NFL Merry-Go-Round: Relocation Roundelay

[STL FANATIC]

I believe the reality of the Chargers lease is they can buy their way out for increasingly small amounts with each passing year. But they don't technically have to renew every year because it's on-going.

So they can pretty much leave with a minimal penalty at any point, but it's not exactly the same as a year-to-year lease.

[STL FANATIC]

Here's some real news.

http://stlouis.cbslocal.com/2014/10/23/nixon-no-talks-in-a-while-with-the-rams/

It's a short article, so read it. I don't want to quote the whole thing here, but here's 2 of the more interesting bits.

“Anything you do has to make economic sense. Anything you do has got to yield a net positive benefit, not just to have the logo of the NFL in your town,” Nixon says. “When you make investments and the public’s involved in those investments, then you need to do that. You need to have a return on that.”

Nixon says he’ll have an informal talk with officials this weekend at the Governor’s Cup in Kansas City, but real negotiations won’t happen until after football season is over.

That's the perfect approach by the Governor. Makes me feel really good that whatever happens will be the right result.

[Gothamite]

If he's actually serious about that, say hello to your Los Angeles Rams.

Stadiums almost never make economic sense. They don't provide a positive rate of return for the money, once you remove the prestige of having a professional sports franchise in your town.

http://theatlantic.com/business/archive/2012/09/if-you-build-it-they-might-not-come-the-risky-economics-of-sports-stadiums/260900/

The notable exception appears to be Staples Center because huh, a premier concert venue in downtown LA brings in lots of bodies and lots of cash. But other than that, they're a bragging-rights drain on the public coffers.

[Gothamite]

One more thing:

Nixon says hell have an informal talk with officials this weekend at the Governors Cup in Kansas City, but real negotiations wont happen until after football season is over.

I would love to know whose idea that was, to wait until the season is over.

If it was Governor Nixon's, then he doesn't believe the Rams have any intention of moving in 2015. If it was the Rams' idea to wait, they've already decided to leave.

The Rams will play their last game on December 28. The deadline for teams to apply for relocation is February 15th. Not a lot of time to make enough progress to postpone a move. That's even if we presume that Nixon means the end of the regular season and not the end of the league's season (February 1).

They're creating a very narrow window in which to negotiate. Odd, but fits in with La Canfora's observation that nobody in St. Louis appears to feel any urgency.

[STL FANATIC]

What we'll find out is if they actually need to feel urgency. I don't really know where the Rams will be in 3 years, but I'm now firmly in the boat that doesn't believe the Rams will be anywhere but STL in 2015.

And if they feel that they need a deal down in the next 3 months and the Governor isn't willing to work within that time frame, so be it. We've still got $264 million to pay off on the building they're trying to get out of. Don't blame anyone for not being ready to commit a bunch more just yet.

You're right about it rarely making true economic sense, but I interpret Nixon's comment on a bit of a curve adjusted for how non-economical most stadiums are. In other words, I don't know that he actually expects one that will truly make money, but he wants one that isn't totally completely awful as so many are. Another thing I could see being important to the political leaders is some sort of commitment from Kroenke to develop adjacent land in a meaningful way. Such a development could jumpstart a North St. Louis area that is ready to be revitalized by other than small pockets here and there, hasn't yet seen the needed investment. So while it's unlikely they make money off a deal, there are still ways to make it be a RELATIVELY sensible deal.

Or, I should say, there are ways to hope for that. Hard to have any idea what the Rams would allow to be possible.

[Gothamite]

I agree with much of that. One minor point:

And if they feel that they need a deal down in the next 3 months and the Governor isn't willing to work within that time frame, so be it. We've still got $264 million to pay off on the building they're trying to get out of.

You mean the building they are going to get out of.

Whether it's to move across town or across the country, the only thing we know for sure is that the Rams will not stay in that building you're paying off for one game longer than is absolutely necessary.

[bosrs1]

I believe the reality of the Chargers lease is they can buy their way out for increasingly small amounts with each passing year. But they don't technically have to renew every year because it's on-going.

So they can pretty much leave with a minimal penalty at any point, but it's not exactly the same as a year-to-year lease.

