.”

314

In 2013 MLB’s luxury tax was $178 million.

315

The A’s total

payroll for the 2013 season was $69,164,500 or about 39% of the total

luxury tax.

316

Under the new NFL CBA, the salary floor requires every NFL team to

spend no less than 89% of the salary cap.

317

The NFL also has a hard salary

cap so that even the highest spending teams do not excessively outspend the

teams that decide to simply meet the salary floor requirement.

318

This

comment argues that MLB could obtain more competitive balance by

abandoning its current salary structure and adopting one more closely

resembling the NFL. Adopting an approach that mirrors the NBA, a 90%

salary floor with a set luxury tax, would also be preferable to the current

MLB structure.

319

The salary floor concept is just one of the reasons the

309. See discussion supra Part I.D.

310. Vittorio Vella, Swing and a Foul Tip: What Major League Baseball Needs to Do to Keep Its

Small Market Franchises Alive at the Arbitration Plate, 16 S

ETON HALL J. SPORTS & ENT. L. 317, 331-

39 (2006); The Canadian Press, With Salary Cap (and Floor) Rising, the NHL’s Economic Landscape

Changes Again, NHL.

COM (Jun. 26, 2011), http://www.nhl.com/ice/news.htm?id=567398.

311. Vella, supra note 310, at 334-35.

312. Kristi Dosh, Can Money Still Buy the Postseason in Major League Baseball? A 10-Year

Retrospective on Revenue Sharing and the Luxury Tax, 2007 D

EN. U. SPORTS & ENT. L.J. 1, 19 (2007).

313. Id. at 19.

314. Vella, supra note 310, at 333-37.

315. Luxury Tax, F

ANGRAPHS, http://www.fangraphs.com/library/business/luxury-tax/ (last visited

Sep. 25, 2014).

316. Top Team Payrolls, supra note 249, at 1.

317. Nat’l Football League, NFL Collective Bargaining Agreement Between the NFL Management

Council and the NFL Players Association Art. 12 Sec. 9 (2011), available at

https://www.nflplayers.com/Articles/CBA-News/2011-Collective-Bargaining-Agreement/ (last visited

Oct. 21, 2013).

318. See Vella, supra note 310, at 331-34.

319. Larry Coon, Breaking Down Changes in New CBA, ESPN.

COM (Nov. 28, 2011),

http://espn.go.com/nba/story/_/page/CBA-111128/how-new-nba-deal-compares-last-one.

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2014] ANOTHER FAILED PICKOFF ATTEMPT 197

other major professional sports leagues have a more competitive balance

between large and small market teams than MLB.

320

If MLB franchises had

unfettered access to franchise relocation, as they do in the other major

professional sports leagues, MLB would likely be forced to adopt a

structure similar to that of the NBA and NFL to stabilize the league.

321

As a

result of adopting this new salary structure, one which likely features a

salary floor, the league would see more competitive balance as payroll

discrepancy between teams could drastically decrease.

322

Because of the protection of its antitrust exemption, MLB has no reason

to change its current salary structure and implement one that would help

facilitate a much-needed change. MLB does not need to fear unfretted

franchise relocation because through its antitrust exemption and

Constitution it can rather easily prevent any relocation it finds unfavorable,

as it did in City of San Jose.

323

This leaves teams that are looking to move to

a new more profitable market or city with few options.

324

Rather than

increasing their payroll to build a true championship team, these teams

instead keep payrolls low and look to cash in on whatever revenue sharing

they are entitled to which results in a competitive imbalance.

325

Other

major professional sports leagues do not suffer from this dilemma because

their franchises are not subject to these strict relocation restrictions provided

for by baseball’s antitrust exemption.

326

Critics of eliminating baseball’s

antitrust exemption claim that doing so will create unregulated and vast

franchise movement.

327

Others assert that other professional leagues have

less franchise movement than MLB so eliminating the exemption would

serve little practical purpose.

328

These criticisms ignore that the number of

teams that relocate in a given league can be for a number of different

reasons. Asserting that MLB’s antitrust exemption does not restrict

franchise relocation simply because another sports league that does not

enjoy the benefit of it has had fewer teams relocate is an overly simplistic

interpretation of a complicated process.

329

Further, the implementation of salary floors by the other three major

sport leagues now makes these theories outdated and shortsighted.

330

320. Vella, supra note 310, at 331-39.

321. See id. at 331-32.

322. Id.

323. City of San José, 2013 WL 5609346, at *3.

324. See supra Part V.

325. See Vella, supra note 310, at 338-39.

326. See discussion supra Part I.D.

327. See Grow, supra note 36, at 233.

328. Mitchell Nathanson, The Irrelevance of Baseball’s Antitrust Exemption: A Historical Review,

58 R

UTGERS L. REV. 1, 24 (2005).

