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MLB’s takeover of the Dodgers could imperil baseball’s antitrust exemption

Apr 22, 2011, 9:11 AM EST

MLB Commissioner Bud Selig speaks during a news conference in New York

Yesterday I noted that Major League Baseball may be wary of a fight with Frank McCourt because it has a lot of rules with respect to club ownership that exist simply because owners agree to them and that, if challenged, there are likely several that wouldn’t hold up in court.  One of them — Major League Baseball’s putative right to approve who buys a team and enters the ownership club — could be seriously jeopardized in all of this.

You know how it works: a team goes on the market and the bidders line up. Before the deal is done, MLB “approves” the winning ownership group. And that group is not necessarily the highest bidder. There is much talk, however, about who Bud Selig likes and who he doesn’t, who is friends with Jerry Reinsdorf and who isn’t and that sort of thing. This is the step where Mark Cuban’s ambitions get thwarted.  It’s also a step that probably violates antitrust laws and, according to the only court that has ever considered the matter, does not fall into baseball’s more-limited-than-you-think antitrust exemption.

Flash back 18 years to the case of Piazza v. Major League Baseball (831 F. Supp. 420 (E.D. Pa. 1993) for those of you who care), in which some gentlemen from Pennsylvania tried to buy the San Francisco Giants and move them to Florida. Then-Giants’ owner Bob Lurie was going to sell, but MLB stepped in and indicated that it would not approve the sale. The buyers sued, arguing (among other things) that baseball illegally restrained free trade in the market in which baseball teams are bought and sold. Baseball argued that it was allowed to do this pursuant to the antitrust exemption.

The trial court agreed with the would-be buyers during the preliminary stages of that case, ruling that the antitrust exemption didn’t apply to the purchase of teams.

Granted, this wasn’t a final decision on the merits. Rather, the court basically ruled that if the plaintiffs could prove that MLB wrongfully thwarted the sale — say, that baseball had no legitimate business basis for excluding a potential ownership group –they could win. Of course it never got that far. Having seen that its antitrust exemption was in peril, baseball settled with the plaintiffs, paying them $6 million for their trouble, and the case went away and does not now serve as any sort of binding precedent.

Since that time, baseball has continued to approve or deny “ownership applications” as though they were country club memberships as opposed to the restraint of the sale of goods in a free market. It has been able to get away with this because, to my knowledge, no current owner selling a team has challenged baseball’s ability to approve buyers — remember, they themselves got into the club through this very process — and, with no dispute, there can be no court case. Both the Cubs and the Rangers sales had the potential for this inasmuch the team sales were thrown into court, but neither instance created a situation in which the selling owner wanted to sell to A, but baseball wanted to sell to B.

So, back to the present: Frank McCourt is making serious noises about suing Major League Baseball. No matter how this all shakes out, it’s hard to see it ending in any way other than a sale of the Dodgers.  As is suggested by the legal experts cited in today’s article from Bill Shaikin in the Los Angeles Times, the only way that McCourt won’t sue over the specifics of the sale is if baseball agrees to take the highest bidder.  If that highest bidder isn’t someone Bud Selig wants to let in his club — say, I dunno, some skeezy businessman from some unpronounceable former Soviet Republic who is on record saying that he wants to give out the biggest free agent contracts in recorded history — Selig could have a serious dilemma on his hands:  allow a potential maverick (Maverick?)  into the club or risk re-litigating the Piazza case.

I want to see Frank McCourt gone and I want to see a responsible owner in Los Angeles with a minimum of fuss.  But boy howdy, it would be fun to see Major League Baseball’s anti-competitive practices blown away too, so I can’t say that I, as a popcorn-eating gawker to all of this, will be disappointed either way.

  1. jgraening - Apr 22, 2011 at 9:54 AM

    I would love to see your library of Bud Selig images. The ones used on HBT never cease to amaze me.

    • cur68 - Apr 22, 2011 at 11:00 AM

      Agree. Mines the shot of Bud looking dyspeptic with the bandaid on his noggin.Can’t use that one enough IMO.

      • Old Gator - Apr 22, 2011 at 12:16 PM

        I really wish that Bud Light would stop blowing his nose in his hands.

      • BC - Apr 22, 2011 at 1:50 PM

        Gator, you stole my thunder.

  2. cjcottin - Apr 22, 2011 at 10:01 AM

    Interesting scenario, but the stone cutters would never allow it.

  3. petesickle - Apr 22, 2011 at 10:20 AM

    would have liked to hear more about the “due diligence” Selig went through to approve McCourt in the first place.

    reminds me of the criticism of (Orioles owner) Angelos who seemed to have a new manager every 12-18 months (or the Redskins’ Snyder) — if they don’t last, then you didn’t pick them very well in the first place.

    having grown up with the Dodgers under the O’Malleys in the 1970s, I have found it hard to stay loyal to the Dodgers.