Bingo. It's not a year to year lease. It is a term of years lease that has an escape clause with penalties. The penalties decline in proportion to the remaining years left on the lease. But it is definitely not a year to year lease. They don't have to renew yearly. ESPN's information is incorrect which shouldn't shock anyone when referring to anything west of the Appalachians...

[dfwabel]

If there was a team in London, there would no doubt be a "permanent" facility for visitors, which would be stocked with whatever non-team-specific supplies would be needed, as well as probably even the luxuries that the top stadiums currently have reserved only for the home team. I don't think that's even a concern. The league would make it as easy as possible for a visiting club to get off the plane and be set up and running as quickly and as comfortably as possible.

The "only" real hurdles are the aforementioned time zone difference and player-travel issues. IMO those simply can't be worked around at this time.

There's also the currency difference - players are working in London, so wouldn't they have to get paid in pounds? If I was a good player who knew he'd be there for more than a season, I'd probably try to establish residency and have my contract written to pay in pounds rather than USD with a conversion. That could expose the league to some risk if the dollar drops vs the pound (which correct me if I'm wrong has been historically stronger.)

That's a good point - the pound has historically kicked the dollar's ass.

And there's another factor; taxes.

I don't know how they're working it for the temp gig, but I suspect that all players who call London home on a more permanent basis will be subject to Inland Revenue, which is 20% basic rate tax on the first £31,865 over Personal Allowance, 40% higher rate tax on taxable income between £31,865 and £150,000 and 45% additional rate tax on taxable income over £150,000. That's a hefty hit by American millionaire standards, and will have to be worked into their compensation.

So payroll will be much higher for the London Whatsits than any other team, meaning an exemption from the salary cap (or at least an adjustment based on taxation rates). Which will make teams that play in California and other states with income tax in the US argue they should get a similar exemption/adjustment over teams in state income tax-free Florida and New Jersey. That amount isn't such a big deal between states, but the gulf will be much bigger once Her Majesty's government gets a hand in.

Or base the team in NY so we here and fly the "home" team to London with the road team. No competitive disadvantage for the visitors, but the London team essentially plays 16 road games. It'd fix some of the issues though.

Also Would English fans really get behind a team that would probably not in their lifetimes have a British-born player?

Both Forbes (in 2012) and ESPN.com (in 2013) addressed some of the issues which you both presented. I think the Forbes story goes into greater detail.

Currently, neither the NFL Constitution nor the current CBA, which has a sample contract in its Appendix, possess wording that all contracts are to be paid in USD. That is unlike the NBA CBA, which specifies that all contracts are in USD.

[Gothamite]

Both Forbes (in 2012) and ESPN.com (in 2013) addressed some of the issues which you both presented. I think the Forbes story goes into greater detail.

Interesting, thanks.

Although I wouldn't say that either article actually addresses any of the issues, they do an admirable job of listing the problems.

Currently, neither the NFL Constitution nor the current CBA, which has a sample contract in its Appendix, possess wording that all contracts are to be paid in USD. That is unlike the NBA CBA, which specifies that all contracts are in USD.

Of course the NBA's CBA would have to specify USD, as they still have a team in Canada. The NFL has never before expressed much interest in permanently basing a team outside of the United States, so it wouldn't have come up. You can be sure that it will in the next negotiation, if the NFL keeps on this path.

[Josh.0]

I can see a few things happening before next year. I see the piece of land that Silent Stan bought as a bargaining chip to get the Rams back to LA by offering it to the league for a league-owned Stadium. If that doesn't work I could the Rams easily fitting into Farmers Field downtown or just building the stadium himself in Inglewood.

Then, I could the Chargers and Raiders vying for that second spot. It wouldn't surprise me if the Chargers took the leap and moved to protect their invest in the LA market. There's too much money for the Chargers to miss out on if they don't act.

Which then sets up the Raiders to stay one more season in Oakland while looking for a long term stadium situation in 2016. Maybe they move in with the Niners? Maybe they move to San Antonio? Portland? Oklahoma City? San Diego? St. Louis? Or stay in Oakland? But, that seems less likely.

