NFL in LA?

Discussions around a new NFL franchise in Los Angeles have swirled since the Raiders moved back to Oakland in 1995. After all, Los Angeles is a top 3 television market in the nation and has at least one franchise in every other major sport. In fact, it’s very strange that LA does not have a team in the most popular professional sports league while the Bay Area has two and even San Diego has a team. In the past 15 years, Los Angeles has been used as leverage for existing pro teams to coerce cities into helping to pay for a stadium, otherwise they could threaten to move to LA. Many interest groups in Los Angeles have long lobbied for a team and it is accepted that the next new franchise or franchise move with bring a team there, but there is no specific date in site for this move. One event that has recently brought forth discussions of a Los Angeles move is the sale of the Jacksonville Jaguars.

Shahid Khan recently bought the team from Wayne Weaver with assurances from both former and new owners that the team will stay in Jacksonville. However, Jacksonville is one of the smallest markets in the NFL, has a struggling team, a slightly outdated (1995) stadium, and so-so attendance and fan base. Jacksonville, especially with the recent sale, would seem ripe for a move to LA and there has been a lot of speculation on this point. The barriers to the move include the usual, with Jacksonville wanting to keep the team, the logistics of the new stadium in Los Angeles, and the terms of moving. Jacksonville’s agreement with the franchise includes a very large buyout for a move, something Khan, very successful but not one of the NFL’s most wealthy owners, would like to avoid. However, if the Jaguars are deemed to be losing money, he could avoid a large portion of that settlement. Now, some ethical issues come to light as the NBA lockout has shown that some creative bookkeeping can be used to show profits the way the owner would like. The Jaguars are certainly are one of the least profitable teams in the NFL, but are they actually losing money? In fact, even if they aren’t and Khan would have to pay the settlement, he could probably get Los Angeles to pay some of it and still come out well in the black with the added revenues a move to Los Angeles could bring. The proposed downtown stadium next to the Staples Center would be a huge cash cow and Los Angeles seems primed to do what is necessary to acquire a team. This situation is definitely worth monitoring as Khan’s motives become more clear.

The Winnipeg Jets

We recently looked into a few franchise relocations that appeared to be necessary for the survival of the franchise.  One of the teams we looked at was the Winnipeg Jets.  The moved from Atlanta after last year.  The NHL season is now sufficiently developed to give us a reasonable sample size to look at to see if the relocation was successful.  By all accounts the Jets have been enormously popular in Winnipeg and even have had more success on the ice than in any of their recent years in Atlanta.  Attendance is up by a large margin and many games are actually sold out well in advance.  For example a ticket to tonight’s Bruins game could only be purchased on the secondary market on stubhub.com for at least $199.  This was unheard of in Atlanta where tickets could be had the day of the game for extremely low prices.  In addition the team is in third in its division and has a realistic shot at the play-offs.  In fairness this may be caused by player improvement and have nothing to do with the move from Atlanta to Winnipeg but it is also possible that the increased fan support and general positive attitude around the franchise that has been created by the move has caused some of the improvement.

The most important facet of the relocation however does not have to do with ticket sales or wins and losses.  As we attempted to show in our case study about the Sonics, professional sports franchises hold a unique position.  They are technically businesses but they have a stronger responsibility to their fans than the average firm has to its client base.  This is because a sports team really does have a monopoly on the people in that area.  Particularly with hockey in Canada, the only option is to be a fan of the team in your city.  Thus the team has a greater responsibility to protect and look after the interest of these fans.  The people of Winnipeg had a team ripped from them in 1996 when the Jets originally left for Phoenix.  Grantland’s Chris Jones outlines what the return of the Jets meant to Winnipeg on this article, but it can be summed up in the subtitle of the article; “For one night Winnipeg was the happiest town on Earth.  With apologies to hockey fans in Atlanta the team was never really appreciated there and will be a much better fit in Winnipeg.  This is one example where relocation was the perfect solution.

