[Congressional Record Volume 142, Number 69 (Thursday, May 16, 1996)]
[Senate]
[Pages S5191-S5192]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. HATCH:
  S. 1767. A bill to harmonize the application of the antitrust laws to 
professional sports, and for other purposes.


                 the professional sports protection act

  Mr. HATCH. Mr. President, I like almost all Americans, am a fan of 
professional sports. We all enjoy following the competition on the 
field and on the hardwood and watching the performances of our favorite 
players. Even as I make this statement today, my fingers are crossed 
for the Utah Jazz in this evening's playoff game.

  But professional sports is not just a game, it is a business, and it 
is the future of professional sports as a business that my bill, the 
Professional Sports Protection Act, seeks to address. I am afraid that 
the current rash of franchise relocations is only the symptom of larger 
economic trends in professional sports. If these trends are allowed to 
continue, we will see the same fan disaffection that has occurred in 
Major League baseball, with the result that professional sports--one of 
our growing national industries--will suffer.
  My bill will protect professional sports by permitting the leagues--
the National Football League, the National Basketball Association, and 
the National Hockey League--to review and, if necessary block, 
franchise relocation decisions. Under some interpretations of the 
antitrust laws, the professional sports leagues may be liable for 
treble damages for blocking franchise relocations. This prevents 
leagues from preventing moves that are not in the best long-term 
economic interests of the sport because they have the threat of 
billions of dollars in damages hanging over them.

[[Page S5192]]

  As chairman of the Judiciary Committee, I am concerned about sports 
not just because I am a sports fan, but because I want to make sure 
that the antitrust laws are properly applied to professional sports--
just as they should be to any other business--to ensure healthy 
competition and economic growth. I am concerned that the current 
ambiguous application of the antitrust laws to franchise relocation 
decisions actually may suppress the healthy competition and economic 
growth that has characterized professional sports in our nation. My 
bill will permit leagues to make these franchise relocation decisions--
which seem to me to be, in this case, the decisions of a single joint 
venture rather than of economic competitors--without fear of antitrust 
liability.
  I understand that some fear that the leagues might use their 
antitrust immunity in franchise relocation as leverage in other, 
unrelated areas. Some think that the leagues might block a franchise 
move unless the franchise favors certain policies and decisions in, 
say, revenue sharing. I have addressed this concern by providing for 
specific standards that leagues are to consider when reviewing a 
franchise move. If a league considers a factor that is unrelated to the 
franchise move, then it will be in violation of the law, and it will 
not receive antitrust protection. My bill also provides for judicial 
review of these decisions, with proper deference given to the league's 
business decisions, to ensure that the league has not used the 
antitrust immunity to abuse its authority.
  Let me be clear that this is a narrow bill. It does not contain 
several provisions that were included in a House bill reported out of 
the House Judiciary Committee a few weeks ago. In particular, I am 
opposed to any provisions that would force the sports league to create 
new expansion franchises to replace teams that relocate. I do not 
believe that the Federal Government should nationalize professional 
sports, and I do not believe that it is in the national interest to 
take such intrusive steps into the internal operations of an industry 
such as professional sports. My bill intends only to codify what I 
believe is the proper interpretation of existing antitrust law: that 
franchise relocation decisions are not violations of the antitrust 
laws, but instead are the decisions of team owners who are 
collaborating in the joint venture of a sports league.
  Some might question why Congress needs to turn to this subject. 
Shouldn't we concern ourselves in Congress with more important matters? 
Professional sports is important to our nation. According to some 
estimates, the professional sports leagues, in the form of Major League 
Baseball, the National Football League, the National Hockey League, and 
the National Basketball Association, generate more than $5 billion in 
annual revenues in the United States. There are literally tens of 
thousands of people whose jobs depend on professional sports. 
Professional sports is one of America's fastest growing industries, 
with numerous teams being established in new cities, both in the United 
States and overseas. Professional sports also generates billions of 
dollars in revenue for other industries, such as 
advertising, telecommunications, construction, and sports equipment. 
And let us not forget the fun and pleasure healthy professional sports 
leagues bring to millions of fans both in America and abroad.

  But the improper application of Federal antitrust law to franchise 
relocation may end the rapid economic growth in professional sports. I 
have held hearings on this issue, as has my good friend and colleague, 
Senator Thurmond of South Carolina. According to the league officials, 
sports agents and businessmen, economists and law professors who 
testified, a potentially destructive economic dynamic is behind the 
recent spate of team moves. In order to win games, teams must hire the 
best players. Because of the salary cap structure in football, for 
example, the only way to attract the top players is to offer large 
bonuses and financial incentives. The only way some teams feel they can 
pay these salaries is to move to new cities, in return for generous 
stadium revenues and tax packages. This financial imperative is fed by 
the desire of new, up and coming cities that want the prestige and the 
financial benefits of having a major sports franchise located in their 
area. This is ironic because some economic studies indicate that major 
league teams do not bring a significant economic benefit to their new 
cities.
  Congress must address this dynamic because it will injure interests 
of the industry and of the fans. I was convinced during my hearings 
that short-sighted franchise relocations eventually will hurt 
professional sports. Professional sports, after all, is a product that 
is consumed by all of us, the sports fans. If teams move around too 
often, the fans will lose their enthusiasm and support for their teams. 
If the fans lose interest, eventually the overall economic pie created 
by the sports will begin to decrease. Fewer fans will attend the games 
or watch them on television; fewer fans will purchase merchandise; 
fewer children will want to play the sport.
  We have already seen a similar phenomenon occur in major league 
baseball. After the strike, which canceled the World Series and 
shortened the following season, fans began to lose interest in 
baseball. Much of this was the result of the owners, whose actions 
against the players during collective bargaining have shown an utter 
disregard for the best interests of the game and of the fans. The 
owners were able to engage in their practices in part because they 
benefit from a judicially created immunity from the antitrust laws that 
has no basis in the law. Accordingly, I have introduced legislation, 
which has passed the Judiciary Committee, to remove baseball's 
antitrust exemption, except in regard to franchise relocation.
  I intend that this bill will not move forward until the problems in 
baseball are addressed. Since it appears that the same economic trends 
are affecting all of the professional sports, then it makes sense to 
provide the same antitrust standard to all of the leagues. It also 
makes no sense for the other leagues to operate under the rules of the 
antitrust laws, while baseball can operate in an anticompetitive 
fashion free from the rule of law. The antitrust exemption for baseball 
has been an embarrassing anomaly in antitrust law--one that has led to 
profound distortions in the sport. In the near future, I will take 
action to ensure that baseball and the other professional sports 
leagues receive the same treatment. Either this bill must be merged 
with my baseball legislation, or baseball legislation must be added to 
this bill. Either way, the professional sports soon will operate under 
a uniform antitrust standard.
  I believe that the time for Congress to act is now. We have already 
seen several teams move in recent years, and even more moves--the 
Cleveland NFL franchise to Baltimore being the most noteworthy 
example--are planned. Professional sports should not be a game of 
musical chairs, and fans deserve better than to have their loyalties 
treated with disrespect. As importantly, the sports industry deserves 
the right to have a say in its destiny. Congress has the chance now to 
address this problem in its early stages, before even greater 
dislocation, fan unhappiness, and industry losses, occur. For this 
reason, Congress should pass the Professional Sports Protection Act in 
1996, not years from now when it may be too late.
                                 ______