Edward Gramlich, a governor of the Federal Reserve, thinks Major League Baseball’s antitrust exemption should be repealed. At a Brookings Institution discussion of baseball’s business model this morning, Gramlich repeated the stock argument that repealing the exemption would not harm baseball, since, after all, antitrust laws don’t seem to harm the NFL, NBA, or NHL.
Gramlich apparently was unaware that all four professional leagues enjoy a separate antitrust exemption to jointly negotiate television rights contracts. In the absence of that exemption, the financial model for major professional sports could collapse, since television rights contracts enable low-revenue teams to remain viable.
Baseball’s peculiar exemption derives from a 1922 Supreme Court ruling holding the antitrust laws were never intended to apply to baseball. This was a sensible ruling, and one modern antitrust investigators should take to heart before expanding the antitrust laws to apply to the smallest, most economically insufficient market. The current exemption, enacted by Congress a few years ago, basically allows MLB to conduct its business free of antitrust second-guessing. True, baseball may be no more deserving of such an exemption than any other industry. But that’s precisely the point: Every industry should be exempt from the antitrust laws.
It’s not like baseball’s profiting unjustly from its antitrust exemption. MLB is doing far worse economically than the NFL and NBA, and Gramlich is correct in asserting that repealing the exemption would do little to improve or harm baseball’s financial picture.
I would add, however, that it’s humorous for a Fed governor to be complaining about monopoly. Not only does Gramlich manage a government banking monopoly, but the Fed Board of Governors itself is little more than a rubber stamp for Alan Greenspan’s presumed aura of infallibility.