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>> Bloomberg Law with June Graasso from

Bloomberg Radio.

>> Welcome to the weekend edition of

Bloomberg Law. I'm Amy Morris in for

June Graasso. June's off this week.

Coming up this hour, we'll be focusing

on a couple of major antitrust cases.

We'll break down the Justice

Department's case against Live Nation as

that trial gets underway. We'll take a

deep dive on why baseball is exempt from

antitrust laws. All of that is on the

way on Bloomberg Law just ahead. But

first, let's begin with Elon Musk's big

securities fraud class action case. The

billionaire took the stand in federal

court in San Francisco to defend himself

against claims that he deliberately

drove down Twitter's stock price before

he bought it by tweeting. Bloomberg's

Jeff Eely is in San Francisco. He's been

following this case and joins us now to

bring us up to speed. First of all, uh

Jeff, the tweet that is at the center of

this case, what did that tweet say? What

was it about?

>> It was a tweet in May of 2022 in which

Mr. Musk, who was frustrated by uh

Twitter's foot dragging on handing over

information

uh that he wanted to tie to the deal. He

basically

tweeted out that he was putting the

whole the deal on hold temporarily

until they could give him um the

material he sought. uh that same day

that he issued that tweet, he also

issued a tweet saying he was still

committed to the deal. Um so, you know,

he claims that it was frustration. The

investors who are suing him claim

instead that it was really part of a

campaign to drive down Twitter's share

price so he could buy it on the cheap.

>> Let's talk about that. Your story on the

Bloomberg terminal says that this trial

is going to take a closer look at that

six-month window when Musk was going to

take over Twitter, then tried to

withdraw the offer and then went through

with the deal because the company sued

him. What's the line that may be crossed

here between someone having second

thoughts about a deal or just being

flaky about a deal versus someone

deliberately trying to manipulate a

deal? Is that what they're trying to

prove?

>> Right. That's exactly what they're

trying to prove. the the in in in M&A

litigation, which we cover a lot of in

Delaware, uh you're always going to get

allegations of buyer remorse. Um you

know, M&A situations are always tied to

the market. Market fluctuates. Uh the

bases for deals can be affected. Um,

here the investors contend that it was

not fluctuations in the market that

really drove uh Elon to start thinking

about trying to repric the deal. It was

really the fluctuations in the Tesla

stock price. He was using Tesla shares

to both generate cash for the deal and

secure loans and they took a dive during

that period and that made it made the

deal much more expensive for Mr. Musk.

So the investors contend that he

launched a organized campaign to attack

Twitter um to uh in hopes in hopes of

driving down the stock price so he he

wouldn't have to you know pay as much

for the company.

>> Now he did wind up paying 44 billion for

Twitter. Um

>> that's right.

>> Did they intend for him to pay more or

is there a share price that should have

been up instead of down or or where's

the discrepancy?

Well, the the discrepancy here is the

deal the timeline is Mr. Musk makes an

offer. Uh Tesla shares uh crash. Mr.

Musk uh attempts to renega on the deal.

Twitter sues. Mr. Musk counters sues and

then uh after some pre-trial rulings

from the judge in Delaware that were not

favorable to Mr. Mosque, he decided to

wave the white flag and pay the full uh

54.20

per share that he had originally

offered. So uh you know it was this is a

you always have two versions of reality

in legal disputes and this jury is going

to decide which one of the the views of

reality

uh sound more plausible to them. So then

what do the investors want? If they

ultimately got the money that he had

promised,

what what do they want?

>> These are some Yeah, these are some

investors who when Mr. Musk issued his

May 13 tweet decided or figured that he

had, you know, he was pulling out of the

deal and they they sold their shares in

the 30s um rather than getting 5420

per share in October when the deal

closed.

>> I see. So, it's about them having sold

their shares based on the idea that he's

backing out.

>> That's right. And under securities

fraud, you're you're you are barred in

an M&A situation from making a false or

misleading statement that would affect,

you know, the market. And uh the

investors contend that that's what this

this tempor deal placed on temporary

hold was. It was a false or misleading

statement.

