Posted by John Vrooman on Wednesday, July 12, 2017 in National Football League.

Interview with Bloomberg News

Is this suit unique/unusual in the history of litigation over NFL franchise moves?

No, the City of Cleveland successfully sued the NFL after the relocation of the relocation of the original Browns to Baltimore Ravens in 1996. In the relocation extortion case the NFL settled with the City of Cleveland by granting the 31 expansion franchise new Cleveland Browns to replace the old Art Modell owned Browns in 1999.

As a monopoly cartel the League artificially restricts its membership to max out the expansion fees and more recently the grossly over-inflated relocation fees. In economic terms the League would be justified in charging a relocation fee equal to the amount of damage caused by potential franchise moves. The $650 million relocation fees presumably charged to the Rams and Chargers are exorbitant and unjustified because the other member of the League are actually better off after the moves to LA, the second largest media market in NA.

The exorbitant relocation fees are clear and present evidence of the unregulated monopoly power of the NFL. (See the attached appreciation in franchise values in excess of the S&P 500 over the last quarter century)

https://www.thestreet.com/story/13449643/1/why-will-moving-to-l-a-potentially-cost-an-nfl-team-650-million-here-s-a-breakdown.html

Does the NFL have any particular vulnerability re/ this suit? Do the allegations strike any nerve that the NFL is sensitive about?

Yes, the League is an unregulated monopoly cartel that has leveraged over $7 billion in public money for luxury venues with the extortion threats of franchise relocation since the 1995 expansion. (See attached summary of stadium extortion deals since the 1995 expansion).

The NFL has lost two important legal battles that clearly reveal the League’s vulnerability to potential violations of the cartel-conspiracy Section 1 of the Sherman Act. The first setback was the adverse ruling in the original Raiders relocation case (Oakland to LA) in 1984 and the second was the supporting ruling in the US Supreme Court’s American Needle Case in 2010. In both cases the League was found to be a collection of potential competitive firms that collectively conspired to act as a cartel in violation of Sherman Act Section 1. This is the Achilles heel left unprotected by the NFL shield, and the membership knows it.

https://cdn.vanderbilt.edu/vu-my/wp-content/uploads/sites/2119/2019/04/14134840/franchise-free.pdf

https://cdn.vanderbilt.edu/vu-my/wp-content/uploads/sites/2119/2019/04/14134758/VROOMAN-NFL.pdf

The suit, in addition to lost tax revenue and expenses incurred in trying to keep the Rams, seeks the $550 million (I believe) relocation fee that Rams had to pay to other NFL teams.  This re/ alleged tortious interference.  Have NFL owners been faced with that before?

Yes the League was sued by the St. Louis CVC because of the expansion fees ($29 million then compared to $650 million now) charged by the League to the Rams for the original relocation from LA to St. Louis in 1996. (See the attached summary of relocation and expansion fees since the 1995 expansion). The CVC argued that the $29 million fees was paid from $78 million (tax exempt) PSL funds paid from the CVC to the Rams and not the rest of the League.

Overall, what is your reaction to the suit?

The St. Louis lawsuit has merits in some of the counts but not so much in others. The League is vulnerable because of the precedent of Section 1 cartel conspiracy violations in 1984 and 2010. There is also the precedent of the Cleveland Browns settlement in 1996.

There is fairly strong evidence that Stan Kroenke did not bargain in good faith after he acquired control of the Rams in 2010. As a matter of fact Kroenke or the Rams didn’t appear to bargain at all with St. Louis, while they had clearly had their wandering eyes on SoCal and Hollywood Park development

In many of the counts the League appeared to violate its own relocation guidelines (set up after the Raiders case in 1984), but the economic damages to St. Louis are not clear.

The unjust enrichment of the $650 million expansion fees after the relocation extortion game in LA is clear and present evidence of the monopoly cartel power of the NFL “membership,” but it is not clear that the CVC or St. Louis were damaged by that exorbitant fee, while they may have been damaged originally by the League in 1995.

Much of the Rams’ recent relocation problem derived from the concessions that the CVC and St. Louis made to attract the Rams from LA in the original extortion gambit played out in 1995.

In the end, the NFL is an unregulated monopoly cartel, as evidenced by a growth in values that doubles the best competitive rate available in the S&P 500 over the last 25 years.

The strongest arguments against the Rams relocation are the Leagues raw economic power where large metro markets like LA, Oakland, San Diego and Las Vegas are reduced to bidding against one another in a fan-cruel extortion game being played out throughout North America and suing each other and the League in Court. Why not simply expand into each of the competing markets and charge expansion and relocation fees only as economically justified.

That is the expansive wide-spread nature of the NFL’s relocation extortion games and local or regional fan objections and legal actions are too restrictive or limited to capture the global nature of the NFL’s true expansive power. The NFL cartel is ironically too big and too diversified with too much monopoly power to fail.

V