A New Game : Congress Is Threatening to Play Hardball With Baseball Over Antitrust Exemption It Has Enjoyed Since Supreme Court Decision Was Handed Down in 1922

In a tumultuous period of evolution and revolution in baseball, Congress may soon get in its own licks.

At stake is the game’s antitrust exemption, cherished for 70 years.

Rep. Michael Bilirakis, R-Fla., insisting that “time has run out on the house of lords that controls baseball,” has submitted a bill, H.B. 108, to the House Judiciary Committee aimed at eliminating the exemption.

Sen. Howard Metzenbaum, D-Ohio, who chairs the Senate judiciary subcommittee on Antitrust Monopolies and Business Rights, plans to introduce a similar bill next week.

At his committee’s December hearing on the exemption, Metzenbaum said baseball had become a complicated and, at times, cutthroat business, and that the owners might be abusing the privilege of their exemption.

“Fay Vincent understood that the antitrust exemption placed a special obligation on the commissioner to govern . . . in the manner that protected the public interest,” Metzenbaum said of the former commissioner. “Vincent had independent authority to put the interests of the fans and the interests of the sport . . . ahead of the business interests of the team owners.

“That’s no longer the case. . . . It appears that the owners don’t want a strong and independent commissioner who can act in the best interests of the sport or act as a potential check against abuse of their monopoly power.

“Instead, they want a commissioner who will function as the cruise director of their cartel.

“If decisions about the direction and future of major league baseball are going to be dictated by the business interests of team owners, then the owners should be required to play by the same antitrust rules that apply to any other business.”

The political rhetoric is not new.

Allegedly bereaved congressmen, reflecting the anger of constituents over the departure of their team to another city or the failure to be voted a team, have often threatened to revoke the exemption.

But no such bill has ever gotten out of committee, and there is no certainty Bilirakis or Metzenbaum will do better, given a capital climate in which health care and economics are the priorities.

Nevertheless, Bud Selig, president of the Milwaukee Brewers and chairman of baseball’s executive council, said he is concerned about the new threats, although he is not sure they are any more critical than before.

Before, however, baseball didn’t sense the need to employ a full-time liaison with Congress, as it now does.

Responding recently to the exemption threats, baseball hired Eugene Callahan, a 25-year veteran of public service, as director of governmental relations.

Selig said baseball will continue to use longtime lobbyist Tom Korologus from the consulting firm of Timmons & Co., but that Callahan, unlike Timmons, will have no other clients.

“Given the dimension of all the issues facing us in Washington, we should have a full-time person there on a day-to-day basis,” Selig said.

“It goes beyond the antitrust issue, though that’s certainly an important one. Callahan has already talked to a fair number of senators on the judiciary committee, and I can only reiterate what I said at the hearing. . . . In no way, shape or form have we ever

abused our privilege. I really believe the exemption has served the public good.”

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Long before arbitration and free agency, before billion-dollar television deals and the sale of expansion franchises for $95 million, baseball was looked at in a more romantic way.

That faded memory is illuminated by a 1922 Supreme Court decision in the case of the Federal (League) Baseball Club of Baltimore vs. the National League.

The court, as expressed in the majority opinion of Oliver Wendell Holmes, held that baseball is an amusement and not a business dependent on interstate trade.

Although labeled illogical by a later Supreme Court, that decision provided baseball with its exemption from federal antitrust laws, leaving it a legal monopoly.

Or as Don Fehr, executive director of the Major League Baseball Players Assn., put it, “Baseball is the only unregulated cartel around.”

It is the only professional sport to enjoy an exemption, which has survived despite later Supreme Courts calling it an “aberration and anomaly,” and “unreasonable and inconsistent.”

The court, however, has refused to overturn the 1922 decision, consistently saying--most recently in the 1972 Curt Flood challenge--that the responsibility for eliminating the exemption belongs to Congress.

But Congress, despite a 1976 study by the House Select Committee on Professional Sports that concluded that the exemption was unwarranted, has never taken significant action.

Some believe that the legislators have always backed off in the fear that if baseball proved to be damaged by the removal of the exemption and application of statutory regulations, fans would respond at the voting booth.

A more likely explanation was provided by Marvin Miller, former director of the players’ union, who said nothing has ever been done because Congress “has always been reluctant to spend the time and energy when there are many more important issues,” and “the baseball ownership has been quite effective in lobbying what it had to, always staying one step ahead.”

Miller cited the decision to put an expansion franchise in Kansas City after the late Stuart Symington, then a Missouri senator, raised an exemption ruckus when the Athletics moved from Kansas City to Oakland; and the decision to put another in Seattle after the Pilots had moved to Milwaukee and then-Washington Sen. Henry Jackson said it was time to remove the exemption.

“It’s all show and always has been,” Miller said of the congressional threats.

Only time will determine if the new threats are strictly smoke. They seem to stem from the following:

--The disappointment of Bilirakis and the two Florida senators, Bob Graham and Connie Mack Jr., at baseball’s refusal to approve the sale and transfer of the San Francisco Giants to Tampa-St. Petersburg.

Deprived of the exemption, baseball would not have been able to prevent the move or, at the least, would have had to pay major financial damages to the Florida interests.

Asked Mack: “How can keeping a franchise in a money-losing market be good for baseball?”

--A perception, as indicated by Metzenbaum’s statement at the December hearing, that the owners have only their own interests at heart and no real desire for self-regulation through a strong and independent commissioner.

