Sports Law

One of the most controversial issues in modern professional sports is the mobility of professional sports franchises. Teams in the four major sports leagues—the National Basketball Association (NBA), Major League Baseball (MLB), the National Hockey League (NHL), and the National Football League (NFL)—have long been capable of moving their franchises from one city to another, with the requisite approval of the other teams in the league. Nevertheless, the practice did not become common until the late twentieth century. The incidence of franchise movement became a plague in the 1990s, as owners of sports franchises sought to offset rising player salaries and maximize the values of their teams.

Many people perceive professional sports teams as beneficial for the local economy and essential to an area's civic identity. Professional sports teams have been credited with providing jobs and injecting millions of dollars into local economies. The presence of a professional sports franchise from one of the four major sports is often regarded as a prerequisite to becoming a "big league" city or state. As Wisconsin state representative Marlin Schneider joked in 1995, "Without the Milwaukee Brewers, Milwaukee Bucks, and Green Bay Packers, [Wisconsin] ain't nothing but another Nebraska." With so much money and status on the line, professional sports teams have become highly sought after, and their movements from city to city have led to public outrage, lawsuits, and legislative proposals.

The owners of professional sports teams have been able to obtain generous deals from city and state officials by threatening to move their franchises. If the owners do not receive the support they seek, they move their team to a more accommodating city. Typical benefits include the use of sports facilities at below-market rents and taxpayer funding for the construction and maintenance of new facilities. Most of the funding comes from the team's home state, but some funding comes from the federal government.

At times, owners have moved their teams even after receiving what they demanded. Harris County, Texas, incurred $67.5 million in bond indebtedness in 1987 to finance stadium improvements to keep the Houston Oilers football team from moving to Jacksonville, Florida. The Oilers began playing in Nashville, Tennessee in 1998 as the Tennessee Oilers, and in February 1999 the team changed its name to the Tennessee Titans. Fortunately for Harris County, Houston was awarded an expansion team in October 1999, which became known as the Houston Texans.

Owners have been able to achieve their powerful bargaining positions largely through the judicial construction of ANTITRUST LAWS. Courts have given each major league the power to restrain trade by limiting the number of franchises within the league. At the same time, courts have limited the ability of the leagues to prevent team relocations by finding that such restrictions are unreasonable restraints of trade. For example, a federal court found that the NFL rule requiring the approval of three-fourths of the teams in the league before a team could move was an unreasonable restraint of trade (Los Angeles Memorial Coliseum Commission v. NFL, 726 F.2d 1381 [9th Cir. 1984]).

The judicial holdings have emboldened the owners of professional sports teams. The owners' willingness to move their teams has led to frenzied bidding wars between cities and the relocation of many franchises.

The idea of building a new stadium outside Los Angeles to bring a franchise back to the area after nearly a decade was discussed at a meeting of NFL officials in Philadelphia, Pennsylvania in May 2003. Los Angeles had two teams, the Rams and the Raiders, both of which left after the end of the 1994 season. (The Rams headed to St. Louis, Missouri, while the Raiders returned to their former home of Oakland, just outside San Francisco.) Although one option for giving Los Angeles a franchise would be to expand the NFL, another is to find a team that would be willing to relocate. Among the teams that expressed an interest in relocating to Los Angeles (the nation's number two television market) were the Indianapolis Colts and the Minnesota Vikings. Interestingly, Los Angeles almost got an expansion team in 1999, after well-known entertainment BROKER Michael Ovitz promised to head up a proposal to build a new stadium. The NFL determined that there were too many questions at the time about financing, which was why Houston got the expansion franchise instead.

The owners' laissez-faire attitude has been roundly criticized by fans, but owners have simply followed their best business instincts. Owning a professional sports team is a risky, speculative endeavor, and owners must act to protect their interests and maximize the values of their franchises. Owners are split on the issue of franchise relocation. Most owners understand that much of the value of their franchises depends on fan loyalty and that loyalty decreases as teams move. At the same time, the antitrust decisions have created a seller's market for owners, allowing them to seek the best deal possible. If another city is more willing to provide support for a team, there is little reason for the owner to stay put.

