Major League Baseball Anti-Trust Immunity: Examining the Legal and Financial Implications of Relocation Rules

Major League Baseball (MLB) rules restrict the movement of any franchise into another’s territory. These territorial rules are designed to protect each team’s potential local revenue sources as well as to provide stability throughout the league. Recently, Major League Baseball approved financial compensation for the Washington Nationals move into the Baltimore Orioles’ territory – primarily because it was in the best interest of MLB even though it hurt the Orioles. However, the Oakland Athletics were unable to even negotiate a potential compensation plan for a move into the San Francisco Giants territory, despite the apparent financial benefit the move could have provided for every other league franchise. The Athletics are already located within 15 miles of the Giants, and their potential 40 mile move to San Jose, California would not add a new team to the San Francisco Bay Area; rather, it would simply be a move of a current team to a different location within the metropolitan area. The refusal of the Giants or MLB to negotiate a potential compromise has kept the Oakland Athletics in a substandard facility and has led to their potential move to Fremont, CA – a less desirable location than San Jose. This paper investigates the legal, policy, and financial considerations concerning Major League Baseball’s territorial rules. Specifically, it addresses antitrust law as it pertains to American professional sport, relative sport franchise relocation cases, financial arguments why leagues desire to control relocation, financial components of MLB’s current Collective Bargaining Agreement, and the legal and financial impact of a challenge to MLB’s territorial rules – an option the Oakland Athletic initially investigated prior to their decision to pursue a potential move to Fremont.