Since the end of the 1994 season, the city of Los Angeles, the nation’s second largest media market, has been without a franchise in the National Football League (NFL). Industry analysts and NFL executives, including Commissioner Roger Goodell, speculate that it is only a matter of time before a team returns to Los Angeles, whether that team is new or currently existing. However, such a move will not happen until the 2016 season at the earliest.
The most likely candidates to move to Los Angeles are its former teams, the St. Louis Rams and Oakland Raiders, as well as the team currently residing in Southern California, the San Diego Chargers. All three of these teams currently play in older stadiums that are below market standards, each have expiring contracts with their current venues, and all three would see a large increase in profits if they moved to Los Angeles. For example, the San Diego Union-Tribune recently estimated that a Los Angeles Chargers team might be worth about $400 million more than a San Diego team.
Article 4.3 of the NFL Constitution and Bylaws requires prior approval by the affirmative vote of three-fourths of the member club owners before a club may transfer its franchise to a different city. Owners are required to show that they have exhausted all options within the existing home territory (i.e. they attempted to develop a new stadium deal), and cannot simply move the franchise at the opportunity for increased profits. Franchise relocation has been the subject of a number of famous antitrust court decisions, including Los Angeles Memorial Coliseum Commission v. NFL (Raiders I & II). These two cases involved the city of Los Angeles and the Raiders franchise. In Raiders II, the U.S. Court of Appeals for the Ninth Circuit suggested that league imposed “franchise movement restrictions are not invalid as a matter of law…,” but instead stated that “the question of what restraints are reasonable is one of fact.” The court did suggest that, due to the unique nature of a sports league, some territorial restrictions on its member clubs could be imposed, but those restrictions had to be reasonable. Thus, most commentators believe that the NFL’s attempt to control franchise relocation in the eventual return to Los Angeles is valid. NFL insiders reported on January 3, 2015 that Rams owner Stan Kroenke has said on numerous occasions to Inglewood, CA Mayor James Butts that he will move the team to Los Angeles “no matter what.” This potential relocation could set the stage for another court battle if the league decides to prevent the Rams relocation.
Should the league decline to invoke Article 4.3 and one of the three current cities wish to keep their franchise within that territory, the city or respective state could invoke its constitutional powers of eminent domain. Within the context of the Chargers and Raiders, the California Supreme Court previously held in Raiders I that intangible property could be taken as a matter of law. So long as a valid public use can be shown and just compensation paid, “the operation of a sports franchise may be an appropriate municipal function.” Therefore, if the Chargers were to plan to move to Los Angeles, the city of San Diego may be able to exercise its power of eminent domain to keep the team in San Diego.
The ability of a city or state to take a franchise under its eminent domain powers is a question that was left slightly unanswered by the Raiders I & II decisions. The Constitution of the United States grants Congress the authority to regulate commerce between the states, and thus, any city or state legislative enactment with the goal of economic protectionism is invalid per se if it has more than an incidental burden on interstate commerce. The Court in Raiders II held that the City of Oakland taking the Raiders by eminent domain would violate the Commerce Clause because the NFL was involved in interstate commerce and was subject to national uniform regulation.
Many commentators are critical of the perceived effect that a franchise taking by eminent domain might have on interstate commerce. These commentators suggest that the league’s structure would remain intact and the court decision in Raiders II was based on an earlier precedent regarding a collective bargaining agreement that would have drastically changed the league. While there is uncertainty over which teams will make the move to Los Angeles, there is certainty that it will happen within the next few years, possibly setting up an important legal battle between the NFL, its member franchises, and governments of all levels.
February 10, 2015