Posted by John Vrooman on Monday, February 12, 2018 in National Football League.

Interview with Arizona Republic.

A state bill here in AZ that would have Arizona join a national compact forbidding the use of taxpayer money for new professional sports facilities or renovations to existing ones. The compact would not take effect until 24 other states adopted it, the goal being that sports teams could no longer threaten to move elsewhere if enough states stopped offering financial incentives.

One of my colleagues who suggested you may be able to weigh in on how a compact like this would affect the sports industry as a whole.

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I can’t really comment without seeing the details of the bill. But I will anyway.

North American sports leagues are classic monopoly cartels that maximize franchise value and expansion/relocation fees by artificially restricting the number of franchises.

This creates a de facto venue extortion game where potential host cities complete with each other by maximizing bids of public stadium subsidies for an essentially private business with overestimated net economic impact on the relevant markets.

Unilateral remedial legal action taken by any state or host market would only be as effective as the strength of the agreement among all possible destination markets in all states. In order to be an effective restraint the League’s economic monopoly cartel would have to be matched by a countervailing legal cartel of all states.

If 25 states adopt a mutually binding non-relocation agreement, then what about the other opportunistic 25 states? In order to be effective any legislation limiting the footloose NFL must be as expansive and binding as the League cartel itself.

Regulation of the footloose and fickle NFL must therefore bind all potential states and markets, and the regulatory authority should come from the Federal level. Unfortunately for local taxpayers held hostage, that ain’t gonna happen anytime soon.

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This local bill seems to be inadequate in scope to solve the national problem that it is trying to correct. That is the underlying reason why the stadium extortion game persists.

The subsidized NFL is playing chess while the local subsidizing governments are playing checkers.