MLB sends letter to Congress to address antitrust claim

July 29th, 2022

Commissioner Rob Manfred responded Friday to a Senate Judiciary Committee letter that had asked Major League Baseball to explain the potential impact of stripping away the league’s century-old antitrust exemption on the Minor Leagues.

Manfred’s 17-page letter responds to questions that had been posed to the league by Democratic Sens. Dick Durbin of Illinois and Richard Blumenthal of Connecticut and Republican Sens. Chuck Grassley of Iowa and Mike Lee of Utah. In their letter to MLB, dated July 18, the Senators had sought information on a range of issues affecting Minor League players, including lockouts and work stoppages, contract rights, treatment of international prospects and team contraction.

Manfred’s response disputes the assertion of a nonprofit organization called Advocates for Minor Leaguers that the antitrust exemption, which was granted to MLB in a Supreme Court ruling in 1922, is detrimental to Minor Leaguers and that removing it would improve their working conditions.

“We respectfully submit that the opposite is true -- the baseball antitrust exemption has meaningfully improved the lives of Minor League players,” Manfred’s letter reads, “including their terms and conditions of employment, and has enabled the operators of Minor League affiliates to offer professional baseball in certain communities that otherwise could not economically support a professional baseball team.”

The letter contends that, without MLB subsidization, it would not be possible to have affordable Minor League and partner league baseball on 184 teams in 43 states and that MLB spends approximately $108,000 on a per capita basis on Minor League player compensation and benefits (including health insurance, housing benefits, pension benefits, meals and tuition reimbursement).

Manfred’s letter addresses the following key questions that were asked by the Senate Judiciary Committee members:

What justifies maintaining a general antitrust exemption for MLB that the NBA, NFL and NHL do not have?

Manfred notes that the scope of MLB’s exemption was narrowed by Congress through the Curt Flood Act of 1998 and that all professional sports leagues with a collective bargaining agreement benefit from non-statutory labor exemptions and the Sports Broadcasting Act of 1961.

The letter goes on to discuss the contrast between MLB and the other major professional sports leagues in terms of the scope and cost of player development, noting that MLB spends more than $1 billion annually to support the Minor Leagues and Minor League players. MLB clubs provide the players to the MiLB clubs, therefore reducing the cost of operating MiLB clubs.

What effect does the antitrust exemption have on the incidence of lockouts and work stoppages at the MLB level?

Manfred notes that MLB has lost zero games to work stoppages over the last two decades and that the lockout that preceded the 2022 MLB season had no impact on the operation of the Minor League system or Minor League players’ ability to utilize club facilities and resources.

What effect would removing the antitrust exemption have on Minor League player working conditions and wages?

The letter notes that the amateur Draft, the terms and condition under which amateur players (both domestic and foreign) sign their first professional contract, the requirement that all such players sign a Minor League Uniform Player Contract, the bonus and incentive structure, the amount and terms of college scholarship or other tuition benefits and the terms of the Rule 5 Draft (under which players who are not added to a Major League roster within four or five years are eligible for selection by other Major League clubs) are all a direct product of bargaining with the MLB Players Association and therefore would not be subject to antitrust scrutiny even if the exemption were removed.

“For this reason,” Manfred writes, “Advocates’ primary contention that ‘the antitrust exemption is the reason MLB owners can require Minor League players to sign the Minor League Uniform Player Contract’ is just plain wrong because this requirement is the product of collective bargaining.”

Manfred contends that the removal of the exemption would put MLB’s ability to mandate improved working conditions and benefits for all Minor League players at risk and would make it difficult to provide uniformity in the Minors. He notes that, in addition to the aforementioned player benefits, MLB mandates that each club maintain four Minor League affiliates.

“If left solely to the individual decisions of the MLB Clubs, some may choose to maintain fewer than four affiliates,” Manfred writes, “and some may not keep certain affiliates in their existing communities.”

Further, Manfred cautions that, if the exemption were repealed, “Minor League players could be forced to engage in individual negotiations for health, pension, housing and meal benefits that likely would result in many (or even most) Minor League players receiving fewer benefits than MLB currently requires.”

What role, if any, does MLB’s antitrust exemption play in creating the conditions that enable corruption and abuse in the market for international prospects?

The letter details MLB’s effort to create an International Draft that would have eliminated the culture of early deals with international prospects well ahead of their signing eligibility. (Earlier this week, MLBPA rejected MLB’s International Draft proposal as part of the Collective Bargaining Agreement talks.) It also makes note of the Trainer Partnership Program, in which MLB works with more than 100 trainers in the Dominican Republic, Venezuela and other countries to implement a voluntary drug testing program.

“The baseball exemption,” Manfred writes, “gives the Commissioner the ability to investigate and sanction misconduct without subjecting MLB’s remedial efforts to antitrust challenges brought by those who are the subject of our investigations and penalties.”

How did the 2021 reorganization of the Minor Leagues affect Minor League players?

Manfred’s letter notes that the reorganization reduced travel for Minor League teams and improved the mandatory standards for Minor League facilities, with $35 million spent in 2021 and an expectation that $250 million will be spent from 2022-23. Also, 40 of the 43 communities that lost an affiliated Minor League franchise as part of the restructuring will have a professional team from a partner league or a collegiate summer wood bat league by 2023.

“Removing the exemption,” Manfred writes, “would not be in the interests of Minor League players because, absent the exemption, enforcement of such centrally issued regulations would be subject to antitrust challenge.”

What affect would repealing the Save America’s Pastime Act (SAPA) have on the relationship between MLB, the Minor Leagues and Minor League players?

SAPA, which was passed by Congress in 2018, exempts Minor League players from the federal minimum wage and rules around overtime pay. Manfred notes that treating Minor Leaguers as hourly, rather than salary, workers would require them to work a fixed schedule and prevent them from working outside those hours.

“Such a system is antithetical to ultra-competitive fields such as acting, music, sports, or other creative or entertainment pursuits in which the chance of success is slim but the potential reward is substantial,” Manfred writes. “Individuals trying to enter these fields have significant latitude to determine how much time to devote to their craft to stand out from their competitors. A large portion of the hours worked by Minor League players is for their own development as they try to advance in a system in which over 1,000 players are released and replaced each year by a new group of players.”

Before concluding the letter, Manfred notes that the antitrust exemption has prevented rampant relocation of MLB clubs.

“In the last 50 years,” he writes, “only one MLB Club has relocated to another market [from Canada to the United States]. In that same period, 14 NBA, 10 NFL, and nine NHL franchises have relocated. MLB differs from other professional sports leagues because MLB’s antitrust exemption allows it to enforce a rigorous process that ensures Club relocation is carefully considered and vetted before a loyal fan base loses its team.”