A (Very) Abridged Legal History of Sport
Federal Baseball Club v. National League
This is the first in a series of articles discussing the legal rulings that made the sporting landscape what it is today.
Major League Baseball stands apart from the other major professional sport leagues in the United States in more than just longevity. Thanks to a lawsuit almost 100 years ago, MLB is also afforded an antitrust exemption that other commissioners would drool over. This exemption gives baseball the ability to protect its monopoly power in a way that other leagues can’t. Hence, whereas the NBA, NHL, and NFL have all had to deal with upstart leagues that eventually forced mergers, the most recent serious challenger to baseball’s monopoly power was the Federal League, which last played a game in 1915.
The Federal League formed in 1913 as a response to a backroom deal between the American and National Leagues. To artificially deflate labor costs, both the AL and NL agreed in 1903 to stop poaching players from the other, leading to average player salaries dropping sharply over the next decade. The Federal League believed this offered them an opening to attract talent through higher wages.
The brainchild of baseball promotor John T. Powers, the league consisted of eight teams each of the two seasons it operated. As part of their attempt to break up the stranglehold the two dominant leagues had on the game of baseball, the Federal League filed a lawsuit against them, using the Sherman Act to charge the major leagues with “being a combination, conspiracy and monopoly.” The lawsuit was strategically filed in the District Court of Northern Illinois before Judge Kenesaw Mountain Landis, as Landis had a known affinity for trustbusting. Unfortunately for the Federal League, he also had an affinity for the sport of baseball, and would go on to eventually be MLB commissioner for 22 years. Landis rebuked the Federal League’s lawyers, saying that any attack on baseball “would be regarded by this court as a blow to a national institution.” He encouraged the owners of the respective leagues to come to an agreement, after which all but one Federal League team owner took a buyout.
The lone remaining party in the suit now was Ned Hanlon, owner of the Federal League’s Baltimore franchise. Hanlon had a colored career as a baseball man, and was inducted into the Hall of Fame in 1996. He won five pennants as a manager, chaired the National League’s Rules Committee, and pioneered numerous game strategies now common to all levels of the sport. These include the squeeze play, the concept of platooning players, and even the idea of a set pitching rotation. Indeed, Hanlon seems to have more than earned his moniker as ‘the father of modern baseball’.
Because of Hanlon’s numerous other appearances in the pages of baseball history, it’s easy to understand how his role in the lawsuit is often overlooked, but Hanlon took the league’s owners, many of them his friends and acquaintances, all the way to the Supreme Court. Hanlon felt personally slighted after having been offered less than his fellow plaintiffs as part of the buyout. Charles Comisky, owner of the Chicago White Sox at the time, explained to him that Baltimore was a “minor league city, and not a hell of a good one at that.” As it turns out, it may have been easier for the owners to just pony up the extra cash for Hanlon. In a Washington, D.C. Federal District Court, Hanlon sought and won an $80,000 settlement, which, since this was an antitrust case, was automatically trebled to $240,000. But this judgment was overturned on appeal, and the suit went to the Supreme Court.
In May 1922, seven years after the Federal League folded, Justice Oliver Wendell Holmes penned the unanimous decision in Federal Baseball Club v. National League, deciding that the Sherman Act did not apply to professional baseball, because it was not interstate commerce. As Holmes wrote, in part,
The business is giving exhibitions of baseball, which are purely state affairs. It is true that, in order to attain for these exhibitions the great popularity that they have achieved, competitions must be arranged between clubs from different cities and states. But the fact that, in order to give the exhibitions, the Leagues must induce free persons to cross state lines and must arrange and pay for their doing so is not enough to change the character of the business. According to the distinction insisted upon in Hooper v. California, the transport is a mere incident, not the essential thing.
If this ruling doesn’t seem to make sense to you, that’s okay. It hasn’t made sense to generations of legal scholars either. Some suggest that the court was worried losing the case would be the death knell for professional baseball in the wake of the Black Sox scandal. Others have pointed to Chief Justice William Howard Taft’s history as a ballplayer at Yale, and the fact that he was related to Chicago Cubs owner William Wrigley, as probable reasons for the decision.
It seems that even the court itself has realized it erred in this case. It has never allowed Baseball Club v. National League to be used as precedent in other arguments, even by other sport leagues making identical ones. So according to U.S. law, professional baseball is not interstate commerce, but professional basketball and football are. Though the ruling has been challenged in subsequent cases, the court has used the legal principle of stare decisis to defend it, basically admitting that the ruling was wrong, but that too much now rests on the faulty ruling for it to be overturned. But this series of challenges to baseball’s monopoly power throughout the second half of the twentieth century would slowly chip away at baseball’s iron grip on players’ rights.
Though the league lasted just two seasons, the Federal League had an important impact on the game. The rise of the outlaw league led to increased player leverage with the clubs, allowing them to negotiate higher wages. Additionally, the Federal League gave us Wrigley Field, which was originally constructed for the league’s Chicago franchise. Finally, though Hanlon lost his lawsuit, Federal Baseball Club v. National League was ultimately the first step towards ballplayers achieving true free agency over a half century later.
