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104th Congress                                            Rept. 104-656
                        HOUSE OF REPRESENTATIVES

 2d Session                                                      Part 1
_______________________________________________________________________


 
            FAN FREEDOM AND COMMUNITY PROTECTION ACT OF 1996
_______________________________________________________________________


                 June 27, 1996.--Ordered to be printed

                                _______
                                

 Mr. Hyde, from the Committee on the Judiciary, submitted the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 2740]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 2740) to protect sports fans and communities 
throughout the Nation, and for other purposes, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
The Amendment....................................................     2
Purpose and Summary..............................................     5
Background and Need for Legislation..............................     6
    Background...................................................     6
    Antitrust Implications of Franchise Relocations..............     8
        Current Legal Environment................................     8
        Objective Criteria and Procedural Mechanisms.............     9
        Sports Leagues as Single Entities........................    10
        Other Sports Antitrust Exemptions........................    11
The Hyde Amendment in the Nature of a Substitute.................    11
Hearings.........................................................    12
Committee Consideration..........................................    13
Votes of the Committee...........................................    13
Committee Oversight Findings.....................................    17
Committee on Government Reform and Oversight Findings............    17
New Budget Authority and Tax Expenditures........................    17
Congressional Budget Office Estimate.............................    17
Inflationary Impact Statement....................................    24
Section-by-Section Analysis......................................    24
Changes in Existing Law Made by the Bill as Reported.............    27
Dissenting Views.................................................    28

    The amendment is as follows:
    Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Fan Freedom and Community Protection 
Act of 1996''.

SEC. 2. FINDINGS.

  Congress finds the following:
          (1) Communities, sports fans, and taxpayers make a 
        substantial and valuable financial, psychological, and 
        emotional investment in their professional sports teams.
          (2) Professional sports teams promote civic pride, and 
        generate jobs, revenues, and other local economic development.
          (3) Professional sports teams remain in communities for 
        generations and represent much more than a business.
          (4) Current law does not protect the rights of sports fans 
        nor the interests of communities when a professional sports 
        team decides to relocate.
          (5) Professional sports team owners are positioned to extract 
        enormous benefits from communities, and they are taking 
        advantage of these opportunities.
          (6) Professional sports teams and leagues have directly 
        benefited from Federal legislation, including the following:
                  (A) Public Law 87-331 (15 U.S.C. 1291 et seq.; 
                commonly referred to as the Sports Antitrust Broadcast 
                Act of 1961).
                  (B) Public Law 89-800 (80 Stat. 1508; commonly 
                referred to as the Football Merger Act of 1966).
                  (C) Public Law 93-107 (87 Stat. 350; relating to a 
                prohibition of local television blackouts of network 
                games which were sold out 72 hours in advance).
                  (D) Federal tax laws that allow depreciation of 
                player contracts, capital gains, carryover losses, and 
                the formation of Subchapter S corporations.
          (7) The Court of Appeals for the Ninth Circuit ruled in Los 
        Angeles Memorial Coliseum Commission v. National Football 
        League, 726 F.2d 1381 (9th Cir. 1984) (commonly referred to as 
        ``Raiders I''), Los Angeles Memorial Coliseum Commission v. 
        National Football League, 791 F.2d. 1356 (9th Cir. 1986) 
        (commonly referred to as ``Raiders II''), and National 
        Basketball Association v. SDC Basketball Club, Inc., 815 F.2d 
        562 (9th Cir. 1987) (commonly referred to as ``Clippers'') that 
        a league has the authority to prevent a professional sports 
        team from relocating from one community to another community.

SEC. 3. NOTICE OF PROPOSED RELOCATION OF A PROFESSIONAL SPORTS TEAM.

  (a) Requirement.--A professional sports team owner seeking to 
relocate the team from one community to another shall provide notice of 
the proposed relocation to the parties listed in subsection (b) not 
later than 180 days before the commencement of the season in which the 
professional sports team is to play in the new community.
  (b) Parties.--The notice required under subsection (a) shall be 
provided to--
          (1) the local government for the community in which the 
        professional sports team's stadium or arena is located;
          (2) the sports authority, or similar entity with jurisdiction 
        over the stadium or facility in which the professional sports 
        team is located;
          (3) any owner or operator of such stadium or facility; and
          (4) the professional sports league and each professional 
        sports team that is a member of the league for the professional 
        sport concerned.
  (c) Additional Requirements.--The notice required under subsection 
(a) shall--
          (1) be delivered in person or by certified mail;
          (2) be published in one or more newspapers of general 
        circulation within the community in which the professional 
        sports team is located; and
          (3) contain an identification of the proposed new location 
        for the professional sports team, a summary of the reasons for 
        moving the professional sports team based on the factors listed 
        in section 5(b), and the date on which the proposed change is 
        scheduled to become effective.

SEC. 4. REQUIREMENT TO MAKE EXPANSION TEAMS AVAILABLE TO COMMUNITIES 
                    UPON THE FULFILLMENT OF CERTAIN CONDITIONS.

