Billionaire owners have for years leveraged the threat of relocation to line their pockets. Here’s how three cities are fighting back against one of the longest-running scams in American sports

Does this story sound familiar: a sports team pleads poverty and gets public funds to build a new stadium. A few years later, that same team changes hands at a massive valuation. A decade or two later, the team gripes about the stadium and leaves town. To the dismay of local fans and politicos, taxpayers are stuck with a tenant-less stadium and a sizable bill.

Columbus, Miami and Washington DC are fighting to change that same, sad tune. Here’s how:

Last fall, MLS’s Columbus Crew started to publicly angle for a move to Austin. They claimed the market was “underperforming”, Mapfre Stadium was old, and pined for a downtown location. Fans responded with a vociferous ‘Save the Crew’ movement, but the city refused to pony up tax dollars for any venture. The Crew then got serious about Austin, and found themselves in court after the state and city sued.

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The lawsuit is based on Ohio state law, which uniquely addresses taxpayer funded stadiums. In 1996, the Ohio Legislature passed legislation to try and prevent sports teams from using public funds to build stadiums and then leave town; the law was inspired by the NFL’s Browns’ acrimonious move to Baltimore. Basically, the Ohio Revised Code requires a team in a stadium paid for by public funds to give six months notice of a plan to move, and then another six months for the local government or investors to have an opportunity to buy the team.

Before the Crew’s open flirtation with Austin, the law had never been used. Nobody knows how it will play out; there’s no legal precedent and many of the key terms are a bit vague (in the non-legal sense). The key questions will be: what counts as “notice” to get the clock ticking on those six months? Has that happened already? What is a “reasonable opportunity” for a local group to buy the team? How much would the local owners need to pay?

What’s at stake, in addition to civic pride, is millions of dollars. If the Crew vacate Mapfre Stadium for Austin, the public would bear a significant financial burden; Columbus would have to pay maintenance costs for a stadium with no anchor tenant, or shell out tens of millions of dollars to demolish the structure. They would also lose the annual rent paid by the Crew, often around a million dollars per year.

Ohio and Columbus may ultimately lose the lawsuit, but at least the ‘Browns law’ has put the brakes on the team’s relocation. It also has hit both the Crew and MLS with legal bills. And, if the law succeeds, other states – sick of getting played by billionaire sports team owners – could pass similar legislation.

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In the absence of legislation, local governments can protect stadium investment by insisting on ‘no relocation’ agreements. For example, in July of this year, MLS’ DC United will begin play in a new stadium: Audi Field. The team paid $150m in construction costs, but the District spent $85m to get most of the land and still has an eminent domain case for the last two acres pending. Thus, the total bill could easily pass one hundred million dollars.

Thus, the District signed a 12 page Non-Relocation Agreement with the club. On Page 5, Section 2.3, DC United agree that “so long as this Agreement is in effect, the Team shall not enter into any contract or agreement with respect to or which would result in the move or relocation of, and shall not move or otherwise relocate or attempt to move.”

This agreement is a good idea, but cities can already sue a moving partner for breach of lease. By tying it to the lease, there’s not much additional protection. According to Section 5.2, the remedies if relocation happens are: “specific performance” – they can make the team stay and play out the lease – or “declaratory relief” – they can ask a Judge to rule that DC is violating the agreement preemptively. This is not that different from DC suing the club for breaching the lease contract.

Ideally, a remedy would have more bite. For example, cities could insist on liquidated damages, which is basically a fine. If X party violates the agreement, they must pay $5m per breach.

Equally worrisome, DC’s Non-Relocation Agreement would not apply to the Columbus Crew’s flirtation with Austin. That’s because no “agreement” has been signed between Columbus and the city – just negotiations and contacts.

A stronger Non-Relocation Agreement could include “exclusive negotiation windows” language. Basically, in layperson terms, a sports team cannot cast sideward glances at other cities during the lease. It would state that the team cannot talk with other localities about a stadium up until one year before the lease expires, for example. MLS has agreed to exclusive windows in TV deals.

Even when relocation doesn’t happen, there’s another problem: risk v reward. These stadium deals are often followed by the owner selling the team at a profit. And a big part of the team’s new valuation is that very stadium deal. Taxpayers foot the risk, but don’t see the upside.

For example, in 2010, the Miami Marlins of Major League Baseball (then known as the Florida Marlins) were valued by Forbes at $317m. In 2013, only three years later, Forbes valued the Marlins at $520m. What happened? They got a new stadium that was paid for largely by taxpayers. Of the $639m construction costs, the team only paid $1 out of every $5. Even worse, Miami-Dade borrowed over $400m and will end up paying over a billion dollars.

Still, Miami smartly inserted a clause in their agreement that they would get 5% of any profits from the sale of the team. Loria bought the team for $158m in 2002, and then sold the team for $1.2bn. Ballpark, that’s a $1bn dollar increase in value. Even assuming that’s all profit, 5% of that would still only be $50m dollars. That’s a lot of money, but only one-eighth of the construction costs paid by taxpayers. And much less than the billion paid over time on bonds.

To make matters worse, Miami taxpayers may not even see that $50m dollars. Or even a single dollar from the team’s sale. MLB claims the Marlins are a “money-losing” franchise and the profit sharing clause in the contract allows Loria to deduct “debt, certain expenses, and taxes tied to a sale.” Thus, his attorneys told Miami-Dade County he would not be sharing anything. They claim there was no profit. The County has responded by suing, and the case is winding through the courts.

Thus, the era of sports teams bullying communities into paying for stadiums while they keep the profits appears at a crossroads: legislation and savvy negotiations means local governments are pushing back. The tide hasn’t turned, but Columbus, Miami and Washington are taking steps in the right direction. Hopefully others will follow suit.