NFL relocation primer: Bills stadium committee stokes discussion
updated 12:37 PM , June 23, 2015
Gov. Andrew M. Cuomo's new-stadium exploratory committee has generated much chatter about the Buffalo Bills and their future.
One of the perpetual talking points is the possibility of relocation after 95-year-old owner Ralph Wilson dies.
Erie County Executive Mark Poloncarz was a guest Tuesday on WGR 550, and he, as many others have over the years, reminded us that an exorbitant relocation fee should be considered a significant deterrent to moving the team even when the stadium lease allows the Bills to waive the final three years for $28 million in 2020.
Poloncarz said a new owner who might want to move the Bills "would have a relocation fee that they'd have to pay to the NFL, which could theoretically be a half a billion" dollars.
Theoretically, the relocation fee could be zero dollars.
Article 4.3 of the NFL Constitution and Bylaws spells out the process for relocating a team. It's specified that fees are at the league's discretion.
Let's use this opportunity to examine the NFL relocation process more closely.
Before a team can move, its first obligation is to do whatever it can to grow revenues in its current market.
From the NFL's policy:
"Each club's primary obligation to the League and to all other member clubs is to advance the interests of the League in its home territory. This primary obligation includes, but is not limited to, maximizing fan support, including attendance, in its home territory."
A new owner won't have any trouble proving this threshold has been met. The current Bills front office has been proactive in establishing and publicly declaring it's doing everything it can to regionalize the Bills in the Rochester area and in Ontario.
The relocation policy also explains the NFL disapproves of moving for the sake of moving. But there are exceptions.
"League traditions disfavor relocations if a club has been well-supported and financially successful and is expected to remain so. Relocation pursuant to Article 4.3 may be available, however, if a club's viability in its home territory is threatened by circumstances that cannot be remedied by diligent efforts of the club working, as appropriate, in conjunction with the League Office, or if compelling League interests warrant a franchise relocation."
The Bills have been well-supported from a fan loyalty standpoint. You need only to scan the parking lots at 8 a.m. on game day.
But the Bills have suffered from dwindling revenues and season ticket sales despite having a seven-game regular season and offering one of the NFL's cheapest tickets.
Prior to relocation consideration, teams:
1. Must show they've done all they can to "maintain suitable stadium facilities in their home territories, and to operate in a manner that maximizes fan support in their current home community."
2. May consult with the NFL on an official or informal basis. If "a club concludes that it cannot obtain a satisfactory resolution of its stadium needs, it may inform the League Office and the stadium landlord or other relevant public authorities that it has reached a stalemate in those negotiations. Upon such a declaration, the League may elect to become directly involved in the negotiations."
Cuomo's exploratory committee would help address this step one way or the other.
3. Are allowed to negotiate "with a community outside its home territory" before Nos. 1 and 2 have been settled.
Among issues spelled out the NFL's policy are "whether the League's collective interests (which include, for example, the League's television interests, the League's interest in strong and geographically distributed franchises, the League's interest in securing attractive stadium facilities in which to play its games, and the League's interest in having financially viable franchises) would be advanced or harmed by allowing a club to leave its assigned home territory to assume a League-owned opportunity in another community. These collective interests generally include having clubs in the country’s most populous areas, taking into account competitive entertainment alternatives, stadium options, and other factors."
Given NFL Commissioner Roger Goodell's stated desire to have two teams in Los Angeles and his willingness to discuss a franchise in Toronto, it's clear the league considers both markets beneficial for business.
Los Angeles is the second-most populous U.S. market. Toronto would rank fourth behind Chicago and ahead of Dallas-Fort Worth, based on 2012 census numbers.
Los Angeles or Toronto, however, needs an NFL-caliber stadium. The chance one or both markets build one before 2020 is quite plausible.
Once all of the above criteria have been met and an owner decides to move the process goes thusly:
1. Ownership notifies the commissioner in writing of its intent to move and publishes a "notice in newspapers of general circulation within the incumbent community."
It's about to get clunky, dear reader, but hang in there. All of this is important.
2. The notice must include a list of reasons to support the relocation and address a) how well the team has tried to serve "its principal obligation of effectively representing the NFL and serving the fans;" b) fan loyalty and support; c) stadium inadequacies and the community's willingness to remedy them or build a new one; d) how much public money the team has received; e) revenues or net operating losses that threaten the franchise; f) degree of good-faith negotiations; g) how much the team has influenced the need to relocate; h) any other NFL clubs in the current city; i) any other NFL clubs in the new city; j) whether league business will be "advanced or adversely affected" by relocation; k) the impact of relocation on scheduling games or on travel; l) how a move would "adversely affect a current or anticipated League revenue or expense stream (for example, network television)."
If you survived that paragraph, you're in the clear. You can digest the rest with ease. Now back to the process ...
3. The commissioner evaluates the proposal and reports to the other 31 owners.
4. "Interested parties" are given the chance to provide commentary about the proposed move, "including at a public hearing conducted by the League in the community from which the team seeks to relocate."
5. The proposal will be presented to the NFL owners "for action in accordance with the Constitution and Bylaws, either at a Special Meeting of the League held for that purpose or at the Annual Meeting."
6. The owners vote, with three-fourths approval -- 24 teams -- necessary to allow relocation.
Now we get to the relocation fee.
The policy states: "If a club’s proposal to relocate to a new home territory is approved, the relocating club will ordinarily be expected to pay a transfer fee to the League."
Note the use of "ordinarily."
"The transfer fee will compensate other member clubs of the League for the loss of the opportunity appropriated by the relocating club and/or the enhancement (if any) in the value of the franchise resulting from the move."
Do you think the Bills' franchise value or the NFL's overall value would go up or down if the team left Western New York for Los Angeles or Toronto?
Both values, obviously, would increase.
The other 31 owners would make long-range money off the move and wouldn't need to be directly compensated for losing Western New York as a television market or for its gate receipts compared to what Los Angeles or Toronto would offer when it comes time to negotiate broadcast deals with NBC, Fox, ESPN and the like.
"The Commissioner may recommend a transfer fee to the membership and Finance Committee for consideration in connection with any proposed transfer that he recommends be approved."
Again, "may recommend" and "for consideration" are critical phrases.
The factors specified for a relocation fee include new revenue streams (advantage L.A./Toronto), team revenue streams available in the current city (advantage L.A./Toronto), projected NFL revenue streams in the new city (advantage L.A./Toronto), incurred expenses in current city at the time and projected in the future (unknown), desirability of the stadiums compared to each other (unknown), team's status in revenue sharing (advantage L.A./Toronto), population trends and demographics (advantage L.A./Toronto).
So the commissioner makes a recommendation on the relocation fee amount, but the other 31 owners decide what the figure should be.
"The membership will determine the transfer fee (or, in the alternative, a recommended, binding method for determining the transfer fee), if any, at the time it approves any proposed club relocation."
Again, "if any" is important.
The Los Angeles Times obtained a relocation memo Goodell sent to all 32 clubs in June 2012.
In the memo, Goodell reiterated relocation will be controlled by the NFL, not the team that wants to move, and reemphasized the points within the NFL Constitution and Bylaws.
Let's hope none of this comes to pass and the Bills remain in Western New York forever.
But knowing how the NFL relocation process works is better than remaining in the dark while uncertainties surrounding the Bills continue to roil.