Sunday, February 1, 2009
The recent controversy over attempts by Kansas City to pry (some might say steal) the New York Islanders NFL hockey team from the Nassau County Coliseum has got me collecting stories about teams that have bought their way of our leases for sports stadiums. The Islanders have a long lease--signed in 1985, it runs for thirty years, until 2015. There's also a clause in the lease acknowledging that an attempt to break the lease would cause irreparable damage to the stadium's owners. (Sort of a liquidated damages provision, except in this case it's a liquidated equity provision.)
We spoke some about the lawsuit over the Seattle Supersonics' lease last summer. That was easier for the Supersonics to buy their way out of--there was only a short time left on the lease. The Islanders have a long way to go--six years. So any attempt to buy their way out of the lease is going to be pretty costly. (In that lease the rent is computed at eleven percent of ticket sales, as I understand it.)
What other teams have recently bought their way out of sports stadium leases (what most people call breaking their lease)? Well, just recently the Chicago White Sox broke (bought their way out of) a lease at Electric Field in Tuscon, Arizona, which they had used as a spring training facility. Their lease ran through 2012.
These stadiums and the leases around them are pretty interesting devices--they're designed, of course, to lure a team (or to keep a team put). The Florida Marlins may be getting a new stadium, which would come with a thirty-five year lease that prohibits moving the team. A liquidated damages clause would require the team to reimburse Miami for all costs of the construction of the stadium if it relocated. Hmm, pretty interesting question of whether that's enforceable towards the end of the lease. Maybe that's a good question for a remedies exam down the road....