Back when St. Louis Rams owner Stan Kroenke picked up his team and moved it to Los Angeles, I noted here that hey, I wondered if PSL holders could sue for breach of contract, since they now held the right to buy tickets that didn’t exist? As it turned out, they could, and did, and won, sorta. I did not suggest that the city of St. Louis could sue as well, and for 15 months I was right — until yesterday:
The city, the county and the Regional Convention and Sports Complex Authority are suing the National Football League over the relocation of the Rams 15 months ago.
The 52-page suit filed Wednesday in St. Louis Circuit Court lists the National Football League and all 32 NFL clubs as defendants and seeks damages and restitution of profits.
If you’re wondering, “Hey, isn’t the NFL one of those cartel thingies where franchises have the right to move wherever, so long as the other owners say it’s okay?”, why yes. it is. But St. Louis’s lawyers have thought of that, arguing that the Rams “failed to satisfy the obligations imposed by the League’s relocation rules,” and so therefore the public is entitled to damages for:
- Breach of contract (against all defendants).
- Unjust enrichment (against all defendants).
- Fraudulent misrepresentation (against the Rams and team owner Stan Kroenke).
- Fraudulent misrepresentation (against all defendants).
- Tortious interference with business expectancy (against all defendants except the Rams). This last count basically alleges that the NFL and the other 31 teams “intentionally interfered” with the business relationship between the St. Louis plaintiffs and the Rams by approving the relocation.
The suit says that the city of St. Louis is losing an estimated $1.85 million to $3.5 million a year in amusement and ticket tax revenue (true as far as it goes, though if bereft Rams fans are spending some of their entertainment dollars on other amusements, the city is getting some of that tax money back) plus about $7.5 million in property tax (whuh?), $1.4 million in sales tax revenue (again, not so much if some fans spend that money on other St. Louis activities), and “millions in earning taxes,” whatever those are. The city and county aren’t saying how much they’re looking for in damages, but if the above is any guide, it would have to be in excess of $100 million.
In essence, the city and county are saying, “Hey, no fair, you said you weren’t gonna move the team unless you had to, and then you did anyway, you cheaters” — which doesn’t seem particularly like a legal argument, but then, I am extremely not a lawyer. Whatever happens in the end, though, the discovery phase of this suit promises to be oh, so tasty, as St. Louis tries to dredge up every last detail of how the relocation decision was made and whether it followed the league’s rules that the NFL totally doesn’t just make up whenever it feels like it. We may get to be a fly on that wall after all.
Looks like St. Louis may be using the NFL’s own misguided accounting to one-up the league.
Searched for this story a few times yesterday on NFL.com. Unsurprisingly, not a mention.
Maybe there wasn’t room for it with all the CTE information taking up space?
It stinks for St. Louis that the Rams left but the legal basis of the suit is strained at best. What they seem to be arguing is that the NFL policy on moves was a guarantee a team wouldn’t move and that the team had a legal obligation to try and stay. (It specifically mentions the Rams not negotiating in good faith.) Jerk or not, Kroenke owned the team and good faith, bad faith, or no negotiations at all he could move at his leisure.
But think of the legal precedent this suit could set. Imagine Atlanta suing the Braves for leaving for Cobb County, etc.
It’s far crazier than that. Think beyond sports. If Jiffy Lube draws up a 20-year business plan to operate 10 franchises in St. Louis, that now becomes a binding contract with the City guaranteeing 10 operational franchises for 20 years. If they close a franchise in Year 5, the City can sue them for 15 years of lost property taxes, sales taxes, payroll taxes, economic activity, etc. The landlord can sue them for 15 years of rent, even with a year-to-year lease. It’s completely absurd.
Absolutely true. Because if the principal held for a pro sports team it would apply to any business. But I brought up the Braves because it wouldn’t even have to be an out-of-area move. Had the Rams stayed and St. Louis built a new stadium you could have one suburb suing the team (or the other suburb possibly?) for moving cross-town. So, in your example Jiffy Lube couldn’t even move locations around without getting sued.
And the Colts could end up returning to Baltimore.
Seriously though, this case constitutes bribery at best because that is what it was. And who helped carry out that bribery? None other than Jerry Jones. Remember that the Rams got to move because the NFL also got new studio facilities.
I just don’t see how a city has any standing to sue a business based on the business’ internal franchise/territory rules. The very idea of it seems cray-cray. The NFL relocation rules are not a contract with the city. The only contract the NFL ever had with St. Louis was the Rams’ Dome lease, and nobody’s claiming the Rams violated the lease.