>> Isn't that interesting? I was thinking

about how this is basically all based on

a tweet and how unusual that is because

there's no documentation. And there's

nothing signed. He could probably argue

that it was just something he a thought

that he just tossed out there. And this

>> That's exactly what he's arguing. By the

way,

>> I nailed it. So there's no documentation

there. There's nothing signed. He could

argue that it was just a thought that he

tossed out there, which is what he did.

How would this change how future

securities fraud suits might be handled?

Social media may be changing how the

courts are looking at this, how juries

are looking at this. Is that actually a

factor now?

You know, I I'm not sure. You might

argue that you're going to have more

securities fraud because people, you

know, are availing themselves of of

public platforms like Twitter, which is

of course now called X.

>> Uh I I I think this is pretty much, you

know, your garden variety sec federal

securities fraud. It's being tried in

federal court, San Francisco, by the

way. And I don't, you know, it's all

going to come down to whether the jury

believes that Mr. Musk had intent to

drive the stock price down. And that's

very hard to prove. Okay? So, you know,

nobody's this is no slam dunk by any

stretch of the imagination

>> for the those who are suing for the

investors.

>> Correct.

>> Because they have to show intent.

>> That's right. And you know in a criminal

case as you know intent is inferred. If

you point a gun at someone and a gun

goes off you are you know the law

basically infers that you intended to

kill that person. Civil court completely

different. You don't have that you know

beyond a reasonable doubt burden that

you have to meet. you know, you have to

somehow get, you know, persuade the

jurors that 51%

of the scale tips in your favor when it

comes to intent, but it's just very

difficult to prove.

>> How long would a case like this last?

>> They're thinking this is going to take

roughly two weeks to try.

>> Wow, that seems pretty quick for a

securities fraud case.

>> Well, you basically given each side a

week, right? And it's it's you can do it

in that again this there's not a lot of

ground to cover here. You know, two two

or three tweets and a podcast. That's

the sum and substance of the um

allegations that were allow that were

allowed to go to trial. The judge

knocked out other allegations.

>> Okay, Jeff Phely, thank you so much for

joining us with this. We do appreciate

your insights and your time. Thank you

so much.

>> Sure, Amy. and our thanks to Bloomberg's

Jeff Ele for joining us. Now, let's turn

to the entertainment space in a highly

anticipated antitrust case involving

Live Nation. It is a massive

entertainment company. And they're in

court to defend themselves against

claims from the Department of Justice

that it monopolized the live music

market, acting as the biggest ticket

seller while also running and in a lot

of cases owning some of the nation's

biggest concert venues. The trial just

got underway in New York. Joining us now

to talk about what comes next, Bloomberg

News antitrust reporter Leah Nyl. Leah,

thank you for taking the time with us.

>> Thanks for having me.

>> So, for years, let me just come at it

from a fan point of view. For years,

those of us who have attended concerts

and bought tickets through Ticket

Master, which is owned by Lifation, um

have complained about the cost,

complained about the monopoly, and those

are just the fans. That's not even the

venues and the concert promoters and the

agents and those who have also had to

deal with Live Nation. bring us up to

speed how we got here.

