A Sports Owner's Candidacy: Dictator or Democrat. On November 6,1995, the city of Cleveland, Ohio was rocked with the announcement

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1 Lincoln!1 Barrington Lincoln Justin Dixon ACC Strategies 2 Dec 2016 A Sports Owner's Candidacy: Dictator or Democrat On November 6,1995, the city of Cleveland, Ohio was rocked with the announcement made at Camden Yards Stadium. Art Modell, the Cleveland Browns owner, announced that he had signed a deal to relocate the team to Baltimore, Maryland. His decision was made based on the fact that he had lost millions of dollars in revenue as well as the failure of the city of Cleveland to actively fund his $175,000,000 plan to refurbish Cleveland Stadium in which his team played (Nuemann). This is one of the most recognizable team relocations in sports history. The reason being is that this deal shows you some of the biggest factors that led to owners deciding to relocate their teams. Yet, there is one question that still boggles the minds of local fans all the way up to sports executives. That question is: Should teams be allowed to relocate solely upon the decision of the owner? Before we answer the question at hand, we need to gain a larger understanding of this topic. We'll start by covering the history of sports teams relocating in the US. Then, we'll look at the economic benefits and detriments that a sports team might have on a particular city and whether or not the team is essential to a city's economical success. After this, we would have compiled enough information to answer our question. Let's begin. In North America, professional sports teams have always been privately owned, whether that be a wealthy businessperson or a large company. North American sports teams operate under the franchise system. Within this system, a league is comprised of a certain number of clubs,

2 Lincoln!2 which are commonly referred to as franchises controlled by an owner. For the most part, these franchises operate on their own as far as territorial rights (Conner). This enables them to basically "own" a particular municipal area so that they can avoid the conflict of local rivals. The franchise system was established in 1876, when the National League in baseball was created. After 1876, every North American sports league began to adapt this new system (Conner). The franchise system allows for teams to locate freely as well as new teams being created through league expansions. This principle would allow owners to relocate their teams as they see fit. The first professional team relocation in American sports history occurred in The Milwaukee Brewers moved to St. Louis and became the St. Louis Browns (Kultler). This started a huge reaction of relocations that would ultimately shift how the four major sports in America look today. In the past 114 years, there have been a recorded 144 sports teams relocating; whether that be the Milwaukee Hawks moving to St.Louis in 1955 or the New Jersey Nets moving to Brooklyn in 2012 (Beisner). This idea of relocating has impacted the American sports system from the day it was seen in affect. Seeing the great deal of sports teams relocating in American history, one could easily wonder why someone would choose to relocate a team. Owners would move their teams for one of these the two reasons; They had a weak local fan base or the team was in debt and needed to move somewhere that was financially dense allowing them to get out of debt and thrive. This is self evident in the 1995 relocation of the Cleveland Browns to Baltimore, Maryland. The Cleveland Stadium was renovated in 1974 for the local football team, the Cleveland Browns. It had an annual operational cost of 300,000 dollars. Over the next fifteen years, Art Modell paid an annual rent of 150,000 dollars in addition to the large percentage of the operational cost

3 Lincoln!3 (Neumann). In 1990, the local baseball team, the Cleveland Indians, successfully balloted to the local taxpayers and government officials to have a new facility built for them. In addition to the stadium, they would have ultimate control in charging for their suites. Suites are a huge factor in sports team revenue which basically assured teams a great deal of financial success. There was a lot of speculation that this would put the Browns in debt because people would stop attending games in their out dated facility (Nuemann). Modell was not concerned with him team losing revenue, but he was mistaken. He would lose 21 million dollars in less than a year. He knew that he would have to fix this issue very soon. He submitted a ballot that would pay for a 175-million dollar reconstruction of the Cleveland Stadium. A lot of officials and fans weren't eager to invest in a team that hadn't necessarily done anything to deserve such an investment. At the end of the 1995 season, Modell was ready to leave. Baltimore gave him an offer that he couldn't refuse: a new stadium. He accepted their offer and relocated his team that very year. Cleveland was allowed the rights to retain their team name, logo, records, color, and awards. Due to this, Modell's new team would become the Baltimore Ravens. Out of spite, Cleveland passed the ballot for the new stadium and acquired an expansion team in 1999 (Nuemann). This shows that some of the largest factors in a team's relocation are based on fan support and financial stability. Today, every professional sports team is in great financial stability. So why do they decide to move? No owner is comfortable making a bare minimum. They want all the money that they can possibly make. They decide to move for financial gain. A bigger market means bigger money. For example, the Minneapolis Lakers were founded in Although they won a ring in the 13 years that they were in Minnesota, they lacked a large market. The owner wasn't in debt because of his team, but he wanted to make a larger profit. He moved his team to