The NBA Lockout

One of the most interesting ethical issues in professional sports today is the NBA lockout and its recent resolution.  The lockout has been going on for over 100 days and is going to cost the league 16 games of the season.  The lengthy lockout was due to an attempt by the owners to fundamentally change the way in which player salaries, player movement, and revenue sharing worked out.  The exact terms of the settlement are still unclear and are exceptionally complicated. This article from ESPN.com and this one from SI.com detail the new collective bargaining agreement as well as the current information allows.  The final settlement is important but not the real issue from an ethical standpoint.  Regardless of how everything shakes out and which side actually “won” the lockout, many stakeholders who had no role in the negotiations were hurt by the work stoppage.

The first group of stakeholders that were harmed by the lockout are the many people who rely on the NBA season for employment.  The players of course are included in this group but the vast majority of people employed by the NBA and its franchises were not involved in the negotiations and were also less able to deal with a few months with no income.  Employees such as stadium security or concession workers as well as the people on the financial and marketing side of each teams front office were left out in the cold by the NBA.  NBA owners made the decision to lock out the players until they were offered a more favorable collective bargaining agreement.  This was the best decision from a profit-maximization standpoint but it certainly had unintended negative consequences for may of their employees.

Another group of stakeholders harmed by the lockout is the fans of the NBA.  They, like the non-player employees, were given no voice in the negotiations, but were negatively effected.  The fact that there are 16 fewer games lowers the value of this season, but more importantly as SI.com’s Zach Lowe details in his column, the condensed schedule will lower the overall quality of play.  The NBA does not exist without its fans so the welfare of these stakeholders needs to be a high priority for both the players and the owners when considering work stoppages.  In this case the fans seem to have been neglected.  The season was not cancelled so the NBA avoided a catastrophic loss of fan interest and support but both sides, and the owners especially went on record as being willing to sacrifice the season to achieve their goals.  This shows a disregard for perhaps the most important stakeholder in the success of the NBA.

Minnesota Vikings Stadium

The Minnesota Vikings are in a very interesting situation as the team lobbies for a new stadium. The Vikings have desired a stadium for awhile but have previously been mostly rebuffed by Minneapolis and their real need for a new stadium has been questioned by the local governments. However, talks now are moving forward to build a new stadium in the area. The Vikings were very clever in using leverage to get the talks going and they have become very contentious in Minnesota. The Vikings did not use the threat of relocation to make city officials jump to keep them, but instead used a different strategy.

The Vikings are essentially playing different areas of Minnesota off themselves to get the sweetest deal and best stadium. Ramsay County is seen as being the leader right now and the Vikings preferred destination, although they would certainly be open to a higher bidder as well. The new plans call for a 1.1 billion dollar stadium in Ramsay County, with the County itself financing at least 350 million. Other Minnesota representatives have questioned how Ramsay County can do this as their plan to raise sales taxes was rejected by the governor but the county maintains it can get the funds. After refusing a new stadium last year, Minneapolis is jumping into the picture and backtracking on prior statements about tax revenues that could or could not be used towards the stadium. Minneapolis would rather not build a stadium but would much rather not lose the Vikings cash cow to a rival county. A lot of people are also advocating for a Mall of America stadium. The Vikings have different municipalities in the area fighting over the chance to pay hundreds of millions of dollars for their new stadium, not a bad situation for an NFL team, especially with the vague threat of a Los Angeles move always looming with Jacksonville’s owner declaring that the new owner will keep the team in Jacksonville (assuming that isn’t a Sonics situation).

So, did the Vikings do anything wrong? I say no. They don’t have a bad stadium now and maybe don’t really need a new one, but the fact that so many counties are clamoring to help fund a stadium worth over 1 billion dollars certainly shows that the demand is there and the stadium could be successful. Also, they are staying in their metro area, despite perhaps moving away from the city (a la the New England Patriots in Foxborough or the Giants  and Jets in New Jersey). The Vikings seem to have made a very shrewd business move in a market that loves its football. Not everyone is for the new stadium as some protestors held signs with slogans like: “We Need Housing Not Stadiums.” And of course, the team maintains they lose money with the old stadium, but everyone else is pretty sure they’re making good money (with a significantly less than great team in the last couple years). Other dissenters chanted “Make Zygi Pay”, a shot at owner Zygi Wolf and the funds he wants. I for one think a new stadium is a great idea, especially after the Metrodome’s epic roof collapse last year.

