Ending Sports Owner Blackmail
What do the Brooklyn Dodgers, Houston Oilers, Seattle SuperSonics, Kansas City Chiefs, Oakland Raiders, and Oakland Athletics have in common? They’re among the many professional sports teams that have moved on to new host cities. The fans left behind have to make do with past glories and what-ifs on their own fields of dreams.
Communities that want to keep their teams don’t have it any easier. They end up wrestling with professional sports owners’ extortionate demands for new tax breaks. More often than not, state and local officials sweat it out, cave in, and give up revenues, including property taxes, sales taxes, rents, and much more.
Then they engage in elaborate subterfuge to disguise the contractual sweeteners that end up making the deal even more expensive for resident taxpayers. Or the city loses out anyway, thanks to teams angling with their hometown and a competing community nearby or clear across the country.
Pitting states and municipalities against each other in a furious clash to design lucrative packages for already-wealthy owners is an essential ingredient in the carrot-and-stick cocktail of lopsided negotiations and relocation threats—ones that professional sports leagues use to maximize profits, to the consternation of fans and government officials.
Last week, Rep. Greg Casar (D-TX) and Sen. Bernie Sanders (I-VT) proposed restoring some balance of power to states and cities in contractual negotiations over relocating professional sports teams. While the bill isn’t likely to pass anytime soon, it serves as an initial blueprint for how to end the double-dealing by sports owner billionaires.
The Home Team Act would end sports leagues’ prohibitions on public ownership by community members or local governments. It would also facilitate transfers of a franchise to a local entity, such as a city or town, community members, a nonprofit, a public-private partnership, or a public-spirited individual.
The Home Team Act would end sports leagues’ prohibitions on public ownership by community members or local governments.
It would require any team to give one year’s notice of its intention to move across state lines or into a new metropolitan statistical area. The local community would have that time to find an individual, entity, or group to buy the team at its “fair market value.” If no acceptable offer comes in, the owner can then move on. But if local investors do make a bid deemed fair by independent appraisers, they would be able to buy the club.
Not only would a local community potentially gain a financial stake in a team instead of pushing out more dollars to team owners, but state and municipal governments would be better situated to negotiate deals and ignore threats that lead to committing public funds to build stadiums. Noncompliant owners would be subject to fines of $30,000 a day.
Not only do billionaires contribute to social harms by underpaying workers and ruining government, Casar said at a Capitol Hill press conference announcing the bill, but “they are destroying the simple things in life that make every day worth living like rooting for our home teams.”
He pointed to the competition between taxpayers in Indiana and Illinois over the NFL’s Chicago Bears, valued at $8 billion. In February, Indiana Gov. Mike Braun (R) announced that the state had hammered out a deal to move the team across the Illinois border. State lawmakers passed a bill that would create a Northwest Indiana Stadium Authority to oversee the new facility.
The Bears said in a statement that the team is “committed to finishing the remaining site-specific necessary due diligence to support our vision to build a world-class stadium near the Wolf Lake area in Hammond, Indiana.” The Bears had been working on a $5 billion stadium/mixed use deal in suburban Chicago, and wanted another nearly $1 billion in additional public funds. ESPN reported that the Illinois House had scheduled a hearing on those issues on the same day that Indiana announced its plan. The hearing, not so surprisingly, was canceled.
The Casar-Sanders bill could complicate Indiana’s calculus. “Yes, this is a keep-the-Bears-in-Chicago bill,” Casar said.
Braun later blasted the “crazy ideas” in the plan, but Casar told Front Office Sports that the bill has already attracted interest from the Illinois congressional delegation.
The stadium battle that sent the Kansas City Chiefs from Missouri to Kansas featured more cash going to the team’s Hunt family owners (net worth: $25 billion). The deal includes a nearly $2 billion public subsidy, the largest ever negotiated, on the heels of the Washington Commanders’ $1 billion subsidy, hammered out with cash-strapped Washington, D.C., last year. The team will return from suburban Maryland to play in a new stadium built on its old stomping grounds near the U.S. Capitol.
Sanders said that when teams move, communities suffer a “double tragedy”: Not only do they shed jobs and economic activity, but there’s a “deep loss” that comes with breaking the emotional bonds between a team and its fans.
“The idea that somebody can make that decision to move to another city to make more money, that they can blackmail a community against another community for more tax breaks or public subsidies is not acceptable,” Sanders said. He lamented growing costs for fans. A working-class family of four that wants to go to a football game would have to pay upward of $1,000.
The two members held up the Green Bay Packers’ publicly owned, nonprofit corporation model as a framework that state and local governments could use to keep decades-old sports ties to their cities intact.
Under the Packers model, no one individual can own more than 4 percent, or about 200,000, of the team’s five million shares. A board of directors and a seven-member executive committee oversee team operations. Sanders compared the American environment with Germany, where most soccer teams are owned by fans and ownership by an individual or a single group is prohibited.
Geoffrey Propheter, an associate professor of public affairs at the University of Colorado Denver, told the Prospect that the Packers model has limitations. The fan-owners don’t get to make key decisions about the next CEO, head coaches, or player personnel.
He suggests municipalities would be better served by another public-ownership framework employed by the Columbus Clippers, the Triple-A affiliate of the MLB’s Cleveland Guardians. Franklin County, Ohio, owns the team and its stadium, and operates it much like a public utility. One of the benefits of a government-run franchise is what it can offer cost-conscious families. Clippers “Family Day” seats are cheap; seats for two adults and four kids run $30 or less.
What might a team want in return if it decides to sell to a public entity? Propheter notes that “there’s some promise in the idea,” but offers several cautions. Teams are “stupidly expensive,” he says. So if a team is prohibited from moving, the owners will want a premium price to sell, which increases the price of teams more broadly. “In a world in which taxpayers pay for both the stadium and the teams, it’s going to be pretty cost-prohibitive,” he says.
“But at the same time that’s what they thought in 1986,” Propheter adds, “when they passed the Tax Reform Act [which had prohibited using municipal bonds for projects like privately owned stadiums]. “That didn’t stop state and local governments. In fact, if anything, it accelerated the subsidies they’d be willing to give to sports. They got more creative in how they came up with the money, but it didn’t arrest these subsidies in any way, shape, or form—and this [bill] isn’t going to do that either.”
The hope from Casar and Sanders is that the independent valuation mechanism puts a lid on bidding up franchises, and makes owners think twice about threatening to move.
Both Sanders and Casar described their own experiences seeing their teams leave town. When the Oilers left Houston and made it to Super Bowl XXXIV in 2000 as the Tennessee Titans, Casar cheered instead for the St. Louis Rams, a team that had left Los Angeles. For Sanders, a native New Yorker, the defining moment was the Brooklyn Dodgers’ move to Los Angeles. He called it a “horrific moment” for the community where he grew up. Casar says the bill would have saved teams like the Dodgers, the Oilers, and the Oakland teams, among others.
As for pushback from sports leagues like the NFL, Casar isn’t concerned. “If there are 32 owners per league that are mad, that’s 32 people compared to the millions of people who I think would support the bill,” he told the Prospect.
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