Congress Takes a Swing At Baseball Owners
MIAMI — Major-league baseball is often called the ''national pastime.'' Since 1922, the pro sport has also enjoyed a special legal status.
But Congress is moving to close an antitrust loophole which could dramatically alter the business of baseball.
If the exemption - which no other professional sport enjoys - is dropped, disgruntled players could start up a rival league. That could send high salaries even higher as each league tried to outbid the other for top players.
Free agency, salary arbitration, and baseball's player draft would almost certainly take on a different form. With all of these changes, profits - including the lucrative television revenues that teams derive each year - might take a plunge.
Major league baseball owners are expected to lobby hard to prevent any change in the law.
But if there's any time when the antitrust exemption could be lifted, it is this congressional term, says professor Ken Shropshire at the University of Pennsylvania's Wharton School.
''It's more likely now with a conservative, business-minded Congress firmly in place,'' says Mr. Shropshire. ''From an equity standpoint, there's absolutely no reason why baseball should have the exemption, and professional football, basketball, and hockey should not.''
The US Supreme Court agrees with that assessment. In 1972, it called the antitrust exemption an ''aberration,'' but called on Congress to repeal it. With baseball's longest strike still vivid in lawmakers' minds, the Senate is moving to do just that.
When the 1922 Supreme Court ruling was handed down, baseball games were ''exhibitions'' and baseball players usually earned less than $10,000 a season. Justice Oliver Wendell Holmes declared that baseball is not ''interstate commerce'' and, as such, is exempt from federal antitrust laws.
After 73 years of profiting from this benefit, owners now face an uncertain future. Last week, the Senate Judiciary Committee voted 9 to 8 on a bill that would change baseball's unique status. The vote sends the proposal to strip baseball of this antitrust exemption toward its first consideration by a full house of Congress after years of failed attempts.
While prospects for passage are unclear, what is certain is that since 1922, baseball owners have used that Supreme Court ruling to take actions that would have been declared unlawful under any other circumstances.
''Owners routinely use closed-door meetings to decide whether and where baseball franchises may relocate,'' says Richard Blau, a Tampa attorney. ''That would be a 'conspiracy' in violation of federal antitrust law in any other business.''
Mr. Blau saw this first hand three years ago when he represented the city of St. Petersburg, which was trying to land a baseball franchise. Tampa Bay area investors and Robert Lurie, the owner of the San Francisco Giants baseball team, reached a sale and relocation agreement. But National League owners voted 9-4 to reject the Tampa Bay group's purchase of the Giants.
''Although federal law prohibits individuals or groups from engaging in activities that operate as a restraint on trade, baseball used its exemption to frustrate Mr. Lurie and effectively unwrite his exclusive contract with Tampa Bay investors,'' says Mark Mills, a spokesman for Sen. Connie Mack (R) of Florida.
Senator Mack, the namesake of the legendary baseball owner and manager, has led the fight in Congress to repeal baseball's antitrust exemption since the Tampa Bay episode. When he co-sponsored legislation with former Sen. Howard Metzenbaum (D) of Ohio two years ago, he argued that by removing the exemption, it would place ''some free-market pressures on Major League Baseball.'' But Mack's bill never made it out of committee.
The bill that made it out of committee this year is more narrowly defined. Sponsored by committee chairman Sen. Orrin Hatch (R) of Utah, the bill would not affect franchise relocation rules or the minor leagues.
But prospects for passage are uncertain. ''You have a conservative Congress that generally believes in a free market,'' says Mr. Blau. ''But you also have 28 very wealthy individuals who are major campaign contributors. That makes Congressional action a little harder to undertake.''