[Congressional Record Volume 145, Number 63 (Tuesday, May 4, 1999)]
[Senate]
[Pages S4673-S4675]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SPECTER:
  S. 952. A bill to expand an antitrust exemption applicable to 
professional sports leagues and to require, as a condition of such an 
exemption, participation by professional football and major league 
baseball sports leagues in the financing of certain stadium 
construction activities, and for other purposes; to the Committee on 
the Judiciary.


         stadium financing and franchise relocation act of 1999

  Mr. SPECTER. Mr. President, I have sought recognition today to 
introduce legislation, the Stadium Financing and Franchise Relocation 
Act of 1999, which is designed to respond to the need for stabilizing 
major league baseball and football franchises located in metropolitan 
areas of the United States.
  I have long been concerned with the pressure put upon communities by 
baseball and football clubs seeking new playing facilities, where, with 
the gun to their heads of the team's overt or tacit threat to move to 
another city, government leaders feel compelled to have taxpayers 
finance a lion's share of ballpark and stadium construction costs. As 
those costs rise--a present state-of-the-art new facility goes for 
close to $300 million--those pressures have intensified.
  Professional sports teams are entrusted with a public interest. The 
movement of the Dodgers from Brooklyn, which broke the hearts of 
millions of their Flatbush followers, was the start of pirating of 
sports franchises in America, and should never have been allowed. It 
was accompanied, of course, by the flight of the Giants from New York 
to San Francisco.
  Since then, the matter has proliferated to an almost absurd degree. 
It is hard to understand why the taxpayers of Maryland and Baltimore 
had to be in a bidding contest for the Cleveland Browns, when Baltimore 
should have had its own team, the Colts, instead of the Colts moving 
out of Baltimore in the middle of the night to go to Indianapolis.
  I have participated in America's love affair with sports since I was 
a youngster in Wichita, Kansas, reading the box scores in the Wichita 
Eagle every morning because of my love and passion for baseball. I have 
been attending Phillies and Eagles games, and, when I can, Pirates and 
Steelers games, because of my love for each of these sports. They are 
tremendously exciting.
  Basically, it was unfair for the old Browns to have been taken out of 
Cleveland, but now I am glad to hail the arrival of the new Browns, 
even though it was at great cost to the taxpayers, and deprived the 
Eagles of a well-earned first overall draft pick.
  The value of sports franchises to their owners has ballooned in 
recent years. Jeffrey Lurie bought the Philadelphia Eagles in 1995 for 
a then-high price of $185 million. Last year, the successful bidder for 
an expansion NFL franchise in Cleveland paid $530 million. The bidding 
for the Washington Redskins franchise (including Cooke Stadium) has 
surpassed $800 million. There also seems to be no limit to the amount 
of money available to club owners when it comes to paying players--
witness Mike Piazza's signing last year of a $91 million ten-year 
contract with the New York Mets.
  New ballparks and stadiums clearly provide an enhancement to the 
culture and tax base of communities. That said, however, there is also 
no doubt that having a new ballpark or stadium significantly increases 
the value of a sports franchise for its owner. In December, 1998, 
Forbes Magazine estimated the net worth of the nation's professional 
sports teams. Seven of the top ten valued baseball franchises and eight 
of the top ten valued football franchises were in cities with ballparks 
and stadiums built or approved to be built since 1990.
  In January, 1999, the Philadelphia Inquirer quoted Jeffrey Stein, 
managing director of McDonald Investments, a Cleveland brokerage house, 
who said: ``New stadiums, in and of themselves, significantly enhance 
the value of a team.'' He cited the Cleveland Indians Baseball Club as 
an example. In the December, 1998, Forbes article, the value of that 
team, which now plays in beautiful new Jacobs Field, was listed as $322 
million, the third highest in baseball. In 1986, the Indians had been 
purchased for $35 million. In 1993, the last year the Indians played at 
Cleveland Stadium, the team had revenues of $54.1 million. Its 1997 
revenues were $140 million.

