Garber v. Office of the Commissioner of Baseball: Why we should care

The Garber suit, first filed in 2012, is a certified class action lawsuit that accuses Major League Baseball's blackout and television territory policies are in violation of the Sherman Antitrust Act. The claim is essentially that because MLB is able to restrict access to television markets around the country they're giving teams monopolies in each of their respective cities. On the national level, there's a similar claim, in that because only Major League Baseball can negotiate national television contracts they're restricting the ability of teams to broadcast their own games on that national level. Baseball will argue that in aggregate these rules are beneficial to the game, and allow for more overall games to be broadcast, improve competitive balance, and has allowed teams to benefit from things like MLB.tv which they could not have come up with on their own.

There's an excellent breakdown of the suit by Nathaniel Grow over at FanGraphs, which I encourage everyone to read.

The local implications of any decision striking down local area broadcast exclusivity are tremendous. On first blush, it might seem as if such a decision would pave the way for more people in the Delaware Valley area to watch Phillies games on MLB.tv, thus allowing baseball fans who would rather not pay for a cable subscription to still be able to watch the Phils. There are, however, bigger implications. From an earlier Fangraphs article written by Grow (emphasis mine):

As unpopular as the blackout rules may be with fans, they are critical to MLB’s current business model. Indeed, MLB teams are able to generate tens to hundreds of millions of dollars in local television revenue by offering regional sports networks the exclusive rights to telecast their games in their local market. If the blackout policy were struck down in court, all thirty MLB teams would have to renegotiate their local television contracts, inevitably costing the league millions of dollars in broadcast fees.

That would harm the Phillies significantly, as the multi-billion dollar television rights deal signed with Comcast in 2014 goes into effect beginning this season. If the judge strikes down the entirety of the broadcast restrictions and blackout areas, the value of Comcast's investment drops significantly, and as Grow states, you might expect Comcast to try to renegotiate the terms of that deal. Such a turn of events would presumably cost the Phillies millions.

It's also possible that the Judge Scheindlin ends up agreeing with the arguments made by Major League Baseball, and decides to keep the restrictions in place. In May the court ruled that the plaintiffs in the suits could not sue for monetary damages, and could only pursue injunctive relief which would force the league to change its policies. As the case is a bench trial, Judge Scheindlin is going to have full authority to determine what parts, if any, of the current blackout and broadcast restrictions are in violation of the Sherman Act and must be thrown out or amended.

It's difficult to say which way the wind is blowing here. The Garber suit has survived multiple attempts by the defendants to have the suit thrown out, which would lead you to believe there's at least some merit in the plaintiff's claims. Dan McLaughlin, a baseball writer, political opinion-haver, and lawyer knows Judge Sheindlin and says she's not going to be unafraid to issue an order that may ruffle some feathers:

Knowing Judge Scheindlin, expect a lengthy & detailed opinion; she won't be afraid to break new ground. https://t.co/IIwi9ijzWY

— Dan McLaughlin (@baseballcrank) January 11, 2016

The NHL settled a similar lawsuit last year, which was handled by the same lawyers as in the Garber suit, rather than risk losing at trial. Rather than completely do away with all territorial restrictions, the agreement let the NHL keep regional blackout restrictions in place, but the NHL conceded to allow out-of-market fans to purchase cheaper, team-specific pay-per-view plans, rather than having to buy all games for all teams. Think of this as if it would allow someone like Phrozen, living in Alaska, to buy a cheaper MLB.tv package with just Phillies games broadcast. Delaware Valley residents would still be unable to watch without a cable subscription. That is a potential outcome as well, one that would be disappointing to fans who don't want to pay for cable but still want to watch their favorite local sports teams. It would also, however, keep that $2.5 billion+ television money coming in for the foreseeable future.

Any decision, and the appeal process, will take so long as to make this irrelevant for the 2016 baseball season, but the long-term ramifications may be tremendous. As Grow says:

...the Garber lawsuit is probably the most significant under-the-radar story in the baseball industry today. Depending on the outcome, this is a case that could dramatically alter the way we watch the game in the future, making the suit one that certainly bears watching.