Academic journal article Fordham Journal of Corporate & Financial Law

Is Baseball Shrouded in Collusion Once More? Assessing the Likelihood That the Current State of the Free Agent Market Will Lead to Antitrust Liability for Major League Baseball's Owners

Academic journal article Fordham Journal of Corporate & Financial Law

Is Baseball Shrouded in Collusion Once More? Assessing the Likelihood That the Current State of the Free Agent Market Will Lead to Antitrust Liability for Major League Baseball's Owners

Article excerpt

Introduction

On March 19, 2019, Los Angeles Angels superstar center-fielder Mike Trout signed the most lucrative contract in sports history, guaranteeing him more than $430 million over a twelve-year span.1 While Trout is considered one of the greatest players of his generation-and to many, one of the greatest to ever play the sport-this is undeniably a large sum of money.2 The contract was an extension of his current commitment with the Angels-the club Trout has played for since he was drafted into the league at eighteen years-old.3 With merely two years left on his contract, Trout was close to hitting the market where he would have had the opportunity to sign with the highest bidder for his services. On the market, he would have been one of the most sought-after commodities in the history of the sport.4 Instead, Trout joined the long list of established players in Major League Baseball (MLB) who have erred on the side of caution by securing their futures with their current employers.5 When asked why he chose to secure his future before reaching that point, Trout cited the slow progression of the free-agent market during the 2018-2019 off-season as being a major reason for his decision.6

During the 2019 off-season, Manny Machado and Bryce Harper- two of baseball's biggest stars-were slated to be highly-coveted free agents.7 With both players entering the 2019-2020 season at only twentysix years-old and with multiple productive seasons under their belts,8 it 938406/2019/04/23/dale-murphy-i-played-against-some-of-the-all-time-greats-miketrout-is-better-than-all-of-them/ was presumed within the industry that both players would have suitors lining up to pursue them.9 However, fewer teams than anticipated vied for their services.10 The absence of serious pursuit from multiple teams for two of the game's transcendent talents has emblemized the notion that the current free agent system in the MLB is broken, and may lead to another prolonged labor dispute for the sport.11

Machado and Harper eventually signed long-term deals,12 but other marquee players in the sport have not been so lucky.13 Free agents, including pitchers Dallas Keuchel and Craig Kimbrel, remained unsigned well into the 2019 season despite having tremendous track records of success.14 The situation these free agents have found themselves in is puzzling to many within the industry because while revenue for the MLB is at an all-time high, salaries for its players actually decreased in 2018.15 This decline is likely a result of the free-agent market simply not proving as fruitful for players as in years past.

This reality has led to speculation that MLB's club-owners are colluding by implicitly refusing to get into bidding wars for players' services.16 In theory, doing so would discourage players from pursuing free agency in order to retain their teams' talent at more favorable rates.11 Collusion-which is prohibited by federal law18-is generally defined as any collective action that restricts competition.19 This would not be the first time MLB's club-owners have been faced with collusion charges.20 The number of "labor-management disputes have arisen more in [the MLB] than in any other major professional sport played in the United States, particularly since the advent of collective bargaining in the past three decades."21

Professional teams in the MLB have enjoyed a special non-statutory labor exemption from antitrust law since 1922.22 The non-statutory labor exemption is permissible in United States professional sports because of the "peculiar nature of the labor-management relations in the industry."23 Sports leagues are asked to promulgate rules that will level the playing field among competitors-such as barring players of a certain age from participating in a sport, or preventing the relocation of a franchise- frequently to the detriment of teams and individual competitors.24 But if any sports league is incapable of establishing such rules, their ability to remain competitive would be near impossible. …

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