    As an ex-catcher, I still can’t believe how they refuse to hold on to good catchers (Piazza, Lo Duca, now Martin) and then can’t figure out why they have trouble with their pitching staffs . . . Torre was the only one who seemed to value consistency behind the plate (Posada doesn’t put up Hall of Fame numbers, but should get a great deal of credit for the Yankees’ success over the years)

    • craigbhill - Apr 22, 2011 at 1:30 PM

      The Dodgers let Martin go because his head wasn’t in his game, either defensively or offensively, his last two years in LA. As a fan since ’58 who has never given up on the Dodgers, i was glad to see him go. That he’s seemingly got his head together with the Yanks is nice for him—we sincerely wondered whether he was having serious mental problems—but that doesn’t mean he ever would have in LA.

      The Piazza trade was one of the darkest days in Dodger history, orchestrated by some boob at Fox, which then owned the team. Very regrettable. THE worst was of course Pedro Martinez for Delino DeShields, when we fans KNEW young Pedro was going to be lights out. I wanted to do Fred Claire some damage the week after when i saw him at the park 10 feet from me, but regrettable better sense took hold and so Fred Claire still lives.

      I was glad to see Fred commenting positively on the MLB takeover of the Dodgers. All of us are enthusiastic now that this jerk—who stole from the team, btw, while Wilpon made a bad investment—will be gone.

      If McCourt sues, Craig C., the political and judicial climate of today will not serve him. There will be no change in baseball’s antitrust exemption. You’ve got to understand there is no judicial trailblazing going on in this country. The rule of thumb is the judiciary follows the lead of the political climate, which is ungodly-conservative. There IS no anti-trust-busting going on in this country, where conditions scream for it! And there won’t be for baseball, either.

      I expect MLB is going to make McCourt an offer he litigiously can’t refuse. They know he’s in hock over his head. I think they will loan him money to keep oxygen flowing while they put the team on the market and get the best offer they can FOR HIM. After all it was Bud and the other owners who put him in his position from the start under a mountain of debt, and they know it. He will come to see, i think, they had no choice: He couldn’t meet payroll, and had no collateral EXCEPT the team. The situation as it was could not continue. Fans were not going to the park because of the mediocre product Frank put on the field. It could not but have continued to devolve, losing Ethier and Kemp as free agents, with fewer people coming to the games, while Frank drowned in debts he ran up whil stealing from the team. MLB may even offer to help defend him before the IRS, which he has not paid for many years, even tho he took over $100 million from the team and did not declare it as income. He is a shmuck in way over his head. Everyone will be better off once we see the back of him. The team itself probably, if anything, feels a sense of relief, will play better (or at least up to their mediocre capabilities) and will expect MLB to bring in better teammates than Frank would or could, as it did with Texas and Washington when they were being run by MLB.

      The only negative remaining: Ned Colletti will continue to make the unbelievably bad personnel decisions. MLB will not change that horse, but will listen to him for his take on trades and expenditures. So we expect more mediocrity from Frisco Ned, even if he has more money to spend from team revenues, which will now not continue to be siphoned off by McCourt.

  4. mrznyc - Apr 22, 2011 at 10:33 AM

    Who MLB chooses to go after and who they don’t is a mystery – Right now they’re down on McCourt, a complete ass hole and jerk, but a team in one whole lot better financial shape than the Mets who are looking at somewhere around 2.5 Billion in liabilities with an owership being sued in open court for felonious financial trangressions in the hundreds of millions of dollars – McCourts a jerk, the Wilpons are criminal, yet Bud Selig chooses to go after the jerk and not the criminal – You think maybe Fred Wilpon arranged to allow Bernie to make a few Mil for Ole Bud Light?

  5. garlicfriesandbaseball - Apr 22, 2011 at 1:21 PM

    What’s happening in our society? Who does he think he is – Obama? First the banks, then General Motors, Isn’t anything sacred? Leave it alone …. it will take care of itself.

  6. BC - Apr 22, 2011 at 1:55 PM

    How in the heck does this imperil the anti-trust exemption? Selig acted on his own. Unless there are Emails or texts or tweets or whatever that prove otherwise, Selig fall back on the “best interests of baseball” thing or some other power he’s vested with, and that’s that. And there’s precedent – Montreal. No way this imperils the anti-trust exemption IMHO.

  7. simon94022 - Apr 22, 2011 at 1:59 PM

    Even without the antitrust exemption, Bud may be able to reject owners on partnership grounds. The NFL had no problem rejecting the bidders before Dan Snyder bought the team.

  8. natstowngreg - Apr 22, 2011 at 6:00 PM

    Just wondering if the Piazza in the lawsuit was Mike Piazza’s father.

    • Roger Moore - Apr 22, 2011 at 11:28 PM

      Yes, that was Mike’s dad. Quite unusual for a player to come from a family that’s rich enough to try buying a team.

  9. king3319 - Apr 22, 2011 at 11:08 PM

    Bud Selig is arguably the worst commissioner in pro sports!!!! He hesitated on postponing games after 9/11, and stayed interim commish for as long as he could so he could still have ownership of the Brewers. Now let’s mess with the Dodgers(no argument mcCort is an asshole!!!) but not issue any kind of legitimate reaction against Bonds and let that self centered ass stay in the record books….Good call!!!!

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