The New York Times dropped a bombshell of a story Tuesday morning, reporting that the FBI is investigating whether front-office officials from the St. Louis Cardinals may have illegally hacked into the Houston Astros’ proprietary computer network. According to the Times, government officials believe that unnamed Cardinals employees may have accessed the Astros’ computers in order to retrieve the team’s internal trade discussions, proprietary statistics and scouting reports. The FBI has apparently traced the source of the hacking to a house shared by some Cardinals employees.

While some are understandably comparing Tuesday’s news to the NFL’s recent “SpyGate” scandal – in which the New England Patriots were accused of impermissibly videotaping the New York Jets coaches’ hand signals during a 2007 game – if true, the Cardinals’ alleged hacking would, of course, be much more serious. Beyond just league-imposed penalties, the hacking allegations carry the possibility of criminal prosecution, not just for the Cardinals employees involved in the breach, but potentially for the organization as a whole.

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Major League Baseball has seen its fair share of television-related litigation over the last few years. On Thursday, there were significant developments in two of these lawsuits.

First, the legal proceedings surrounding the failed CSN-Houston regional sports network took a new turn when the bankrupt station filed suit against Comcast, accusing the cable provider of a variety of misdeeds. If successful, the case could potentially allow the Houston Astros and the National Basketball Association’s Houston Rockets – the two primary owners of the defunct station – to recover hundreds of millions of dollars in damages.

Meanwhile, the long-running Garber lawsuit challenging MLB’s television blackout and pay-per-view package policies took an interesting turn as well, when the parties in a companion case challenging the National Hockey League’s analogous TV policies reached a tentative settlement. Although this settlement does not directly affect the suit against MLB, the deal nevertheless has potential implications for the Garber case.

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As most baseball fans are by now aware, a fan at Friday night’s game between the Oakland A’s and Boston Red Sox was seriously injured after being struck in the head when a fragment of a broken bat flew into the stands. Although initial reports suggested the woman had suffered “life-threatening” injuries, it fortunately now appears that she is expected to survive the incident.

Nevertheless, the severity of Friday’s accident has brought renewed calls for Major League Baseball to take greater steps to help protect fans from similar injuries in the future. Although broken bats and foul balls at MLB games have only resulted in one documented fan fatality in history, a recent study estimated that approximately 1,750 fans are injured by foul balls alone each year.

As a result, various observers are calling on MLB to require that teams install more extensive netting to protect fans sitting close to the field from flying objects. At the same time, others have urged a more cautious approach, suggesting that additional netting will detract from the fan experience, and that ticket buyers can rationally weigh the pros and cons of sitting in exposed seats.

While there are reasonable arguments to be made on both sides of the issue, all too often these debates overlook an important legal reason that helps explain why MLB hasn’t done more to protect its fans from these sorts of injuries. Under what is known as the “Baseball Rule,” courts have historically held that professional baseball teams are not legally liable for any injuries fans that may sustain after being hit by a foul ball or broken bat.

Until this rule changes, there will be little financial motive for MLB to install additional netting to protect fans sitting in the closest proximity to the field.

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To the extent that most fans pay any attention to legal issues relating to Major League Baseball, they are typically aware that MLB is somehow immune from antitrust law. How exactly this came to be, however, is often less well understood. And in many cases, fans may not have a firm grasp on precisely how this antitrust exemption actually affects MLB’s operations.

Having written a bit on the topic, I thought I’d begin an occasional series of posts examining baseball’s antitrust exemption to help clarify some misconceptions regarding what is admittedly a rather peculiar legal doctrine. This first post will recount the history of baseball’s exemption, dating back to its creation in 1922. Future posts will consider the current scope of the exemption – i.e., what it does and does not cover today – as well as the practical effect that the exemption has on the league.