  The value of these sports franchises to a community is reflected in 
the astronomical broadcast rights fees the sports leagues command in 
the U.S. marketplace. Ten years ago, the National Football League 
received $970 million a year for its network television rights. The NFL 
now receives three times that amount, through contracts with TV and 
cable networks that pay the League $17.6 billion for its TV rights over 
an 8-year period commencing with the 1998 season, an average of $2.2 
billion per year, while Major

[[Page S4674]]

League Baseball annually derives more than $400 million from this 
source. These revenues are shared by the clubs and their players.
  One would think some of that giant revenue windfall might trickle 
down and be used to help finance new ballparks and stadiums, which 
produce greatly enhanced revenues for team owners, yet it seems the 
more TV money a league makes, the more its clubs demand from local 
taxpayers to fund the construction of new playing facilities. The irony 
of this is that none of these huge TV revenues would accrue to the 
clubs and their players if the leagues did not have the benefit of an 
antitrust exemption permitting clubs to pool their TV rights.
  In the interest of fairness, I believe the leagues should, with a 
small portion of these TV revenues, assist local communities in the 
financing of new playing facilities for the leagues' clubs, as a 
condition of their continuing to receive the antitrust exemption which 
permits pooling of TV rights.
  I also believe the leagues should have an antitrust exemption which 
permits them to deny a club's request to move, thus minimizing the 
implied threat to move which has characteristically accompanied demands 
upon local government for a new ballpark or stadium.
  Both these objectives are met by the legislation I am offering today. 
It will clarify the broadcast antitrust exemption given to sports 
leagues and give the National Football League and Major League Baseball 
an opportunity to continue to receive it by agreeing to place 10% of 
their network TV revenues into a trust fund to be used to help finance 
construction or renovation of ballparks and stadiums for use by their 
teams. Trust fund revenues will be restricted to such use and will be 
excluded from the league's gross receipts which are distributed to 
clubs and players.
  Money from the trust fund will be provided to finance up to one-half 
the cost of construction or renovation of ballparks and stadiums on a 
matching fund basis, conditioned upon the local government's agreement 
to provide at least one dollar of financing for every two dollars to be 
provided from the trust fund.
  Thus, for example, if the cost of constructing a new stadium for the 
Philadelphia Eagles, or for the Pittsburgh Steelers, were $280 million, 
the National Football League would be obliged to provide $140 million 
to each such project, on condition that the city and state, combined, 
provided at least $70 million. Ideally, the League would pay one-half 
the cost out of the trust fund and the other half would be financed by 
the club owner and the local government.
  The legislation will also enlarge the antitrust exemption given to 
baseball, basketball, football, and hockey leagues to permit those 
leagues to deny a member club's request to move its franchise to a 
different city.
  My bill will take effect on the date of its passage, and will apply 
to all network TV revenues thereafter received by the leagues, and to 
all new ballpark and stadium facilities not yet constructed, such as 
the construction now underway in Cleveland and Pittsburgh.
  I have sought recognition today to introduce the Stadium Financing 
and Franchise Relocation Act of 1999. This legislation would require 
that the National Football League and Major League Baseball act to 
provide financing for 50 percent of new stadium construction costs, and 
that the National Football League be given a limited antitrust 
exemption to regulate franchise moves.
  This legislation is necessary because baseball and football have for 
too long had a public-be-damned attitude. At the present time, major 
league sports is out of control on franchise moves for football teams 
and the demands upon cities and states for exorbitant construction 
costs is a form of legalized extortion in major league sports.
  The National Football League has a multi-year television contract for 
$17.6 billion which it enjoys by virtue of a special status and 
antitrust exemption which they have for revenue sharing or else they 
could not collect television receipts of $17 billion. But, at the same 
