Tuesday, March 28, 2017

NFL's Business Judgment Rules: Will Raiders' Move To Vegas Harm the League?

The Oakland/Los Angeles/Oakland Raiders are soon to become the Las Vegas Raiders. This has fans in an uproar, with some saying the move is like losing "family."  Moves of sports teams are rarely well received in the place the team leaves, and this move is no different.  

Teams move for a variety of reasons, though the primary reason comes down to money.  And there's nothing wrong with that.  Although it is a loss for long-time fans, the team will get new fans in the locations (if history is any indication), and it's certainly the right of the business owners to decide what is best for their business.  In the judgment of Raiders' ownership, it's time for Vegas Baby.  

The structure of the NFL is such that team owners need approval of the league to make such a move, which makes sense because a sports league is necessarily dependent on other teams.  As such, the teams have created some obligations to one another and agreed to give up some level of control for the good of the league.  All but one team voted to support the move to Vegas (the Miami Dolphins dissented), giving the Raiders 31 votes, when they only needed 24.  Thus, it means the other league owners (sans the Dolphins' owners) thought the move was in their best interest, too. 

This makes three recently announced NFL team moves. In addition to the Raiders, the former St. Louis Rams returned to Los Angeles, and the former San Diego Chargers are now a second L.A.-based team. This means the super majority of NFL owners feel all of these moves are in the best interest of the league, or are at least neutral to the moves.  This makes some sense, as there had been relative stability for the league teams, with the last move before these three taking place in 1997, when the Houston Oilers left for Tennessee (Memphis temporarily, then Nashville in 1999). 

Moving forward, though, how much will fans take?  If several more teams make a move in the next few years, will it upset fans to the point that they stop watching? Hard to say, but the league will be able to put a stop to it if they are concerned.  There are a number of older stadiums in the league, so there may be more moves to come. There will almost certainly be threats to move, even if teams end up staying put.

If teams keep moving, it's possible the league could be hurt, but that would require the NFL fans in the old league cities to stop watching the NFL. That could happen, but it seems unlikely.  Either way, it probably won't be a move that tells us the league is being harmed.  Instead, it will probably be when teams without a lease don't get a lucrative offer to move another city.  

https://lawprofessors.typepad.com/business_law/2017/03/nfls-business-judgment-rules-will-raiders-move-to-vegas-harm-the-league.html

Contracts, CSR, Joshua P. Fershee, Sports | Permalink

Comments

Once all taxpayers decide that they will not subsidize the forum for professional sports, this venue shopping will end. However, so long as these forums are subsidized by the public coffers and economists sell that the teams are financial boons to the State and local (more realistic) economies we shall continue to see team hopping. Makes the wisdom of Green Bay citizens look even better!

Posted by: Tom N | Mar 29, 2017 8:17:04 AM

Enjoying sports means believing in some important sense that it's not just "about the money." The NFL has been doing its best to make it clear that it is just about the money to them. The question is how long fans will keep pretending that the teams care about them. Probably for a while yet . . . old habits die hard. But there's a lot of entertainment competition these days.

Posted by: Frank Snyder | Mar 29, 2017 9:28:16 AM

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