As NFL Lockout Looms, Mayors Consider Their Strategy

Owners wanted municipalities to build them stadiums -- and taxpayers ponied up. Now the NFL may refuse to play games at the very facilities they requested.
by | May 26, 2011

Cities that host professional sports teams could soon form an association to weigh in on the ongoing National Football League labor dispute.

The NFL faces the potential for a canceled season as the league's owners and players have remained deadlocked on negotiations over a new contract. That battle has spilled into the court system, which may ultimately dictate the legality of a potential owner-imposed lockout and a canceled season.

Now, Indianapolis Mayor Greg Ballard is trying to get cities that host sports teams to form an organization that would represent their interests. This week, NFL owners are in Ballard's city for their annual meeting. But Ballard hopes to pitch his idea to his colleagues when he meets with the nation's mayors at their annual conference in Baltimore next month.

"We want to make sure the cities kind of understand that they're a piece of this," Ballard tells Governing. "We have the owners. We have the players. But the cities have a voice in this too. There are a lot of people involved in the city who've put a lot of heart and soul, and a lot of tax dollars, into these things."

In a letter to mayors whose cities host pro sports teams, Ballard names the lockout as one of many issues the association could address. The association could make recommendations to cities regarding how to intervene in the collective bargaining process and its associated lawsuits to ensure compensation as a result of a lockout. It could also report to members what rights they have to lease payments teams owe the municipalities -- which typically own NFL stadiums -- in the event of a canceled season.

There's been an ongoing debate in communities across the country over whether NFL teams will still have to pay their leases on publicly-owned stadiums if games are canceled due to a lockout. In many cases, it appears the teams would be off the hook for those payments -- even though they'd be the ones who canceled the season in the first place.

In some cities -- such as Denver and St. Louis -- the teams never pay rent to use the publicly-owned stadiums. So while the municipalities wouldn't technically be losing a revenue stream, they'd be getting no return on the major gift of that free rent itself if the season was canceled.

Ballard emphasized that his proposal is not a direct response to the lockout, and it's not meant to be adversarial.

In his letter, Ballard writes that pro sports have an important financial and emotional role in their communities. But their costs to municipalities "can become unbalanced over time or be threatened by unanticipated events" -- such as labor disputes.

Many city leaders and fans have expressed frustration at the potential loss of an NFL season, due largely to the massive amount of public dollars put into stadiums. Since 1992, 29 of the 32 NFL stadiums have been built or refurbished at a cost of $10 billion, and more than 60 percent of that total was paid by municipalities, according to Ballard. Teams also typically get favorable lease and taxing terms, as well as other perks such as infrastructure construction and operational expenses at below-market price.

Mayors in Kansas City, Minneapolis, Miami and Houston, along with elected officials in San Diego, have reportedly contacted league and team officials to advocate against a canceled season. Meanwhile, the players' union has mailed letters to city and state officials to emphasize the negative economic impact a canceled season would have on cities that host teams. In the players view, a canceled season would be the fault of the owners -- as would any negative financial side effects that result from it.

"[T]he conservative estimate is that a lockout will cost every American team city over $160 million in lost jobs and revenue," Kevin Mawae, then-president of the NFL players union, wrote in a letter to New York Gov. Andrew Cuomo late last year. (That's actually a very liberal estimate that has been debunked by some economists, who argue the true cost would be much lower, as fans would just spend their money on other activities).

Mawae goes on to write that the public funds that benefit teams are "apparently taken for granted by NFL owners." Other elected officials received letters similar to the one sent to Cuomo.

The NFL, for its part, has criticized the union for trying to appeal to state and local officials. League officials note the irony of professional athletes earning lavish salaries trying to seek curry with elected officials at the very moment they're laying off their own unionized employees and reducing benefits.

Ballard himself has been careful not to pick sides in the battle, and he says he has not been in talks with officials from the Indianapolis Colts. 

The proposed association, dubbed the Municipal Alliance for Taxpayer Equity in Sports, would seek to protect municipalities' capital investments -- the stadiums -- and the city income associated with teams. It would also try to retain teams in their home cities based on terms that strike an appropriate balance between taxpayers, players and team owners, Ballard writes. It would be formed as a 501(c)(4), which would allow it to lobby for favorable legislation.

Teams frequently play cities against one another as they vie for the most favorable stadium financing deals. When a team's lease on a stadium expires, it is common for an owner to threaten to relocate unless taxpayers fund a new facility. And sometimes they do locate to cities whose taxpayers are willing to provide more funding.

Ballard proposes that the association collect data to analyze how much money taxpayers contribute to sports teams and how great a return they got in their investment. He also says the association could assemble teams' financial information collected by each city. 

"If we can kind of open it up and be transparent about this sort of thing, I think that will help out the cities," Ballard tells Governing.

In theory, such an association could be a powerful force, says Philip Porter, a sports economist at University of South Florida. If cities banded together, shared information, and pledged not to offer teams large financial incentives, they could avoid being pitted against each other to lure professional franchises. But that may be tough to execute.

"They don't talk about enforcing a non-compete agreement with each other for teams," Porter told Governing after reading Ballard's memo. "As soon as nobody bids on a team, then a city that wants a team is going to make a bid. I think it's a wonderful idea, and if they could pull it, off it would have great consequences. I doubt such a cartel of mayors could hold together."

Join the Discussion

After you comment, click Post. You can enter an anonymous Display Name or connect to a social profile.

More from View