Could cities use eminent domain to acquire teams? Don’t hold your breath

Field of Schemes‘ Neil deMause has an intriguing article at VICE Sports today positing the idea of teams buying teams via eminent domain. It’s not an entirely original idea. You see it on a message board every so often, and the City of Oakland famously tried to use ED to keep the Raiders from moving to LA (it failed). deMause doesn’t consider any eminent domain proceedings to be a slam dunk, as their efficacy could vary wildly based on jurisdiction. Instead, deMause looks at the ED threat as a cudgel to use against another threat, the move threat teams often wield over cities. Whether or not teams actually talk about moving to other markets, the possibility of being tied up in court, having to open the books, etc., might make team owners think twice about it.

As for eminent domain actually having teeth, it’s difficult to argue for it. California already has two cases on the books that support teams and leagues over cities, and of the teams that have recently built or are looking to build new venues, none are using that extortion weapon – except perhaps for Arte Moreno against Anaheim.

The Green Bay Packers are often touted as the model for publicly-owned sports franchises. The franchise was stabilized nearly 90 years ago when they became run as a public corporation, with real stock sales. Once issued, shares cannot be resold except back to the franchise, and the stock doesn’t offer any sort of dividend or significant voting rights, so they’re mostly for stadium improvements or for financially supporting the team, which struggled through the Great Depression.

Let’s say Raiders fans wanted to try such a model in Oakland. They’d have to raise $1 billion, or 10 million shares at $100 each. A new stadium would also cost around $1 billion, so make that 20 million shares. If the NFL was amenable to the idea (they have disallowed publicly owned franchises except for allowing the Packers to be grandfathered in), it might work. 20 million shares at $100 with no tangible returns is pretty hard sell, though cheaper than Coliseum City when you think about total costs. deMause floated the idea of cities using eminent domain, then raising bonds for the team purchase. Cities don’t have the cash to competitively outbid private parties in today’s escalating franchise sales wars. If eminent domain were considered legal for this purpose, it’d probably be the only way a city could buy a franchise.

You may consider the concept of cities attempting to own sports franchises a serious overreach of government power and responsibility. On the other hand, you might see it as a reasonable alternative to the increasingly money-driven, greedy ownership model we currently see. A third way might be the public stock offering, which worked in Green Bay and is also in use to a much greater degree in European soccer. Whatever your take, the very rich men who plowed nine or ten figures into their sports franchise investments have zero desire to change the current ownership model. If that is legitimately threatened, you can be sure that they’ll fight to the bitter end to protect those investments. While I wouldn’t expect it to happen, challenging the status quo can often be a good thing. I’d like to see what happens. It’s not my retainer, after all.

9 thoughts on “Could cities use eminent domain to acquire teams? Don’t hold your breath

  1. I would agree on this. Why not local government get involved in something like this? it’s because pro sports like the NFL, major league baseball, NHL, and the NBA ruined it for the fans and the local economy.

    The pro sports ownership of today is ruining the experience of going to the games and supporting the home teams. All ownership wants is money and plenty of it. Once great local cities, like Oakland, start to run out of money and don’t support the home teams, owners like Lew Wolff and Mark Davis, threaten to leave until they get a better deal out of cities like San Jose, L.A., and San Antonio. Pro sports of today will die if nothing is done about the greed.

    • The JPA can’t even properly manage a stadium properly. What would make anyone think they could run an entire TEAM correctly?

      Not to mention the furor over city employees pulling down multi-million dollar salaries… just for starters.

  2. The Government can do things cheaper and more efficiently ( oops forgot about the JPA ). This is the Single Payer Health Care debate in a nutshell. It works perfectly in theory but when put into the real World it fails ( see Vermont). The reality of the matter is that is not going happen. Even on the College Level the role of States is declining even in Research $$$$ as opposed to Athletics (we see that @ Penn State & Pitt and how difficult it is to get funding from the State of Pennslyvania). Give me a break.

  3. Many cities can’t even properly manage their current responsibilities. Why the hell would someone want them to horribly run a pro team? Can you imagine if Detroit owned the Lions, Red Wings, and/or Tigers? Or if Oakland owned the A’s, Warriors, and/or Raiders? Etc. It’d be terrible.

  4. If a team is crying foul and says that they are poor they should look at the Manchester United model and have some stocks publicly trades on the stock market. It works for Man U why not a sports franchise here in the US. It gives fans a chance to buy a piece of the favorite sports teams and it could give that franchise the extra cash it needs to make stadium improvements or help build a new stadium.

    http://www.marketwatch.com/investing/stock/manu

  5. This really is an interesting idea and addresses a lot of the civic pride issues that folks raise around sports teams. Really this is no different than zoo’s, symphonies, ballet’s, etc. which are typically either run as non-profits or in some cases publicly run.

    That being said I don’t think this will ever happen because there is too much money to be made in sports. If you look at the history of this country, whenever there is money to be made in an industry, even if the industry has some initial public ownership roots, if it’s easy to turn a profit, folks will find a way to turn it into a private company.

    Just look at thinks like the post office. Specialized services like what FedEx provides can be profitable, but delivering daily mail service to everywhere in the country, even areas that are difficult to reach all at the same price, can’t be done profitably so this is left up to the government. The military is another good example of this. The profitable elements have been outsourced, and the non-profitable elements are run by the government.

    If you look at this in regards to sports, given who typically pays for stadiums, what this probably says is that in most cases owning a stadium isn’t profitable even if owning the sports franchise is.

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