>> Yeah. So, uh, Live Nation, uh, bought

Ticketmaster. They used to be separate

companies back in 2010. Um, at the time,

this was during the Obama

administration. There was an antitrust

review of the deal. And they were

concerned because Live Nation is um

what's known as a concert promoter. So,

they own both a bunch of concert venues,

but they also um help promote uh

concerts. So they uh have people who

help artists sort of pick out which

venues that they're going to um perform

at and then arrange all of the details

of a tour. Um and they wanted to buy

ticket master at the time the largest uh

ticketing company. The Justice

Department decided to allow this to go

through but with some conditions. And

the conditions were that uh Live Nation

could not um retaliate against any

venues that wanted to use other uh

concert promoters or other ticketing

services. Um so the uh so the merger was

allowed to go through. Everything uh

went uh along, but the Justice

Department alleges that um Live Nation

repeatedly sort of violated a lot of

these orders. Um there were allegations

that they were threatening venues um to

sort of uh make them uh use ticket

master which is why something like 87%

of venues across the United States use

ticket master instead of other ticketing

options. So the justice department went

back to court um changed its sort of

agreement with ticket master to one in

which it had a monitor and um it had a

lot more obligations

um and they feel that that didn't work

either. this sort of bad conduct

continued. So, uh, the Justice

Department under the Biden

administration started a new

investigation and in 2024 they sued

Ticket Master for being a monopoly in

multiple markets. Um, now some of the

case ended up getting thrown out before

trial, but um, on Monday, I guess, um,

it went before a jury in New York. Um,

the case is supposed to take several

weeks. Um, we're thinking probably 5 to

6 weeks and it's going to feature

testimony from people all across the

live uh music industry. So, there'll be

people from various venues. There'll be

people from Ticket Master. There will be

uh music artists. Um, Kid Rock and

someone from Mumford and Suns are both

supposed to testify. Um, as well as just

some regular fans about how um, Ticket

Master are controlling so much of the

industry has sort of impacted things.

Okay, Leah, let's hold it there for just

a moment. We are talking with Bloomberg

News antitrust reporter Leah Nland.

We'll have more with Leah about the big

Live Nation antitrust case. That's just

ahead. I'm Amy Morris in for June

Graasso. You're listening to the weekend

edition of Bloomberg Law.

You're listening to Bloomberg Law with

June Graasso from Bloomberg Radio.

>> Thanks for listening to the weekend

edition of Bloomberg Law. I'm Amy Morris

in for June Graasso and we've been

talking about the Department of Justice

antitrust trial against the live

entertainment giant Live Nation.

Bloomberg News antitrust reporter Leah

Nin is with us. The crux of the DOJ's

case against Live Nation, Leah, is that

it has a monopoly on live entertainment

because it owns Ticket Master, which is

the nation's largest ticket seller in

the nation. And Leah, one of the things

you mentioned is that at the very

beginning of this, back in 2010, when

the judge allowed for this merger in the

first place, even then, the judge said,

"Don't threaten concert venues. If they

don't want to use your services, you

can't intimidate them." The judge said

that from the beginning. So, is that

what they're accused of doing?

>> So, that is one of the allegations that

the Justice Department is seeking to

prove. Um, their very first witness, in

fact, was the CEO from the Barclay

Center, which is a large uh concert

venue in Brooklyn, New York. Um, and,

uh, they are one of the venues that

alleged that they were sort of

threatened by Ticketmaster. Um,

Ticketmaster, uh, they had wanted to

switch their ticketing provider away

from Ticketmaster to Segeek, which is

another, um, ticketing provider that,

um, it primarily does a lot of, uh,

sports, uh, related events.

>> Events. Thank you. Uh, Segeek primarily

does a lot of sports related events. Um

and uh so Barclays agreed to switch to

Segeek and uh they played a phone call

in court uh with the uh CEO of Barclays

and the CEO of Live Nation. And the CEO

of Live Nation said, "If you switch

away, it's going to be hard for us to

keep sending you concerts." Um and then

after they switched to SeatGeek, um the

allegation is Live Nation started moving

concerts, popular concerts to another

concert venue in Queens instead of this

one in um Brooklyn. And so there was

some talk about a Billy Isish concert

that had been booked at the Barlay

Center and all of a sudden it got moved

to this other venue. So, they're not

just switching venues, they're actually

moving acts from a venue that was

already booked to a different venue that

uses ticket master.