It will be interesting to watch and see what happens. But, if the Rams move first, I think it will make the Chargers act fast. But, we shall see ...

[Lights Out]

I can see a few things happening before next year. I see the piece of land that Silent Stan bought as a bargaining chip to get the Rams back to LA by offering it to the league for a league-owned Stadium. If that doesn't work I could the Rams easily fitting into Farmers Field downtown or just building the stadium himself in Inglewood.

Then, I could the Chargers and Raiders vying for that second spot. It wouldn't surprise me if the Chargers took the leap and moved to protect their invest in the LA market. There's too much money for the Chargers to miss out on if they don't act.

Which then sets up the Raiders to stay one more season in Oakland while looking for a long term stadium situation in 2016. Maybe they move in with the Niners? Maybe they move to San Antonio? Portland? Oklahoma City? San Diego? St. Louis? Or stay in Oakland? But, that seems less likely.

It will be interesting to watch and see what happens. But, if the Rams move first, I think it will make the Chargers act fast. But, we shall see ...

Agreed. Spanos is already starting to make noise about how 30% of the Chargers' business comes from LA. He's clearly not happy about the possibility of the Raiders moving there.

[Gothamite]

My heart breaks for him.

He's lucky to have had the market vacant for as long as he has. If San Diego won't support the Chargers on their own, then maybe he should focus on beating the Raiders to that second spot in LA.

[STL FANATIC]

I agree with much of that. One minor point:

And if they feel that they need a deal down in the next 3 months and the Governor isn't willing to work within that time frame, so be it. We've still got $264 million to pay off on the building they're trying to get out of.

You mean the building they are going to get out of.

Whether it's to move across town or across the country, the only thing we know for sure is that the Rams will not stay in that building you're paying off for one game longer than is absolutely necessary.

You're mostly right with that, but I will take some issue with the "one game longer than absolutely necessary." If that's true, then they're gone, gone, gone.

But I don't really believe it's true. I think they'll play there a few more years if need be even though they could be out of there in December. I just think it depends on the status of negotiations with St. Louis, but that's obviously the thing we keep trying to learn more about but don't know much about.

To clarify, I believe by the end of the 2015 season, the Rams will know if they're staying or going. But if they're staying, that could still be 2-3 more years in that building, which would be 3-4 years in total that they didn't HAVE to be there.

But that's a lot of typing to say, "yeah, I pretty much agree" lol.

[Mac the Knife]

I knew I had this somewhere... below is copied from a .PDF outlining the NFL's policies and procedures for franchise relocations.

Policy and Procedures for Proposed Franchise Relocations
Article 8.5 of the NFL Constitution and Bylaws vests in the Commissioner the authority to “interpret and from time to time establish policy and procedure in respect to the provisions of the Constitution and Bylaws and any enforcement thereof.” Set forth below are policy and procedures to apply to future League consideration, pursuant to Section 4.3 of the Constitution and Bylaws, of any proposed transfer of a club’s home territory.

Article 4.3 requires prior approval by the affirmative vote of three-fourths of the member clubs before a club may transfer its franchise or playing site to a different city either within or outside its existing home territory. Article 4.3 confirms that each club’s primary obligation to the League and to all other member clubs is to advance the interests of the League in its home territory. This primary obligation includes, but is not limited to, maximizing fan support, including attendance, in its home territory. Article 4.3 also confirms that no club has an “entitlement” to relocate simply because it perceives an opportunity for enhanced club revenues in another location.

Indeed, League traditions disfavor relocations if a club has been well-supported and financially successful and is expected to remain so. Relocation pursuant to Article 4.3 may be available, however, if a club's viability in its home territory is threatened by circumstances that cannot be remedied by diligent efforts of the club working, as appropriate, in conjunction with the League Office, or if compelling League interests warrant a franchise relocation.

Article 4.3 also reflects the League’s collective judgment that unassigned franchise opportunities (including “second franchise” opportunities in the home territory of a member club) are owned by the League’s members as a collective whole and, by definition, that no club has rights to more than a single “home territory.” Such collective League opportunities may be acquired by an individual club only by an assignment reflecting the consent of the League and subject to its generally applicable voting requirements.

