The Staten Island Yankees are taking the New York Yankees and Major League Baseball to court.
The team, a single-A squad that plays in the short-season New York-Penn League, announced Thursday that it had filed a lawsuit against the Yankees and MLB “to hold those entities accountable for false promises.” The team’s complaint was filed in a state trial court and raises claims for breach of contract, tortious interference and related violations of the law. The statement also indicated that the Staten Island Yankees plan to cease operations.
The decision to shut down is in response to the New York Yankees’ reshuffling of their minor league structure. As revealed by the Yankees on Nov. 7, the franchise intends to reduce the number of affiliated MiLB franchises from 10 to six.
Other MLB clubs are taking similar measures in light of the league’s desire to cull 40 minor league teams from short-season and rookie minor league levels. The contraction (restructuring) will leave behind approximately 120 minor league teams. The move is intended to reduce operational costs and streamline player development. At the same time, it will lead to losses of jobs, termination of sponsorship arrangements and disappointment for local fans.
Some of the MiLB teams stripped of big-league affiliations could move to independent leagues. Yet as the Staten Island Yankees assert, such a change “would require additional expenses including payroll for players, coaches and staff.”
The complaint addresses the expiration of the professional baseball agreement between MLB and MiLB on Sept. 30. “Unsatisfied with its billions in revenues,” the complaint charges, “MLB is now trying to destroy the independence of MiLB and, in doing so, put 40 MiLB teams into insolvency.” As Sportico recently reported, the MLB and MiLB continue to engage in discussions for a new agreement. The complaint, however, contends that MLB has “made it clear that they have no intention of ever entering into another [PBA] with MiLB.”
MLB clubs and their minor league affiliates remain contractually tied through licensor-licensee agreements. In the complaint, the Staten Island Yankees argue that they detrimentally placed their “trust and confidence” in the Yankees “to abide by their fiduciary duties.” In a similar vein, the press release claims the New York Yankees “had made repeated assurances [the Staten Island Yankees] would always be a minor league partner.”
The press release also asserts that a portion of any proceeds from a litigation settlement or jury award would go to charities.
While the New York Yankees might dismiss a lawsuit brought by a low-level minor league team as a small-time worry, the team’s lawyers might view it in a more scrutinizing light. Should the lawsuit progress, it could lead to pretrial discovery.
New York Yankees officials would then be compelled to testify about communications with their minor league affiliates and would be ordered to share emails, texts and other sensitive documents about the relationship between the parent club and a minor league partner. The manner in which New York Yankees officials communicated the decision to cut ties with an affiliate—and, in effect, the affiliate’s fans and sponsors—could have substantial public relations repercussions. Of note, the complaint highlights public assurances by Yankees president Randy Levine and other team officials on the Staten Island Yankees’ future. Discovery would be concerning to MLB for the same set of reasons: It could expose records about MLB’s restructuring discussions and risk portraying certain officials in a negative light.
The parent club might also be concerned by the caliber of attorneys retained by the Staten Island Yankees. One is well-known sports litigator James Quinn, who has a track record of defeating the NFL in court. In McNeil v. NFL, Quinn served as lead counsel in a case where NFL free agency restrictions were deemed in violation of antitrust law.
Similar lawsuits could soon surface with other minor league teams impacted by MLB’s reorganization. Those teams could argue their parent organization breached contracts, reneged on enforceable promises, committed tortious interference, engaged in unfair and deceptive trade practices, partook in fraud and violated state antitrust laws. Possible plaintiffs could extend to cities and counties that provided taxpayer funds for the construction of minor league ballparks and adjacent infrastructure that would collapse in value with the loss of a team. Likewise, sponsors who spent money on signage with the expectation that the MLB parent club was committed long-term to the contractual relationship could engineer a legal claim.
Meanwhile, the bipartisan Save Minor League Baseball Task Force in Congress could continue to exert pressure on MLB to mollify the impact of the MiLB reorganization on impacted clubs and the fan bases and business communities that support them. The task force is led by Representatives Lori Trahan (D-MA), David McKinley (R-WV), Mike Simpson (R-ID) and Max Rose (D-NY)—who lost his seat in the November election. The remaining members could seek to exert Congressional leverage over MLB.
To that end, MLB enjoys an exemption from federal antitrust law courtesy of the U.S. Supreme Court’s 1922 decision in Federal Baseball Club v. National League. However, the exemption was narrowed by the Curt Flood Act of 1998 and could be narrowed further or outright abrogated through additional legislation.
MLB, like the NFL, NBA and NHL, also benefits from the Sports Broadcasting Act of 1961. The SBA permits the major sports leagues and their competing franchises to conspire in negotiating national broadcasting contracts that, until the exemption, had run afoul of federal antitrust law. If the SBA were repealed or constrained, the negotiation of broadcasting contracts could be altered.
Even without taking steps to limit antitrust exemptions, Congress could hold hearings on the impact of MiLB contraction and demand that MLB officials testify. Hearings in the backdrop of litigation brought by impacted teams, cities and sponsors would shed light on a process that has left many feeling left out.
(This story has been updated with details of the complaint inserted throughout.)