The anti-trust movement in America during the 18th and 19th century isa prime example of the conflict in society and sports between autonomy andresponsibility. Primarily Senator John Sherman created the earliest anti-trustlaw in 1890. President Benjamin Harrison signed it and is the root of all antitrustlegislation that are in effect today. The Sherman Anti-Trust Act wasextensively used during the Progressive era by “trust busters” such asTheodore Roosevelt, William Howard Taft, and Woodrow Wilson.
TheStandard Oil Company (headed by John D. Rockefeller) and the United StatesSteel Corporation (headed by Andrew Carnegie) were among the giants thatfell to the wrath of the anti-trust acts. The anti-trust laws sole purpose is tomake sure that powerful firms that hold or wish to hold a monopoly in themarket cannot abuse businesses and consumers. Anti-trust laws outlaw manyspecific strategies. It includes price fixing (agreement on prices of uniformgoods), predatory pricing (setting low prices to knock off competitors), andvendor lock-in (nearly forcing a consumer to buy from a certain supplier).
The polemic began in the beginning of the 20th century, when a player in theNational Baseball League attempted to join a fresh created club in theAmerican League. However, this was settled in 1903, when it was claimedthat the two leagues were a shared monopoly between the team owners. But,years later, the case of Federal Baseball Club of Baltimore v. NationalBaseball Clubs became the essential case in the status affirmation of baseballin the economy. Any business that operates nationally has been subjected toanti-trust legislation for it implies interstate commerce. However, Baseball didfall under the anti trust legislation, especially since teams travel from state tostate to play games.
In 1922, the Supreme Court unanimously settled the case.It was stated that baseball did not fall under this trust laws since the travelingis not the focal point in the sport. The Supreme Court felt that baseball gamesdid not fall under the Sherman act.
Since the ruling, baseball has kept itsunique status and has been exempt from anti-trust laws. This, of course, has awide spectrum of effects on many different things. Toolson v. New YorkYankees (1953) and Flood v. Kuhn (1972) further established the exemptionby rejecting opposition to it.
The anti-trust exemption has had close ties to the minor leagues. Theminor leagues follow a reserve system, which means when a team is assigned to a major league counter part and the players can only negotiate with theparent team. It allows the players to be exempted from the act and can followmajor leaguers and become free agents.
In 1970 the league stopped thereserve system. Professional baseball players could only negotiate with oneteam. Plus, they had to seek approval from the commissioner before movingto another city. To keep a team within a major city it allowed taxpayers totake care of expensive cost.
Allowing the commissioner to make the decisionto have a limited amount of teams in the league to fuel completion betweenthe cities. With that the uneven distribution of teams throughout the nation iseconomically rational to maintain teams in areas that would boom financially.However, many fans see that it is unfair that financially enhance metropolitanteams such as the New York Yankees have a clear advantage over lower endteams such as the Colorado Rockies when it comes to signing free agents andtrading.
So to resolve this issue in other sports a salary cap was incorporatedto provide all teams equity. The salary cap allows teams to spend a certainamount without going over the “cap”. Salary caps can be viewed as an antitrustact; it aims to de-monopolize and spread the wealth. However MajorLeague Baseball does not take part in the concept of a salary cap but offers analterative in luxury tax. The luxury tax penalized teams who spend over certain amount. However one can still argue that famous, popular, andwealthy teams still offer lavish contracts (ie: The Yankees).
In the end I believe that baseball can benefit if there was an anti trustexemption. The Major Leagues hold too much executive power and theplayers have no bargaining room. Without the anti-trust regulation the teamscan make deals and bargains that would normally be illegal. However if theylifted the exemption it can create lower ticket cost in smaller cities andconform relationship to its consumer base.