America’s Favorite National Pastime: 7th Circuit Upholds Baseball’s Antitrust Exemption
Although baseball’s popularity has waned in recent years, the sport remains unique from any other professional sports league in that it is exempt from the scrutiny of federal antitrust laws. While other leagues have attempted to gain a similar exemption, and have consistently been unsuccessful, baseball has managed to maintain the exemption for close to a century. Recently, the 7th Circuit upheld this exemption in Right Field Rooftops LLC et al. v. Chicago Baseball Holdings LLC. The decision begs the question: isn’t it time for baseball’s undeserved, outdated exemption to be overturned?
The exemption was originally granted to the sport in a 1922 Supreme Court decision called Federal Baseball Club of Baltimore v. National League, in which the Court ruled that federal antitrust laws did not apply to baseball because only interstate commerce was subject to federal antitrust scrutiny, and such “exhibitions” were not interstate commerce. Over thirty years later, in a 1953 decision called Toolson v. New York Yankees, the Supreme Court declined to overturn Federal Baseball, reasoning that the league had “been left for thirty years to develop, on the understanding that it was not subject to antitrust legislation” and that Congress, not the courts, should decide whether to overturn the holding in Federal Baseball. Meanwhile, in two cases also decided in the 1950s (one in boxing and one in football), the Supreme Court made it clear that the antitrust exemption granted to baseball would not be extended to other sports. Today, baseball remains the only sports league that has a judicially created exemption from federal antitrust laws.
Congress did make a significant change to the exemption with the passage of the Curt Flood Act of 1998, which resulted in baseball losing the antitrust exemption in what has been a critical area for other leagues: the labor market for players. Players in other sports leagues had used antitrust laws to gain leverage against their respective leagues in collective bargaining negotiations, and Congress made it clear baseball players could now do the same. However, the applicability of the antitrust laws to the “business of baseball” remained unchanged. This “business of baseball” concept is the main reason why the 7th Circuit ruled against Right Field Rooftops.
The Right Field Rooftops control two buildings adjacent to Wrigley Field and sell tickets that allow fans to watch Cubs games and other events at the stadium from their rooftops. In 2002, the Cubs filed suit against Right Field Rooftops and other buildings who provided the same service, alleging these businesses were misappropriating Cubs’ property by charging fans to watch Cubs games. Prior to the 2004 season, the parties settled the lawsuit by agreeing that the rooftop businesses would pay the Cubs 17% of their gross revenues in exchange for their views into Wrigley.
In 2009, the Ricketts family purchased the Cubs and acquired Wrigley Field. In 2013, Ricketts reneged on the agreement with the rooftop businesses and announced a renovation plan for Wrigley that included two large video boards in left and right field. These signs would obstruct the views from the rooftops. Right Field Rooftops followed suit in response, alleging that the Cubs engaged in monopolistic behavior in violation of the Sherman Act by attempting to set a minimum ticket price, attempting to force the sale of the rooftop businesses at below market prices, and constructing these video boards if the businesses did not comply with their demands. The Court rejected the rooftop businesses’ argument because of baseball’s antitrust exemption, reasoning that the Cubs’ conduct in this case was “part and parcel of the ‘business of providing public baseball games for profit’ that Federal Baseball and its progeny exempted from antitrust law.”
If the facts of the case were changed only slightly, and the Chicago Bears (a football team) were the defendants instead of the Chicago Cubs (a baseball team), the plaintiffs may have had a stronger argument and the outcome of the case may have been completely different. Simply put, because this case was in the context of baseball, rather than another sport, Right Field Rooftops and similarly situated businesses were powerless against the Cubs’ conduct, which might have been deemed to be anticompetitive conduct in a similar situation.
Other sports leagues that do not maintain an exemption from federal antitrust scrutiny and have lost antitrust lawsuits in various areas of their businesses still manage to operate at a highly successful rate. Baseball, too, could continue to be successful without such an exemption. Today, there is no reason for baseball to maintain an antitrust exemption in certain areas while other leagues do not enjoy the same benefit, despite the courts’ and Congress’s continued reluctance to take such action.
Suggested citation: Andrew Saba, America’s Favorite National Pastime: 7th Circuit Upholds Baseball’s Antitrust Exemption, Cornell J.L. & Pub. Pol’y, The Issue Spotter, (Oct. 20, 2017), https://live-journal-of-law-and-public-policy.pantheonsite.io/americas-favorite-national-pastime-7th-circuit-upholds-baseballs-antitrust-exemption/.