time, when they are asked to step forward and help with stadium 
construction costs, which are minimal compared to their television 
receipts, they put one community in competition with another community. 
A franchise, being what it is, leaves a city like Hartford and a state 
like Connecticut to offer $375 million to lure the Patriots from 
Massachusetts to Connecticut.
  This is a problem which is particularly acute for my State, 
Pennsylvania, which is now looking at the construction of four new 
stadiums. Two are now under construction in western Pennsylvania--
Pittsburgh for the Pirates and the Steelers--and two more are being 
sought in eastern Pennsylvania for the Phillies and for the Eagles. It 
is a $1 billion price tag which we are looking at now, which is 
significant for public funding, especially in a context where our 
schools are under funded, where our housing is in need of assistance, 
where we need funds for child assistance, where we need funds for 
transition from welfare to work, where we need funds for highways, and 
for so many other important matters. But, understandably, a NFL 
franchise is a very major matter for the prestige of a city and also 
for the economy of a city. And a major league baseball franchise, 
similarly, is a major matter for the economy and the prestige of a 
city.
  You have a situation, for example, where the Colts left Baltimore in 
the middle of the night for Indianapolis. Then there was a bidding war 
for the Browns, which left Cleveland to go to Baltimore at an enormous 
cost to the taxpayers of Maryland and Baltimore. Indianapolis ought to 
have a football team, but they ought not to have Baltimore's football 
team. Similarly, Cleveland ought to be able to retain the Browns. It 
has been a matter of great pride for Cleveland for many, many years.
  The start occurred in 1958 when the Dodgers left Brooklyn to go to 
Los Angeles. Brooklyn had no more precious possession than ``Dem 
Bums,'' the Dodgers. And I recall as a youngster the 1941 World Series, 
Mickey Owens' famous fumble, dropping of the third strike, and the 
tremendous tradition that the Dodgers had with Jackie Robinson and Pee 
Wee Reese in the Pennant races. And off they went to Los Angeles. Los 
Angeles should have had a baseball team, but not Brooklyn's baseball 
team. And they had a twofer, they took the Giants out of New York and 
put them in San Francisco at the same time.
  Baseball has had an opportunity, to some extent, to control franchise 
moves because baseball has an unlimited antitrust exemption. And they 
have it in a very curious, illogical way. Justice Oliver Wendell Holmes 
ruled in the 1920s that baseball was a sport and not involved in 
interstate commerce and therefore exempt. That has been an item which 
has been out of touch with reality for a long time. Justice Blackmun 
said baseball was a big business, in a Supreme Court decision, and 
involved in interstate commerce. But since it had been unregulated with 
the antitrust exemption for so long, it has been left to Congress to 
make a change.
  It may be that we ought to make a change and take away the antitrust 
exemption from baseball generally. Baseball fiercely resists any 
contribution to stadium construction costs--fiercely resists with a 
lobbying campaign, which is now underway, of great intensity. I will 
not list the cosponsors who have prospectively dropped off this bill 
because of that lobbying.
  I am introducing this bill on behalf of Senator Hatch, chairman of 
the Judiciary Committee, Senator Biden, former chairman of the 
Judiciary Committee, and myself. We had a hearing in the Antitrust 
Subcommittee of Judiciary where I serve, and I asked the head of the 
Antitrust Division of the Department of Justice and the Chairman of the 
Federal Trade Commission to take a look at revoking baseball's 
antitrust exemption totally. Baseball has not been responsible in 
dealing with salary caps and with revenue sharing. So there would be 
some equality and some parity for cities like Pittsburgh, small cities, 
where you have the financial power of the New York Yankees dominating 
the league, buying up all the players; where you have Mr. Murdoch 
acquiring the Dodgers for a giant price in connection with his 
satellite ideas and with television revenues and the superstation which 
Atlanta now has.
  Here you have a goose which is laying a golden egg and baseball has 
not

[[Page S4675]]

faced up to fairness in changing its approach to dealing with the 
realities of the market and has not undertaken the salary caps and the 
revenue sharing necessary to stabilize baseball.

