September 17, 2021

Isn’t It Time Congress Seriously Examines the Monopoly Power of Major League Baseball

July 2, 2021 by · Leave a Comment 

In December of 2020, with results being certified in the much contested election that saw the defeat of Donald Trump, and with two senate seats still hanging in the balance in Georgia, Major League Baseball, Inc. unilaterally ended its cooperative relationship with Minor League Baseball. For decades, the relationship between Minor League and Major League Baseball had been governed by the Professional Baseball Agreement. Minor League Baseball was a nominally separate entity, although the affiliation between individual minor league teams and those in the Majors, was controlled by MLB, Inc. which gave them almost total leverage.

The final agreement expired in September, 2020. The ensuing announcement by Commissioner Manfred in December means quite simply that every aspect of the professional game is totally owned and controlled by MLB, Inc. Everything from the caps the players wear to the stats they generate and are consumed by fantasy enthusiasts, all of it is owned by MLB, Inc. And like with any monopoly, they can extract fees without regard to the marketplace. It is monopoly capitalism at its very worst. And that raises historic questions.

MLB. Inc.’s move was one of the most audacious in the long history of baseball. But it is the timing that raises so many unanswered questions, and leaves me wondering when the other shoe will drop. A new Collective Bargaining Agreement looms on the horizon. The current CBA expires December 1. 2021. Does the takeover of minor league baseball portend a more pugnacious MLB, Inc.? One that may attempt to use its apparently unchecked power to extract new concessions from the MLBPA?

One can examine the damage now as the minor league season plays out. It reveals forty-three minor league teams eliminated from the ranks of professional baseball. Cities and towns where once you could go to see a future major league player, where minor league teams once were a thriving business, one that employed many thousands and generated millions in revenue, have all been shunted onto a side track where they will compete as little more than “wood bat” leagues. Given the scope of the changes, and the vast number of citizens involved, it is little wonder that the move was made with a pandemic still raging, when all eyes were focused on the hopeful possibilities for a vaccine, and what a new president and a new Congress might be able to accomplish in ending the pandemic.

Although the move by Major League Baseball was announced in the wee hours, as the election of President Biden was being certified, it had to have been studied and debated for months, likely years.

Since December, 2020, however, considerable dust has begun to settle. Despite historic irregularities, we have a new president, Joe Biden, who has a long history as a friend of labor. The new Congress is controlled ever so slightly by Democrats. Baseball is the last thing on their minds, and maybe that is why MLB, Inc. acted when it did. But no situation is stagnant. Yes, there are pennant races raging. The games are being played, and everyone is happy to see baseball back on the field, and the stands filled to something close to normal capacity. But the talks have already begun on whatever will replace the CBA that expires on December 1, 2021. Fans may see that as a distant cloud on a blue horizon–an issue that is unrelated to what has happened to Minor League Baseball. But it is unlikely that the owners chose to advance on one front unaware of the armies massing on their flank.

It is interesting to examine Major League Baseball’s takeover from a longer view, a more historical perspective. The capacity to act unilaterally, with so little fear of any pushback, springs from a quite similar situation, dating to the 1922 Supreme Court ruling in Federal Baseball Club of Baltimore v. National League, whereby  baseball was granted an exemption from anti-trust laws. There is an uncanny resemblance between that century-old legal precedent and the current situation. In Federal Baseball, the owners of the renegade league were litigating for financial compensation from Major League Baseball, for the lost value of teams denied status within the rarified realm of professional baseball.

At the outset, the Federal League in 1913 was a minor league, but in the following year, with numerous Major League players, including Walter Johnson, signing contracts with Federal League teams, they declared themselves to be a Major League. Pressure was brought to bear on the renegade players by their former owners, who convinced them to return to their former clubs. The Federal League was forced to fold, but its owners sued for the lost value of no longer being members of professional baseball. Their teams were reduced to nothing, and they wanted something in return. All Federal League owners were granted compensation, and legal proceedings ceased, except for that of the Baltimore franchise owner who went all the way to the Supreme Court, where the issue was settled, seemingly for all time.