Although some fans mistakenly think Congress granted baseball its antitrust exemption, the immunity really results from a nearly 100-year-old decision by the U.S. Supreme Court in a lawsuit arising out of the last on-field challenge to the American and National leagues’ dominance over the sport. Back in 1914 and 1915, the Federal League of Professional Baseball Clubs tried to establish itself as a third major league by signing roughly 50 major league players away from their then-current teams – the most notable of which was probably Hall-of-Fame shortstop Joe Tinker. Read the rest of this entry »

Eight Major League Baseball teams won an initial victory on Wednesday in two federal lawsuits contesting MLB’s minor league pay practices under the minimum wage and overtime laws. At the same time, however, the judge denied the league a potentially more sweeping victory in the cases.

The two lawsuits were filed in California last year by former minor league players who allege that they received as little as $3,300 per year, without overtime, despite routinely being required to work 50 or more hours per week during the playing season (in addition to mandatory off-season training). MLB and its thirty teams responded to the suit by challenging the plaintiffs’ claims on a variety of grounds. Wednesday’s decision considered two of these defenses in particular.

First, 11 of the MLB franchises argued that they were not subject to the California court’s jurisdiction and therefore must be dismissed from the lawsuit. Second, all 30 MLB teams argued that the case should be transferred from California to a federal court in Florida, which they argued would be a more convenient location for the trial.  In its decision on Wednesday, the court granted MLB a partial victory, agreeing to dismiss eight of the MLB defendant franchises from the suit due to a lack of personal jurisdiction, but refusing to transfer the case to Florida. Read the rest of this entry »

Last week was relatively eventful for two pending antitrust lawsuits against Major League Baseball. On Thursday, the district court issued an important decision in the Garber v. Office of the Commissioner of Baseball suit challenging several of MLB’s television broadcasting practices under the Sherman Antitrust Act. Then later that same day, MLB officially asked the district court to dismiss the Miranda v. Office of the Commissioner of Baseball case, a suit contending that MLB’s minor league pay practices violate federal antitrust law.

Let’s start with the Garber case. As both Wendy Thurm and I have previously discussed on several occasions, the Garber suit involves allegations that several of MLB’s television policies violate the Sherman Act. First, the plaintiffs contend that MLB and its regional sports network partners impose unreasonable blackout policies on fans, preventing individual RSNs from competing with one another in each team’s assigned geographic territory. Absent these anticompetitive restrictions, the plaintiffs allege, a Red Sox fan living in California would, for instance, have the option of subscribing to the New England Sports Network (NESN) to watch all of Boston’s game. The resulting competition would, in theory, drive down the cost of sports programming for all baseball fans.

Relatedly, the Garber plaintiffs also accuse MLB of violating antitrust law by selling only league-wide, pay-per-view subscription packages (MLB Extra Innings and MLB.tv), rather than allowing individual teams to offer their own competing out-of-market plans. This restriction on competition also allegedly increases the cost that out-of-market fans pay to watch baseball.

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Barry Bonds last played in a major league game in 2007. Eight years later, he is now reportedly preparing to file a grievance against Major League Baseball, contending that MLB and its teams improperly colluded to prematurely drive him from the game.

As you may recall, back in 2007 Bonds hit an impressive .276/.480/.565 during his age-43 season, all while setting MLB’s all-time career home run record by hitting his 756th career HR in August. And although Bonds was projected to post a .380 wOBA for the 2008 season, he nevertheless went unsigned that off-season, effectively ending his major league career. This despite the fact that he had even gone so far as to offer to play for the league minimum salary (set at the time at $390,000 per year).

These relatively suspicious circumstances caused many to speculate that MLB’s teams conspired together to drive Bonds from the game. Indeed, both Bonds’ agent (Jeff Borris) and the Major League Baseball Players Association expressed concern at the time that MLB clubs had jointly agreed not to sign Bonds, with the MLBPA announcing after the 2008 season that it had found evidence of improper collusion. Despite all of this, however, Bonds and the union ultimately decided at the time not to officially charge MLB’s franchises with collusion, instead reaching an agreement with MLB to postpone any grievance against the league until Bonds had resolved his then-pending criminal charges relating to his alleged perjury and obstruction of justice during the federal BALCO investigation.

