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The existence of the minor league system is partly due to major league baseball's ability to include a reserve clause in the contracts with minor league baseball players which gives a major league team exclusive rights to a player even after the contract has expired. This is possible in baseball because of a 1922 Supreme Court decision which grants baseball a special immunity from antitrust laws.
The term is also used as a metaphor for any organization or activity that serves as a training ground for higher-level endeavors. For instance, sometimes business schools are referred to as "farm clubs" for the world of business.