The best case I can make for the City of St. Louis is “we signed the lease in 1995 believing that the relocation rules would keep them here beyond the lease”. Which is absurd. Oh, really? When you stole the team from L.A. – against the NFL’s wishes and in violation of the relocation rules – you assumed the NFL’s relocation rules were iron-clad? Yeah, that makes perfect sense. (And this is the BEST case I can make for them.)
http://www.cbssports.com/nfl/news/rams-in-london-violates-dome-lease-makes-potential-la-move-interesting/
There is this above article, and there is this fact; the Rams played in London as the home team in 2012 which already violated their lease.
That article is from 2015, and what it says is that the 2016 London “home” game would violate the lease *if* the Rams are still playing in St. Louis in 2016. And that the club made a deal with the CVC to allow the 2012 London game. So I don’t see what your point is. The lease was year-to-year after the 2014 season and was dissolved in early 2016 without any legal controversy.
IF they can prove that the league violated their own cast-in-stone rules (and that’s a big if), they might win… but what do they win?
Seems more like a “lets file action and see if they are willing to pay something just to avoid having to go to court on this” effort.
I guess it could work, but the NFL has shown no reluctance to spend large amounts in defense of suits they deem spurious… or on actions they think they can force defendants to settle just based on cost to defend…
So, on that basis, sure, turnabout is fair play I guess.
Wait a minute. I can’t seem to find it now, but didn’t FoS recently post a story stating that the City of St. Louis has been MAKING money off the Edward Jones Dome since the Rams skipped town??? I suppose there might be an actionable breach of contract here, but it’ll be pretty hard to claim damages if the team’s absence has worked to the City’s financial advantage. This’ll be worth watching, starting with the venue if a trial moves forward (and I’m pretty sure the NFL would lobby like hell to keep it out of Missouri).
It may be a financial advantage in terms of DOME OPERATIONS, strictly speaking, but this suit is based more on the lost tax revenues from the players and team employees and all the related earnings/income taxes, property taxes, athletes and entertainers taxes, etc.
At the end of the day, the untold story here is that Kroenke was planning this move to L.A. (and colluding with the league every step of the way) from the moment he bought majority control of this team, in clear violation of relocation guidelines and in clear contradiction of what he and his executives were saying to stakeholders in St. Louis that were making financial decisions based on those statements.
The question is whether or not the NFL wants to go through the kind of discovery and airing of dirty laundry that will produce that black eye, or if they send some cash to St. Louis (perhaps some of the money spent on developing the new stadium proposal or forfeiting the option to buy the St. Louis practice facility–valuable real estate–for $1 that the Rams currently hold). That’s where I see this thing heading.
I don’t think the city will get the NFL to pay off the dome. However, I think they could maybe get the following in a settlement so the NFL doesn’t have to air any dirty laundry:
-$16 million spent on the Rental Car Field proposal
-the deed to the former Rams Park facility (which right now the Rams can buy for a $1 in so many years or something absurd)
I’m not holding my breath for either though. St. Louis has made just about every wrong decision it could in the whole time, except for declining to put hundreds of millions of dollars into the dome just to extend the lease 10 years.
I’d be one to think “earnings taxes” would include taxes due on earnings by team employees (inc players/coaches) , game day staff and whatever industries had income related to games at the dome. Bars, Restaraunts, Hospitals, Police, Vendors, Security, etc, etc.
Could be a lot of industries.
That’s probably it… but saying it and proving it are two different things completely.
Apart from the team staff that left the community (which is a loss), how will they prove that all the other workers did not get other jobs? Do servers in bars near the stadium have their lives ruined by the reduction in hours or closing of those businesses? No, they work somewhere else. Some for less money, some might make more.
It’s a spurious argument the city is making, really. Were any of the real damages caused by the Rams? Or were they directly attributable to the bad agreement the city willingly signed?
I’m not clear on how the Rams (or NFL) can have been in breach of a contract that had run it’s course?
Unless I’m remembering incorrectly, the Rams could leave any time after 20 years if the Dome was not “among the top quarter” of facilities in the NFL… which I’d have to agree it likely wasn’t. If true, the Rams had an escape clause starting in 2016… and exercised it. So long as they didn’t somehow break their obligations under the contract in doing so, I see limited damage to the city.
The biggest reveal to me is that their ‘actual’ damages are limited to $1.8-$3.5m in ticket and amusement taxes annually…. so that’s literally all the city was getting for it’s $200m 1994 investment into the dome.
The property taxes were abandoned voluntarily as part of the lease agreement. The city owns the building and could tear it down and sell the land for development if they choose to (and wanted the exemption removed from that land).
Maybe it’s just about the practice facility… and all they really want is for the Rams to surrender their right to purchase. But if they wanted that they really should have written language into the lease to support same. Apparently they didn’t.