Fast-forward to last month, when the Ninth Circuit Court of Appeals reversed Bonds’ criminal conviction for obstruction of justice. With Bonds’ criminal troubles now all but behind him – technically, prosecutors are still considering whether to file a long-shot, last-ditch appeal to the U.S. Supreme Court – he is now once again returning his attention to potentially filing a grievance against MLB. So does Bonds has any chance of winning a case against the league, and if so, what might he stand to gain from charging its teams with collusion?

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When reports emerged in January that the Yankees were intending to contest the home run milestone bonus agreement the team entered with Alex Rodriguez back in 2007, it was unclear whether or not the matter would ever actually come to a head. Following a season-long suspension for performance enhancing drug use, no one knew for sure whether Rodriguez would even make the Yankees’ opening day roster, let alone be given enough playing time to hit the six home runs necessary to tie Willie Mays at 660 (triggering the first of five potential $6 million milestone bonuses under the 2007 agreement).

Rodriguez, of course, did make the team and ended up hitting his 660th career home run on Friday evening in Boston. As a result, attention has once again focused on whether the Yankees have any realistic hope of escaping the milestone bonus agreement.

As I noted back in January, because the bonus agreement has never been released publicly, it is difficult to fully assess the Yankees’ chances of escaping the $6 million payment. However, while there is still much that we don’t know about the contract, recent developments have shed some additional light on the legal arguments the Yankees will likely rely on when attempting to avoiding paying Rodriguez under the agreement.

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A few weeks ago I took a look at Major League Baseball players’ declining share of overall league revenues, noting that the players have gone from receiving just over 56% of MLB’s revenues in 2002 to around 38% today. That post went on to identify a variety of factors that have converged to reduce the percentage of league revenues going to the players, including increased revenue sharing, MLB’s growing television revenues, and more efficient front office decision-making.

One factor that I touched upon briefly in my prior post, but that probably merited a more extended discussion, is MLB’s luxury tax. As I explained the last time around, the luxury tax has helped dampen many of the larger market franchises’ willingness to spend on payroll, as teams will now incur a fine ranging from 17.5% to 50% – depending on how many years in a row the club has exceeded the luxury tax threshold – for every dollar they spend on player salaries over $189 million per year.

Because most clubs will only raise their payroll when they anticipate that each additional dollar spent on player salary will generate more than that in added revenue, the luxury tax provides a natural disincentive for most teams to cross the payroll threshold. Now, rather believe that an extra dollar in payroll will generate at least $1.01 in added revenue, teams must instead anticipate that any increased salary obligations above $189 million will generate anywhere from $1.18 to as much as $1.51 per dollar in new revenue in order to justify the expenditure. As a result, the luxury tax has caused most of MLB’s largest market franchises – the teams that the Major League Baseball Players Association has historically relied on to help drive the free agent market – to become more financially prudent in recent years.

But even this basic account doesn’t fully reflect the impact that the luxury tax has had on the players’ declining share of league revenues, as changes to the luxury tax structure since 2002 have increased the penalties for teams exceeding the payroll threshold, while also significantly lowering the threshold as a share of the average MLB team’s revenues.

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For the first time in four decades, the U.S. Supreme Court will have an opportunity to reconsider baseball’s notorious exemption from antitrust law. On Wednesday, the city of San Jose, California filed an appeal with the nation’s highest court, asking it to overturn professional baseball’s nearly century-old immunity from the Sherman Antitrust Act.

The appeal is the latest step in the litigation surrounding the Oakland A’s proposed move to San Jose. Back in 2013, the city sued Major League Baseball claiming that the league’s failure to approve the A’s relocation violated federal antitrust law. The district court dismissed the lawsuit later that same year, concluding that baseball’s exemption shielded MLB’s relocation decisions from antitrust scrutiny. That decision was upheld earlier this year by the Ninth Circuit Court of Appeals.

While these lower courts were constrained by a series of Supreme Court precedents exempting baseball from the Sherman Act, the Supreme Court itself is not bound to follow the prior rulings. So San Jose is asking the Court to seize this opportunity to overturn baseball’s highly controversial antitrust immunity. Like any appeal to the U.S. Supreme Court, however, the odds that the Court will agree to take San Jose’s appeal are rather slim.

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