No ordinary business


The St. Louis Rams, who left Los Angeles for the Gateway City after the 1995 season, are returning to LA. It’s been an oddity that the most popular sport in the United States has not had a franchise in the country’s second largest media market for twenty years. Rams’ owner Stan Kroenke, who is planning to build a $1.9 billion stadium complex in Inglewood, fled St, Louis after the city and state offered to pony up an obviously inadequate (*sarcasm alert) $400 million subsidy to help Kroenke build a new stadium there.

In its application to the NFL relocation committee, among other things, the Rams said that the city had failed to support the team despite an improvement in on-field performance. In its response to the Rams, the St. Louis NFL Stadium Task Force noted that the Rams have gone 50-109-1 in the last ten years, including 15-65 between 2007-2011, “the worst five year stretch in NFL history.” The Rams’ use of the word “improvement” in this context is reminiscent of climate deniers who insist that because some recent years haven’t been quite as hot as other recent record-breaking years (though still very hot by historical standards), we’re actually in a “cooling” period (the Rams have gone 7-9, 6-10, and 7-9 the past three seasons).

Leaving aside that little nugget, a few thoughts:

1)On Mike and Mike yesterday, Greenie suggested that there should perhaps be an independent commission to evaluate whether the team intent on relocating had met its burden of negotiating in good faith with the municipality before leaving. Further, Greenie suggested, this commission of experts could determine whether the team’s claim that it’s not economically viable in the current location stands up to independent scrutiny. This proposal is based on the very reasonable premise that major sports franchises are almost always full of shit when they claim a) they really, really tried to make it work and b) that they really couldn’t possibly make money where they are. Golic took umbrage with this proposal, however. He complained that, at some point, these businessman need to be able to do what they want with their business, just as other business owners do. This is also a fair point, apart from the fact that everything about it is embarrassingly wrong. Most importantly, there is really nothing about NFL franchise ownership that is like owning an ordinary business. For starters, NFL franchises amount to de facto, if not de jure, monopolies in their markets. If I run an ordinary business, say a candy store, other would-be candy store owners can enter the marketplace and compete directly with me. No such look if you want to try to launch a viable, professional football team alongside an existing one. Furthermore, these put-upon businesses known as NFL teams are guaranteed an equal stake in massive television contracts, no matter how much they suck at what they do (as the Rams have for a decade now). How many ordinary businesses are recipients of comparable largesse? Additionally, if an NFL team wants to relocate, it can’t just up and move as it pleases – as Golic should know, since the discussion has been the focus of his professional life. Instead, it must receive permission from three quarters of NFL owners.  The ordinary business line is abject nonsense.

2)Despite an *endless* stream of evidence that sports teams do *not*, by and large, provide a net economic benefit to the market in which they operate, numerous commentators repeated the most pie-in-the-sky assertions from Kroenke about the unbelievable economic windfall he was about to bestow on Los Angeles. ESPN’s Shelly Smith and Bill Plaschke, long time LA sports columnist and regular panelist on ESPN’s Around the Horn, were two such offenders, rattling off a litany of unverifiable and almost certainly overblown claims about all the great things that would happen for the people of LA because of the Rams’ move and new stadium plans. Amazing that folks in the media still repeat the kind of nonsense that should make even PR flacks blush.

3)On the other hand, the insistence by many other commentators that the move to LA would almost certainly be a big windfall for the NFL also strikes me as overblown. I asked the eminent sports economist Dave Berri (a long-time friend of this blog), about this particular claim. I was skeptical for a few reasons: a) NFL TV deals are all national and aren’t going to be re-opened because one team moves from St. Louis to LA. b) the Rams’ franchise value will surely increase as it moves into the bigger TV market, but it’s not obvious that this will substantially affect the value of other franchises. c) Kroenke can charge higher ticket prices in LA, as Berri noted on the radio yesterday, but the benefit to visiting teams from this particular revenue stream is pretty trivial. The Rams do pay a half a billion dollar re-location fee. That’s not nothing, but divided over 31 teams, it’s not a game-changer in the world of the fabulously wealthy NFL. Dave responded that the big difference might be in the next round of negotiations for new TV deals, when the NFL can argue that its product is worth more because it is in the LA market. I don’t know how much value this will add to the contract, but I strongly suspect those insisting this move was a windfall for the other owners don’t either.  Berri also noted that there was  downside to the move for the other owners – the previously unoccupied LA market was great potential leverage for a franchise intent on blackmailing its existing municipality. That frontier has now been closed.

As much as anything, I believe, the other owners voted for the move because of a prevailing norm of reciprocity – if the owners allows one of their own to jilt its former home, they can expect similar latitude if and when they decide they want to do the same. The principle that the owners’ prerogatives always take precedent over those of the fan base, or the city or any other set of civic considerations is the paramount one.

#Thanks to Dave Berri for his wise counsel. All errors, of course, are my own.


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