A. Negotiations Prior to League Consideration
1. Because League policy favors stable team-community relations, clubs are obligated to work diligently and in good faith to obtain and to maintain suitable stadium facilities in their home territories, and to operate in a manner that maximizes fan support in their current home community. A club may not, however, grant exclusive negotiating rights to a community or potential stadium landlord other than one in its current home territory.

2. All clubs, at any time during their stadium negotiations, are free to seek the assistance of the League Office and the Stadium Committee, on either a formal or informal basis. If, having diligently engaged in good faith efforts, a club concludes that it cannot obtain a satisfactory resolution of its stadium needs, it may inform the League Office and the stadium landlord or other relevant public authorities that it has reached a stalemate in those negotiations. Upon such a declaration, the League may elect to become directly involved in the negotiations.

3. The League’s policy and procedures on franchise relocation do not restrict any club’s ability to discuss a possible relocation, or to negotiate a proposed lease or other arrangements, with a community outside its home territory. Nor do they restrict the ability of multiple clubs to negotiate terms of a proposed relocation with a single community.

In evaluating a proposed franchise relocation and making the business judgment inherent in such consideration, the membership is entitled to consider a wide range of appropriate factors. Each club should consider whether the League’s collective interests (which include, for example, the League’s television interests, the League’s interest in strong and geographically distributed franchises, the League’s interest in securing attractive stadium facilities in which to play its games, and the League’s interest in having financially viable franchises) would be advanced or harmed by allowing a club to leave its assigned home territory to assume a League-owned opportunity in another community. These collective interests generally include having clubs in the country’s most populous areas, taking into account competitive entertainment alternatives, stadium options, and other factors.

Like proposed transfers to a different home territory, a transfer of a club’s playing site to a different location within its home territory may also raise issues of League-wide significance. Accordingly, while these procedures apply to any proposed move to a new home territory, the Commissioner may also require that some or all of these procedures be followed with respect to a proposed move within a club’s existing home territory.

A. Procedures Relating to Notice and Evaluation of the Proposed Transfer
Before any club may transfer its franchise or playing site outside its current home territory, the club must submit a proposal for such transfer to the League on the following basis:

1. The club must give the Commissioner written notice of the proposed transfer, including the date on which the proposed relocation is to become effective, and publish the notice in newspapers of general circulation within the incumbent community. The notice must be filed no later than February 15 of the year in which the move is scheduled to occur. The League will provide copies of the notice to governmental and business representatives of both the incumbent community and the community to which the team proposes to move, as well as the stadium authority (if any) in the incumbent community (the “interested parties”).

2. The notice must be accompanied by a “statement of reasons” in support of the proposed transfer. The statement must address each of the factors outlined in Part C below, and may also identify and discuss any other relevant business factors that the club believes support its request to move. The Statement must also include all of the material noted in Appendix One.

3. With the assistance of appropriate League committees, the Commissioner will evaluate the proposed transfer and report to the membership. The Commissioner may also convene a special committee to perform fact-finding or other functions with respect to any such proposed transfer.

4. Interested parties will have an opportunity to provide oral and/or written comments regarding the proposed transfer, including at a public hearing conducted by the League in the community from which the team seeks to relocate; written comments may be submitted within 15 days of the conclusion of such hearing.

5. Following the Commissioner’s report on the proposed transfer, the proposal will be presented to the membership for action in accordance with the Constitution and Bylaws, either at a Special Meeting of the League held for that purpose or at the Annual Meeting.

6. After any League vote on a proposed relocation, the League will:
i. publish, within 30 days of any relocation decision, a written statement of reasons in newspapers of general circulation within the incumbent community setting forth the basis of its decision in light of the League’s rules and procedures for evaluating franchise relocation; and
ii. deliver copies of its written statement of reasons to the local governments of the community from which the club seeks to relocate and any sports authority or similar entity with jurisdiction over the stadium or facility from which the club seeks to relocate.

C. Factors That May Be Considered In Evaluating The Proposed Transfer
The League has analyzed many factors in making prior business judgments concerning proposed franchise relocations. Such business judgments may be informed through consideration of the factors listed below, as well as other appropriate factors that are considered relevant by the Commissioner or the membership.