4 Lincoln!4 Los Angeles in There they would become the Los Angeles Lakers. Little did he know how successful and profitable his team would become. Today, the Los Angeles Lakers are one of the most profitable sports teams in the world ("Lakers Capsule"). They are able to acquire some of the most expensive players in terms of large contracts because they have the capability to pay a lot of luxury taxes. They are able to attract some of the most skilled NBA talents due to their league success as well as the earning potential from working in Hollywood. This comes to show that teams relocating doesn't necessarily mean that they dislike their current fan base or facilities, but if a better opportunity presents themselves, they are more likely capitalize on them. In the United States, cities all around the country have this certain fondness of sports teams. Whether it be a city with no professional team such as Las Vegas or a city lacking a team in a certain sport like Charlotte, cities love sports teams. One could ask why is there such a desire for sports teams in these cities. For the most part, a lot of these cities have this general perception on how a sports team can benefit the city's economy. "The conventional wisdom regarding large, professional franchises is that having them located in a city will result in an increased level of economic development as people flock to the location allowing the surrounding businesses to flourish. The hope is that this economic growth will spread throughout the municipality, increasing incomes and meaningful employment level for citizens, while poising the city for even greater growth" (qtd. in Stephenson). This is the perception of sports teams in these large cities, but how accurate are these assumptions. Are pro sports teams economic victors for these cities? The answer can be yes or no. It honestly depends on the city. Some cities have enough viable economic winners that removing a sports team wouldn't necessarily hurt it. Michael Leeds, a sports economist at Temple University, did a study on Chicago and the economic impact

5 Lincoln!5 of all five major sports teams in the area. He said, "If every sports team in Chicago were to suddenly disappear, the impact on the Chicago economy would be a fraction of 1 percent. The [Chicago Cubs]baseball club has the same [economic] impact on the[chicago] community as a midsize department store" ( qtd. in Bergman). At first this may seem crazy, but he is actually correct. The Chicago Cubs are no different than the Famous-Barr department store in Downtown Chicago, in terms of economics. They both generate roughly the same tax revenue for the city of Chicago making them economically equivalent. There are also some cases where removing a professional sports team results in an economic benefit. In 1999, the Los Angeles Lakers and the Los Angeles Kings left Inglewood to move into the new Staples Center that was built in the heart of L.A. Within the next few years, the sales taxes in Inglewood actually improved (Bergman). This shows that some cities don't even miss their professional sports teams "walking away". Yet, there are those cities who do suffer from the loss of a professional sports team. In January of 2016, the St. Louis Rams requested to move to LA. This was approved by the National Football League. The reason they decided to move was the lack of renovations to the Edwards Jones Dome. Once the move was complete, the St. Louis Regional Chamber began comprising the numbers to calculate the economic loss that St. Louis would suffer as a result of the team's move. Hart Nelson, director of public policy for the St. Louis Chamber said "Being an NFL city is obviously economically important to the St.Louis region and to Missouri...Loss of the Rams is estimate to mean a loss of around $80 million - per year - in total economic impact to the St. Louis region"("rams' Departure"). St. Louis isn't very rich in the amount of viable economic winners, thus explaining their constant plea to keep the Rams. This also explains why Missouri governor, Jay Nixon, announced a plan that would give a reported 400 million dollars to keep the

6 Lincoln!6 Rams from moving. It was a desperate attempt to keep them from leaving and going to Inglewood. St. Louis is a prime example of a professional sports team having a significant hold on a city's economical success. Cities such as St. Louis are always in a standstill with their sports teams. They know that they depend on their sports teams for financial stability and the teams are aware of that circumstance as well. This is why often times you'll find teams threatening to relocate just to get what they want. A great illustration of this would be the situation that occurred with the Carolina Panthers. The Panthers are a NFL team located in Charlotte, North Carolina. In 2012, the team submitted a ballot to the local government that requested roughly $200 million in public funding for renovations to their stadium. The stadium was about 18 year old and was in desperate need of repairs. This gave the city the ultimatum of fixing the stadium or saying goodbye to their football team. After that ultimatum was given, the city didn't have much of a choice. After months of negotiations, the city of Charlotte and the Panthers settled the dispute with a deal that was about $90 million dollars (Stephenson). Although the two organizations settled the issue, the city of Charlotte wasn't so happy. They weren't given much of a choice. It is a little crazy that the city was forced to pay this "ransom" for them to keep their team. A lot of taxpayers and members of the community feels that actions like this should be consider fraudulent or illegal. They feel that they should have a fair say in the decision of their local professional sports team relocating rather that being forced into a "take-it-or-leave-it" situation. These sports owners completely dictate whether or not their sports team relocate. These cities pay a fortune to keep these teams satisfied and it never seems to be enough. Should the owners be allowed to do that? The simple answer is no. They depend