But there have been threats to re-open the issue of baseball’s anti-trust exemption many, many times. The cry of foul has come almost every time there has been a labor dispute between the players and owners. Individual Congress persons have raised the specter of intervention repeatedly during the long war over the reserve clause, and the eventual recognition of the Major League Baseball Players Association (MLBPA), as having legal authority to represent the players in labor negotiations. The losses along the way cost MLB, Inc. dearly, in terms of money, prestige, and power. They have been spoiling for a fight ever since, as witnessed by the notably acrimonious 1994 strike, which followed on the heels of actual work stoppages in 1972 and 1981.

There is real concern that if Major League Baseball overstepped its legal, or more accurately, its political authority, Congress could change the playing field completely–so to speak. If the question is framed as, “Who Owns Baseball?” and if sleepy fans are ever wakened from their slumber by something more egregious than the latest power grab–something like a long work stoppage, then Congress and their constituents alike, might demand something be done. And this time there may be no Judge Sotomayor to grab the reins of the runaway train. Of that you can be sure.

For now however, the issue of compensating the owners of Minor League baseball teams is on a quieter route, something akin to one of those old Federal highways that people only travel for leisure purposes, to remember the good old days.

Greg Rosenbaum, current owner of the Dayton Dragons and the Mahoning Valley Scrappers, is the chair person for the Minor League Baseball Government Relations Committee. He informed me of two bills aimed at gaining some form of assistance for downgraded or abandoned minor league municipalities. Two bills have found sponsors in the 117th Congress: S.R. 2233 and H.R. 4150. The bills, if passed and signed into law, would provide a grants program with $550 million in funding to assist minor league communities impacted by COVID.

It is debatable whether the damages suffered by the relevant cities and towns are directly attributable to COVID-19, or to the Viking raids of MLB, Inc. But that is how the current legislation is framed, whether the principals acknowledge the larger source of the loss or not. Either way, the funds could be available to help with economic losses suffered by minor league cities and towns since COVID-19. New development proposals would be submitted to the Small Business Administration that would oversee granting the funds. Each locality affected could conceivably recoup as much as $15 million of value lost to the displacement of professional baseball.

As with the Federal League Baseball confrontation a century ago, many would be happy to take the money and be done with it. Understandably so.

But there are larger issues at stake. Major League Baseball has for too long been able to hold our national pastime hostage to the financial whims of a very small number of extremely wealthy individuals. That, after all, is what MLB, Inc. truly is. It is the sum of 30 owners, or ownership groups, all of whom had billions of dollars going in, and have made even more from the game of baseball. For example, the Lerner family that own the Washington Nationals, bought the team for approximately $400 million in 2007. The current valuation of the franchise is $1.925 billion, which represents a capital gain of $1.5 billion, something to cushion the losses from the pandemic they are crying about still.

Congress could do more than pass a bill that buys the good will of the owners of minor league teams and helps to fill the financial hole left in the cities where they played. Congress needs to examine the anti-trust exemption for baseball, and exactly what is afoot with the owners who are abusing that privilege. The victims of the current purge are the children in small cities and towns that will see a different brand of baseball played in their home towns if they see any at all. They will grow up without the ability to see a team that has a concrete connection to the players in the Majors, those that they can watch on television.

There was an attempted coup on January 6, 2021. Congress has all it can handle in confronting the dangers raised by that attack on our democracy. But there was a successful coup on December 10, 2020, by MLB, Inc. As S.R. 2233 and H.R. 4150 move through the relevant committees, hopefully Congress will opine on the larger issue as to the power the courts have granted to Major League Baseball, powers which our current judiciary will do nothing to curb. Only Congress stands between MLB, Inc. and its ability to abuse the monopoly powers it has been granted. Baseball’s anti-trust exemption has created a bull in a china shop. If the time has not come presently to limit the damage, it easily could loom in our very near future.

Incurable optimists such as myself, are moved to hope that Congress might yet act to assert the people’s authority in the fray. With no hope of any intervention by the courts, they may prove to be our last hope for relief. It is something to hang one’s hat on, to hope that all god’s children can yet grow up with a favorite Major League star streaking across their night sky. Where they can still go to sleep with a baseball glove tucked carefully under the pillow, dreaming of snagging a foul ball out at their home town, minor league park, sitting next to mom and dad. And that is what we should be about, seeking perfection for our children.

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