Relocation in Sports: The Legal Aspects “At Play”
The past three decades have seen a substantial uptick in the number of professional sports franchises that have relocated to a different city or state.[1] The system that facilitates the prominence of relocation is not difficult to comprehend: owners naturally seek more profitable markets for their franchises, with relocation “regulated” solely by the other owners in their respective league.[2] Indeed, this “regulation” is hardly that, as peer owners nearly always support relocation because it increases revenue for all of the owners league-wide.[3]
Relocation constitutes a game within the game of sorts, wherein the team and its owner come out a winner, while both the fans and the city/state find themselves as the losers.[4] The “loss” from the fan’s perspective is simple: the time, money, and emotion that get invested into a team over the years can be snatched away, seemingly instantly, by a money-hungry owner.[5] On a broader scale, the local economy loses a significant source of revenue with the departure of a team, in addition to many stadium and other local employees losing their jobs.[6] The fear of losing such a significant aspect of the economy prompts state legislatures to do anything they can to prevent a team from leaving, such as through tax incentives, offering state funding to build a new stadium, or threatening a lawsuit.[7]
Sports franchises are empowered by highly controversial antitrust laws, which greatly restrict the ability of sports leagues to prevent relocation.[8] Sports leagues are unable to restrict teams from relocating (for reasons such as maintaining fan loyalty) even if they wanted to, as the courts have found it to be an unreasonable restraint of trade.[9] In a notable 1984 decision, the 9th Circuit held that it was an unreasonable restraint of trade for the NFL to mandate that 75 percent of the teams in the league agree to allow another team to relocate, as NFL member teams are separate business entities.[10]
The foundational antitrust decision that truly gives owners the green light to relocate without state or federal intervention is Federal Baseball Club, Inc. v. National League of Professional Baseball Clubs.[11] In that case, the U.S. Supreme Court found that baseball games are a state matter, as opposed to commerce, and thus not subjected to the Sherman Antitrust Act.[12] Although this holding has long been viewed as giving Major League Baseball an “antitrust exemption,” Supreme Court Justice Samuel Alito interpreted the decision as being the grounds for why all sports leagues are not covered by antitrust laws.[13] He explained that in Federal Baseball Club, the Court was equating sports as a whole to intrastate events, and thus delineated sports as not being covered by federal antitrust laws by their very nature.[14]
These antitrust decisions have been fundamental in creating an environment in which owners face nominal restrictions for relocation, and are thus incentivized solely by monetary factors.[15] Fans are left in limbo while their city/state legislatures seek to incentivize the team to stay, often to no avail.[16]
With antitrust laws working against them, cities have been forced to make creative, last-ditch efforts to get their teams to stay, such as how the city of Baltimore tried to prevent its NFL team, the Colts, from leaving by exercising eminent domain.[17] Upon the 9th Circuit reaching its holding in Los Angeles Memorial Coliseum a few weeks prior[18], the NFL told Robert Irsay, the owner of the Colts, that it would not oppose the relocation of his team.[19] When the city of Baltimore refused to meet his financial demands, he moved his team, coaching/training staff, and all of their equipment to Indianapolis in the wee hours of March 29, 1984.[20]
The very next day, the Maryland Senate passed an emergency bill granting the city of Baltimore eminent domain over the Colts, and the city then filed a petition in court to exert the power of eminent domain over the team to prevent them from leaving.[21] However, their efforts were thwarted by the 7th Circuit, which ruled that Baltimore could not utilize eminent domain to keep the Colts in the city, as their relocation to a different state subjected them to jurisdictional limitations.[22] Thus, eminent domain proved to be an unsuccessful method in which cities/states could potentially circumvent antitrust laws and prevent their sports teams from leaving.[23]
The nature of antitrust law has rendered it nearly impossible to prevent a sports franchise from relocating. Numerous attempts by both federal and state legislators over the past three decades to enable sports leagues to restrict relocation have been unsuccessful in light of the current antitrust laws.[24] There does not appear to be a clear solution in sight, as relocation continues to increase revenues across all the major sports leagues in the United States.[25] The fans are the ultimate losers of the game within the game, as they are forced to sit idly by as their beloved sports team ventures off to “greener” ($$$) pastures, leaving their fans to root from a distance.
Footnotes
