When the most recent print version of the Sports Business Journal arrived at Chez Miller, an above the fold headline read: “NFL: We Have Final Say in L.A.” with a subhead reading “Teams warned not to do own stadium deal.” Here’s the online version of the article.
The NFL has reiterated to its 32 clubs that Los Angeles is the league’s market and that any franchise seeking to negotiate its own stadium deal in the city could threaten the best economic result for the sport, according to team and other sources familiar with the matter.
The league outlined its points in a memo sent to clubs last month. In that memo, the NFL also cautioned that a team buying real estate in Los Angeles would not preclude the league from moving forward on its own stadium deal. There has been some concern in league circles that a team might squat on Los Angeles through buying land for a potential stadium.
The reason given in the article?
The NFL has shepherded the effort to return the league to Los Angeles almost since the Rams and Raiders departed the city after the 1994 season. Owners have sat through countless updates at meetings on Los Angeles and on the league’s perspective on what it will take to get a deal done — so a wild-card club moving in on its own is enough to spark some unease. The potential revenue of the Los Angeles market is another key element, because if a team were to strike a poor economic deal, it would mean less shared money for the rest of the league.
But we can’t ignore the elephant in the room: Los Angeles is a great, credible threat point that individual teams can use for leverage in stadium and lease negotiations with their local and state governments. This threat was effectively played, at least through the local press, when the Vikings negotiated for their new stadium.
Full collusion among NFL teams gives the best outcome for the league as a whole (monopoly is preferred to competition), but each team has an incentive to strike out on its own and negotiate its own deal. This should surprise none of our readers here at TSE, but sometimes the members of the cartel have to reminded of this.