The Un-American Pastime

I have written extensively about steroid use in baseball in general and Roger Clemens in particular. Yesterday, Roger Clemens went before congress. I was going to let the topic lay as my previous writings already covered it; I thought so, at least.

As I wandered around the net and gazed at the major media coverage as well as many blogs that I frequent (some baseball specific, some not), the one common thread was the notion that Congress is devoting too much time to the baseball/steroid/Clemens issue; “Doesn’t Congress have more important things to do”? It’s just a game-nobody cares etc. So, I gather that this response is a popular one. Actually, a better word may be; “populist”. Populist views often seem to be rooted in feelings that people don’t want to be bothered, aren’t interested and/or would like to sweep something under the rug.

So, going against conventional wisdom and populist sentiment, I am going to discuss why, Congress is involved in the steroid issue, why they should be and, why it’s very possible that they need to be involved in Baseball’s business to a far greater extent.

Why is Congress devoting time to steroid use in baseball?

Congress is involved with baseball because, Major League Baseball enjoys an anti-trust exemption.
From ESPN…

Any business that operates across state borders — and therefore participates in interstate commerce — is subject to antitrust legislation. Attempts to control trade and monopolize may be deemed illegal by federal circuit courts under the Sherman and Clayton acts.

Baseball has been exempt from these antitrust laws since 1922, when the Supreme Court ruled in its favor in Federal Baseball Club of Baltimore, Inc. v. National Baseball Clubs. The Supreme Court determined even though there was scheduling of games across state lines, those games were intrastate events since the travel from one state to another was “not the essential thing,” Justice Oliver Wendell Holmes wrote in the decision…

By virtue of the exemption, coupled with decades of reluctance of various courts to overrule, baseball is the only sport, or business for that matter, that has an exemption to the extent that it does.

You have to think of baseball as a business rather than, just a game. Baseball is the only business that has this type of anti-trust exemption.

Baseball is a big business. From the Biz of Baseball.

Baseball will finish this year with just over $6 billion in revenue, according to Bob DuPuy, Major League Baseball’s president and chief operating officer.

That figure, $6 billion in revenue, is for 2007. So, we have an industry that is doing $6 billion a year without any competitors. Not only are there no competitors, the Supreme Court says that no competition is allowed. The only business that has this. Imagine what would happen if the Supreme Court said, “We have decided that we like Coca-Cola, from now on Coke will be the only cola beverage sold in the United States”.

Dupuy continues…

“We have seen a healthy increase in every one of our revenue streams, We saw about a half-billion (dollars of sales) from sources that really didn’t exist 10 years ago.”

What are those revenue streams? There are the obvious ones, ticket sales, T.V. and radio broadcasting, and then there are the side bets; things like food and beverage sales, licensed clothing, parking, sale of advertising on the playing field, the sale of naming rights for the whole stadium. These guys even have legalized ticket scalping operations (season ticket holders can let the club re-sell unused seats for a handling fee). All of this with no competitors. See, they aren’t just in the baseball business they are involved in other industries that normally have an enormous amount of competition-food, broadcasting, clothing, ticket scalping-and they have a free pass.

Let’s say you are someone who has a lot of money. How would you like to be involved in a huge operation that has no competition and never will? The fact is, you can’t just do that. You can’t just take your billion or so dollars, and buy a baseball team. The other owners have to allow you in. If they don’t like you for any reason, they can keep you out. It really is an old boys club. If they think that you might stir up trouble, as a team owner, it doesn’t matter how much money you have. You can’t join.

Major League Baseball has done whatever the hell it wanted since 1922. The only times that the MLB have made any concessions, free agency for instance, have occurred when this anti-trust exemption has been vaguely threatened.

Now, let’s go back to the Coca-Cola analogy for a minute. Let’s say, that all of a sudden Coke secretly stopped using sugar and caffeine. You’re a regular Coke drinker and they can’t pull the wool over your eyes. You know something is up. What would you do? The way it stands now, you at least have some options-you can switch to Pepsi or RC and reclaim your sugar/caffeine buzz. But, if the Supreme Court has said, “only Coke will be allowed”; what can you do?

Here is where this system of checks and balances should kick in. Maybe enough people complain about the impotent cola that Congress takes notice. Maybe even some members of Congress drink Coke themselves and they recognize something is different. Congress can step in and say; “Look Coke, you are getting a free pass here, as far as competition goes so, fix this”. In other words Congress can police this company that has an anti-trust exemption.

That is why Congress needs to be involved in the Baseball/steroid situation. An industry that enjoys an anti-trust exemption needs to have some entity to answer to.

Why does Congress possibly need to be involved in the business of baseball even further?

If the owners, including former used car salesman and present Commissioner, Bud Selig, knew that steroids were being used regularly, they were committing fraud. They were, reaping the revenue growth and selling a product that didn’t abide by even their own set of rules. They were selling a dishonest product. They were committing fraud. At $6 billion a year, that’s a lot of fraud.

Congress needs to be in this mess because it isn’t trivial. It involves a highly diversified industry that employs a lot of citizens. A huge industry that is controlled by a handful of people, that have a free pass and, may have been committing fraud on a huge scale.

If Congress does not serve as the watchdog here, the old boys can continue to do whatever the hell they want and the employees, consumers and marketplace have no say. It would be the Un-American Pastime.