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The anti-trust movement in America during
the 18th and 19th century is a prime example of the
conflict in society and sports between autonomy and responsibility. Primarily
Senator John Sherman created the earliest anti-trust law in 1890. President
Benjamin Harrison signed it and is the root of all anti-trust legislation that
are in effect today. The Sherman Anti-Trust Act was extensively used during the
Progressive era by “trust busters” such as Theodore Roosevelt,
William Howard Taft, and Woodrow Wilson. The Standard Oil Company (headed by
John D. Rockefeller) and the United States Steel Corporation (headed by Andrew
Carnegie) were among the giants that fell to the wrath of the anti-trust acts. The
anti-trust laws sole purpose is to make sure that powerful firms that hold or
wish to hold a monopoly in the market cannot abuse businesses and consumers. Anti-trust
laws outlaw many specific strategies. It includes price fixing (agreement on
prices of uniform goods), predatory pricing (setting low prices to knock off
competitors), and vendor lock-in (nearly forcing a consumer to buy from a
certain supplier). The polemic began in the beginning of the 20th century,
when a player in the National Baseball League attempted to join a fresh created
club in the American League. However, this was settled in 1903, when it was
claimed that the two leagues were a shared monopoly between the team owners. But,
years later, the case of Federal Baseball Club of Baltimore v. National
Baseball Clubs became the essential case in the status affirmation of baseball
in the economy. Any business that operates nationally has been subjected to
anti-trust legislation for it implies interstate commerce. However, Baseball did
fall under the anti trust legislation, especially since teams travel from state
to state to play games. In 1922, the Supreme Court unanimously settled the
case. It was stated that baseball did not fall under this trust laws since the traveling
is not the focal point in the sport. The Supreme Court felt that baseball games
did not fall under the Sherman act. Since the ruling, baseball has kept its
unique status and has been exempt from anti-trust laws. This, of course, has a
wide spectrum of effects on many different things. Toolson v. New York Yankees
(1953) and Flood v. Kuhn (1972) further established the exemption by rejecting
opposition to it.

 

The anti-trust exemption has had close ties
to the minor leagues. The minor leagues follow a reserve system, which means
when a team is assigned to a major league counter part and the players can only
negotiate with the parent team. It allows the players to be exempted from the
act and can follow major leaguers and become free agents. In 1970 the league
stopped the reserve system. Professional baseball players could only negotiate
with one team. Plus, they had to seek approval from the commissioner before
moving to another city. To keep a team within a major city it allowed taxpayers
to take care of expensive cost. Allowing the commissioner to make the decision
to have a limited amount of teams in the league to fuel completion between the
cities. With that the uneven distribution of teams throughout the nation is
economically rational to maintain teams in areas that would boom financially.

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However, many fans see that it is unfair that financially enhance metropolitan
teams such as the New York Yankees have a clear advantage over lower end teams
such as the Colorado Rockies when it comes to signing free agents and trading. So
to resolve this issue in other sports a salary cap was incorporated to provide
all teams equity. The salary cap allows teams to spend a certain amount without
going over the “cap”. Salary caps can be viewed as an anti-trust act; it aims
to de-monopolize and spread the wealth. However Major League Baseball does not
take part in the concept of a salary cap but offers an alterative in luxury
tax. The luxury tax penalized teams who spend over certain amount. However one
can still argue that famous, popular, and wealthy teams still offer lavish
contracts (ie: The Yankees).

 

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