>> Yes. And that that is the allegation

that the Justice Department was focusing

on. Live Nation maintains that this was

at the choice of Billy Eyish's team. Uh

Barlay's, you know, the Barclay CEO

said, you know, they had somebody check

it out and Billy Isish's team said that

this was in fact a request by ticket or

by Live Nation. Um, so it is a little

bit disputed, but the Justice Department

is planning to put on uh a number of

other venues who allege this this

happened to them. They would uh look at

switching to a different ticketing

provider, and Live Nation would say,

"Well, if you switch to somebody else,

we're not going to be able to bring you

the same tickets." Live Nation has

argued all along that it's sort of under

no legal obligation to do business um

elsewhere. that you know the it makes

most sense for them like business-wise

to um put uh concerts at either venues

it owns or venues that are using ticket

master because you know when it's a

vertically integrated company it's

cheaper for them. Um and so that's

actually one of the um major issues in

the trial is is this like a a legitimate

business practice or is this sort of

unfair coercion? uh does this practice

of um them trying to tie their contracts

in this way uh make it illegal and sort

of force uh pressure on these venues to

use ticket master instead of other

options. Um the other interesting thing

here is that the case is being brought

not just by the justice department but

by a number of state attorneys general

and state attorneys general do have the

right to um sort of seek uh damages on

behalf of um their citizens. So there

are 25 states uh 24 and DC uh depending

on how you count it um that are seeking

damages from ticket master on behalf of

concert goers. They say that because of

ticket master's monopoly um ticket

prices were uh increased by at least uh

about $2 per ticket. So obviously $2 a

ticket is not that much, you know, for

individual ticket, but we're talking

about something in excess of like 20,000

concerts at thousands of concert venues

across the country. So, if you add that

all up, we're talking about damages in

the potential millions or billions of

dollars depending on what the jury

finds.

>> You cover antitrust cases a lot. This is

your this is your jam. So, what criteria

then do they have to meet to show that

yes, they violated this.

>> So, first um the jury has to find that

they're a monopoly. Uh that's not really

that uh contest there. There is a little

bit of contention here about whether

they're a monopoly. Um it depends on

what venues you consider to be in the

market versus not in the market. Um

because the government first has to show

that they have the power to sort of

exert undue influence. The government

says that um ticket master uh controls

ticketing at about 87% of what they're

calling major concert venues. So these

are the venues that generally like the

the thing that they do the most is hold

music concerts.

>> Sure.

>> Uh Ticket Master says that that's not

really the appropriate uh market that it

should include sort of all spaces that

could potentially host a concert. So in

addition to like a something what like

an amphitheater or an arena, it should

also include a stadium. Um, and so if

you consider all of those things,

stadiums, amphitheaters, arenas, their

market share is a little bit smaller. It

would be uh only about 40%. Which there

isn't like a legal definition of what a

monopoly is, but generally it's

considered to be at least 50 to 60%. So

that's one of the things the jury will

have to decide. Um, should they be

considering every single place that a

concert should take place or just sort

of major concert venues? Um, the Justice

Department argues that, you know, there

are only certain artists who are going

to be able to fill a stadium, someone

like Beyonce. So, if you are a, you

know, upand cominging artist, you're not

really going to be playing a stadium.

You're going to be playing some of these

smaller places. And that those are the

places where, uh, Ticket Master has a

little bit more power because most of

the business they're doing is music

concerts. Um,

>> so are we also including nightclubs in

this?

>> Yeah. So they're they they sort of start

um they they have a bunch of people from

sort of the music industry who uh are

taking the stand and sort of talking

about this. When an artist starts, you

know, they tend to start in in smaller

venues like clubs and then they move up

to amphitheaters and then they move up

to arenas and then if you're very very

popular, you move up to a stadium. So

the Justice Department's case is sort of

focused on those those slightly smaller

ones, the the clubs, the amphitheaters,

the arenas. this these are like places

that have maybe like a,000 to maybe

20,000 seats whereas a stadium is going

to have like 40,000 to 50,000 seats. So

it's focused mostly on those. Um so

we're we're not going to be hearing from

people like you know Beyonce or Taylor

Swift although Taylor Swift's uh concert

agent is supposed to testify. Um it's

mostly focused on like mid-level

artists. So, um, the people who are

definitely testifying are Kid Rock, who

has been very interested in this case

and is close friends with President

Trump. Um, and then also, um, one of the

members of the Mumford and Sons Band is

expected to testify. So, um, like

artists along that sort of caliber who

do a lot of shows and can talk a little

bit about how, um, you know, uh, Live

Nation's control over concert promotion

has really impacted where they end up.

um performing.

>> So what is the court then being asked to

decide here?

>> So there is a jury uh for this portion

and the jury is being asked to decide

first whether Live Nation is a monopoly

and then second what um if they are a

monopoly what the damage amount per

ticket is. So there will be some

testimony from all these people about uh

Live Nations conduct and then there will

be some testimony from experts about um

how Live Nation's conduct impacted the

price of tickets. Um once the jury

decides that and if they decide in favor

of the government, the judge would then

take the jury's damage number and sort

of decide um the overall damage number.

