Major League Baseball\u27s Monopoly Power and the Negro Leagues

This article argues that the demise of the Negro Leagues was caused by the confluence of several factors. First, the Negro Leagues operated with weak relational contract structures, a condition exacerbated by their over-reliance on star players. Second, and perhaps most important, integration forced the Negro Leagues to compete in a market dominated by the monopoly power of the Major Leagues. By 1922, perhaps earlier, the Major Leagues had acquired a monopoly over the market for White professional baseball players in the United States through its reserve system. Thereafter, the Major Leagues strengthened that monopoly with the development of Branch Rickey’s other great innovation: the development of the minor leagues as the farm system for the Major Leagues. Finally, the owners of the Negro Leagues appear to have accepted the inevitability of extinction. This article first describes the relational contract structures of the Negro Leagues. Second, it examines the possible circumstances under which the Negro Leagues or some remnant could have survived after the integration of the player market. Third, the article describes how the Major Leagues acquired and maintained a monopoly over the market for White professional players through the reserve system, and the subsequent inclusion of Black players. That part further explains how the use of that monopoly power destroyed the Negro Leagues. Finally, the article discusses various legal strategies that the Negro Leagues could have used in trying to survive