What SCOTUS’ NCAA decision means for MLB

This article is free for anyone to read, but please consider becoming a Patreon subscriber to allow me to keep writing posts like this one. Sign up to receive articles like this one in your inbox here.

On Monday, the Supreme Court unanimously ruled in favor of former college players in a case against the NCAA and its lack of compensation for student athletes. It’s a significant deal that this has happened, especially that it has happened unanimously, as it could, as ESPN’s Dan Murphy put it in his report, open the door to “future legal challenges that could deal a much more significant blow to the NCAA’s current business model.”

I suggest you check out something like college-centric Extra Points’ breakdown of what this actually means and could mean, if you want the full breakdown. For our purposes, in the more professional baseball-y neck of the woods, there’s something else to cover. There was some discussion on Twitter following the SCOTUS decision on what this kind of blow to the NCAA’s way of doing things could mean for an entity like Major League Baseball, which has benefitted and continues to benefit from an antitrust exemption bestowed on them a full century ago. After all, if SCOTUS is ruling unanimously in favor of former college players, and claims that the NCAA is violating antitrust law with their limits on “education-related benefits that schools can provide to athletes,” then it’s natural to assume that they would be open to making changes to MLB’s antitrust status.

There are two key points that stand in the way of that, from my extremely not-a-lawyer point of view — and please, if you are a lawyer well versed in the way of these matters, and you disagree with me here, I’d love to hear why so I have a better sense of what this all means. As I see it, though, the problem is that, unlike the NCAA, MLB can violate antitrust law: that’s what an antitrust exemption allows. Sure, maybe this version of SCOTUS will be more amenable to a change to MLB’s antitrust status in order to put a stop to their legal violations of antitrust law, but that brings us to problem number two, but that difference between legality and illegality in the actions of these two organizations could be the difference between the NCAA being unanimously ruled against, and MLB coming away with a 5-4 victory.

What makes removing MLB’s antitrust exemption unlikely is that it will create an enormous mess, one that previous Supreme Courts washed their hands of even while admitting that the exemption was a relic best left in another age. The problem has a name: retroactive liability. FanGraphs’ Nathaniel Grow, author of a now very expensive book on the origins of MLB’s antitrust exemption, explained that concept along with some background for previous affirmations of the antitrust exemption a few years ago:

At the time, many anticipated that the court would strip baseball of its antitrust immunity in the Toolson case. Not only had the Supreme Court dramatically modernized its definition of interstate commerce during the three intervening decades – expanding the term to encompass almost all business activity – but the business of baseball was itself more clearly engaged in interstate commerce by the 1950s due to its greater reliance on television and radio broadcasting. Contrary to these expectations, the Court affirmed the baseball exemption by a 7-to-2 vote.

In its one-paragraph opinion, the Toolson Court provided two main justifications for maintaining baseball’s antitrust immunity. First, the majority noted that Congress had been aware of the Federal Baseball ruling for 30 years, but yet had not taken any steps to apply the antitrust laws to MLB. Indeed, Congress had just held extensive hearings regarding baseball’s antitrust status about a year before the Toolson case reached the Supreme Court, hearings that concluded without the passage of any legislation subjecting MLB to the Sherman Act. This suggested the legislature may have intended for baseball to remain protected from antitrust law.

Second, the Court feared that any decision reversing baseball’s antitrust immunity would unfairly subject the sport to retroactive liability, holding MLB legally accountable for activity that it had reasonably believed was beyond the scope of the antitrust laws. Because any monetary damages in federal antitrust suits are tripled, the Court may have even feared that MLB could potentially be driven into bankruptcy if countless current and former players affected by the reserve clause were freed to file their own antitrust lawsuits against the league. In light of Congress’s inaction and these retroactivity concerns, the Toolson opinion closed by declaring that any change to baseball’s antitrust exemption should come from the legislature, not the judiciary.

It’s not like SCOTUS always adheres to precedence, but when you combine that possibility with retroactive liability, and the sheer volume of suits that could be filed against MLB for behavior their antitrust exemption allowed them to get away with over the last century, well, SCOTUS just isn’t going to be the one to strike the exemption down. It would take Congress to do it, and as we’ve discussed on a number of occasions, they don’t seem particularly keen on it.

Congress didn’t directly threaten MLB’s antitrust exemption even as they railed against the league’s planned shrinking of Minor League Baseball in 2019 and 2020. They haven’t attempted to punish MLB for going ahead with the mass disaffiliation of the minors in the months since, either. During the steroid era, Congress mentioned the antitrust exemption as a way of getting MLB to cooperate with the extremely public distraction from the unpopularity of the Iraq War. It was only recently brought up as an issue again by some Republicans who were only bringing it up because they hate that Black people can vote, and that MLB thinks that Black people should be able to vote. Which is a depressing way of saying that Congress doesn’t actually care about the antitrust exemption, so much as they care about its potential use as a tool to be used to keep MLB in line.

Regardless of what’s going on with the NCAA and antitrust violations, MLB’s exemption is likely safe. The Supreme Court could, hypothetically, reverse course on a century of precedent and open the league up to the perils of retroactive liability, but that’s not a bet I’d make. Congress might feel compelled to actually lift the exemption on their own, doing away with the retroactive liability problem, but that’s even more of a personnel issue than any SCOTUS might have: there would need to be people in power actually interested in removing the antitrust exemption, and the kind of people who get elected to those positions aren’t particularly concerned about any business entity having that kind of power, so long as said business entity isn’t making trouble for the government.