  So this bill goes, to a limited extent, on conditioning baseball's 
continuation of its antitrust exemption to helping with stadium 
construction costs. I want them to help build a stadium for the 
Philadelphia Phillies. I want them to help on the construction costs 
for the Pittsburgh Pirates. I went them to help on construction costs 
for new teams, where cities are facing the reality of either spending 
hundreds of millions of dollars for these new stadiums, or having the 
teams flee to other cities. That is something baseball ought to face up 
to, even though it is true that baseball has a different situation from 
football, because baseball's television revenues are lesser. But there 
has to be some equality and there has to be some parity. Or if baseball 
wants to function like any other business, let them do so, but without 
the antitrust exemption, and let's see what will happen to those giant 
salaries for the baseball players and those tremendous rates and the 
way baseball operates, if it does not have an antitrust exemption which 
is very special and unique.
  Football has an antitrust exemption as to revenue sharing. Without 
that exemption they could not have the $17 billion multi-year 
television contract. They have plenty of funds to face up to stadium 
construction costs for the Pittsburgh Steelers and for the Philadelphia 
Eagles and for other teams. The facts are not yet before the public, 
but I hear the rumors that football is putting up a very substantial 
sum to have the Patriots remain in Massachusetts to top the bid of 
Connecticut. Connecticut is a television market, according to the 
media, about 24th. Boston, MA, is a media market about 6th. And the 
National Football League wants to protect its media market so they will 
put up a substantial sum of money to accomplish that.
  It ought to be regularized and they ought to have a specific 
obligation. And 50 percent is not too much for the leagues to 
contribute. That would leave the owners with 25 percent and would still 
leave the public with 25 percent. One of the prospective cosponsors 
dropped off the bill because he does not want to be associated with 
even 25 percent for the public. But I suggest when the raiders--I am 
not talking about the Oakland Raiders; I am talking about the sports 
franchise raiders coming to his State, which I shall not name--go after 
his baseball team and go after his football team, watch the scurrying 
around to pay a lot more than 25 percent unless there is some 
leveraging and some compulsion.
  Baseball and football are not going to face up to a fair allocation 
of funds if they are left to their own devices. But the Congress of the 
United States does have control of the antitrust exemption and we can 
take it away from baseball or we can limit it for baseball. And we can 
take away, if we choose, the football antitrust exemption on revenue 
sharing. So I do believe this is a matter which is of significant 
public interest. When a city like Hartford and a State like Connecticut 
bids $375 million of funds which could obviously be used better; where 
Pennsylvania is looking at more than $1 billion in four new stadiums at 
a time when $17 billion comes to the NFL, and the salaries are 
astronomical. If the leagues are to have this exemption, if they are to 
have this special break, they ought to face up to some public 
responsibility.
  The second part of this legislation would grant football a limited 
antitrust exemption so they could regulate franchise moves. When the 
Raiders moved from Oakland to Los Angeles, there was a multimillion-
dollar lawsuit which the NFL had to pay. So they are reluctant to take 
a stand on exercising their league rules which require three-fourths 
approval. But, if they had an antitrust exemption to this limited 
extent, then they would be in a position to ameliorate the larceny. 
Maybe it would be petit larceny instead of grand larceny. But I think 
that kind of antitrust exemption would be worthwhile.
  As you can tell, I feel very strongly about this subject. I have been 
a sports fan since I was 8 years old--perhaps 5 years old when my 
family, living in Wichita, KS, made a trip to Chicago for the World's 
Fair and I became a Cubs fan. And I became a Phillies fan when I moved 
to Philadelphia more than a half century ago. And I am a Pirates fan, 
too, except when they are playing the Phillies.
  If you lived in Wichita, KS, when the morning paper came, the major 
item of interest would be the sports page and the box scores. And I am 
an Eagles fan and a Steelers fan and held season tickets as early as 
1958. When the Dodgers and Giants moved away from Brooklyn and New York 
City, I thought that was really a very serious breach. Such moves have 
a great impact on the public, and we ought to stop this legalized 
extortion, and we ought to get a fair share for the tremendous 
antitrust break which baseball and football enjoy.
                                 ______