So they're deciding per ticket. He's

deciding the overall number and then he

will also decide whether there are any

additional remedies needed. So that's

where the potential for a breakup comes

in because the government has said, you

know, we allowed this merger to take

place in 2010 on the condition that Live

Nations sort of not engage in bad

conduct and they have been doing that

the whole time. And so really, you know,

we tried to allow this to to go through.

Um it hasn't worked. And so what we

really need now is to break up this

company. So, um, uh, this might seem

like an out of the left field question,

but I wonder how, uh, reseller, ticket

resellers like StubHub would somehow be

involved with this. Are they completely

left out of this because that the damage

was already done by the person who

originally bought the ticket through

ticket master.

>> So, most of this, yes, is focused

primarily on what we call the primary

ticket. So, that's the very first sale

of the ticket because the venue itself

generally picks the primary ticketer,

i.e. who is the first person selling the

tickets but they don't have a lot of

control over what we call the secondary

ticketing market i.e. when you're

reselling um where you decide to do

that, the venue doesn't itself usually

get involved. So um uh there are a bunch

of concerns about the secondary market.

There's some legislation pending in

Congress um that's focused on that, but

this case is primarily about the primary

uh ticket. How

how difficult will it be for the

prosecution to prove its case?

>> So I mean the standard is a

prepoundonderance of the evidence. um

because this is a civil case, right? But

um it's interesting like uh antitrust

cases by the time they get to this point

with the Justice Department bringing it

to trial, very often the Justice

Department wins. Um they uh there's a

pretty high bar for the Justice

Department to file a monopolization case

in the first place. And then, you know,

it has to get past the motion to

dismiss. It has to get past summary

judgement. This one is pretty

interesting because it's pretty rare

actually for any trust cases to go

before a jury. Um, the only reason it's

actually before a jury is because of the

damages portion, but you know, the

Justice Department was very interested

in getting this before a jury because

these are the people allegedly who uh

have been harmed by this conduct,

>> right? The peers

>> that they are Yeah. They are like the

people who might have actually gotten to

a concert. Live Nation uh a little bit

earlier last week actually tried to uh

insist that if you had ever bought a

ticket through ticket master, you were

ineligible to be a jury. Uh and the

judge actually threw out that request

because he he felt that it would have

been impossible to actually seat a jury.

>> Yeah.

>> If one of the requirements was that you

had never bought a concert ticket

online.

>> Um

>> so it's entirely possible that these

people have have used ticket master's

product before. Um but you know in order

to be seated on the jury they had to

insist that they could be impartial and

fair and so um you know we'll see what

they say. Um you know juries juries much

more frequently find uh for antitrust

plaintiffs. So it's interesting that

Live Nation wanted to take this gamble.

>> It really is. And at at some point there

is going to be let's say if they find in

favor of the department of justice there

is a chance that Live Nation might have

to be broken up. What would that even

look like?

>> Uh so the justice department and the

state AGS say that in this case they

don't think it would be that hard

because these used to be separate

companies. Um and in their view you know

this is now a vertically integrated

company. Live Nation does the concert

promotions. That is the um all of the

logistics behind having a live music

event. Whereas ticket master is a

ticketing service. It is you know like

primarily a website that integrates with

like websites of venues. So so these two

things don't have to go together. Um and

therefore it it would not in their view

be necessarily that difficult to

separate them.

>> So it would still it would then just go

back to what it was before 2010. Life

Nation and Ticket Master. Here's your

tickets and here's your venue.

>> Yes, that's that's the idea of the

Justice Department. It would separate

these two things into two companies and

they would just go back to the way that

they had done business before.

>> Okay, we're going to watch and see how

this develops right along with you,

Leah. Thank you so much for talking to

us.

>> Thank you for having me.

>> Bloomberg News antitrust reporter Leah

Nland. And just ahead, we're going to

take a look at one major business they

haven't had to worry about antitrust

issues at all. That's the great American

pastime of baseball. But how did they

get past that? I'm Amy Morris in for Jim

Graasso and this is Bloomberg.

>> You're listening to Bloomberg Law with

June Graasso from Bloomberg Radio.