Any club proposing to transfer should, in its submission to the Commissioner, present the club’s position as to the bearing of these factors on its proposed transfer, stating specifically why such a move would be justified with reference to these considerations. In reporting to the membership, the Commissioner will also address these factors.

Most of the factors were contained in a bill reported by a Senate committee in 1984; they essentially restate matters that the League has considered important in connection with team location decisions in the past. Certain factors included in the Senate bill have been modified, and certain new factors have been added, to reflect changed circumstances and the League’s historical experience since 1984. These factors are also contained in a “Statement of Principles” relating to franchise location developed by the League in consultation with the U.S. Conference of Mayors.

In considering a proposed relocation, the Member Clubs are making a business judgment concerning how best to advance their collective interests. Guidelines and factors such as those identified below are useful ways to organize data and to inform that business judgment. They are intended to assist the clubs in making a decision based on their judgment and experience, and taking into account those factors deemed relevant to and appropriate with regard to each proposed move. Those factors include:

1. The extent to which the club has satisfied, particularly in the last four years, its principal obligation of effectively representing the NFL and serving the fans in its current community; whether the club has previously relocated and the circumstances of such prior relocation;

2. The extent to which fan loyalty to and support for the club has been demonstrated during the team's tenure in the current community;

3. The adequacy of the stadium in which the club played its home games in the previous season; the willingness of the stadium authority or the community to remedy any deficiencies in or to replace such facility, including whether there are legislative or referenda proposals pending to address these issues; and the characteristics of the stadium in the proposed new community;

4. The extent to which the club, directly or indirectly, received public financial support by means of any publicly financed playing facility, special tax treatment, or any other form of public financial support and the views of the stadium authority (if public) in the current community;

5. The club’s financial performance, particularly whether the club has incurred net operating losses (on an accrual basis of accounting), exclusive of depreciation and amortization, sufficient to threaten the continued financial viability of the club, as well as the club’s financial prospects in its current community;

6. The degree to which the club has engaged in good faith negotiations (and enlisted the League office to assist in such negotiations) with appropriate persons concerning terms and conditions under which the club would remain in its current home territory and afforded that community a reasonable amount of time to address pertinent proposals;

7. The degree to which the owners or managers of the club have contributed to circumstances which might demonstrate the need for such relocation;

8. Whether any other member club of the League is located in the community in which the club is currently located;

9. Whether the club proposes to relocate to a community or region in which no other member club of the League is located; and the demographics of the community to which the team proposes to move;

10. The degree to which the interests reflected in the League’s collectively negotiated contracts and obligations (e.g., labor agreements, broadcast agreements) might be advanced or adversely affected by the proposed relocation, either standing alone or considered on a cumulative basis with other completed or proposed relocations;

11. The effect of the proposed relocation on NFL scheduling patterns, travel requirements, divisional alignments, traditional rivalries, and fan and public perceptions of the NFL and its member clubs; and

12. Whether the proposed relocation, for example, from a larger to a smaller television market, would adversely affect a current or anticipated League revenue or expense stream (for example, network television) and, if so, the extent to which the club proposing to transfer is prepared to remedy that adverse effect.

D. Existing Leases
1. No request to relocate shall be unconditionally approved, nor shall a relocation be allowed to take effect, if it would result in a breach of the club’s current stadium lease. This provision shall not apply if the club and its landlord agree to terminate the lease or if there is a final court order terminating the lease or concluding that the lease does not preclude a relocation.

2. A decision by the League conditionally or unconditionally authorizing a member club to relocate shall not affect the enforceability under state law of a stadium lease to which that member club is a party.

E. Payments Associated with an Approved Transfer
If a club’s proposal to relocate to a new home territory is approved, the relocating club will ordinarily be expected to pay a transfer fee to the League. The transfer fee will compensate other member clubs of the League for the loss of the opportunity appropriated by the relocating club and/or the enhancement (if any) in the value of the franchise resulting from the move.