The most important bargaining chip for many owners is the team's stadium or arena. Typically, owners lease a stadium or arena for a certain number of years. When the lease is up, or sometimes before it has expired, an owner may demand public funding for a new stadium or improvements to the old stadium. If the city or state does not ante up for a new stadium or improvements, the owner threatens to move the team. Sometimes the community reluctantly foots the bill. When this happens, persons who object to the public financing of an essentially private business may attempt to stop the funding through the judiciary, but they usually fail. Most courts hold that the use of public funds to build or improve sports stadiums is a legal expenditure for a legitimate public purpose. Sometimes a community refuses to bow to an owner's demands and the team leaves. Other times the city or state attempts to prevent the relocation of a team by taking legal action.

The city of Baltimore, Maryland, tried to keep its NFL team, the Colts, through the exercise of EMINENT DOMAIN. Eminent domain is the power of a government to take private property for public use, with compensation to the party deprived of the property. In early 1984 the Baltimore Colts were having difficulty obtaining a satisfactory lease for Baltimore's Memorial Stadium. Owner Robert Irsay began to receive solicitations from the city of Indianapolis, Indiana, for the Colts to play in the city's Hoosier Dome. In February 1984 the Maryland Senate entertained a bill that would give the city of Baltimore the authority to condemn and take over professional sports franchises, but it postponed a vote on the bill.

On February 28, 1984, the U.S. Court of Appeals for the Ninth Circuit announced its decision in the Los Angeles Memorial Coliseum case, which affirmed the right of Oakland Raiders' owner Al Davis to move the team to Los Angeles. The NFL told Irsay in a private meeting that, in light of the decision in the Raiders' case, it would not oppose any move by the Colts. Irsay continued to negotiate for a financial package that would keep the Colts in Baltimore until he learned that the Maryland Senate had passed the eminent domain legislation.

Irsay decided to move the Colts to Indianapolis immediately. That day, vice president and general manager Michael Chernoff arranged for a moving company to come to the Colts' training facility and load the team equipment into vans. The Colts left Baltimore, their home city for thirty years, during the night of March 28–29, 1984.

On March 30, 1984, the Maryland Senate passed an emergency bill that gave the city of Baltimore the power of eminent domain over the team. The city immediately passed an ordinance that authorized the condemnation and then filed a petition in court, seeking to acquire the Colts by eminent domain and to prevent the team from doing anything to further the movement of the franchise, but it was too late. A federal court eventually held in December 1985 that Baltimore did not have the power of eminent domain over the Colts because it had not attempted to compensate the franchise and because the franchise had relocated to another state (Indianapolis Colts v. Mayor of Baltimore, 741 F.2d 954 [7th Cir. 1984], cert. denied, 470 U.S. 1052, 105 S. Ct. 1753, 84 L. Ed. 2d 817 [1985]).

Sports fans in Baltimore grew even more beleaguered after the Colts' departure. Their last remaining major professional sports team, the Baltimore Orioles, threatened to move if it did not get a new stadium. In 1990 the state of Maryland was forced to spend millions in taxpayer funds to build a new stadium to keep the Orioles. In 1996 Baltimore regained an NFL franchise at the expense of Cleveland, which lost its beloved Browns after fifty years in part because Baltimore offered the Browns free rent at a new football stadium. The city of Baltimore enjoyed the new Baltimore Ravens' inaugural season in 1996 as dedicated Browns fans suffered through the same nightmare that Colts fans endured in 1984.

Lawmakers on the federal, state, and local levels have proposed legislation that would help communities hang on to their professional sports teams. In 1995 and 1996, several legislators in the U.S. Congress proposed laws that would allow leagues to make their own rules restricting the movement of franchises. For all the activity, no legislation changing the application of antitrust laws to professional sports teams has been passed.

The Minnesota Twins have been threatening to leave the state unless they get a new ballpark paid for by the state, and even had a contract signed by at least one prospective out of state buyer. When that deal fell through and Minnesota refused to build them a new stadium, Major League baseball almost contracted (eliminated) their franchise.