Professional Franchises

1
Chapter 10

• Professional Franchises

2
Chapter 10

• Sports Facilities
• Historically little regard for the facility
• All revenue essentially shared

3
Chapter 10

• Latter 1980s professional teams and colleges
  began to recognize the potential revenue stream
  from sports facilities.
• Building boom

4
Chapter 10

• Franchise free agency
• Relocation of professional franchises
• Supply and demand
• Locations compete for franchises

5
Chapter 10

• Legal issue
• Economic motivation

6
Chapter 10

• Relocationlegal issue
• Oakland Raiders attempt to relocate to the Los
  Angeles Coliseum
• NFL object to move
• Coliseum and Raiders files suit, anti-trust
  violation

7
Chapter 10

• Raiders/Coliseum wins suit
• NFL had to pay millions of dollars in damages and
  legal fees
• Baltimore Colts move to Indianapolis without
  requesting permission from league

8
Chapter 10

• Economic factors
• Gate receipts 60/40 split after 15 deduction for
  home team for maintenance
• Luxury boxes, club seats, concessions, parking,
  advertising, naming rights not shared.

9
Chapter 10

• Supply and Demand
• Ideal bargaining position for the franchises and
  league
• Franchise want-to-be cities compete with
  franchise locations.

10
Chapter 10

• Two ways to acquire franchise
• League grant new franchise to location
• Persuade an existing franchise to relocate

11
Chapter 10

• Efforts to restrict relocation
• Relocation windfall for NFL
• Increase value of teams enormously

12
Chapter 10

• Downside
• Negative reaction by fans that lost teams
• Teams relocate to smaller television
  marketshurts league on TV negotiations

13
Chapter 10

• Major League Baseball anti-trust exemption
• Prevents relocation over MLB objection

14
Chapter 10

• Major League Baseball contraction

15
Chapter 10

• Stadium financing
• Public funds
• Public/private partnership
• Private Seat Licenses (PSL)buy right to purchase
  ticket
• Corporate sponsorship
• Naming rights

16
Chapter 10

• Franchise ownership
• Morsani v. MLB
• NBA v. Minnesota Timber Wolves
• Seattle dispute

17
Chapter 10

• Single entity. Major League Soccer
• Fraser v. Major League Soccer, 2002