The Big Leagues Go to Washington: Congress and Sports Antitrust, 1951-1989
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The Big Leagues Go to Washington: Congress and Sports Antitrust, 1951-1989
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Overview
In The Big Leagues Go to Washington, David Surdam chronicles the key issues that arose during the hearings and the ways opposing sides used economic data and theory to define what was right, what was feasible, and what was advantageous to one party or another. As Surdam shows, the hearings affected matters as fundamental to the modern game as broadcasting rights, player drafts and unions, league mergers, and the dominance of the New York Yankees. He also charts how lawmakers from the West and South pressed for the relocation of ailing franchises to their states and the ways savvy owners dodged congressional interference when they could and adapted to it when necessary.
Product Details
| ISBN-13: | 9780252097126 |
|---|---|
| Publisher: | University of Illinois Press |
| Publication date: | 04/15/2015 |
| Sold by: | Barnes & Noble |
| Format: | eBook |
| Pages: | 344 |
| File size: | 3 MB |
About the Author
Read an Excerpt
The Big Leagues Go to Washington
Congress and Sports Antitrust, 1951â?"1989
By David George Surdam
UNIVERSITY OF ILLINOIS PRESS
Copyright © 2015 Board of Trustees of the University of IllinoisAll rights reserved.
ISBN: 978-0-252-09712-6
CHAPTER 1
A Brief History of Professional Team Sports
An understanding of the history of professional team sports helps place the issues covered in the hearings in the proper context. Player and owner relationships had long been contentious, because the owners held and exploited disproportionate power. The owners' struggles with each other and rival groups were every bit as competitive and cutthroat as those on the playing fields or courts.
Major League Baseball (MLB) established many of the institutions copied by the younger leagues. Baseball owners sought to keep player salaries low and to create price setting, monopoly power by stabilizing league membership. When they succeeded in establishing these goals, they then improved their profitability. Success in these two endeavors, though, meant that other potential owners would envy the profitability of owning a sports team, and these prospective owners would desire to enter the market. Baseball owners, therefore, devised tactics to deter entry. As technology advanced, potentially lucrative opportunities, such as radio and television, arose. Owners realized that under a controlled market, selling broadcasting and telecasting rights could be more valuable. With all of the court cases and antitrust hearings during the twentieth century, owners emerged partially victorious. Their ability to control entry of new teams and to sell broadcast and telecast rights remained largely intact, but they lost much of their power to control the labor market, with the Danny Gardella case being a pivotal event that led to later player successes in whittling down the owners' control.
Although this book focuses on congressional investigations into the actions of professional team sports leagues, court cases have been prominent. The court cases centered upon interpretations of statues and only rarely constitutional issues. The courts often encouraged Congress to enact legislation; on occasion, judicial decisions led to congressional investigations. As an example, Judge Allan K. Grim's decision disallowing the NFL's national-television contract spurred the NFL to seek congressional action to allow the contract. In this case, Congress responded with legislation; in the main, though, Congress proved hesitant to enact legislation.
Baseball's Rise to National Pastime
In the beginning, there was baseball, a game evolved from other games. Numerous historians have documented baseball's early years.
Harry Wright's Cincinnati Red Stockings were the first overtly professional team. He took the squad around the northeast quadrant of the United States, playing all comers and splitting the gate. Because Wright hand-picked his players, he constructed a powerful club that won more than sixty games in a row.
Though individual unaffiliated clubs could have been the future of professional baseball, the wildly uneven quality of opponents and nebulous way of deciding the champions were unsatisfactory. By 1871, a loose association of ball clubs coalesced into the National Association of Professional Base Ball Players. Any club willing to pay the minimal entry fee could participate. The National Association proved unwieldy, as too many small towns fielded short-lived teams. Some cities fielded multiple teams, usually a viable team and a weak team. The National Association was essentially chaos.
William Hulbert, a Chicago businessman and booster, enticed several of the Boston Red Stockings players to play for his Chicago team in 1876; he did not induce the players to jump their current contracts with Boston but signed them to contracts during the 1875 season. He realized that other teams would be outraged at his audacity and would evict him from the association. To preempt this, Hulbert contacted three or four other teams and invited them to a meeting in Chicago. He also planted stories in the Chicago Tribune outlining his plan. After explaining the defects of the National Association, Hulbert suggested a set of rules that included a population requirement of seventy-five thousand or more residents, a $100 membership fee, territorial protection guaranteeing just one team per city, and a more formal structure for scheduling games, including penalties for not completing the schedule. His new league was named the National League of Professional Base Ball Clubs; baseball historian David Pietrusza observed that the new league's title emphasized "Clubs" instead of "Players." In Hulbert's rules lay the genesis of American professional team sports leagues.
