After Austin Council Vote, Columbus Leans on Lawsuit to Save the Crew
With the Austin City Council voting 7-4 last Wednesday to approve a term sheet for construction of a privately funded $200 million, 20,000-seat stadium at McKalla Place that would become the new home to Major League Soccer’s Columbus Crew, an ongoing lawsuit to block relocation of the franchise from Ohio to Texas now takes center stage.
In March, Ohio Attorney General Mike DeWine and the City of Columbus sued Precourt Sports Ventures (PSV)—the operator/investor of the Crew—and MLS in Franklin County Court of Common. They hope to obtain a judicial injunction that would forbid the team from leaving. PSV CEO Anthony Precourt and MLS, in turn, intend to defeat the lawsuit. They would then attempt to finalize the necessary contractual arrangements for stadium construction in Austin, the largest metropolitan area in the U.S. without a major league sports franchise.
Here's a closer look at both sides of the argument:
Legal keys for Columbus in trying to keep the Crew
DeWine’s lawsuit asserts that the Crew’s relocation would violate Ohio Revised Code 9.67, which is titled “Restrictions on owner of professional sports team that uses a tax-supported facility” but is better known as “the Modell law.” Cleveland Browns fans are very familiar with the origins of this law. In the middle of the 1995 NFL season, then-Browns owner Art Modell stunningly announced that the Browns were going to relocate from Cleveland to Baltimore. Modell instantly became the target of rebuke and reproach. He stood to profit handsomely from the Baltimore stadium deal, which included $175 million in public funds and a $48 million loan from the NFL.
The city of Cleveland and Browns’ seasons ticket-holders told Modell, in so many words, “not so fast.” They sued him and asserted, among other claims, that the move would violate a lease between the Browns and the Cleveland Municipal Stadium that wasn’t set to expire until 1998. Although the lawsuits didn’t block the franchise’s relocation, they meaningfully complicated and impeded Modell’s plans. Litigation tends to delay transactions. A lengthy delay could have cost Modell millions of dollars and also frustrated Baltimore municipal and business leaders. Modell and the NFL eventually agreed to major concessions. Specifically, Modell agreed to settle the lawsuits in a manner that led the NFL to provide Cleveland with a replacement Browns franchise by 1999 (the prior iteration of the Browns became the Ravens) and Modell agreed to pay the city $12 million.
Although pleased to see another Browns franchise on the horizon, many Ohio citizens remained outraged that Modell and the NFL could so easily “steal” a beloved team from their community. They wanted to make sure that could never happen again. So they turned to the law.
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In 1996, Ohio adopted the Modell Law, which applies to owners of Ohio-based pro sports teams that play in “tax-supported facilities” for most of their home games and that also receive “financial assistance.” The law forbids qualified owners from relocating their teams unless one of two conditions is met: 1) the relevant government agency consents or 2) the owner provides six months-notice of an intention to relocate and, during that time, the owner offers local business and community leaders an opportunity to purchase the team.
Although the Modell Law has been around for 22 years, it had—until now—yet to be invoked in a sports transaction or appear in a court decision. As a consequence, DeWine’s lawsuit presents an issue of first impression for the court and its presiding judge, Jeffrey Brown. Judge Brown, 62, was elected judge by Franklin County voters in 2016 and has served on the bench since that time. Since judges (and not juries) determine questions of injunctive relief, Judge Brown will rule on the demanded injunction. It is not an overstatement to say that the fate of the Crew is in his hands.
DeWine’s lawsuit hopes to persuade Judge Brown of the alleged unlawfulness of the Crew’s pending move. The lawsuit maintains that the Modell Law is clearly applicable to the Crew’s situation and should prevent any relocation to Austin. The Crew currently play in Mapfre Stadium, which DeWine asserts was built and operates in a manner that has supplied the Crew with millions of dollars in Ohio taxpayer-funded benefits. Those purported benefits include $5 million in state taxpayer-funded improvements to stadium parking facilities; a state property tax exemption for the land on which the 19-year-old stadium sits; and a below-market rate land lease.
DeWine also charges that neither PSV nor MLS has provided notice of an intention to leave. In fact, the team has gone so far as to mail season ticket renewals to Columbus fans for the 2019 season. Likewise, DeWine contends, neither PSV nor MLS has supplied local business and community leaders with a “reasonable” opportunity to purchase the team. As previously reported by SI.com, local bidders in Columbus claimed to have offered to buy the Crew, though Precourt denied that was the case at the time and MLS is adamant that no offer has ever been made. It goes without saying, but MLS is not under any legal obligation to sell to a local buyer.
PSV/Gensler/TBG/CAA ICON
Legal keys for PSV and MLS to move the Crew
PSV and MLS—which are represented by a team of law firms including Proskauer Rose, Hahn Loeser & Parks, and Bailey Cavalieri—sharply dispute DeWine’s interpretation of the Modell Law. For starters, they contend that the Modell Law simply doesn’t apply. PSV and MLS emphasize that the owner of the Crew is MLS, not PSV or Precourt. This is because MLS is a quasi-single-entity sports league. To that end, and like other operator/investors in control of MLS franchises, PSV owns shares in MLS itself. MLS, in turn, negotiates operating agreements with operator/investors to manage specific franchises. The defendants argue that much of DeWine’s lawsuit takes aim at PSV, Precourt and/or the Crew when none is a relevant party for purposes of the Modell Law.
