The Sports Franchise Game

Cities in Pursuit of Sports Franchises, Events, Stadiums, and Arenas

Kenneth L. Shropshire

• Publisher: University of Pennsylvania Press
• Year: 2013
• ISBN:
  9780812209150
• Topic: Politics & International Relations
• Subtopic: Local & Regional Planning Public Policy
• Index: Politics & International Relations

Power, prestige, and millions of dollars—these are the stakes in the sports franchise game. In this book, sports attorney Kenneth Shropshire describes the franchise warfare that pits city against city in the fierce bidding competition to capture major league teams. Rigorous research, fascinating interviews with major players, stories behind the headlines, and an insider's perspective converge in this rare view of the business side of professional sports. Shropshire portrays a complex web of motivations, negotiations, and public relations, and discusses examples from Philadelphia, the Bay Area, and Washington D.C.

Chapter 1

The Sports Franchise Game

You can have Disney World and every major attraction, but if you don’t have a team, in the eyes of the world you’re not a big league city.

—Patrick Williams, president and general manager of the group that successfully obtained a National Basketball Association franchise for Orlando, Florida¹

In Bang the Drum Slowly, a novel about baseball and life, the main characters are professional baseball players who pass time off the field with a card game they call Tegwar, “the exciting game without any rules.”² The veteran players invite an unsuspecting “cluck” to join the game, and then they take his money in every hand, as the mercurial rules develop. The players find a fresh cluck to pluck in every new city they visit.

In the sports franchise game the veteran Tegwar players are the franchise owners and their clucks are the cities that want to host their teams.³ Why do teams move? The obvious and most accepted reason is financial survival. But, as will be illustrated, financial survival is not the sole motivation. Sport is a unique business. Moving a sports franchise is not an easy thing to do, even when a franchise is in dire financial straits and good business acumen would dictate a move to a fresh venue. However, a move by a franchise can be delayed, or even prevented, by other players in the sports franchise game. If the owner is an Al Davis, Charlie Finley, or Bill Veeck he may have trouble gaining league approval for a move not for business reasons but merely because the commissioner or a fellow owner or two does not like him.

A sports franchise owner has limited options compared with the proprietors of other businesses. Like operators of fast-food franchises such as McDonald’s, a sports franchise owner usually cannot just pack up and relocate when such a move makes good economic sense to the owner. The guidelines for successful relocation of a sports franchise are not the same as those of a privately owned dry cleaning business, where the sole proprietor may choose to move to a site where customers may more fully appreciate the business. Sports franchises belong to a bigger entity, a professional sports league. The National Football League, National Basketball Association, Major League Baseball, and National Hockey League operate in much the same way as does a partnership.⁴ The individual teams within a league share profits but usually not individual franchise financial losses.

Several key parties affect the sports franchise business, and to varying degrees, each party looks out for his or her own self-interest.⁵ Apart from the owner and the league, the sports franchise business involves fellow owners, the athletes,⁶ the competing cities, politicians, and the fans (who primarily are voting, tax-paying residents of the involved cities). More so in the past but sometimes even today, these fans forget they are taxpayers and do not always realize the consequences of urging their politicians to do “whatever it takes” to convince a team to stay, to attract a new team, or in some cases, to coax a team back home. More frequently, some sports fans and politicians now show signs of decreasing zeal. A major portion of the 1990 Oakland mayoral campaign that saw longtime mayor Lionel Wilson voted from office focused on whether the city should make the investment to bring the Raiders professional football franchise back “home” from Los Angeles.⁷ Voters have refused to spend on sports in such diverse communities as Phoenix, San Francisco, Santa Clara, and San Jose.⁸ But this trend is not absolute. The voters in Denver, for example, said yes to a tax increase to finance stadium construction. They wanted a Major League Baseball expansion franchise and thought that building a stadium was the only way to get one.⁹ Partly as a result of that tax increase Denver now hosts the Colorado Rockies.

Although money constitutes the main reason cities fight over sports franchises, cities also admit that their civic image is almost as important a factor. Today, sports pages constantly mention incidents of cities trying to entice a team or of a team trying to move to a new area. Direct and indirect economic benefits such as increased tourism, arena or stadium rental income, sports franchise expenditures in the city, taxes, and employment are often mythically thought to be guaranteed by the acquisition of a professional sports franchise. Such is the proverbial carrot at the end of a stick that cities chase. In reality, the only reward a city that successfully attracts a sports franchise may receive is the public perception that their metropolis has been thrust into that class of cities nebulously described as “big-league.”

The value of that big league label to a city defies accurate accounting. Some may perceive overhauling a city’s image to be priceless. When the sports franchise game revs up in high gear, it certainly seems that virtual pricelessness is the value a team acquires. When the Los Angeles Rams deserted the inner city for suburban Anaheim, many civic leaders, headed by the late City Councilman Gilbert Lindsay, asserted that the situation must be remedied. Their position was that an expansion franchise was not enough. The “great” city of Los Angeles (and particularly the feisty councilman’s downtown inner-city district) deserved a team with a “name”—certainly if Oakland and Anaheim had name franchises, Los Angeles should have one too. That was part of the hyperbole that eventually brought the Raiders to Los Angeles from Oakland.

