Franchise Free Agency in Professional Sports Leagues

Abstract

The National Football League (NFL or the League) has expanded membership only twice since its merger with the American Football League (AFL) in 1970. In the wake of each expansion decision in 1974 and 1993, there has been a series of unsettling franchise dislocations and extortions of stadium concessions from estranged NFL cities. The League argues that it has been rendered powerless to regulate these relocations by the adverse antitrust ruling that the NFL suffered in its failed attempt to block the move of the Oakland Raiders to Los Angeles in 1980-2. Over the same period, however, Major League Baseball (MLB) has expanded on only three occasions, and, while incumbent MLB clubs have often threatened relocation to leverage new stadia or lease concessions, not one MLB franchise has actually abandoned home since the Washington Senators became the Texas Rangers in 1972. Since the Raiders decisions,' over onehalf of the franchises in the NFL have played a stadium extortion game with their home markets and, in stark contrast to MLB, about one-half of these relocation threats have been realized. According to the League, the relative frequency of relocations in the NFL derives from the antitrust immunity enjoyed by MLB throughout most of this century.2 The remedy to the relocation revolution, in the League's opinion, requires the legislative empowerment of the NFL with an antitrust exemption similar to that held by MLB. It is argued in this paper that exemption from antitrust law is not necessary, because the NFL already holds the power to regulate the relocation of its members without threat of antitrust litigation, regardless of the Raiders decisions. The location of NFL clubs is inherently unstable, because franchise relocation is often in the best economic interest of a syndicated league. The ultimate source of franchise free agency in the NFL lies in the League's extensive revenue-sharing arrangements well beyond exemption from antitrust law.