« More articles in 1   |   Go Home

Why Don’t More NFL Teams Move?

posted by Shawn Hoffman, on January 27th, 2009 at 10:13 am, in category 1

If you’ve ever taken a sports economics class, or possibly just read a sports economics book, you’ve probably heard this theory: if Congress ever explicitly revoked MLB’s anti-trust exemption (or the illusion of one that they have), all hell would break loose. Therefore, MLB has always (and will always) do whatever it takes to stay in government’s good graces. But is this really true?

I wrote a while back about whether the Tribune would sue MLB if the owners didn’t approve the eventual Cubs buyer. Given the Tribune’s financial state (even before filing for bankruptcy), the company has every reason to take the highest possible bid, regardless of the bidder’s chemistry with the other 29 owners.

It’s probably a moot point now, with the Ricketts family reportedly getting the team. But what would happen if the ATE actually was defeated in court, or through the legislative process? Would the draft be eliminated? Would there be 15 teams in New York and Boston by the end of the next decade?

No, and no. Unlike Major League Baseball, the other three major American sports leagues don’t have exemptions. In fact, only the leagues’ national television deals are specifically protected under law, via the Sports Broadcasting Act of 1961.

And yet, these leagues tend to have very similar tendencies as Major League Baseball. Really, the only differences are in the ownership realm — transfer of ownership, relocation, etc. In the early 1980’s, the NFL infamously tried to block Al Davis from moving the Raiders to Los Angeles. Davis took the league to court, and eventually won. Since then, the NFL has kept its ‘approval process,’ more for formality’s sake than anything else.

So according to our chaos theory, NFL teams should be piling into New York, Chicago, Boston, and Los Angeles. If the only cost is that of the moving vans, why not?

The short answer: stadium subsidies. The Arizona Cardinals still play their home games in Arizona because the local governments built them a stadium in Glendale. If Los Angeles had been willing to do the same, the Steelers would likely be playing the L.A. Cardinals on Sunday.

Now, if public subsidies ever dried up (gasp), we could eventually see a huge wave of relocations. It makes zero economic sense that the NFL hasn’t had a team in Los Angeles for fifteen years, except that the city wasn’t willing to build a stadium for the Raiders or Rams, let alone the Cardinals or Vikings. But if the teams knew they were going to be on the hook for the bill anyway, it would be much more prudent to build in L.A. than to re-build in Minnesota.

The same could be said for MLB teams. If territorial rights were eliminated, and relocation was no longer subject to league approval, teams would go wherever the stadiums were being built for them. But if the Marlins were forced to build a stadium with their own money, it would make a lot more sense to build in, let’s say, Brooklyn, than in downtown Miami.

But don’t fret, Rays fans. We’re still a far way off from this. Elected officials love to cut ribbons, and shiny new stadiums make for great ribbon-cutting ceremonies.

Feedback? Write a comment, or e-mail the author at shawn(AT)squawkingbaseball.com


7 Existing Comments

Add New Comment

  1. on January 27th at 12:07 pm
    Lou Whitman said:

    Interesting piece, with a lot of strong points. But one question: Does the amount of shared revenue (via the national tv deals) impact this as well? It seems to me local media rights mean a lot more in the MLB than they do in the NFL. If so there would possibly be an extra motivation to move to Brooklyn that just does not really exist in the NFL.

  2. on January 27th at 12:55 pm
    Rodney Fort said:

    I think you have the ATE all wrong. It was about MLB v. rival leagues and the way that MLB behaves towards its own talent. Thus, the ATE really only applied to things like the now defunct reserve clause and actions taken within collective bargaining. But with passage of the 1998 Flood Act, the ATE is effectively dead.

    The rest of the issues you discuss, as you point out, cannot be about the ATE because other leagues don’t have one. But those issues were outside the original MLB ATE in the first place.

    You also overstate the impact of Mr. Davis’ antitrust suit. He did win, but the reason is that the NFL behaved arbitrarily (outside its own rules) toward Davis. After that, the NFL decisively blocked the Rams move to St. Louis until compensation was worked out.

    And that’s the crux of the issue you raise anyway. There is no “chaos” theory (another misused term here) for leagues other than MLB. And it isn’t stadium scarcity that is the issue. Instead, leagues do what their member owners demand. Primary and essential is the definition and protection of market areas. So NFL teams simply cannot unilaterally move to New York because league rules (applied correctly as in the Rams case) do not allow it.

    Courts have continued to allow this exclusionary behavior by leagues under the “single-entity” doctrine that doing so is essential to the NFL product. I happen to think that represents a fundamental misunderstanding. Congress could intervene on this behavior, but it would have to come through direct antitrust action based on harm to consumers (fans).

    Since the courts (wrongly, I think) let the behavior continue, and Congress has seen fit NOT to intervene on exclusive territories, you will not see more teams in NY until the current members of the league, including the owners of the Giants and Jets, say it is OK. Unlikely.

  3. on January 27th at 02:07 pm
    Shawn said:

    Rod — I’m going to disagree with you on the ATE, on a general level. The original ruling was that baseball isn’t interstate commerce, and therefore isn’t subject to the AT laws. The Flood Act eliminated the ATE in regards to how the leagues deal with players, but from what I remember, it doesn’t explicitly reverse the original ruling.

    The real issue at the center of this is that government (federal and local) has every incentive to support professional sports, and the MLB ATE illusion gives them an easy blackmail tool, just in case. So both sides remain happy with the arrangement, even though it’s totally incongruous.

  4. on January 27th at 04:43 pm
    Pete Toms said:

    I’ve read over the years that ATE allows leagues to pool their media rights and sell them as a single package. For this same reason I’ve thought that the other leagues have a limited ATE. ( whatever that means ). I’m not saying any of this is accurate….is this a popular misapprehension? Directed at both Rodney & Shawn.

  5. on January 27th at 04:53 pm
    Shawn said:

    Pete — That’s the SBA of 1961 (mentioned above). That was specifically for network broadcasts, so technically leagues are still in violation when they sell collective rights to cable. But that is, in a sense, a limited ATE. It wasn’t directed at MLB though, since MLB had what is presumed to be a full ATE.

  6. on January 27th at 09:08 pm
    Rodney Fort said:

    I’m sure you recognize this is a different story and argument than you originally offered.

  7. on January 28th at 12:22 pm
    Shawn said:

    Rod,

    Re: the ATE, that goes along with the post. Re: the government, it’s a separate point, but related, and I should have put it in the original post.

Pittsburgh Florist

Blog Design and Development by Veritocracy Consulting