A decision on their anti-trust exemption may have MLB -- along with the NHL, Comcast and DirecTV -- on their way to court.
Major League Baseball has enjoyed an anti-trust exemption largely untouched since the 1922 Supreme Court Federal Baseball Club of Baltimore, Inc. v. National Baseball Clubs decision that established it.
But, according to the Associated Press, a ruling by U.S. District Judge Shira A. Scheindlin regarding MLB, the NHL and broadcasting partners DirecTV and Comcast may change that. The decision to reject "anti-trust exemption" as legal defense allows two cases which argue that collusion between the organizations creates "anti-competitive blackouts" -- according to Reuters -- to proceed in the court system.
In addition to the judge's explanation that "the U.S. Supreme Court has 'expressly questioned the validity and logic of the baseball exemption and declined to extend it to other sports," her belief that "exceptions to antitrust laws are to be construed narrowly" may have had led to a decision with a slight activist bend to it. As ESPN's Darren Rovell explained in 2001, the 1953 Toolson vs. the New York Yankeesdecision states that the Sherman Anti-Trust act -- from which MLB has an exemption -- was not created with things like them in mind, making it not privy to the accompanying restrictions.
Scheindlin argues, somewhat oddly, that "baseball's contracts for television broadcasting rights" are "a subject that is not central to the business of baseball, and that Congress did not intend to exempt." For a league which generated 700 million dollars last year from their television deal as part of, according to Forbes, roughly eight billion dollars in revenue last year, the argument that slightly less than 10% of annual revenue isn't central to "the business of baseball" is obviously problematic.
The second part, however, makes legal sense even if it ignores the fact that the Supreme Court and not Congress created the exemption. Or the idea that, when given the opportunity -- as they did with the Curt Flood Act in 1998 -- Congress only restricted the teams control over things like salaries and player movement.
This legislative inaction is not stopping Judge Scheindlin or the plaintiffs in the case. As their lawyer Ned Diver said in a phone interview with Reuters, "we don't view it as a surprise that the court simply accepted that the leagues and their media partners are subject to the antitrust laws."
There's no telling what this could mean for Major League Baseball, the National Hockey League or even their broadcast partners such as Comcast and DirecTV -- which Scheindlin called "more than passive participants" in what she referred to as "consciously depriving consumers of out-of-market games they would prefer" -- but it's certainly a decision worth following into the future.