The Rational Behavior behind NFL Relocations
![handle is hein.journals/utol30 and id is 457 raw text is: THE RATIONAL BEHAVIOR BEHIND
NFL RELOCATIONS
Dean V Baim
INTRODUCTION
F EW would argue that professional sports teams pay enough in rent and
concession incomes to reimburse their municipal landlords for the use of the
municipal stadiums they inhabit. A 1994 study concluded that of fourteen stadiums
surveyed only one earned a positive return on municipal expenditures to secure or
retain the franchise.' To date, the only thing that changed since the completion of the
survey is that the costs of the stadium projects are much greater than those covered
in the study Indeed, most new projects are so expensive they exceed the resources
of the host city and have become state projects.
Despite the seemingly bad nature of the stadium investment, during the mid and
late 1990s four National Football League (NFL) franchises relocated to receive
significant municipal subsidies, and several cities have been engaged in weighty
bidding wars to secure expansion NFL franchises.' A fifth franchise (the New
England Patriots) announced a relocation in 1998, but at this writing the franchise
has decided to remain in Boston after the site in Connecticut was found to have
significant environmental clean up costs.' This gave the Massachusetts government
time to put together an incentive package lucrative enough to retain the Patriots.
Supporters of government-owned stadiums, and subsidies to the franchises that
reside in them, argue that it is unfair to conduct a cost-benefit analysis using only the
operating income generated by the stadium. The stadium, proponents argue, provides
many improvements in the quality of life to the city and its residents. Congressman
Wilmer Mizell, a former Major League Baseball (MLB) player, made the point in a
1971 speech before Congress:
[T]hrough baseball, opportunities have been afforded to young men who otherwise
would not have been able to fully enjoy the American dream
Baseball builds character into young men who are going to be the leaders of the future.
This leadership development and chara.ter building comes about in many ways, some
* Professor of Economics & Finance, Seaver College, Pepperdine University.
1. See DEAN V. BAIM, iE SPORTS STADIUMASA MUNICIPAL INVESTMENT 170-71 (1994). In
this book, fourteen stadiums were studied as to the direct funds received in operating the stadiums as
related to the funds the municipal authorities paid to build and operate the facility Of the fourteen
stadiums, only one had repaid the municipal investment back fully
2. See Leonard Shapiro, NFL Seeks Antitrust Exemption: League Wants Ruling to Curtail Team
Moves, WASH. POST, Feb. 7, 1996, at CI.
3. See Meg Vaillancourt, Kraft Mum as Both States Claim a Hold on Patriots, BOSTON GLOBE,
Apr. 29, 1999, at Al.](ViewImageLocal?handle=hein.journals/utol30&div=27&collection=&method=preview&ext=.png&size=3)
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The Rational Behavior behind NFL Relocations
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