Major League Baseball

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Chapter 6

• Major League Baseball

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• Reserve Clause history

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• Federal Baseball Club of Baltimore v. National
  League of Professional Baseball, 1922.
• Supreme Court Baseball not affect interstate
  commerce.
• Major League Baseball exempt from anti-trust law.

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• Toolson v. New York Yankees, 1953.
• Supreme Court cited Congress inaction to justify
  courts refusal to change the law.
• Congress did not create exemption.

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• Flood v. Kuhn, 1972.
• Flood confident he would win because the court
  applied anti-trust in the NFL.
• Supreme Court defer to Congress.
• Congress did not create exemption.

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• Marvin Miller takes over union in 1960s.
• Players not allowed to have copy of contracts.
• MLBLabor Law and Reserve Clause.

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• 1974 Catfish HunterFree Agent
• Owners screampredict end of baseball.

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• 1976 Messersmith Arbitration
• Challenges meaning of to renew the contract for
  the period of one year on the same terms.
• Arbitrator holds that the renewal provision does
  not allow renewal for perpetuity.
• Owners screampredict end of the world.

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• 1976 CBA
• Basic Agreement. Reserve ClauseFree Agency
• First 2 years player had to accept team offer.
• Next 4 years player bound to team but could
  submit salary to arbitration.
• After 6 years player became free agent.

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• Salary Arbitrationnot conventional arbitration
• Final Offer Selection
• Upward push on salaries
• Many players win even when lose

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• Baseball Collusion
• Antitrust no help for players to address
  collusion
• Labor law did applyviolation of CBA.

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• Silverman v. MLB
• Management exposed to treble damages for labor
  violations.
• Fear of potential liability leads to new CBA.

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• Collective Bargaining Agreement 1996.
• Interleague play
• Joint proposal to Congress to end anti-trust
  exemption.
• Three-man panel arbitrations proceedings.

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• Payroll tax on players salaries.
• Minimum salary increase from to 150,000 with
  escalators to 200,000 in 1999.
• Luxury tax on 5 teams with highest salaries.

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• Curt Flood Act
• Applies to players in Major League
• Doesnt apply to players in the Minor Leagues
• Doesnt apply to teams

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• Baseballs financial problems.
• Big market versus small market
• Middle market teamsno incentive to add to payroll

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• Unprecedented talk of team contraction
• Relocation of Montreal team to Washington, D.C.

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• Collective Bargaining Agreement, 2002.
• Revenue sharing
• Payroll tax rates
• Team contraction

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• Drug testing
• Study worldwide draft
• Expiration date, 2006

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• 2006 CBA
• Revenue Sharing
• Competitive balance tax
• Amateur draft
• Draft choice compensation

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• Benefit plan
• Minimum salary
• Free agency

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• MLBs salary disparity
• 2006 season, New York Yankees, 200 million plus
• Florida Marlins total payroll under 15 million

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• Three Yankee players earn over 20 million
• Seventeen of the Marlin players earn league
  minimum

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• 2006 season, Yankees earn 300 million in local
  revenue.
• Many other teams earn less than 50 million.

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• Drug testing
• Steroid scandal
• Barry Bonds
• Mitchell reportRoger ClemensCongress

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• Minor Leagues
• Minor League teams affiliated/controlled by Major
  League teams
• Different classification A, AA, AAA
• Major League team control player contracts

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• DraftFifty rounds
• Draft high school and college players
• Drafting club has exclusive rights to player
  until the next draft
• Once signed is bound to team for 3 ½ years
• Team can keep a player for additional 3 years by
  placing him on forty-man roster.

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• Rule 5 draft
• After 3 ½ years any player not on the 40-man
  roster can be drafted by another major league
  team at the Rule 5 Draft. To retain a Rule 5
  player the acquiring team must keep the player on
  the active 25-man roster for the entire next
  season.
• If not kept on the 25-man roster player must be
  offered back to the original team.

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• Minor Leagues
• Low Pay
• Little or no travel benefits
• Can be released at any time
• Approximately 10 of the players in the minors
  make it to the majors.

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• Draft and free agency
• Team failure to comply with rules illustrate
  value of free agency.