PSV and MLS also assert that MLS did not receive the type of public financial support that would trigger application of the Modell Law. They stress that the language of the Modell Law expressly requires that an owner use a “tax-supported facility” and also receive “financial assistance” from the government. The statutory phrases “tax-supported facility” and “financial assistance” must have different meanings or they would—in contravention of Ohio law—comprise redundant terms.
With that in mind, PSV and MLS highlight that each of the examples listed by DeWine as evidence of financial support appear to connect only to Mapfre Stadium. They note the absence of examples of financial assistance unrelated to the stadium. If this interpretation is correct, there would be a paucity of terms that support the phrase “financial assistance” and thus the Modell Law would not apply. To that point, DeWine’s list of examples doesn’t include other kinds of possible benefits, such as public payments in exchange for an agreement to not relocate the Crew, funding of the Crew’s travel or advertising expenses or subsidization of reduced-price tickets for children and the elderly. In fairness to DeWine, he and his colleagues would argue that some of their listed examples provide value beyond the facility. We’ll see how Judge Brown analyzes these points.
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Even if the Modell Law blocks the Crew’s relocation from the vantage point of Ohio law, PSV and MLS charge that the law can’t be applied by Judge Brown without violating the supreme law of the land: the United States Constitution.
Under Article 1, Section 8, Clause 3, the federal government—and therefore not states’ governments—has the power to regulate commerce between states. For that reason, state governments are forbidden from improperly interfering with transactions that occur between states (this also known as the “dormant commerce clause”). This proved influential in 1979, when Louisiana Judge John Boutall green-lighted the move of the NBA’s New Orleans Jazz to Utah. Judge Boutall noted that the transaction constituted interstate commerce and was a federal matter.
Article IV, Section 2, better known as the Privileges and Immunities Clause, could also assist PSV and MLS. This provision of the Constitution ensures that states do not discriminate against out-of-state citizens—meaning, in a general sense, Ohio can’t discriminate against the California-based Precourt, New York-based officials of MLS or business persons in Texas. PSV and MLS emphasize that the Privileges and Immunities Clause guarantees the rights of citizens of different states to pursue economic opportunities. Here, PSV and MLS underscore, the fundamental question is whether “citizens of other states have the right to pursue the economic opportunity to citizens of Ohio vis-à-vis Crew.”
These federal questions are important for PSV and MLS not only in arguments before Judge Brown, but because they could ultimately lead them to seek relief from the U.S. Supreme Court. This could theoretically occur if they exhaust all avenues in Ohio state courts and lose there. To be sure, the odds of PSV and MLS obtaining a hearing before the U.S Supreme Court would be profoundly slim—the Court only grants cert to about one percent of petitions, there is no legal right that a federal court will review a federal question already reviewed by a state court and this case is unlikely to attract the attention of Supreme Court justices. As an alternative vehicle for potential federal court review, PSV and MLS could attempt to challenge the constitutionality of the Modell Law itself in a federal court (such an attempt would need to comply with the fairly complicated Rooker-Feldman doctrine). In short, this litigation could become more complex depending on how it is resolved in Franklin County and in any Ohio appellate courts.
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Next steps: September 4 hearing on a motion to dismiss
The simple truth is that the only way the city of Columbus can keep the Crew–barring a shocking sale of the club–is if the team doesn’t relocate. If the Crew move to Austin, they are almost certainly gone for good. Realistically, no lawsuit or legal theory will bring them back.
With that in mind, the two sides are scheduled to appear in Courtroom 4A of the Franklin County Court of Common Pleas at 2:30 p.m. on Tuesday, Sept. 4. Each side will have 45 minutes to present arguments to Judge Brown, who will decide whether to grant the defendants’ motion to dismiss—a motion that, if granted, would (absent a successful appeal) end the case. The judge could rule on the matter at the conclusion of the hearing. More likely, he will take the competing arguments under advisement and issue a written order at a later date.
If Judge Brown grants the motion to dismiss, DeWine and the City of Columbus would have the right to appeal the order to state appellate court. If he denies the motion, the case will continue in his court for the foreseeable future.
The hearing is important for DeWine and Columbus not only because they want to win, but because they want to prolong the timeline and gain bargaining leverage from delays. They know how Modell and the NFL reacted to litigation brought by the city of Cleveland and Browns’ seasons-ticket holders: they cut a deal with the plaintiffs to expedite the move to Baltimore. That deal included a replacement franchise for Cleveland.
Could the same happen for Columbus and its loyal and passionate fans? It remains to be seen.
Michael McCann is SI’s legal analyst. He is also Associate Dean of the University of New Hampshire School of Law and editor and co-author of The Oxford Handbook of American Sports Law and Court Justice: The Inside Story of My Battle Against the NCAA.
