Monday, July 29, 2002

FORUM: It's time to toss the antitrust exemption

By Bruce K. Johnson
Guest columnist

        Hey baseball fans, have you had enough of bilious billionaire owners and militant millionaire players reaching into your pocket with an Enron executive's sense of entitlement? Does the prospect of another strike disgust you?

        Then write to your Representative and Senators in Congress and tell them to repeal baseball's antitrust exemption.

        Eighty years ago the Supreme Court ruled that the nation's antitrust laws do not apply to baseball, giving Major League Baseball (MLB) free rein to restrict economic competition. The resulting monopoly has enriched owners and players.

    Bruce K. Johnson is the James Graham Brown Professor of Economics at Centre College in Danville, Ky., where he teaches a course on the economics of sports.
        But it has also created a huge revenue gap between teams in big and small markets. Big-market teams such as the Yankees can afford to pay Jason Giambi $17 million a year because he can sell at least $17 million worth of tickets, beer, and TV ads in New York. He's just not worth that much in Cincinnati or Oakland.

        Is it any surprise we see the Yankees in the World Series every year?

        Even the owners and Bumbling Bud realize this isn't good for the game, so they've proposed that each team give 50 percent of its net local revenues to the other clubs, up from the 20 percent they share now. Players oppose such extensive revenue sharing because it would lower their salaries.

        As Yogi Berra might say, “It's deja vu all over again.” The same basic issues resulted in the strike of 1994-95 that wiped out the World Series and shrank baseball's fan base.

        As long as the revenue gap remains, the risk of a strike will arise every time the collective bargaining agreement comes up for renewal.

        So what can close the revenue gap? Eliminate the antitrust exemption and make the National and American Leagues compete with each other for the best locations. Teams would move to the most lucrative locations and the leagues would expand to put teams in any market that could support one, lest the other league get there first.

        Instead of contraction, or languishing in Montreal or Tampa Bay, teams would move to Brooklyn, New Jersey, and Washington. If the Yankees, Mets, and Orioles had to compete to sell tickets and broadcast rights in their home markets, the revenue gap between big and small markets would fade away. So would the sense of entitlement of owners and players, and so would the pressures leading to the strikes of 1994 and 2002.

        This could all be accomplished with a partial lifting of the exemption, affecting only the leagues' ability to conspire with each other on the number and location of teams. We need not interfere with MLB's relationship with minor league baseball or with the World Series and All-Star game.

        Lifting the antitrust exemption might not be a panacea. There could be strikes for other reasons, and some teams would end up with bigger markets than others. But it's worth a try. For baseball, it might be the difference between “play ball” and “one more strike and you're out.”


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