Can a Lawsuit vs. Anthony Precourt and MLS Save the Crew for Columbus?
Can the government of Ohio stop the privately owned Columbus Crew from relocating to Texas? According to Ohio Attorney General Mike DeWine, the answer is yes.
On behalf of the state of Ohio, DeWine joined the city of Columbus in filing a lawsuit in the Franklin County (Ohio) Court of Common Pleas on Monday against Major League Soccer and Precourt Sports Ventures—the operator/investor of the Crew. Last October, Anthony Precourt, the CEO of Precourt Sports Ventures, publicly expressed a desire to relocate the Crew to Austin, Texas. Precourt is frustrated that neither the city of Columbus nor private investors appear willing to offer him sufficient financial assistance for constructing a new stadium in Columbus. The Crew currently play in Mapfre Stadium, which is 19 years old and is the first soccer-specific stadium built for an MLS team.
Precourt’s demand—which some might label an ultimatum—has been received poorly by many in Columbus. This isn’t surprising since proposals that entail using tax dollars to fund stadia for privately owned teams and their wealthy owners often generate disapproval. In addition, the state of Ohio has already supplied lucrative benefits to the Crew. For instance, in 1998, Ohio leased 15 acres of state-owned property to the Crew at below market rates. The land was then used to build the privately owned Mapfre Stadium. Eight years later, the state granted tax-exempt status to the stadium.
Adding to the frustration of many in Columbus, local business and community leaders contend that the California-based Precourt refuses to entertain local offers to buy the Crew. As reported by SI.com last October, there are assertions that Precourt has rejected offers to sell 100 percent and 50 percent of the team to local bidders, though those were denied by Precourt at the time. Either way, Precourt does not appear interested in relinquishing control of the Crew.
Any sale of the Crew would need to be approved by MLS, which technically owns all of the 22 MLS clubs. Operator/investors, like Precourt Sports Ventures, are shareholders in MLS itself; the league and operator/investors negotiate operating agreements that furnish limited authorities to each operator/investor to manage specific teams (for more on MLS’s quasi single entity structure, read on here).
Since October, both Precourt and MLS commissioner Don Garber have reportedly engaged in discussions with Austin city officials about a potential soccer stadium. To date, there has been no announcement that Precourt and MLS have reached an arrangement to relocate the Crew; however, many in Columbus fear that it is only a matter of time before such an announcement is made.
How the Austin Clause Wound Up in Anthony Precourt's Columbus Crew Purchase
Assessing the legal arguments for each side
Precourt and MLS are, of course, under no obligation to sell the Crew. Although the Crew have benefited in various ways from public funding, the team is neither a public trust nor a public utility. It is a privately owned business.
Whether Precourt and MLS can relocate the Crew is a more complicated matter. Any attempt to move the team would likely spark legal consequences.
For starters, the Crew’s stadium lease to use the publicly owned land will last for several more years. According to Dewine’s complaint, a 25-year lease was signed in 1998—meaning the lease appears to have five years remaining. Franchise relocation might trigger a breach in the lease, or at least an obligation to find a replacement tenant.
More significantly, the Crew might be barred from relocating altogether. As DeWine details, Ohio has enacted Revised Code 9.67, better known as “the Art Modell law.” The Modell law came into force in 1996, one year after then-Cleveland Browns owner Art Modell moved the Browns to Baltimore. This state law instructs that the owner of a pro sports team that “uses a tax-supported facility for most of its home games and receives financial assistance” cannot stop playing most of its home games at that stadium and begin playing them elsewhere—unless one of two conditions is met: 1) the government consents or 2) the team provides six months notice of an intention to relocate and, during that time, the team offers local business and community leaders an opportunity to purchase the team.
DeWine asserts that neither of the two conditions has been satisfied. The Ohio government has not consented to a relocation and, in the eyes of state, Precourt and MLS have neither given notice of an intention to move nor have they provided local bidders what DeWine calls a “reasonable opportunity” to purchase the Crew.
The lawsuit seeks a court order that would block a move until at least the Modell law is satisfied. The block would first come in the form of a preliminary injunction and then a permanent injunction. As a practical matter, filing the lawsuit before the Crew moves is essential, as once the team is gone, it is gone. No court has ever ordered a major pro team that physically relocated to a new city to relocate back to the originating city.
To obtain an injunction, DeWine must convince a judge of several factors. Most notable among them is that there would be “irreparable harm” if an injunction isn’t granted and there is a likelihood of success on the merits of the case.
