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The controversial 1922 Federal Baseball Supreme Court ruling held that the "business of base ball" was not subject to the Sherman Antitrust Act because it did not constitute interstate commerce. In Baseball on Trial, legal scholar Nathaniel Grow defies conventional wisdom to explain why the unanimous Supreme Court opinion authored by Justice Oliver Wendell Holmes, which gave rise to Major League Baseball's exemption from antitrust law, was correct given the circumstances of the time. Currently a billion dollar enterprise, professional baseball teams crisscross the country while the games are broadcast via radio, television, and internet coast to coast. The sheer scope of this activity would seem to embody the phrase "interstate commerce." Yet baseball is the only professional sport--indeed the sole industry--in the United States that currently benefits from a judicially constructed antitrust immunity. How could this be? Drawing upon recently released documents from the National Baseball Hall of Fame, Grow analyzes how the Supreme Court reached this seemingly peculiar result by tracing the Federal Baseball litigation from its roots in 1914 to its resolution in 1922, in the process uncovering significant new details about the proceedings. Grow observes that while interstate commerce was measured at the time by the exchange of tangible goods, baseball teams in the 1910s merely provided live entertainment to their fans, while radio was a fledgling technology that had little impact on the sport. The book ultimately concludes that, despite the frequent criticism of the opinion, the Supreme Court's decision was consistent with the conditions and legal climate of the early twentieth century.
The business of baseball stands in sharp contrast to the game’s wholesome image as America’s favorite pastime. Major league baseball is a deeply troubled industry, facing chronic problems that threaten its future: persistent labor tensions, competitive dominance by high-revenue teams, migration of game telecasts to cable, and escalating ticket prices. Amid the threat of contraction, existing franchises are demanding public subsidies for new stadiums, while viable host cities are begging for teams. The game’s core base of fans is aging, and MLB is doing precious little to attract a younger audience. According to Andrew Zimbalist, these problems have a common cause: monopoly. Since 1922 MLB has benefited from a presumed exemption from the nation’s antitrust laws. It is the only top-level professional baseball league in the country, and each of its teams is assigned an exclusive territory. Monopolies have market power, which they use to derive higher returns, misallocate resources, and take advantage of consumers. Major league baseball is no exception. In May the Best Team Win, Zimbalist provides a critical analysis of the baseball industry, focusing on the abuses and inefficiencies that have plagued the game since the 1990s, when franchise owners appointed their colleague Bud Selig as MLB’s “independent” commissioner.
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This article examines Major League Baseball's (MLB) antitrust exemption from a practical, historical perspective and concludes that it is largely irrelevant to the actual (as opposed to theoretical) workings of the business of baseball. This article focuses first on the exemption's supposed protection of baseball's "reserve clause" and finds that it was irrelevant to its creation in 1879 as well as its demise in 1975. Despite the exemption, the reserve clause has always been subject to challenge under contract law and it was a simple argument based on contract law principles that led to its eventual dismantling. This article then focuses on the exemption's purported ability to allow team owners to prevent franchise relocation and unwanted expansion (unlike their brethren in the NFL) and concludes that the exemption is merely a mirage: while it appears to exist from afar, up close it disappears. As a result, MLB owners have historically acted no differently than their counterparts in the NFL and in accordance with the principles of the Sherman Act out of fear that if they did not, Congress would step in and formally remove the exemption. Thus, in an ironic effort to prevent the Sherman Act from applying to it, MLB has voluntarily abided by it.
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Major League Baseball is experiencing a period of distinct uncertainty. Average game attendance has fallen since the 1994 strike. Congress has called into question baseball's presumed antitrust exemption. Broadcast rights disputes for popular teams have created complications for fans. However, new stadium facilities and, more important, the renewed excitement brought to the game by shattered batting records and the blazing pitchers of the late 90's brought fans back. A strike was narrowly averted at the end of the 2002 season, a campaign that yielded one of the most exciting post-seasons yet, with the unlikely Anaheim Angels claiming the coveted World Series trophy.Beneath these encouraging developments deep problems persist within Major League Baseball. Though a labor agreement was finally reached between players and owners, the specter of another dispute looms in the minds of fans. The new agreement, while a positive step, introduces several perverse incentives and will only make a modest dent in baseball's economic deformities. While Commissioner Bud Selig's proposal to eliminate two under-performing franchises was put on hold, the Players Association has agreed not to challenge an owner effort to contract two teams before the 2007 season. Beyond that, Selig himself has become the object of controversy, as questions regarding his possible conflicts of interest and poor leadership taint his reign over baseball. Disputes surrounding the establishment of regional sports networks, such as New York's YES network, make it more difficult and expensive for fans to watch their favorite teams. Tough questions about baseball's presumed special antitrust status have been raised by many, including an official Congressional inquiry.This book explores the abuses and inefficiencies in the functioning of the baseball industry and how these problems are directly connected to Major League Baseball's monopoly status, its presumed exemption from antitrust regulation, and public policy. Andrew Zimbalist, a noted sports economist, spares no criticism for baseball's current leadership. He asserts that the biggest problem for baseball remains the economic realities of its monopolistic practices. The absence of competitive pressure has bred arrogance, laxity, and inefficiency in Major League Baseball, according to Zimbalist. Among other recommendations, he argues that lifting the presumed exemption would allow government and judicial oversight, with an eye toward ending the abuses.May the Best Team Win provides a solid, hard-hitting analysis of the current state of America's pastime. Easily accessible and highly informative, it is bound to become a standard reference tool for fans seeking a deeper understanding of the important issues