Maintaining a Credible Threat

Great article today at Slate from Matt Yglesias about the Sacramento Kings proposed move to Seattle. It appears as if the NBA will try to force the current Kings’ ownership to take a lower bid from a Sacramento group that includes a new publicly financed stadium than a higher bid from a Seattle group that proposes to build a largely privately financed arena. As noted by Yglesias,  “The Seattle bid, in other words, would have set a good precedent for the future of American public policy. And the owners didn’t want that.” I’m not sure Yglesias is exactly right here. There are plenty of examples in the NBA of largely privately financed arenas including those in Chicago, New York City, Boston, Toronto, Philly, and Salt Lake City.

His point about using Seattle as a blackmail threat, however, is spot on. He states, “The owners want to be able to make this move over and over again. ‘Give us a new publicly financed stadium or we’ll move to Seattle’ is a threat that works as well in Portland or Milwaukee or Minneapolis or Salt Lake City or Memphis or New Orleans or Phoenix as it does in Sacramento.” Seattle is a much more credible threat for franchise relocation than Sacramento, so unless the Seattle bid is a whole lot better than the one in Sacramento, having an open city in Seattle is worth a whole lot more to the league than having an open city in Sacramento.

One can see the most obvious example of this in the NFL. While it may seem odd that the NFL doesn’t have a team in Los Angeles, the nation’s second largest media market, in fact, Los Angeles is a credible relocation threat for just about every team in the country. The open market in LA just got the normally quite parsimonious citizens of Minnesota to cough up about $500 million for a new Vikings stadium. The Indianapolis Colts and the New Orleans Saints almost certainly have LA to thanks for their new or upgraded stadiums as well. All in all, LA is probably worth more to the NFL without a team than with a team.