When the team leaves home
By Trebor Banstetter Nashville Banner
The frenzy of big-league sports franchises pulling up the stakes and moving is one of the biggest stories to hit sports and business journalism in years. In Nashville, the relocation of the Houston Oilers was the biggest story to hit Music City in years. I was assigned to cover the story from a business perspective, and it took the bulk of my time for more than eight months. Here are some things to remember when relocation fever hits your city.
It's a money game
Always remember that professional sports is a business, and should be covered as such. Very often we don't look at a football team the same way we cover the town's big manufacturer, but its likely the team's revenues are just as high or higher.
Don't worry about the coaches and the players. Find out the names of the administrators, finance people, marketing and human relations people - these will be your real sources.
Early on, do a story profiling the team as a business. What's its revenue, profit? Who are its employees? What is its business strategy? Does it have any subsidiaries? How about its historical business performance? What else is the team owner into? (Rarely is the team their only business).
Since most pro sports teams are closely held, you'll need to get much of the financial data from the organization. But surprisingly, (probably because they're not used to being covered as a business) they often share a good amount of information. Other data can come from the league, and consultants and academics who track the sports business, and other business sources. Check state corporate records and the Securities and Exchange Commission to find out what other cookie jars the owner has his hands on and how successful he or she has been outside of pro sports.
Luxury, luxury, luxury!
The most important element in a team relocation that involves a new stadium is the luxury box (or skybox, luxury suite, dream suite, etc.) These suites are gigantic cash generators for the teams, and usually are the single largest source of revenue coming out of the stadium every Sunday.
In fact, one sports economics expert told me that the ideal stadium of the '90s would be 85 percent luxury boxes and about 15 percent seats to look good on television.
The reason for the importance of the luxury is twofold. First, they are enormously expensive.
A second reason for the luxury suite mania is the way they are structured in the stadium lease. Generally, the suites are managed by a separate corporation, and the revenues flow directly through that company, rather than the team.
Of course, the suites that create all this cash for the team owners are usually built at taxpayer expense. Nashville taxpayers will be coughing up more than $6 million to pay for the suites in our new stadium.
Who's behind the door?
After identifying the importance of luxury boxes, a fantastic story to pursue is identifying all the suite buyers and how much they are paying. Readers might be interested in knowing if luxury box owners include non-profit hospitals, public utilities, companies that have recently laid off workers, and city government political cronies. You can also check to see if anyone is getting a discount or break on their suite and why.
This is not an easy nut to crack. In most cities, the suite holders list is considered "super top secret" and they will not hand it over without a fight.
Make your own list. Determine the obvious suspects from the big companies and rich private citizens in town, and then call around and ask if they've got luxury boxes. Many will own up, especially big companies that see the stadium as an economic development tool. The obvious problem with this is that you will never get a complete list, and many of the really interesting luxury box buyers will never admit they hold suite leases.
Do some footwork. Work your way into the suite level of the stadium and look at the doors. In some stadiums, the suite holders names are printed. In Boston, a Globe reporter was invited to enjoy a game in a PR firm's luxury suite at the city's new Fleet Center, and was able to compile a complete list. He followed up by calling all the buyers, and using the standard city and county documents to identify more obscure names.
Get a list leaked to you. This isn't easy, but if you have been cultivating business sources within the organization, sometimes you can find a lower-level person with access, who will share it with you.
Take the team to court. If your paper or station has the stomach for this, a good case can be made that a luxury suite list in a publicly-funded stadium is public record. In Nashville, we successfully sued the Oilers and they gave us copies of all the leases a week later.
The political connection
Politics plays a major role in sports relocations. Look to see what kinds of deals are getting cut to get support from the city's legislators. In addition to just the stadium, lots of "pork" can be generated on the city and state level to get widespread support for the project. The paper's political writers can have a bonanza with this.
Watch the neighbors
Always compare your city to other cities of similar size that also have new sports teams.
Don't forget philosophy. There is a philosophical element to sports relocations that screams to be examined. Talk to philosophy professors, ethicists, and religious leaders about what the issue says about the community's priorities. A school teacher may have a very different perspective that needs to be pursued. Also, don't forget that there are people who oppose professional sports on principal, and see it as violent, exploitive pastime that is a major waster of civic money. Don't forget to examine this point of view.
It's a zero-sum game
If your city is getting a team, someone is losing one (unless it is through expansion, but that's only a fraction of sports movement today). Always keep close tabs on the city that the team is leaving. What do they think about it? People there can tell you what kind of a corporate citizen the team was, how active the owner was in the community, how they dealt with employees, unions, etc. See what kind of measures the city is taking to save the team. (Houston, for example, didn't care much at all that the Oilers were leaving. Even business leaders told me they would rather go without football and try to attract a new team than work to keep Bud Adams in town).
Pick apart the lease
The stadium lease is the real treasure trove of information. This document spells out exactly how the facility will be managed, how the revenues will be divided, how contracting will work, etc. This will be the single most important document of a sports relocation. Will the team manage the stadium? In Nashville, a subsidiary of the Oilers will manage the stadium, even for non-football events. That subsidiary will essentially have total control over the taxpayer funded stadium get to choose the events, the scheduling, and keep 100 percent of the revenues for most of the stadium functions.
If the team is managing the stadium, look into what kind of controls the city has. How often will they be inspected and audited? Who oversees them? Does the city have the authority to fire them if its management is inadequate?
Look to the future
A team relocation is like someone leaving their spouse to marry someone else they recently met and decided they like better. The danger there is that they've done it before, they might do it again.
Check the lease for an "escape clause." In St. Louis, for example, the city's lease with the Rams has a clause that voids the lease if the stadium is no longer considered "First Tier." The problem here is that "First Tier" is not really well defined, and if the Rams decided in five years they want to move, that clause will be a strong tool to persuade a judge that the lease is null and void. The team would then also have the option of holding the city hostage and demanding millions in renovation to the facility.
Finally, one great question you must ask the team owner: Do you plan to permanently move to our city along with the team? (It's surprising how many team owners don't live in their host city.)
Trebor Banstetter can be reached at (615) 726-5968 or by e-mail at trebor.banstetter@nashville.com