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St. Louis Sues NFL Over Rams Move to L.A.

By Christopher Coble, Esq. on April 17, 2017 6:57 AM

Professional sports teams, much to the chagrin of less geographically-mobile fans, have a tendency to up and move. Franchise mobility, and the new-stadium-deal-or-bust extortion racket that precedes most moves, makes it all too apparent that leagues and teams are out for money first and fan appreciation third, fourth, or elsewhere down the list.

But at least one city isn't taking the taking of their team lying down. The city and county of St. Louis have filed a lawsuit against the NFL and its teams, accusing them of breach of contract by moving the Rams to Los Angeles.

Playing by the Rules

The NFL, through a vote of its member organizations and their owners, approved the Rams move last year, along with giving relocation consent to the Oakland Raiders and San Diego Chargers. But St. Louis is claiming that the Rams "failed to satisfy the obligations imposed by the League's relocation rules and the fact that relocation was not supported by the required statement of reasons or the adopted relocation standards." As such, the lawsuit claims the league "made intentionally false representations," "interfered with the [city's] valid business expectancies," and "unjustly enriched themselves."

"Under the Relocation Policy," the lawsuit alleges, "teams must work with diligence and in good faith to remain in their home community and cannot relocate unless the Policy is satisfied." The policy was put in place in 1984 after the Ninth Circuit Court of Appeals ruled the NFL violated federal antitrust statutes regarding another Raiders move, this one from Oakland to Los Angeles. And St. Louis claims it did enough to keep the Rams:

With the Relocation Policy in place, plaintiffs made substantial investments in [the Rams' home stadium.] Plaintiffs paid expenses and interest on 30-year bonds used to finance the construction. The City and County both paid 25% of the bond obligations, including millions in maintenance expenses. The City and County each incurred bond cost obligations of $180 million. The City and County collected hotel taxes to service their obligations and paid these obligations out of general revenue funds.

Penalty Flags

The lawsuit doesn't ask for a specific damages amount, but experts estimate the value of the Rams franchise doubled with the move to $3 billion, and St. Louis listed a litany of lost revenue from the move:

The City of St. Louis has lost an estimated $1.85 - $3.5 million each year in amusement and ticket tax collections. It has lost approximately $7.5 million in property tax. It has lost approximately $1.4 million in sales tax. It has lost millions in earnings taxes. The City of St. Louis will have lost over $100 million in net proceeds due to the improper conduct described above. The County of St. Louis has lost hotel and property tax revenue, as well as sales tax revenue. The failure to approve the new stadium cost approximately 2,750 jobs in construction and more than 600 jobs per year in the City of St. Louis. The average annual state revenue impact exceeds $15 million.

The NFL will argue it is immune from such lawsuits or, in the alternative, it followed its own rules on relocation. If those arguments prove unpersuasive, future franchise movement might look a lot different.

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