Professional Sports and Antitrust Law: The Groundrules of Immunity, Exemption and Liability

As professional sports leagues increased their wealth and national prominence, the federal judicial system became uncomfortable with its characterization of sports as something other than a business. The Supreme Court reflected this change in policy in the 1950s by refusing to extend baseball\u27s antitrust exemption to other sports. The application of the Sherman Act to all nonbaseball sports established the foundation for the forceful imposition of antitrust constraints on team owners in the sports litigation of the 1970s. These revolutionary decisions substantially eliminated the status of sports as a game or amusement insulated from the legal obligations of profit-making industries. Public policy now called for professional sports to be accorded the same legal treatment as other commercial endeavors. This alteration of the judicial system\u27s perception of the nature of professional sports was employed by players and their unions to destroy management\u27s unilateral control over professional sports and to substitute in its place a collectively bargained equilibrium in which owners and players shared control of a league\u27s structure. This new balance also allowed the players to participate more fully in the increased revenues being furnished by the broadcast industry. In this sense, the courts applied the antitrust laws to give players\u27 unions leverage at the bargaining table that they had never before possessed. The major remaining judicial vestige of the old public policy view of sports is the antitrust immunity still enjoyed by baseball pursuant to the Supreme Court\u27s ruling in Flood v. Kuhn. Team owners in the other sports have tried to mitigate the effects of this change in judicial attitude by obtaining some variant of judicial or legislative immunity from the full effects of the antitrust laws. This chapter analyzes the three major forms of immunity sought by team owners since the advent of the modern sports litigation era. These are (1) the nonstatutory labor law exemption to shelter restraints contained within collective bargaining agreements, the single-entity defense to render inapplicable to sports leagues Section 1 of the Sherman Act, and (3) the direct grant of a congressional immunity to foreclose antitrust litigation regarding designated league practices. The chapter then examines the principles of substantive antitrust liability by courts to professional sport practices that are not included within an appropriate exemption