The 1876 season was marred by the New York and Philadelphia teams' unwillingness to travel west to complete their schedules. Both clubs offered the western teams inducements to travel east, but the western teams declined. Hulbert and the other owners ultimately kicked the New York and Philadelphia teams out of the league. This disciplinary action, while drastic, emphasized the importance of adhering to league rules.
One key piece was missing from Hulbert's initial set of rules: clear-cut property rights to individual athletes. Owners sought ways to control players. By 1879, they had begun to devise a reserve clause binding a player to the owner. Owners could initially reserve just five players on their rosters. Other owners pledged to honor the reserved players' contracts and not to tempt them with offers. The owners eventually extended the reserve clause to bind all of the players on their rosters.
This initial plan had defects. Owners in the same league might pledge and honor a reserve clause, but owners in other leagues might see little reason to honor such a clause. This reserve system had a second drawback. To fully reap the benefits of owning rights to a player, an owner needed a convenient and safe way to transfer his players to another team. Two owners interested in trading players had to release the individuals and then re-sign them. Such a transaction was risky, as other owners might poach the players upon their temporary release. Initially, owners wanting to trade players sought promises from their fellow owners not to step in. Such gentlemen's agreements were a fragile basis upon which to trade players, and owners gradually created a system whereby they could trade players without the requisite release.
These rules helped owners keep salaries artificially low. The rules worked fairly well, unless a rival league appeared, which occurred frequently. Buoyed by the National League's relative success in the late 1870s, a new set of owners decided to challenge the National League by creating the American Association.
When a lesser league, the Northwestern League, contacted the National League seeking to reach a mutual agreement respecting each other's player contracts in 1883, the National League invited the American Association owners to join in a tripartite agreement, dubbed the National Agreement. The agreement entailed respecting each other's player contracts and reserve lists, while establishing minimum salaries and setting up a grievance board. Over the years, the National Agreement included additional leagues until it dominated organized baseball. The National Agreement also proved handy in combatting new leagues, as the incumbent leagues banded together to fight the interlopers.
After crushing the short-lived Union Association in 1884, National League and American Association owners, while still sparring among themselves, continually sought to suppress player salaries and rights. The players chafed under the owners' power. John Montgomery Ward, a former player turned attorney, suggested a league owned and operated by players, the Players' National League. The players, backed by some businessmen, raided National League and American Association rosters. This was a revolt unlike any before and since. Unfortunately for the players, the resulting losses from having three leagues discouraged their financial backers, and the Players' National League folded after just one season.
Only the National League remained by 1892. The "Gay 90s" were a troubled decade, though, for the National League, even with its newfound monopoly status. Owners were able to tamp down player salaries, but proprietors of stable, wealthy franchises began lending money to and acquiring interests in their weaker brethren, creating a system of interlocking ownership. In some cases, owners with interests in multiple teams would strip one club of its best players to fortify another of its teams in a more lucrative city.
The owners' internecine squabbles and fights led to the revolutionary idea of syndicate baseball, whereby ownership would be centralized and players parceled out under a master plan. Four of the owners favored this dubious idea but four opposed, ultimately dooming the plan.
Professional sports leagues are unique in that while there is competition between teams, teams must also cooperate. In essence, owners are selling competition: competition between independent teams. Although they were selling competition, they feared unbridled competition. As law professor Jeffrey Glick points out, "League members are not economic competitors in the same sense as are individual companies. 'No NFL team, in short, is interested in driving another team out of business, whether in the counting house or the football field, for if the league fails, no one team can survive.' This is certainly not the case in the typical horizontal relationship." He concedes that professional teams could independently arrange games and forego formal ties, but such behavior has been rare since the National Association debacle. Owners were aware of the tension within their leagues. James Hart, owner of the Chicago team, stated: "We are the only paradoxical business institution in the world. My good is your ill; your good is my ill. We compete for players, we compete for points, we compete for games; it is an antagonistic business from start to finish. If it was not, we would not be in business."
A Successful Challenge to the Baseball Monopoly
During the National League's feud, Ban Johnson was dreaming of transforming the Western League into a new major league. By 1901, his association was raiding National League rosters for top-flight talent. Washington owner Clark Griffith recalled that American League owners had to resort to signing "reserve jumpers" to attain parity with National League teams: "We could not have been big league for quite some time. You know, it takes time to develop ballplayers." The American League succeeded in enticing many stars onto its teams, quickly reaching parity with the National League teams. The bidding for players and the invasion of National League territory in five cities infuriated National League owners, whose ongoing internecine strife weakened their resistance. The owners finally declared peace, with two separate leagues sharing the pinnacle of the baseball world.