 

Joe Paterno

I am sure everyone is familiar with the recent events surrounding the Penn State football program.  This is obviously not a professional sports issue but the allegations concerning former Penn State defensive coordinator Jerry Sandusky, and the ethical issues surrounding the failure to report his actions are such that we would be remiss if we do not discuss them here.  If true Sandusky’s actions are horrifying and sick but in many ways the fact that people within the Penn State organization knew is worse.  Pedophilia is sadly not unique to Sandusky but the tolerance of it in this case seems to be.

It seems that many people in the Penn State football program had some sort of knowledge of Jerry Sandusky’s actions.  Everyone who had any knowledge is in the wrong, but I am choosing to focus on Paterno because of his position as supreme head of the football program.  Not only was Paterno the most powerful person in the athletic department but it is completely reasonable to assume that given his long tenure and legendary stature that Paterno was the most powerful person at the entire university.  Given this level of power and control it is clear that Paterno had an ethical responsibility to address Sandusky’s actions when they first came to his attention.  Instead Paterno simply notified his superior, the athletic director, and then moved on.  This is enough to clear him from legal wrongdoing, but is in my mind a weak and inappropriate response from Joe Paterno.  In theory he has a superior to whom he can report violations but in practice he is the real leader of Penn State athletics.  By choosing to pass responsibility for this matter on rather than deal with it head on Paterno failed Penn State University and deserved to be fired

MLB Labor Deal

In the wake of the troubling, unfortunate, yet predictable break down of the NBA labor talks, let’s look at a league with labor discussions going rather swimmingly: Major League Baseball. Only weeks removed from the end of the season, the MLB is already about finished with the new labor deal (begging the question once again: why did the NBA wait until October to start getting serious?). This deal would guarantee two straight decades of labor peace after the 94-95 strike, unprecedented since the birth of the MLB Players Association. In fact, the 11th hour deal struck before the 2002 season was the first time a new labor agreement was agreed upon without a strike or lockout. Sure the sides aren’t as far apart as the NBA or even the NFL when negotiations started, but nevertheless the MLB is providing a blueprint for how labor discussion SHOULD work while still going forward with some major changes.

One of these changes is league realignment, making for two even 15 team leagues (something that has made a lot of sense for a long time). The problem has been getting a team to actually move, destroying most of its rivalries and traditional opponents, not to mention the rule changes and some would say competitive upgrade that the American League presents. The Houston Astros seem poised to make that move, with the MLB and former owner Drayton McLane reportedly offering a $70 million discount if the Astros switch leagues. This is interesting as the league is offering significant financial incentives to switch leagues, greatly benefitting MLB. Astros fans are not all happy with this move as they now will be part of the AL West, and, while the Texas Rangers rivalry should benefit, the other three teams in the division are squarely on the west coast and have no history with the Astros.

Another change the MLB is moving towards is the addition of a new wild card spot. This spot would go to the next best record of a team that does not win its division. Management is on board with this idea as it add meaning to more late season games and extra playoff games for more TV revenue. Right now, it appears as if it will be a one game playoff for added drama for TV ratings. Opponents of this plan argue that it would be unfair if one wild card had a significantly better record than the other yet lost in a one game playoff instead of, say, a three game playoff. Regardless, this format seems very likely to come into fruition in the near future and will add an interesting new dimension to the playoffs, the hardest statistically to reach out of the four main sports leagues. It gives smaller market teams a better chance, while teams such as the Yankees tend to already make the playoffs almost every year.

Another point of negotiation is spreading interleague play throughout the season. Because the leagues aren’t geographically spread out and inter league play has lost a bit of its luster, I think this is a good move. Now series like Yankees-Mets or Cubs-White Sox don’t have to be at the same times every year but can be scheduled accordingly. The other changes have to do with the draft with some restrictions on bonuses and how many picks are forfeited through free agency. The changes have teams losing 1st round picks only when star players are signed and not the old Type A standard (which could include players many teams might be more hesitant to sign with the consequences of lost draft picks). The Competitive Balance Taxes are still being worked out, but it certainly looks like we will not come close to missing any baseball in the coming year. If only our basketball friends could be so kind.