Monday, August 11, 2003

Antitrust: Taking on Zimbalist

Andrew Zimbalist is an intellectual leader among baseball conservatives who believes with great frevor that the only way to improve his beloved sport is to—drumroll, please—repeal the antitrust exemption. Andrew Alexander, co-editor of the Intellectual Conservative website, begs to differ:
For Zimbalist, the roots of baseball’s problems are clear: Major League Baseball is an unregulated monopoly. The Supreme Court’s 1922 Federal Baseball decision exempted MLB from the nation’s antitrust laws on the grounds that baseball did not constitute “interstate commerce;” baseball has enjoyed exempt status ever since. This exemption is unique to MLB; football fans may recall that Oakland Raiders owner Al Davis successfully brought an antitrust suit against the NFL and was able to move his team to Los Angeles in 1980. Applying antitrust law, the judge in that case held that the NFL engaged in an “unreasonable restraint of trade” by preventing the Raiders from moving out of Oakland. If Congress were to remove MLB’s antitrust exemption, MLB would be unable to prevent teams from changing cities – except when preventing such movement was “reasonable.”

Like most monopolists, MLB artificially restricts supply to increase demand, according to Zimbalist. The “restriction of supply” takes the form of limiting the number of Major League ballclubs. The most glaring example of this restraint on trade is the lack of a baseball team in Washington, DC, the nation’s sixth-largest market. According to Zimbalist, MLB uses Washington as economic leverage against current baseball cities. MLB threatens to relocate teams to Washington if current host cities fail to publicly finance stadiums for their teams. On the other hand, if MLB were subject to antitrust regulation, it would be unable to prevent the creation of an expansion team in Washington unless such action was found to be “reasonable.” Nor could MLB prevent an owner from moving its team to Washington -- or any other city -- unless such action was deemed “reasonable.”

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What is needed is not antitrust regulation but a salary cap or a strong luxury tax. Repealing MLB’s antitrust exemption seems like a way of avoiding confrontation with those most responsible with maintaining the status quo – the players union and the high-revenue owners.

And it is not clear why Zimbalist thinks MLB is a “monopoly” anyway. He states that baseball is a monopoly because “it is the only provider of top-level professional baseball in the country.” But so is the Professional Bowlers Tour, and is anyone clamoring for increased antitrust scrutiny of bowlers?
Alexander, of course, misses the point: Antitrust is generally designed to punish successful businesses. Although, to be fair, the current administration likes to use antitrust against financially struggling businesses as well, making it a political weapon of mass destruction rather than just a tool to use against unpopular "greedy" businesses.

Chief Justice Rehnquist, dissenting from the denial of certiorari petition in the early 1980s, suggested the professional sports leagues should be viewed, for antitrust purposes, as competitors with each other, rather than construing the individual franchises within a league as market competitors. This would certainly make economic sense, but antitrust has nothing to do with making sense, but empowering government lawyers to decide how the market should be run.

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