Seems very much like the city is fishing for a settlement related to an agreement it wishes it had never made.
I never saw it reported anywhere that the Rams were in breach of anything when they left. The bulk of the suit seems to be an effort to prove the NFL violated its own internal rules on relocation so St. Louis should get damages. But any internal business rules are just that–internal. They can be amended or outright ignored by the business as they see fit and they’re certainly not a contract with any outside entity.
Best I can imagine is St. Louis might be able to win back some direct expenses prior to the move they only made because they’d been promised the team would stay. (Even then it would hinge on them proving there’d been a promise or agreement to stay.) But the lost of revenue after the team left is a non-starter from a legal standpoint as far as I can see.
The lease and the terms of the lease are totally different than the relocation policy of the league. The NFL relocation policy (which taxpayer-funded entities in St. Louis were relying upon as they spent millions of dollars to comply with it as they developed a new stadium proposal) does not entitle a team to the right to relocate simply because a lease is expired, broken, or is on a year-to-year basis. In fact, the relocation guidelines seem to prevent that type of “franchise free agency”.
The question is whether or not NFL officials deliberately misled St. Louis officials into spend over $18 million buying land options, site planning and prep, architecture, legal fees, etc., on a stadium proposal they never had any intentions of embracing because “the fix was in” for Kroenke in L.A.
The mistake that Kroenke and the NFL made was in not approving the Rams move a year sooner, or on a faster timeline that would’ve prevented St. Louis from presenting an actionable stadium plan, given the political realities there. They never expected St. Louis to cobble together the plan they did, and figured the “best offer” St. Louis could make would be a low-budget renovation of the dome.
It wasn’t a mistake on the part of the NFL/Rams, though. It was St. Louis’ decision to begin competing to “retain” the Rams, just as it was the city’s decision to lure them to St. Louis with a free domed stadium in the first place. No-one forced them to do so and no-one other than the city leaders are responsible for this decision.
Thanks to the poorly constructed lease, this franchise essentially became portable after the 2015/16 season. The city knew that.
Had the Rams moved significantly earlier, they would have been in violation of their lease.
If it costs me $350 to travel to a distant city to make an offer to buy a new car and the dealer turns that offer down, does the dealer owe me $350 for my trip and time?
I think all you knuckleheads aren’t remembering coach Jeff Fisher who said something to the effect that he was hired specifically because of his experience in moving franchises and that he knew Kroenke would move well before talks “broke down.”
There’s also the mysteriously curious purchase of the land from Walmart when it wasn’t marketed…but that’s mere conjecture right?
Ah yes, the mysteriously curious 2013 purchase of that mysterious, unmarketed 60-acre Walmart parcel.
Paulek Report, October 12, 2012: “[The] owners of a 60-acre parcel of land currently used to park cars and horse vans at the Inglewood, Calif. [Hollywood Park] racetrack have put the property on the market. The owner of the property, which Hollywood Park track president Jack Liebau said is WalMart, has listed it with CBRE (formerly Coldwell Banker) of Los Angeles with an asking price of $95 million … The listing claims the property is the ‘largest available undeveloped urban in-fill land site in Los Angeles County.’ … CBRE’s overview says the land may be used for “retail, single-family and multi-unit residential, or business park.\'”
http://www.paulickreport.com/news/ray-s-paddock/95-million-for-a-racetrack-parking-lot/
It’s a shame that St. Louis didn’t get the Stallions. They lost out to Charlotte and Jacksonville for expansion. Walter Payton I think drew their logo, and the Broncos ripped it off later.
I don’t think the NFL was ever serious about being in St. Louis, or they would not have allowed a creature like Silent Stan Kroenke buy the team. At least Rush Limbaugh would have kept the team in town.
Have a nice summer Nuggets. Have a nice summer Avalanche.
I’ll also add that this is especially rich coming from St. Louis, who only acquired the Rams in the first place via relocation, against the NFL’s wishes (owners voted 21-3 against, 6 abstain), and in violation of “several” relocation rules according to the league.
And it was Jay Nixon himself, then-Attorney General of Missouri, who sued the NFL to force the move, claiming the NFL’s relocation rules violate antitrust laws! The NFL relented, and that’s how the St. Louis Rams came to be.
“Chutzpah” does not begin to describe this.
Good point. I’d forgotten some of that.
Just wondering , are the attorneys that put together lease the same clowns handling the law suit ?
The attorney named Blitz was there when the lease-with-a-loophole was signed and was lead counsel on the group that tried to retain the Rams. It’s likely he’ll be in the mix somehow.