The Commissioner may recommend a transfer fee to the membership and Finance Committee for consideration in connection with any proposed transfer that he recommends be approved. Among the factors to be considered in the recommendation of such fee will be:

1. The income streams available to the club in its new location and the likelihood that they will be realized (which may be affected by community or business guarantees or similar undertakings);

2. The income streams historically available to the club in its previous location, and the incremental income streams (if any) that could reasonably be expected to be made available to the club in its old location;

3. The expenses to be borne by the club in its current and proposed locations;

4. The expenses that could reasonably be expected to be assumed by parties other than the club if the relocation does not take place;

5. The desirability of the club’s current and proposed stadia as locations for professional football games;

6. The club’s current status under any revenue sharing plans then in effect and its anticipated status if the move were approved;

7. The effect of the proposed relocation on current or anticipated League-level revenue and expense streams; and

8. The demographics of the club’s old and new markets.

The Commissioner’s recommendation of a transfer fee will not be based on any effect that the proposed move would have on any salary cap or similar player-employment arrangements.

The membership will determine the transfer fee (or, in the alternative, a recommended, binding method for determining the transfer fee), if any, at the time it approves any proposed club relocation. The terms on which the transfer fee will be paid will be set forth in the resolution itself, and will be reflected in appropriate documentation acceptable to the Commissioner and the Finance Committee.

In addition, in certain circumstances, the League’s collective interests may depend upon the maintenance of quality franchises in specific geographic areas. If a team proposes to relocate into, or to relocate from, such an area, in evaluating the proposed relocation, the Commissioner will and the membership may take into account, in determining the appropriate transfer fee (if any), the League’s interest in encouraging the proposed relocation, discouraging the proposed relocation, or permitting the relocation on terms that would permit the League to restore a meaningful presence in the area being vacated by the relocating club.

Finally, if League-level revenue or expense streams or visiting team shares are projected to be adversely affected by a proposed relocation, on either a short-term or long-term basis, based upon a recommendation by the Commissioner and Finance Committee the relocating club will be required to indemnify other members of the League for adverse effects that could result from the proposed relocation. If such recommendation is included by the membership in the resolution authorizing the move, the Commissioner will, in consultation with the Finance Committee, negotiate with the relocating club appropriate indemnification arrangements, including the extent to which the relocating club may participate in League revenue sharing pools, to be reflected in documentation acceptable to the Commissioner and the Finance Committee.

[Gothamite]

Note the several references to fan support. This is where fans can empower themselves to put up stumbling blocks up against a possible relocation.

By my reading, unless Goodell wants to veto the move (which he could), I don't see much to keep the Rams from moving to Los Angeles. I can see a lot that would keep them from moving out again, though. That would definitely impact broadcast contracts.

Also has some bad news for the Chargers:

by definition, that no club has rights to more than a single home territory.

Spanos is going to have to learn to make it on San Diego alone.

[hbgoo1975]

Los Angeles has a new soccer club coming because SOCCER is a big deal. By the way, The Rams and Raiders may not come and we won't have NFL football until the world ends!!

[Gothamite]

Yeah, no.

[bosrs1]

http://www.cbssports.com/nfl/writer/jason-la-canfora/24779844

Raiders seem to be making a push to start the discussion as soon as this month on making a move to LA.

[illwauk]

Also has some bad news for the Chargers:

by definition, that no club has rights to more than a single home territory.

Spanos is going to have to learn to make it on San Diego alone.

Wait... I thought Milwaukee is officially considered Packers territory. We're definitely subjected to the same blackout rules even though Lambeau is more than 75 miles away.

Granted, the Packers have an infinitely stronger claim to Milwaukee than the Chargers do to LA, but still....

[The_Admiral]

According to the506, secondary markets (Milwaukee and Wausau/Fox Cities are Green Bay's) have to show all road games but not all home games, but in practice, no way in hell is Milwaukee showing anything other than a Packers home game, given the choice. I was under the impression that Milwaukee had kind of a "special relationship" as far as media markets go since the media flagships are based in Milwaukee, but maybe not.

Incidentally, their list also says Los Angeles is a secondary market for the Chargers, but also notes that the NFL determines these for broadcast purposes and the teams themselves get no direct benefit.