King Kaufman's Sports Daily

Fantasy ruling: Major League Baseball gets lucky and loses a battle in its war on fans.

Published August 9, 2006 4:00PM (EDT)

Major League Baseball got a huge break in court Tuesday in its attempt to force fantasy-league companies to pay a fee to use players' names and statistics.

It lost.

In a summary judgment in a lawsuit brought by CBC Distribution and Marketing, a company that runs fantasy leagues, federal Judge Mary Ann Medler ruled that baseball doesn't have the exclusive right to ballplayers' names and stats, and that even if it did, that right "must give way to CBC's First Amendment right to freedom of expression."

Medler wrote that if the court had found in favor of Major League Baseball Advanced Media, MLB's Internet arm, "information which is otherwise readily accessible would be removed from the public domain and CBC's First Amendment rights would be infringed."

Baseball, which argued that it has the exclusive right of publicity to players' names and stats under a 2005 licensing agreement with the players association, may appeal.

Is there a single baseball fan out there who's rooting for MLB to prevail in this case?

"This was just baseball trying -- and I dont blame them -- to seize this growing area and make money on it," Rudy Telscher, a lawyer representing CBC, told Alan Schwarz of the New York Times.

Well, I do blame them. It's baseball declaring war not just on its fans, but on its most devoted fans. A lot of people occasionally take in a ballgame rather than, say, going to a movie, watch a few innings when "House" is a rerun. Those people don't play much fantasy baseball. Baseball fans do.

It's received wisdom nowadays that baseball's growth since the 1994 strike was spurred first by Cal Ripken chasing and breaking Lou Gehrig's consecutive games record in 1995, then by the Mark McGwire-Sammy Sosa home run chase in 1998 and the general offensive explosion of the "chicks dig the longball" era, which is still going on and which is possibly driven in large part by steroids.

But I'd like to hear a good argument that the explosive growth of fantasy baseball isn't a major driver of baseball's boom. Because I've never heard one. It's a chicken-egg question. Maybe fantasy's growth is an effect of baseball's. But maybe it's a cause.

Baseball wants to cage this free-market golden goose so it can make a few bucks. And even though we're talking millions here, in the big picture, it's a few bucks.

MLB's licensing agreement with the players association is for five years and $50 million. USA Today reports that baseball boosted its price for licensing fantasy games to big operators such as ESPN and Yahoo from about $2 million a year to $2.5 million after signing that agreement, and cut its list of licensed companies from 20 to seven.

CBC, which had been licensed since 1995, was one of the companies dropped before the 2005 season. It filed suit in February 2005.

So we're talking about $17.5 million a year that baseball's making from licensing to fantasy leagues. That's $87.5 million over five years, minus the $50 million MLB paid to the union, for a nice profit of $37.5 million. Over five years. Divided by 30 teams.

We're talking about each team making an annual profit of $250,000 -- before accounting for inflation, the roughly 10 percent annual growth of fantasy baseball in recent years or any additional licenses being sold in future years, but also before administrative costs and taxes.

A quarter of a million dollars a year. That and $50,000 buy you one rookie making the major league minimum salary for one season.

I'm oversimplifying here. I have to. I'm an overly simple person. I understand there's a larger issue at stake for MLB. It's fighting to protect what it argues is an exclusive right to publicity for the players, which can be valuable in all sorts of ways both known and not yet known.

But there's an even larger issue than that. It's an old business axiom they may or may not teach at the better schools: Don't micturate on the customers.

Even if baseball's argument is right -- and I don't think it is -- that CBC and similar companies use baseball players' names for a commercial enterprise and should pay for that right, it's a bad fight to pursue. It's a war on your best customers. Penny wise and pound foolish, or $250,000 wise and millions foolish.

Baseball fans mostly haven't noticed this dispute over the last year and a half. There's been some coverage, but you'd have to be pretty tuned in for it to appear on your radar screen. So there hasn't been any kind of collective outrage on the part of fans at baseball's attempts to cash in on their hobby while reducing their options for pursuing it, thus making it more expensive.

But what if baseball had won -- or what if it wins on appeal?

You want to see some outrage? Tell a few million fantasy players that they have to close down their leagues or move them over to one of a handful of big-media Web sites, where, thanks to limited competition and no-doubt ever-escalating rights fees, they'll be paying more and more and more money to play.

It's chicken droppings, is what it is. Baseball can still profit from fantasy baseball without squeezing its most die-hard fans, without testing just how die-hard they are. And it has a leg up. It owns the product, after all, has the players themselves as partners. Just go compete in the marketplace. It's worth a few million not to have your customers thinking of you as the enemy. It'll pay off in the long run.

MLB Advanced Media could still win on appeal. Those of us without law degrees and easy access to cat entrails predict legal outcomes at our own peril. But for now baseball got lucky by losing. It saved itself the outrage and bitterness of the fan base.

Baseball's licking its legal wounds today, but that was the best defeat since the Chicago Bulls lost out on the chance to draft Sam Bowie.

Previous column: Of faith and Floyd Landis

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