“Even if the owners give the next commissioner a fig leaf of authority, Vincent’s ouster sends a clear signal that he or she should not cross them,” Metzenbaum said.

“It also raises questions about whether baseball can respond credibly and effectively to allegations of misconduct by an owner or league official.”

Metzenbaum said that the disciplining of Cincinnati Reds’ owner Marge Schott did little to change his view on that. He called her one-year suspension “without inflicting pain” and the $25,000 fine “laughable.”

“I still believe that the public would have been better served if the matter had been handled by an independent commissioner, rather than by a group of owners sitting in judgment of one of their own,” he said. “There is a lack of accountability in that, and this should serve as a wake-up call for baseball.”

Said Vincent: “The assumption in Congress has always been that the best interest of baseball would always be looked after by an independent commissioner. It seems that now, with the (duration of the) Schott situation and the ongoing restructuring of the commissioner’s office, Congress may be thinking that the owners are out of control.”

--The additional perceptions that in no other industry do competitors make group decisions, and that the owners have used the exemption as a shield to limit the number of franchises, increasing their value.

“A scarcity of franchises inflates the resale value of existing teams, and increases each owner’s share of the national broadcasting revenue,” Metzenbaum said.

“It also enables owners to squeeze concessions and subsidies from their home cities by threatening relocation to another city.

“Many cities badly in need of revenues for schools, hospitals and other vital projects have been forced to obtain public funding of elaborate new stadiums or risk having their team move to another city. This blackmail game is unseemly and a disservice to fans.

“The baseball owners trumpet their commitment to franchise stability, even though they routinely threaten to abandon their home city whenever it suits them financially. And the owners have refused to permit municipal ownership of teams, which is probably the most effective way to protect fans from franchise relocations. . . .

“Baseball’s special treatment under the antitrust laws also has helped to inflate the value of its TV contracts. The baseball owners have agreed among themselves to impose territorial restrictions on the broadcasting of games by local TV stations. These restrictions can facilitate the movement of games onto pay TV and hurt fans who can’t afford or don’t have access to cable.”

In response, Selig said:

--The exemption helps baseball provide franchise stability, avoid frivolous shifts and the possibility of treble damage litigation if those shifts were blocked by baseball.

He cited the unilateral decision by Al Davis to move his Oakland Raiders to Los Angeles and the decision by Bob Irsay to clandestinely move his Baltimore Colts to Indianapolis under the dark of night, and said the exemption protects baseball fans from moves similar to Irsay’s “midnight ride.”

“I think that’s a compelling factor (for keeping the exemption),” he said. “I’m sure that the first time a team moved (if the exemption is revoked), the hollering out of Washington would be legendary.”

--The exemption allows the major leagues to significantly subsidize the minor leagues, bringing baseball to cities that would otherwise not have it. It also allows baseball to avoid a barrage of nuisance suits--the NFL has had to defend more than 60 antitrust suits since 1966--and to establish TV territories that help small-market teams survive.

“Strip away the exemption (opening the door to TV access anytime, anywhere) and I’m not sure the Indians would still be in Cleveland or the Brewers would still be in Milwaukee,” Selig said.

“I mean, is that in the fans’ best interest?”

--The forced resignation of Vincent does not mean the owners are unwilling to accept a strong and independent commissioner with the power to act in the game’s best interest and maintain discipline and integrity.

“The clubs lost confidence in Fay Vincent for many reasons,” Selig said. “The concern heard most often was his inability to develop a consensus on the vital issues. Rather than pulling together under his leadership, the clubs were pulling apart.

“The restructuring committee has yet to complete its work, but I’m confident we’ll have a commissioner with strong powers to protect the integrity of the game. We all still feel that’s imperative.”

The restructuring committee is definitely aware of the threat. Several members of Metzenbaum’s committee, including Dianne Feinstein, D-Calif., and Arlen Specter, R-Pa., have said that the exemption should be revoked if baseball reduces the commissioner’s powers.

“It’s part of the environment we’re working in,” said Dodger President Peter O’Malley, a member of the restructuring committee now likely to retain many of the commissioner’s “best interest” powers.

O’Malley wouldn’t specifically comment on the committee’s work, but he predicted it would lead to the hiring of a “strong, independent and outside” commissioner.

The players’ union, which believes the commissioner will always be the owners’ man, no matter how the office is restructured, says the exemption should be revoked, period.

Both Fehr and Miller, the current and past directors of the union, said that the owners have used the exemption to restrict the number of teams and, thus, the number of available jobs; and that, despite the antitrust protections built into what is the strongest collective bargaining agreement in sports, the players should have the “bargaining chip” that football, basketball and hockey players have.

In other words, players should have the ability to pursue antitrust sanctions through the courts. Given that option, Fehr said, some or all of the work stoppages that have been part of the last seven collective negotiations might have been avoided.

Said Miller: “If it wasn’t for the exemption, I don’t think the owners would have been as unanimous as they had to be in running their collusion conspiracy. I have to believe that during those three years of disgraceful behavior, one or two would have stood up and said, ‘Look, this is clearly against the law.’

“The owners have now agreed (in the bargaining contract) to pay treble damages if they collude again, but it’s still not the same as having Uncle Sam look over your shoulder.”

How far will Uncle Sam take it this time? It is too early to predict.

Charles O’Connor, counsel to the owners’ Player Relations Committee, said the loss of the exemption would not be baseball’s “death knell,” but would be significant.

Metzenbaum said that to preserve the exemption, baseball will have to prove how it benefits the fans and the game.

It might be a tough sell.