Minor league baseball teams sue MLB for antitrust exemption

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The operators of four minor league baseball teams, recently ousted from the ranks of the newly consolidated Major League Baseball development system, have filed a lawsuit in federal court challenging the MLB’s effective federal antitrust exemption.

Federal civil lawsuit filed in Southern New York City by owners of Staten Island Yankees, Norwich Sea Unicorns, Salem-Keizer Volcanoes and Tri-City ValleyCats alleges MLB “collectively decided to artificially reduce” the number of teams minor leagues. affiliated with MLB clubs to cut spending in 2020. The plaintiffs called the MLB’s restructuring of the minor leagues a “bare horizontal deal to solidify MLB’s dominance over all of professional baseball.”


What would you like to know

  • Four minor league baseball teams sue Major League Baseball in an attempt to challenge baseball’s effective antitrust exemption
  • Teams allege that by letting an agreement with minor league baseball expire, MLB entered into a horizontal deal to eliminate minor league teams and increase revenue
  • In 2020, the minor league baseball system was overhauled; out of 160 associated minor league teams, only 120 were asked to maintain their MLB affiliation
  • Plaintiffs hope their case can get stronger with June Supreme Court ruling allowing student-athletes to earn money without NCAA penalties

For over 100 years, minor league baseball associations have collectively bargained to protect their clubs from player poaching by National League and American League teams; in 1903, an agreement known as the Professional Baseball Agreement was made. As a result, all leagues would recognize each other’s contracts and structures were put in place for teams to buy player contracts to move up the professional baseball ranks.

In the mid-20th century, MLB clubs began buying their own minor league clubs and negotiating deals with other clubs, leading to the modern farming system where young players would develop their skills for major league teams. .

Most of these transactions rely on the MLB’s effective antitrust exemption, which originated in the landmark 1922 United States Supreme Court case, Federal Baseball Club v. National League. In that case, the court ruled that baseball games are not subject to federal antitrust laws as they relate only to the states in which those games are played – that despite the fact that the NL and AL teams frequently cross the borders of the Reports for games, travel and transportation are “a simple incident, not the main thing,” according to the majority opinion drafted by Judge Oliver Wendell Holmes.

Last year, the MLB allowed the professional baseball agreement with the minor league baseball company to expire. Soon after, the MLB began to negotiate itself with the minor league leagues and baseball clubs. In September 2020, the MLB announced partnerships with three independent leagues, the Atlantic League, the Frontier League and the American Association, all within two days.

In May, MLB announced a complete overhaul of the Professional Development League minor leagues, restructured into levels with levels associated with levels of play. Along with the announcement, the MLB promised improvements to minor league facilities, less in-season travel for players and coaches; and salary increases at all levels of minor league play.

Last December, 120 clubs were invited to join MLB and its PDL squad roster. But as part of this restructuring plan, the plaintiffs allege that the MLB cut 40 teams from the new reorganization, including the plaintiffs.

The plaintiffs’ four teams – the SI Yankees, Sea Unicorns, Volcanoes and ValleyCats – were all previously associated with Class A Short Season leagues, a classification that was eliminated during the restructuring.

The plaintiffs argue that the MLB’s restructuring of minors is hurting the economies of the “Baseball Towns” these teams have served, as well as the fans who cannot make it to the markets where MLB teams play or of the MiLB.

But much of the case seeks to have the court overturn the “baseball exemption” – an argument based on the June Supreme Court ruling in NCAA v. Alston, who ruled that the NCAA violated antitrust laws by prohibiting student-athletes from being compensated for their work. .

Along with Alston, the plaintiffs argue, the court made it clear that it “will not support special antitrust treatment for sports companies, and will not adhere to decades-old rulings articulating such special treatment when factual predicates fail to emerge. ‘not apply’.


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