>> You're listening to the weekend edition

of Bloomberg Law. I'm Amy Morris filling

in for June Graasso. June is off this

week. Major League Baseball is a massive

organization and is exempt from federal

antitrust law. Now, this week, the

Supreme Court refused to hear an appeal

to challenge this long-standing

exemption. Why the MLB Players

Association is fighting to change it. We

get more on the history of this and why

the MLB Players Association is fighting

to change it with Martin Nell, co-chair

of Golston and Stores Sports Law

Practice and adjunct professor at

Columbia Law School. Okay, Martin, thank

you so much for joining us today.

>> Amy, thank you so much for having me.

>> The high court called this exemption an

aberration. It's clearly unusual. Why is

baseball so special?

>> Well, but baseball is magical in many

ways because it stirs everyone's

imagination.

People from the farmlands joined

baseball when it first started. It

became a path for immigrants to become

part of American society and it's easy

to understand the basics not the real

strategy but the basics. So it tends to

appeal to everyone and in that way it is

different than many sports uh but the

same as many other sports at least

economically and perhaps legally except

as we're about to get into. Okay, let's

talk about that. Why was this exemption

created for baseball in the first place?

>> You have to go back to 1922 when the

Supreme Court, US Supreme Court, first

looked at baseball and whether it was

subject to the antirust laws. Now, put

yourself in the time frame. In 1922, the

GIS had just come back from World War I

and had lots of cash to spend,

particularly on leisure topics.

You had a Supreme Court which had a very

cramped view of the commerce clause

tending to restrict its

availability.

Uh, and you had the Blacksock scandal by

1922.

So you put these three things together

and the Supreme Court looks at baseball

in 1922 and it dealt with an ownership

dispute at the time and in an opinion

written by none other than Oliver Wendel

Holmes, one of the great jurists uh on

the Supreme Court, he decided that

baseball for the court, he decided

baseball was an exhibition that was not

involved in interstate commerce and

therefore was exempt from the antirust

laws because as we know Congress gets

its power to regulate from article 1

section 8 the commerce clause if you're

not in commerce congress can't regulate

that type of activity so that was the

start of the baseball exemption

I must say it made little sense in 1922

and as I'm sure we'll get into it makes

even less sense 104 years later

>> well I was going to say maybe in 1922 it

wasn't in interstate commerce, but today

it's worldwide. It's it's America's

pastime. So, um why how has it managed

to survive any challenges for these

changes?

>> So, what we've had is the Supreme Court

has looked at the baseball exemption two

more times after 1922. Once in 1953 in a

case called Tulson against the New York

Yankees

>> where Mr. Tulson was claiming that

something called the baseball reserve

clause was an antirust violation. It

restricted players to particular teams

and didn't give them any mobility to

move to another team such as we now see

in free agency.

And the Supreme Court looked at this

case six sentence decision. It was

called procurium because it was by the

court no individual author. And in six

sentences, the Supreme Court said star

decisis. We had decided this 31 years

ago and therefore there's no reason to

change. Congress could have acted to

eliminate the baseball exemption and did

not do so. So that's the end of it. Then

in 1972, we have the Supreme Court

looking at it again in a case called

Flood against Cune. This is sometimes

referred to as the Kurt Flood case. And

what happened there? You now had a five

to3 decision by the Supreme Court. The

major decision the was written by

Justice Blackman. For those who like

elegance of language, the first third of

his decision is this great elegy to the

game of baseball. The second third of

his decision is based on Kurt Flood's

outstanding statistics as a as the

premier center fielder of his time. And

the third third of his decision was,

hey, this is an aberration, but it's our

aberration. And while there's something

to be said for consistency, even when

it's layered in inconsistencies,

we're going to uphold the baseball

exemption. Congress hasn't stepped in.

There's been what the court called

positive inaction and therefore baseball

exemption stands. Sounds quite Ralph

Waldo Emersonian in its scope.

>> So it sounds like also because the

Supreme Court opted not to take up this

case that what did you call it? The um

act the inaction

>> positive inaction.

>> Positive inaction remains.

>> Correct. And since 1972 we've seen a

whole bunch of developments. We've had

on the congressional front, Congress in

19 forget it's 1997 or 1998 passed

something called the Kurt Flood Act.

Unfortunately, Kurt Flood had passed

away before Congress enacted this and

President Clinton signed it into law.