Irreparable harm normally refers to harm that money cannot cure. Irreparable harm is usually difficult to establish, but courts are inclined to view money as an adequate remedy for most kinds of harms. Here, however, DeWine could assert that Columbus's loss of an MLS team is exactly the kind of harm that money cannot remedy. After all, the city would be unlikely to get another MLS team anytime soon–especially with Cincinnati being a prime candidate for an expansion team. In response, Precourt and MLS could insist that the impact of a team’s relocation is one answered by economics, not sentimentality. Further, the defendants could argue that DeWine’s petition is not yet “ripe”—meaning appropriate for judicial review—since there is no agreement (yet) to relocate.
As to the likelihood of the merits of DeWine’s legal argument, it is debatable. This is mainly because: (1) the Modell Law is arguably imprecise in regards to several key words and phrases; (2) application of the Modell Law in this situation could interfere with federal protections for interstate commerce; and, only adding to the uncertainty, (3) there have been no court rulings on the Modell Law—meaning it will be a legal question of “first impression” for whomever is assigned as the judge.
Furthering these points, expect Precourt and MLS to assert that the Modell law is far less clear than portrayed in the lawsuit. For instance, the law does not clarify the meaning of a “tax-supported facility.” Does this term include a privately owned stadium that receives favorable legal and tax treatment, or does it require direct taxpayer involvement in the stadium’s construction or ownership?
The Modell law also doesn’t explain how Precourt and MLS can provide “notice” of an intention to sell. Does “notice” demand an official statement that the team is leaving, or could reports of conversations between Precourt and officials in Austin possibly count? It’s possible that Columbus has technically been on notice since 2013 that the Crew might leave for Austin. Earlier this year, Garber confirmed to SI.com that Precourt negotiated a contractual stipulation that would allow him to relocate the Crew to Austin if certain conditions were met. It’s unclear what those conditions are, but if officials in Columbus knew about this clause, Precourt and MLS could more persuasively maintain that notice has been in place for a while.
Crew's Fabric is Interwoven With Columbus; If Precourt Can't See That, He Should Sell, Not Move
Similarly ambiguous, the Modell law doesn’t illuminate the necessary conditions for an acceptable “opportunity to purchase the team.” In the complaint, DeWine repeatedly refers to a “reasonable opportunity” but the word “reasonable” does not appear in the actual statute. Even if “reasonable” applies, how should it be defined in this situation? While legislative hearings that preceded passage of the Modell law in 1996 may prove helpful in addressing these ambiguities, the wording of the law itself is poised to trigger debate.
As a related point, courts are generally unwilling to block franchise relocations, even when teams are contractually bound to remain and even when stadium leases compel “specific performance”—that is, contractual language that literally says the team cannot break the lease and leave. Courts usually prefer to award monetary damages rather than block a team’s move. This was true when the Seattle SuperSonics broke a specific performance clause in their lease with the KeyArena to move to Oklahoma City and became the OKC Thunder.
It was also true in 1979, when the state of Louisiana sued the New Orleans Jazz over the team’s move to Salt Lake City. By virtue of its lease, the Jazz were contractually obligated to play in New Orleans’s Superdome. Stated differently, the contract forbade the team from moving. Yet a Louisiana judge permitted the move to Utah, in part because the team had already relocated and it would have caused “chaos” to move the team back.
The judge in the Jazz case also noted that a franchise relocation between states constituted “interstate commerce,” a term of art that refers to Article 1, Section 8, Clause 3 of the U.S. Constitution. This clause dictates that the federal government—and, by implication, not states’ governments—has the authority to regulate commerce between states. The corollary of this authority is a legal doctrine known as the “dormant commerce clause,” which, as a general matter, instructs that state governments cannot unduly burden commercial activity between states. In the context of the Crew, Precourt and MLS might contend that the Modell Law unduly interferes with interstate commerce by potentially blocking a move out of state to a preferred location and venue.
Whether the Modell law saves the Crew remains to be seen. It will be up to an Ohio judge (who, perhaps good news for Crew fans, will be a locally elected official). History suggests that when a team wants to move and its associated league concurs, it’s difficult to use the law to stop the move. But history never before encountered the Modell law—until now.
Michael McCann, is SI's legal analyst. He is also the Associate Dean for Academic Affairs at the University of New Hampshire School of Law and co-author with Ed O'Bannon of the new book Court Justice: The Inside Story of My Battle Against the NCAA.