Sports franchises and American cities are not alone in their pursuit of sports. Nagano, Japan, spent between $11 million and $14.3 million on public relations alone in its successful efforts to host the 1998 Winter Olympics. And planners estimate that the cost of constructing facilities for the Winter Olympics in Nagano will exceed $2 billion.¹⁰ In an unsuccessful effort to land these same Olympics, the Utah state legislature approved expenditures of $56 million for the development of a site in Salt Lake City.¹¹ In its bid to host the 2000 Summer Olympics, the Berlin bid committee announced that tickets to all events would be free. This policy represented the forfeiture of $68 million in potential ticket revenue.¹²

The factor that seems to trigger most relocations today is the desire of an owner to make more money. The public reasons have ranged from complaints about the quality of the stadium or arena or having to share it with another tenant, to poor fan support or too small of a fan base. General complaints about the terms of the stadium or arena lease are often raised as the major point of contention as well. As the forthcoming chapters will outline, new revenue avenues for owners are limited. One key area of revenue that some owners began to tap in the 1970s is the luxury box, luxury suite, sky box, or executive suite. These seats, which are often elaborate suites, vary from facility to facility. Generally, such a suite is an enclosed area, approximately the same size as a living room, with a plexiglass front and great sight lines for the event. The suite may include elevator access, private bar, private restrooms, catering service, and customized decor. Generally, corporate entities purchase the suites at a price that includes enough tickets to fill the box with clients or potential clients or as an incentive or reward for employees.¹³ The revenue from these boxes, which can be worth millions per year to an owner, are generally retained by the home team. Unlike other game ticket revenues, this income is not likely to be shared with fellow league members. From an owner’s viewpoint, a stadium with luxury boxes is far more valuable than one without them.¹⁴

Currently, Robert F. Kennedy Stadium in Washington, D.C., is the only facility in the National Football League without luxury boxes. In 1992 Jack Kent Cooke, owner of the Washington Redskins, was in the midst of stadium negotiations with RFK Stadium while simultaneously proposing construction of a new Redskins Stadium in nearby Alexandria, Virginia.¹⁵ The Virginia Senate Finance Committee conducted a study to determine its support for the proposed Alexandria stadium. The study found that the arrangement Cooke sought would take him from having the worst stadium lease in the NFL at RFK Stadium to the best lease in the NFL at the new Virginia site.¹⁶ The Virginia plan would have required Cooke to pay one dollar per year in rent, with no taxes levied on the stadium, ticket sales, luxury box rentals, or parking fees.¹⁷ The proposed Alexandria stadium would have had 331 luxury boxes.¹⁸ The deal did not go through.

In the major sports leagues the revenues are divided among league members in varying percentages. Football teams split ticket sales, or gate receipts, with 60 percent going to the home team and 40 percent to the visiting team; baseball’s split is approximately 80–90 percent to the home team and 10–20 percent to the visitors. Basketball and hockey permit the home team to keep all of the gate receipts.¹⁹ Concessions and parking revenues are not shared. The home team does not necessarily retain these revenues either. Depending on the individual contracts, the stadium or arena owner or an outside contractor may keep the revenues, or there may be a split with the franchise-tenant.²⁰ Each arrangement hinges upon how well the respective parties fared in their stadium or arena lease negotiations.

National broadcast revenues are shared equally among the teams within the football, basketball, and baseball leagues. In football, for example, the NFL will receive approximately $4.4 billion or $39.2 million per franchise in total broadcast revenues from 1994 to 1997.²¹ Of this amount, $1.56 billion is from the Fox Broadcasting Company.²² The $39.2 million per franchise split compares with $32.5 million per franchise under the contracts that expired in 1994.²³

In football, other than some preseason game exceptions, there are no local television contracts for the broadcast of games of individual teams. The NFL regulations do not allow individual franchises to impair the value of the national television contract. In all of the other leagues, however, the home team keeps all of those local broadcast revenues. A city with a large population, and hence, a large viewing audience, may be a more desirable location.

There is still controversy over just how “local” are revenues from “superstations,” which invade the local markets of other teams.²⁴ A superstation, such as WTBS in Atlanta, broadcasts all its local team’s games, in this case the baseball Braves, over national cable television systems. There has been litigation regarding how the revenues from the Chicago, Atlanta, and New York superstations should be divided among fellow league members or what type of fee a team or superstation should have to pay for such extraordinary rights.²⁵ Thus, overall it is clear that in all sports except for NFL football, the income a team can earn from television revenues varies depending upon the city in which a team plays.

A vivid example of the price a city may pay when competing for a franchise is instructive. St. Petersburg, Florida, has long publicly expressed the desire to be the home of a Major League Baseball franchise.²⁶ In 1988, St. Petersburg spent tax dollars to build a 43,000-seat baseball stadium, the Florida Suncoast Dome, purely on speculation. No team had committed to move to St. Petersburg, and no expansion franchise was guaranteed. Without a commitment in place, even more money had to be spent to attempt to attract a franchise. An initial prime candidate for the new stadium was the Chicago White Sox, who played in what was the oldest stadium in baseb...

Table of contents

• Cover
• Title
• Copyright
• Contents
• List of Tables
• Foreword
• Acknowledgments
• Introduction
• 1 The Sports Franchise Game
• 2 Impact Studies and Other Quantitative Analyses: Inconclusive Conclusions
• 3 The Philadelphia v. Camden Story
• 4 Shifts in the Bay Area, Part 1: San Francisco
• 5 Shifts in the Bay Area, Part 2: Oakland
• 6 The Field-of-Dreams Approach: Baltimore and Indianapolis
• 7 Washington, D.C.: Longing for the Senators
• 8 Putting the Pursuit into Perspective: The Value of Sports
• Notes
• Index