Baseball, contraction, and Florida law

ESPN’s Rob Neyer mentioned something I’d heard once or twioce before in his column yesterday:

I gather that Florida has unusually strong state antitrust laws, but I have little idea how they would be used to prevent a team from going out of business, even if it’s part of an (arguably) oligopoly like MLB. Does anybody know what the baseball pundits are talking about here?

Since I’m a lawyer, legal cites would be appreciated, but they’re not required. :slight_smile:

Warning: IANAL

The problem with contracting the Twins was that they had a contract to play in the Metrodome in 2002. I don’t know if a similar problem exists with regard to the Marlins and Devil Rays.

You can’t legislate against a company’s going out of business. If they don’t have money, then they are gone. The argument, I suppose, is that the Marlins and Devil Rays are not really independent companies, but are really part of a larger monopoly called Major League Baseball.

Zev Steinhardt

Yes, but AFAIK, there is no principle of antitrust law that says a monopoly or oligopoly (MLB is much closer to the latter) must remain in business. I can see how moving or being sold might arguably be an antitrust problem for a monopoly/oligopoly, but simply quitting the business would not seem to be a problem. That’s why I’m curious about the specifics of this extra-strength Florida law.

That would be the case, minty green, if the Devil Rays and Marlins were truly independent companies.

However, in this case, it’s not MLB that’s going out of business, it simply wants to excercise it monopolistic power to remove some teams. That, I think, is what the argument is going to be. If MLB, as a whole were going out of business, then Florida wouldn’t have a leg to stand on.

Zev Steinhardt

That’s where I think you’re missing the difference between a monopoly and an oligopoly, Zev. MLB is OPEC, not Standard Oil. It is an association of individual businesses that have joined together for mutual competitive advantage. The Devil Rays are not MLB, and MLB is not the Devil Rays.

The general rule is that a “refusal to deal” only violates antitrust laws if the refusal is (a) by a business with “market power” and (b) intended to create or maintain a monopoly. Even assuming the Devil Rays have market power (roughly speaking, the ability to set prices in the market without having to worry about competition), how on earth would quitting business maintain or create a monopoly?


Not really. The members of OPEC don’t really need each other. The members of MLB do (who else would they play against?).

The members of an oligopoly can unilaterily sell their stakes, move, set their own prices, etc. The Devil Rays cannot unilateraly move, the owners cannot sell, they cannot determine their own roster size, etc.

It is true that the Devil Rays != MLB. It is also true that, technically, all the franchises are independent companies. But, in practice, it is like a 30 member partnership.

Zev Steinhardt

I’m just brainstorming here, but perhaps Florida’s arguments against MLB contraction would be grounded in promissory estoppel. That is, “The taxpayers spent $million fixing up the St. Petersburg Thunder Dome/Tropicana Field/Whatever it is called this week Stadium, based on MLB’s promises, and therefore the team can’t be contracted without reimbursing the state.”

As I say, I don’t have any cite for this, its just an educated guess.

I don’t know if Florida would have any legal recourse if the teams just up and folded due to financial problems. MLB is talking about “contracting” the teams, which involves paying the owners something like $250M to remove the teams from the league. That seems like a very different scenario than a team just going belly-up.

I don’t think that’s necessarily true for oligopolies in general, and it’s certainly not entirely true for baseball teams in particular. Oligopolies frequently have agreements that restrict the individual members from taking certain actions, and it wouldn’t surprise me if some of those included restraints on alienation. Oligopoly members certainly cannot set their own prices, however: those pricing restraints are the very essence of an anticompetitive oligopoly. If OPEC restricts output to increase prices to $35 a barrel, Venezuela can make a fortune by selling all the oil it wants at $34 a barrel–but if the oligopoly holds together, it will not do so because that would encourage other members to do the same thing, thereby dropping prices back to the competitive market price.

The Devil Rays, on the other hand, are perfectly free to set their own prices. They can charge $5 or $50 or $500 per box seat, set their own prices for beer and hot dogs, and negotiate their own local broadcast contracts. I don’t know what MLB rules are on moving the team, but the Devil Rays freely assented to them when they started the team, which is also true for the rules on who can buy them out and the labor contracts that dictate roster size and other player issues. So while there are certainly some aspects of oligopoly there, it is basically not applicable to antitrust law (as I understand it) because those restrictions do not amount to restrictions on pricing.

True, there are certainly some partnership aspects to MLB. The question, though, is what why Florida law would make it especially difficulty to contract a Florida team.

PatrickM, I think the promissory estoppel issue is a good one, and of course you’ve got serious contract problems with the Devil Rays and their long-term lease of teh worst stadium in baseball. But those are issues that would affect nearly all the teams–witness Minnesota, who by court order cannot be contracted due to their existing contracts. What’s so special about Florida?

I don’t know if it’s as much Florida law as Florida’s AG, though. Butterworth seems dead against contraction and whether he actually has a leg to stand on or not (and I haven’t the faintest), he could certainly hold things up, couldn’t he? Contracting non-Florida teams might just be less of a headache.

A few (possibly) relevant cites:
These came from just googling on butterworth contraction, and of course there are a whole lot of others, as well, which I didn’t bother to read.

It looks like Butterworth has decided that these are “against the antitrust laws and restraint of trade.” And it appears that the Florida Supremes have decided that the anti-trust exemption doesn’t apply to relocation of teams (dating back to when the Giants wanted to move to Florida). I have no clue if any of this is relevant, but I figured I’d give my $0.005 worth.

I believe the thread is veering towards a debate on legal issues when in fact MLB’s problem in Florida would be a political one.

MLB is, of course, exempt from federal anti-trust law, and to the best of my knowledge is the only private industry that is. Contraction of a Florida team carries with it three significant political problems:

  1. Florida politicians have threatened MLB with a suit and threatened to fight its anti-trust exemption before. In fact, that’s one of the reasons Tampa Bay got a team. Taking the team, or BOTH teams, away would cause a firestorm among Floridians, who would rightly perceive that they had been scammed. And by the way, the governor of Florida, Jeb Bush, has a brother named George. You may have heard of him.

  2. Washington, D.C. powerbrokers are understandably miffed as it is that Washington doesn’t have a team when not one but TWO ownership groups have made it plain they want one. You would have a tough time convincing a D.C. baseball booster of the sincerity of your intentions if you contracted the Devil Rays when they could easily be converted into the Washington Senators 3.0 with a far better chance of success.

  3. Contraction in general is widely and correctly believed to be a scam designed to blackmail governments into building taxpayer-funded stadia, rather than a legitimate attempt to fix any alleged financial problems; after all, if some teams are hopelessly in the red, shouldn’t they be able to solidly state which teams those are?

So I think MLB would face a political firestorm more than a legal one. Contracting the Marlins or D-Rays may well be the straw that broke the Congressional camel’s back.

Ironically, this may be good for baseball. Baseball would, IMHO, benefit in the long run from the removal of the anti trust exemption. The first thing that would probably happen would be more franchise moves, including, in all likelihood, teams moving to Washington and New York, which would be problematic under the current oligopolistic system.

minty: There’s no friggin’ way Tropicana Field could be the worst stadium in baseball. Not while Stade Olympique still stands, rotting away on Montreal’s west end.