>> That said that baseball players for

Major League Baseball had the right to

sue under the antitrust laws. Of course,

by that time it didn't matter much

because baseball had developed a union,

the Major League Baseball players union

and the Major League Baseball players uh

Major League Baseball owners had

negotiated a collective bargaining

agreement where you have a collective

bargaining agreement. The labor law

takes precedence over the antirust laws

and so there is no such thing as an

antirust violation for player disputes

as long as there is a collective

bargaining relationship.

So it was a sop to unfortunately

at that time the deceased Mr. Flood but

it didn't matter much. You had a whole

bunch of lower court cases coming up

challenging the scope of the baseball

exemption. Why? Because this exemption

did not apply to any other sport. The

Supreme Court and all lower courts had

held foot professional football,

professional hockey, professional

basketball, theatrical exhibitions. You

name the type of entertainment form the

Supreme Court and the lower courts have

held they're subject to the antitrust

laws. Not so for the great game of

baseball. So lower courts tried to limit

the scope and ultimately they found that

the circuit courts of appeals

uh did not agree and held that baseball

is subject to the antirust is not

subject to the antitrust laws because of

the exemption. So in in this case, if

this appeal had been successful, how

would that change Major League Baseball,

how we experience it as fans, how it

actually is run as an organization?

>> I think the answer is not much. Uh so

what we're talking about is the Congreos

decision that uh where the Supreme Court

last week, last week earlier this week,

sorry, uh denied a petition for rid of

Cersei.

What that affects is not major league

baseball, but the minor leagues. This

involved Puerto Rican baseball leagues.

And were they subject to the same

baseball exemption? Were the players

there subject to the same baseball

exemption? The first circuit court of

appeals held the baseball exemption

applied. and therefore it seemed to

expand it beyond the scope of what the

Supreme Court had held three times

applied to major league baseball. So the

effects would be to minor leagues,

non-sanctioned leagues, and as I'm sure

you're going to ask me, the NCAA,

>> right? Exactly. I was stopping other

organizations like the NCAA cuz I I keep

thinking about things like um name and

image and likeness and the portal and

how students are now able to lobby for

more money which was unheard of back in

my day. So what's stopping other

organizations like the NCAA from

lobbying for this type of an exemption?

>> So great question and the answer is they

are lobbying

>> for an exemption. Um, I can't tell you

every day, but the NCAA has lobbyists

who are going to Congress on a regular

basis and claiming that the NCAA should

be exempt at least in some of its

activities from the scope of the

antitrust laws. The principal reasons

given by the NCAA are one, money, and

two, money. Um, and the reason for this

is antitrust laws are so antitrust

lawsuits are so expensive and take so

much time and divert energy that they in

fact divert attention from the scope of

the activities that the parties want to

engage in and take on a life of their

own.

>> How does that not apply to baseball

though?

>> It would, but for these three Supreme

Court cases.

>> Okay. Okay. Okay. So, what happens now?

Um, there have been challenges. They get

shot down or they're not hurt at all. Is

this just the way it is. Baseball has

this uh antirust exemption?

>> So, the answer is

um yes and no. Uh that's my legal and

lawyerly type answer. Um yes, because we

have three Supreme Court cases which

uphold the baseball exemption. Lower

courts can't change that. What can

change that is Congress. If Congress

wanted to jump into the fray, and that's

in effect why the NCAA is lobbying

Congress. Now, it can create exemptions

to the antitrust laws. The antirust laws

are congressional laws. They're not

constitutional

laws, and they can be changed by

Congress or modified by Congress. So,

that's one avenue. Another avenue would

be if the Supreme Court waited in again,

which doesn't look likely. Um, it's had

ample opportunity over the last 54

years since the flood case was decided

and has chosen not to do so. So, those

are the two areas. A third area may be

private parties.

If for instance, Congreos

decided to develop a collective

bargaining relationship with its players

>> um and the players would unionize and

then perhaps be subject to the scope of

the National Labor Relations Act, they

could then bargain without the sort of

damocles of an antirust suit hanging

over their heads because the antirust

laws would be superseded by the

collective bargaining relationship.

>> Marty, we're going to leave it there.

Thank you so much for taking the time

with us. This was fascinating.

>> Amy, thank you so much for having me.

I've really enjoyed myself.

>> Marty Adele is co-chair of Goulston and

Store Sports Law Practice. And that does

it for this edition of Bloomberg Law.

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