The two sets of owners revised the National Agreement that dictated rules for governance of the leagues and issues such as player advancement, while maintaining a hierarchy of baseball leagues. The two major leagues set up a governing commission consisting of each league's president and a third member chosen by the presidents. This governing board persisted until the aftermath of the Black Sox World Series gambling scandal of 1919 and owner dissatisfaction with the system. To assuage public confidence in baseball after the 1919 scandal, the owners decided to appoint a commissioner, Kenesaw Mountain Landis, and endowed him with broad powers.
With peace reestablished and player salaries again suppressed, the owners enjoyed a period of prosperity. Several chose to replace their current wooden stands with stadiums constructed of concrete and steel. These stadiums created new barriers to entry: in addition to having to acquire recognized players, potential new leagues needed access to large stadiums. The two leagues also agreed to stage a championship series, the grandiosely named World Series. Having two stable leagues with a total of sixteen teams in the majority of the country's largest cities proved a successful formula.
These actions were so successful that years later, Marvin Miller, head of the MLB Players Association during the 1960s and 1970s, attempted a piece of satire. He summarized the owners' advantages in a mock advertisement, extolling ownership of a MLB team: "You are therefore free to utilize what would otherwise be illegal sanctions to enforce your will in controlling the entire skilled labor complement of the industry, to deprive cities and entire areas of your product when you choose to do so, to maintain with your associates a complete monopoly by barring would-be competitors, to fix prices and to allocate divisions of the market."
The Federal League Challenge
The owners' prosperity throughout the first decade of the twentieth century did not go unnoticed. Other businessmen hungered for their own teams, and because MLB was uninterested in expansion, these nascent owners decided to launch the Federal League. The Federal League had modest success in luring big league stars onto their rosters, and planted franchises in Brooklyn, Chicago, Pittsburgh, and St. Louis in direct competition with existing MLB teams. Both of its pennant races were tightly contested, so the league's competitive balance was not detrimental. The new owners, though, in addition to obtaining players, scrambled for playing sites. Naturally, the MLB owners combined to battle the interlopers, with the incumbents threatening to stage minor league games in their stadiums, when the big-league team was on the road. Players, though, benefited from the increased competition for their services.
The Federal League presented a serious challenge, but the combined strength of the two established leagues proved sufficient to stymie it. What was the price of peace? The American and National Leagues paid Federal League owners $600,000, allowed Federal League owners in Chicago and St. Louis to purchase the Cubs and Browns, reinstated ineligible players, and allowed the Federal League owners to sell their player contracts to the surviving clubs. One team, however, refused to meekly surrender. The Federal League's Baltimore franchise owners wanted to buy the St. Louis Cardinals and shift them to Baltimore, but were rebuffed. They were offered $50,000 and the Baltimore franchise in the International League. The owners of the Baltimore club disliked the settlement and sued MLB. The established owners, perhaps recalling previous MLB attempts at making Baltimore a successful franchise, disdained the city and the owners of its ball club.
The Baltimore club's lawsuit wended its way to the Supreme Court. During the lawsuit, MLB official Garry Herrman claimed that the owners had not used the reserve clause to injure the Federal League, but rather, "the reserve clause had been used only as a matter of internal protection within organized baseball and, in his opinion, that was the only way it should be used—'to protect yourself.'" He denied that the reserve clause was intended to give MLB owners a monopoly over the player market. In a telling point, the owners filed lawsuits only against players who had jumped their contract, and not those who had jumped their reserve clause.
L. Edwin Goldman, an officer of the Baltimore Federal League Club, made an interesting observation during the team's lawsuit against MLB. When asked, "The fact is, is it not, that in the fall of 1913 there were not enough recognized first-class players to supply both the then existing leagues and also your Federal League, if it should become a major league?" Goldman answered, "No. I will not agree to that at all, for this reason, that if influenza struck every ballplayer in the two major leagues during 1913, you could have taken the next rank of ballplayers, called them major league players and the public would have gone precisely in the same way to see them, because they were the best available." He added, "If you grant that the two major leagues that were then existent had selected the very best talent that existed in baseball, if we wanted to actually compete for public favor by having equal playing strength, undoubtedly we were driven to the ranks of organized baseball for these players."
(Continues...)
Excerpted from The Big Leagues Go to Washington by David George Surdam. Copyright © 2015 Board of Trustees of the University of Illinois. Excerpted by permission of UNIVERSITY OF ILLINOIS PRESS.
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