329. Id.

330. See supra note 310 and accompanying text.

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MLB employed a similar salary floor, it could have its antitrust exemption

lifted and have few concerns about the league’s stability, because each new

city or market would likely be required to pay somewhere around 90% of

the total salary cap each season.

331

This would mean franchises would only

move when they found buyers and cities that were willing to meet the

requirements of the salary floor, a rather expensive commitment. Thus,

although franchise relocation would still be rare, it could provide a solution

for a team such as the A’s and its quest to relocate to San Jose.

332

Without question, a major benefit of MLB’s antitrust exemption is that

it stabilizes the league in regards to franchise relocation.

333

However, as a

consequence these restrictions on franchise mobility can create competitive

imbalance, especially for small market teams.

334

Implementing a salary

floor rather than continuing to rely on its exemption is a superior alternative

for MLB in regards to franchise relocation because it provides both stability

and competitive balance.

335

Despite not having the luxury of an antitrust

exemption, other major sports leagues facilitate franchise stability and

competitive balance much more effectively than MLB.

336

One of the key

reasons is that they have a salary floor and some combination of a hard cap

or luxury tax.

337

In order to give all MLB teams a truly fair shot at winning

World Series championships, and not simply the Yankees or other high

payroll teams, baseball’s archaic and flawed antitrust exemption must be

eliminated in favor of adopting a structure similar to that of other major

professional sport leagues.

338

VI.

CONCLUSION

Since Justice Holmes’ opinion in Federal Baseball, MLB franchises

have changed drastically in the way they generate revenue and how that

affects their ability to produce a championship caliber baseball team.

339

Despite this, baseball’s antitrust exemption still places many of the same

restrictions on a franchise’s ability to relocate as it did over ninety years

ago.

340

There are both legal and practical reasons baseball’s deeply flawed

331. See supra note 319 and accompanying text.

332. City of San José, 2013 WL 5609346, at 3.

333. Grow, supra note 36, at 233-34.

334. See Vella, supra note 310, at 338-39.

335. See id. at 331-339.

336. Id.

337. Id.

338. Id.

339. See supra Part II.A-C.

340. See supra Part II, IV.

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2014] ANOTHER FAILED PICKOFF ATTEMPT 199

antitrust exemption should be eliminated.

341

This comment has highlighted

the three major reasons that removing the exemption is necessary.

First, as articulated in Piazza, the Supreme Court’s decision in Flood

should be read to interpret the exemption as pertaining solely to the reserve

clause.

342

With the reserve clause now eliminated, MLB’s antitrust

exemption should be viewed as obsolete and not be available to place

restrictions on activities such as franchise relocation.

343

Second, the

exemption is not only outdated, but judicially recognized as unrealistic,

inconsistent and illogical.

344

Because the exemption is a problem that was

judicially created, the courts should remedy the issue rather than passing it

off on Congress.

345

The Supreme Court has the power to address and fix

this flawed doctrine by granting review of City of San Jose.

346

Simply

because Congress has failed to address such an enormous decision does not

prevent the Court from reexamining the Supreme Court baseball trilogy and

articulating a solution to this problem.

347

Finally, the exemption should be eliminated because it promotes

competitive imbalance.

348

By placing restrictions on franchise relocation

through its antitrust exemption, MLB puts small market teams in poorer

cities at a competitive disadvantage.

349

There is an undisputed correlation

between spending money and winning; only one team in the bottom half of

total payroll has won a World Series in the last nineteen years.

350

Without

the ability to relocate, many small market franchises, such as the A’s, may

be left with few options.

351

Instead, MLB should allow franchise relocation

in a way that mirrors that of the other professional sports.

352

It can then

adopt ways to stabilize the league and promote competitive balance through

superior solutions such as a salary cap floor, a hard salary cap, or better

revenue sharing.

353

This comment acknowledges that the complete elimination of baseball’s

antitrust exemption would affect activities outside the scope of franchise

relocation.

354

However, other professional sports leagues face the same

341. See supra Part V.

342. See supra Part V.A.

343. See supra Part V.A.

344. See supra Part V.B.

345. See supra Part V.B.

346. See supra Part V.B.

347. See supra Part V.B.

348. See supra Part V.C.

349. See supra Part V.C.

350. See supra Part V.C.

351. See supra Part V.C.

352. See supra Part V.C.

353. See Vella, supra note 310, at 333.

354. See supra Part V.C.

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challenges and are still able to flourish.

355

The Supreme Court can no longer

allow this outdated exemption to be an aberration confined to baseball, and

must either recognize that it applies only to the reserve clause or abolish it

entirely in order to provide the competitive balance that our nation’s

pastime now so desperately lacks.

355. See supra Part V.C.

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