7 Lincoln!7 on these cities to invest in the teams as well as their facilities. Even those teams that aren't as successful as other franchises still expect all of these things from their respective cities. This issue has been a common concern throughout the history of sports. Is there some sort of solution to this matter? There have been many suggestions proposed to solve this issue. Yet, most of them involve anti-trust laws which are often dismissed in federal cases once the team gets involves in the lawsuit (Lazaroff). So how can this be fixed? One of the most common and reasonable suggestion is that the teams who decide to relocate pay back public funds to the city they are leaving. The most recent example of that would be the relocation of the St. Louis Rams to Los Angeles. Once the team decided to move, Senator Claire McCaskill drafted a bill that would force these teams to pay back the public dollars spent on them as compensation for leaving prematurely (Hunn). This is to make sure that those cities who lose a viable winner for their economy receive some sort of fair compensation. McCaskill's plan actually makes a lot of since. These sports clubs play in facilities run by the city's public fund. The citizens of those cities deserve reimbursement for using their hard-earned money to support these franchises. She then argues her last point which puts the icing on the cake. She mentions that paying back a few hundred million dollars should be "chump chain" to these teams (Hunn). She didn't go into great depth about this comment, but upon research, we find that her statement was very true. In order for the Rams to move, they had to pay the NFL a relocation fee. This fee is $550 million. They had the option to play for this all at once or in 10 smaller increments of $64 million ( "Rams headed back"). The team owner, Steve Kroenke, decided to pay for this in one lump sum. On top of this astronomical fee, Kroenke is also paying $2.66 billion to build this stadium complex in

8 Lincoln!8 Inglewood ("Rams headed back"). Reimbursing these cities for their contributions shouldn't put that much of a bigger dent in these owners' pockets. This plan has great potential to really make a difference in the market of sports team relocating. Firstly, it'll protect these cities that depend on their sports team for economic stability. Second, it'll give these teams more to think about before playing the ultimatum game with their communities. Lastly, it will encourage sports owners to privately finance their project if the cities reject to pay for them. This strips the owners of that "dictator" style of running a franchise. Sports team relocating is a factor of the sports world that will never vanish. Its role in the game has proven to be both successful and detrimental. There will be situations where relocating presents a better option for a franchise that is struggling financially or simply exploring possible options once they've completed their tenures in there old cities. That is the reason that the relocating of sports clubs was made for. However, there are owners that have twisted the very perception of this concept. They threaten these cities to pay up or lose their teams without anyone to cross-check them. This is wrong! Owners should not be able to decide to leave on their own agendas. Its more than just them involved. The players, the fans and the city should all have some sort of say in this decision. Once the owners and their respective sports league understand this, all would be well. With plans like Claire McCaskill's, the true essence behind a team relocating will be restored.

9 Lincoln!9 Work Cited Beisner, John (1988) "Sports Franchise Relocation: Competitive Markets and Taxpayer Protection," Yale Law & Policy Review: Vol. 6: Iss. 2, Article 13. Bergman, Ben. "Are Pro Sports Teams Economic Winners for Cities?" Marketplace. N.p., 19 Mar Web. 26 Nov Conner, Christopher. "Why are professional Sports Franchises Increasing in value so fast?" Franchise Marketing Systems. N.p, 5 May Web. 26 Nov Lazaroff, Daniel E. The Antitrust Implications of Franchise Relocation Restrictions in Professional Sports, 53 Fordham L. Rev. 157 (1984). Hunn, David. "Relocating sports teams should pay back public funds, McCaskill says." St. Louis Post Dispatch. STL Today., 13 Jan Web. 26. Nov Kultler, Hillel. "In St.Louis, Celebrating a Team Long Gone" The New York Times. N.p, 19 Oct Web. 26 Nov Nuemann, Thomas. "20 Things to know about tangle 20-year history of Browns-Ravens" ESPN.com. N.p, 11 Mar Web. 26 Nov Stephenson, Jesse. "Letting Teams Walk: Exploring the Economic Impact of Professional Sports Franchises Leaving Cities" (2014). "Lakers Capsule: Minnesota" NBA.com. N.p, n.d. Web. 26 Nov "Rams' Departure will leave $80 Million Hole in St. Louis Economy". KMOV. CBS Broadcasting Inc., 13 Jan Web. 26 Nov

10 Lincoln!10 "Rams headed back to Los Angeles; Chargers have the option to join" ESPN. Np., 13 Jan Web. 26 Nov. 2016