Sports

San Jose Sues Over Baseball's Weird Business Geography


The Oakland As vs. the Seattle Mariners in Oakland, Calif.

Photograph by Ezra Shaw/Getty Images

The Oakland As vs. the Seattle Mariners in Oakland, Calif.

The City Council of San Jose decided on Tuesday to sue Major League Baseball over its refusal to allow the Oakland Athletics to relocate. MLB, which controls the movement of its 30 teams, considers San Jose to be part of the San Francisco Giants’ territory and therefore off limits. San Jose contends it should be allowed to offer the A’s a new home. The dispute reanimates old questions about when to treat baseball teams as competitors and when to treat them as partners.

In a statement, MLB called the lawsuit “an unfounded attack on the fundamental structures of a professional sports league.” San Jose is challenging the antitrust exemption the league has enjoyed since a Supreme Court decision in 1922. The city claims that the logic supporting the exemption—that baseball doesn’t qualify as interstate commerce—is outdated:

Whereas baseball may have started as a local affair, modern baseball is squarely within the realm of interstate commerce. MLB Clubs ply their wares nationwide; games are broadcast throughout the country on satellite TV and radio, as well as cable channels; and MLB Clubs have fan bases that span from coast to coast.

San Jose is not the first to note the evolution of baseball into big business. ”People believed in the 1940s, ’50s, and ’60s that the exemption was outdated and anomalous,” says Gabriel Feldman, director of the Tulane Sports Law Program. “The Supreme Court has recognized that the antitrust exemption is, in fact, anomalous and yet they have reaffirmed it.”  In 1998, Congress passed the Curt Flood Act, which stripped baseball of protection against antitrust claims for controlling player movement.

The question now is whether the league still has special privileges to restrict team movement. “There is a narrow strand of case law holding that now that player restraints are no longer exempt, that the exemption is essentially gone,” says Feldman. “I think a plain reading of the [Curt Flood] Act suggests that the exemption still exists with respect to franchise relocation, but there are judges who have disagreed with that interpretation.” San Jose’s suit, says Feldman, may wind up giving the Supreme Court another chance to rethink the exemption.

If it does, the argument will likely revolve around whether the Giants and A’s are more like McDonald’s (MCD) and Burger King (BKW)—genuine rivals duking it out for market share—or more like the Sharks and the Jets in West Side Story, pretend rivals in the same show who are duking it out for our entertainment and their shared profit. “They look a lot more like competitors on the field than off the field,”Feldman says of baseball teams, “but they still engage in completion off the field for players, for coaches, for sponsors, for fans.” Under the competitor model, Oakland should be free to move where it pleases. Under the partner model, the league should be free to protect the overall quality of its product.

To complicate matters, it’s not clear that the two goals are opposed in this case. A glance at a map suggests that the A’s in Oakland are a greater threat to the Giants than they would be in San Jose. The A’s want out of Oakland because their ballpark is falling apart. Over the weekend, raw sewage “backed up into both clubhouse shower areas” at the Coliseum. ”We need to get a new stadium,” A’s pitcher A.J. Griffin told the Associated Press. (A’s owner Lew Wolff, who isn’t a part of San Jose’s lawsuit, issued a statement saying he is “not in favor of legal action or legal threats to solve business issues.”)

The league has granted San Jose and the rest of Santa Clara County to the Giants since 1990, when the San Francisco team was considering moving there. And the Giants current owners bought the team in 1993 assuming they had rights to San Jose. Wolff, likewise, knew he didn’t get San Jose when he bought the A’s in 2005. The league’s other owners, who have a vote in any relocation, are likely to be skittish about opening the floodgates to team movement. All of that, plus MLB’s very deliberate approach to change, stalls a possible move. The league appointed a relocation committee to evaluate any such move in 2009—and it’s still evaluating.

Boudway_190
Boudway is a reporter for Bloomberg Businessweek in New York.

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  • MCD
    (McDonald's Corp)
    • $94.45 USD
    • -0.08
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    (Burger King Worldwide Inc)
    • $27.11 USD
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