Without the threat of relocation, teams wouldn’t be able to leverage their positions with city and state governments. There are multiple reasons a city issues debt or favorable tax breaks such as school improvement, road construction and infrastructure projects. Of course, municipalities also issue debt and tax breaks for new or improved stadiums for professional teams. If St. Louis or San Diego won’t help the Rams or Chargers, there are other markets looking for an NFL team. That threat alone gives teams leverage.
For the seventh year in a row, the San Diego Chargers officially announced the team would stay in San Diego for another season, returning to one of the older stadiums in the NFL and delaying potential relocation. But that doesn’t mean the threat is gone.
Today, the Chargers are making the same announcement that the team has made each year since 2007: The team will not be exercising the lease termination clause and will keep working to find a publicly acceptable way to build a Super Bowl-quality stadium in San Diego. Calendar year 2015 will constitute the team’s fourteenth year of work on a San Diego stadium solution.
If you read between the lines of the statement from special counsel to the San Diego Chargers Mark Fabiani, the City of San Diego needs to find a way to assist the Chargers or risk losing the team.
San Diego isn’t the only team leveraging the threat of relocation to get some form of assistance from a municipality. The Rams are doing the same thing with the Edward Jones Dome and the city of St. Louis. St. Louis has made a big push to keep the Rams for another year with promises from the city to assist the team. The Oakland Raiders have been looking at multiple different markets in its effort to secure a better stadium situation than the O.co Coliseum. And though Roger Goodell announced that no teams will be allowed to relocate to Los Angeles next year, the threat is still very real for the 2016 season.
Dangling potential relocation to leverage financial incentives isn’t new. Before the New England Patriots built Gillette Stadium in Foxborough, Mass., the team almost moved to Hartford, Conn. Although Gillette was mostly privately funded, Robert Kraft was able to get $72 million out of the Massachusetts legislature, not to mention infrastructure improvements on stadium-accessible highways. That offer might not have been there had there been no threat of a Hartford move.
Leveraging other markets happens in other sports as well. It seems that every time an NBA team is up for sale, several potential ownership groups suggest relocating to new markets (usually Seattle). The Sacramento Kings already leveraged that threat into a new stadium. The looming threat of relocation hangs over the Milwaukee Bucks with constant discussion about the need for a new arena in Milwaukee.
If a team wants a new venue, it immediately starts by asking for public money. Municipalities don’t like to contribute tax-payer money to billionaire owners of sports teams that make millions through locally driven television contracts, gate receipts, concessions and sponsorships. It becomes a staring contest. This isn’t the first time we’ve seen teams such as the Rams, Raiders and Chargers threaten to relocate. But after next season, we may see some cities refuse to contribute.
Michael Colangelo is Assistant Director at the USC Sports Business Institute and Senior Editor of The Fields of Green.