The 100th anniversary of the exemption is still celebrated by the Barons of Baseball.
Does Major League Baseball still need a full antitrust exemption? The United States Department of Justice doesn’t think so and the truth in 2022, MLB seems to only have monopoly status when it comes to territorial rights. Had there been a total rollback in the antitrust exemption in the territorial rights, it is very likely the Oakland Athletics franchise would be located in San Jose, California. The Athletics franchise cannot get into San Jose or Santa Clara County because the real estate is owned by the San Francisco Giants franchise despite the fact that the Giants’ San Francisco ballpark is an hour away from San Jose and is reasonably close to Oakland. The Department of Justice asked a federal court to limit the scope of Major League Baseball’s antitrust exemption to “conduct that is central to the offering of professional baseball exhibitions.”
In 1922, Supreme Court Chief Justice Oliver Wendell Holmes in a landmark decision granted Major League Baseball an antitrust exemption and said baseball was a sport. He was wrong. Baseball is a business. The court ruled in favor of baseball in the case involving the Federal League’s Baltimore Terrapins whose ownership felt the National and American Leagues of baseball didn’t do enough for them after the demise of the Federal League in 1915. The owners sued the two leagues and eventually it got to the Supreme Court and baseball got an antitrust exemption because it was a game not an interstate business even though the Brooklyn, New York Dodgers could play the Cincinnati, Ohio Reds in what was clearly an interstate business. Justice Holmes wrote that “personal effort, not related to production, is not a subject of commerce” and that baseball therefore wasn’t subject to federal regulation. Baseball on all levels is a business. A century ago, the Supreme Court got it wrong.
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