Which Antitrust Exemptions Sports Actually Has

Leagues are joint ventures of competitors, so almost everything they do together is a potential Sherman Act problem. They get out of that problem three ways, and only three.

Baseball has a judge-made exemption dating to 1922 that Congress has since narrowed but never repealed. The four major pro leagues have a statutory exemption for selling their television rights as a package. And every league with a union has the labor exemption, which protects terms reached through collective bargaining.

Everything outside those three is ordinary antitrust territory. That is why the NCAA keeps losing in court, and why it keeps asking Congress for a fourth.

The baseball exemption. It began with a 1922 Supreme Court decision holding that baseball was not interstate commerce, and it survived later cases on the ground that Congress had relied on it. In 1998 Congress cut it back with the Curt Flood Act, which makes conduct directly relating to or affecting employment of major league players subject to the antitrust laws like any other sport. The same statute then lists what stays outside: the minor leagues and the draft, franchise expansion, relocation and ownership transfers, broadcasting covered by the Sports Broadcasting Act, and umpires. It adds that those carve-outs shall not be strictly or narrowly construed. The exemption is gone for major league player employment and intact nearly everywhere else.

The Sports Broadcasting Act. Passed in 1961, it provides that the antitrust laws shall not apply to a joint agreement by which a league of clubs in football, baseball, basketball or hockey sells its member clubs' rights in the sponsored telecasting of their games. That is what lets a league sell one national package instead of thirty separate ones. A companion section says nothing else in the chapter changes the antitrust laws for any other league activity. The exemption covers the pooled TV sale and nothing adjacent to it.

The labor exemption. It is not written in any statute. The Supreme Court implies it from the labor laws, and it applies where needed to make the collective bargaining process work. It shields terms reached through bargaining with a union, and some employer conduct in that process, from antitrust attack.

"Sports leagues are exempt from antitrust." They are not. Outside the three exemptions, league rules are tested like any joint venture's, and leagues lose.

"Baseball is fully exempt." Not since 1998 for its players' major league employment. The rest of the old exemption survives.

"The Sports Broadcasting Act covers any TV deal." It names four professional sports and covers the sale of pooled telecast rights. It does not cover college sports, and courts have read it narrowly.

"The labor exemption protects anything a league does to players." It protects the bargaining relationship. Where there is no union, there is nothing for it to attach to.

MLB. The only league with the judicial exemption, now limited by the Curt Flood Act to everything except major league player employment.

NFL, NBA, NHL. Sports Broadcasting Act for pooled telecasts; labor exemption for bargained terms; otherwise ordinary antitrust.

MLB also has the Sports Broadcasting Act and the labor exemption on top of its own.

NCAA. None of the three. It is not one of the four named professional sports, and its athletes have no collective bargaining agreement. Every compensation rule it has is exposed to Sherman Act review, which is the gap the Senate's Protect College Sports Act would fill with a new statutory exemption for pooled media rights.

Whether Congress grants a fourth exemption. S. 4668 would give college sports a limited antitrust exemption for pooled media rights. Read how narrowly it is drafted.

Whether any new exemption is read narrowly. Courts construe exemptions narrowly as a rule. The Curt Flood Act's instruction not to do so is the exception, and its absence from a new statute matters.

Whether media consolidation tests the Sports Broadcasting Act. It protects leagues selling. It says nothing about fewer buyers.