Restoring Fan Loyalty to Professional Sports

Published August 26, 1996

By what right should Congress consider regulating or interfering with the business of professional sports . . . particularly a Congress that is a fierce champion of free markets and free enterprise?

The short answer is the Sports Broadcasting Act of 1961. Through this Act, Congress granted the four major sports leagues a limited antitrust exemption, allowing them to pool their separate broadcasting rights for sale to a single purchaser.

This Act creates the economic foundation of the leagues. It provides not only for their profitability, but for their very existence. In the case of the National Football League, for example, the antitrust exemption makes it possible for the league to divide over $1.1 billion in network television revenue in equal amounts of about $38 million per team.

By allowing the leagues to pool and then redistribute broadcast revenues, Congress intended to protect the competitiveness and viability of weaker league teams. This, in turn, would protect communities whose teams might otherwise fold or relocate to greener financial pastures. In other words, Congress granted sports leagues the special exemption from antitrust laws to create stability, and to protect communities and fans.

It’s pretty obvious that the Sports Broadcasting Act is no longer working very well. The current hopscotching of teams by owners who offer their clubs at auction to the highest bidder and move their teams at will, with no apparent regard to the destruction of their most valuable asset, fan loyalty, indicates only too clearly that the owners have completely abrogated their responsibility to fans and communities.

Owners have taken advantage of the guaranteed broadcast revenue stream made possible by Congress, plus the monopoly pricing made possible by a tight rationing of the number of franchises available, to legally extort cities into bidding wars against each other. The enticements typically include new stadiums, luxury boxes, concessions, parking fees, stadium advertising revenue, tax abatements, practice facilities, moving expenses, legal contingency set-asides, and slush funds–all to the tune of billions of dollars nationwide, all for the exclusive benefit of a small group of owners and players, and all largely paid by taxpayers.

In exchange, the cities and fans–no matter how well they support their teams–don’t even have the assurance that their teams will stay in town. This is a morality play of monumental proportions, involving loyalty and betrayal on a massive scale.

It is perfectly appropriate, even compelling, that Congress, having had so much to do with enabling the financial success of the leagues, should intervene to stop the exploitation of fans and cities and attempt to stabilize the leagues. Two very simple changes in the law could do exactly that:

After a team has been in a community for ten years, the team name may not leave the city. In other words, Mr. Modell can remove his team from Cleveland, but he can’t take the Browns. The Yankees will never leave New York, the Bears will never leave Chicago, and the Celtics will never leave Boston.

If a team leaves a community and the city identifies a new investor who meets certain market tests of financial viability, then the league must grant a new expansion franchise within twelve months. This will level the playing field and give communities an improved bargaining position. At the same time, it will neither prevent owners from moving their teams nor force leagues to put teams in communities that haven’t supported them.

It is not enough simply to grant the leagues greater exemption from the antitrust laws, in order to enforce their own rules against franchise relocations. Under those rules, the NFL could have stopped the move of the Rams from Los Angeles to St. Louis, or of the Browns to Baltimore. But that didn’t happen and it won’t happen. Memorializing in book law what already exists as a matter of case law will not level the playing field, it will not protect fans from exploitation, and it will not protect cities from extortion.

The betrayal of Cleveland touches a raw nerve not just in Northern Ohio, but all over America–even our arch-rivals, the Pittsburgh Steelers, are outraged. This latest insult so clearly demonstrates that in America today, fan loyalty no longer counts for anything.

We owe it to the fans and communities–and yes, even the leagues themselves–to restore integrity to professional sports.

Congressman Martin Hoke is a Republican from Ohio. This essay, distributed by The Heartland Institute, is derived from Mr. Hoke’s November 1995 testimony before a subcommittee of the Senate Judiciary Committee