  (a) League Requirement To Grant Franchise.--Not later than 12 months 
after the submission of the name of an investor under subsection (b) to 
a league, the league shall grant to the investor a new expansion 
professional sports team franchise from the league at a fee in an 
amount no greater than an amount equal to the franchise fee charged by 
the league for the last expansion professional sports team franchise 
granted by the league, and on financial terms and conditions no less 
favorable than those granted to the last expansion professional sports 
team franchise granted by the league.
  (b) Three-Year Opportunity for Investment.--The requirement of 
subsection (a) applies to a league in any case in which--
          (1) the league approves the relocation of a professional 
        sports team from one community to another;
          (2) not later than three years after such relocation, the 
        community in which the team was previously located submits to 
        the league the name of an investor to be granted a new 
        professional sports team franchise in such community by the 
        league; and
          (3) the investor demonstrates that he is financially able to 
        purchase and support a team.
  (c) Ten-Year Relocation Prohibition.--In the case of a grant of a 
professional sports team franchise under subsection (a), the league may 
approve a resale of the team, but may not approve a relocation of the 
team during the ten-year period beginning on the date of the grant of 
the expansion professional sports team franchise, except as provided in 
section 5 of this Act.
  (d) Exception.--This section shall not apply in the case of a 
community with a professional sports team if the team relocates within 
25 miles of the community and remains within the State in which the 
community is located.

SEC. 5. LEAGUE RELOCATION AUTHORITY AND RELOCATION DETERMINATION 
                    CRITERIA.

  (a) League Authority.--It is not unlawful by reason of the antitrust 
laws for a professional sports league to enforce rules or agreements 
authorizing the membership of such league to decide whether a 
professional sports team that is a member of the league may relocate 
from one community to another.
  (b) Determination Criteria.--In determining whether to approve or 
disapprove the relocation of a professional sports team from one 
community to another, a league, after public hearings held in 
accordance with the provisions of subsection (c) of this section, shall 
make specific written findings regarding--
          (1) the adequacy of the stadium in which the team played its 
        home games in the previous season, and the willingness of the 
        stadium, arena authority, or the local government to remedy any 
        deficiencies in such facility;
          (2) the extent to which fan loyalty to and support for the 
        team has been demonstrated during the team's tenure in the 
        community;
          (3) the extent to which the team, directly or indirectly, 
        received public financial support by means of any publicly 
        financed playing facility, special tax treatment, or any other 
        form of public financial support;
          (4) the degree to which the owners or managers of the team 
        have contributed to any circumstances which might demonstrate 
        the need for the relocation;
          (5) whether the team has incurred net operating losses, 
        exclusive of depreciation and amortization, sufficient to 
        threaten the continued financial viability of the team;
          (6) the degree to which the team has engaged in good faith 
        negotiations with appropriate persons concerning terms and 
        conditions under which the team would continue to play its 
        games in the community;
          (7) whether any other team in the league is located in the 
        community in which the team is currently located;
          (8) whether the team proposes to relocate to a community in 
        which no other team in the league is located;
          (9) whether the stadium authority, if public, is not opposed 
        to such relocation; and
          (10) whether there is a bona fide investor who is offering 
        fair market value for the professional sports team and who will 
        retain the team in the current community.
  (c) Requirement for Public Hearings and Published Findings.--No 
decision by a league to permit the relocation of a professional sports 
team shall be valid or final until the league has--
          (1) conducted at least two public hearings in the community 
        from which the professional sports team seeks to relocate;
          (2) permitted any interested member of the public, including 
        any representative of the local government of the community 
        from which the professional sports team seeks to relocate, or 
        any sports authority, or similar entity with jurisdiction over 
        the stadium or facility from which the professional sports team 
        seeks to relocate, to deliver oral comments or file written 
        comments regarding such relocation;
          (3) published, within 30 days of such decision, written 
        findings in one or more newspapers of general circulation 
        within the community from which the professional sports team 
        seeks to relocate setting forth the basis of such decision, 
        with specific reference to each of the criteria set forth in 
        subsection (b); and
          (4) delivered copies of its written findings to the local 
        government of the community from which the professional sports 
        team seeks to relocate and any sports authority, or similar 
        entity with jurisdiction over the stadium or facility from 
        which the professional sports team seeks to relocate.

SEC. 6. REQUIREMENT FOR PROFESSIONAL SPORTS TEAM OWNERS WHO RELOCATE TO 
                    NEW PLAYING FACILITIES TO REIMBURSE STATE AND LOCAL 
                    GOVERNMENTS FOR VALUE OF FINANCIAL ASSISTANCE 
                    RECEIVED.

  (a) Reimbursement for Financial Assistance.--In a case in which a 
professional sports team owner relocates a professional sports team 
from one playing facility to another facility (including a facility 
located in the same community in which the previous facility is 
located), and in doing so the owner breaches a contract with the State 
or local government with respect to use of the previous playing 
facility, the professional sports team owner shall, within 30 days 
after the team plays its first game in another facility, pay to the 
State or local government an amount equal to the value of financial 
assistance provided by the State or local government to the team.
  (b) Limitation.--The provisions of subsection (a) shall not apply in 
a case in which recovery of financial assistance as defined in 
subsection (c) is a remedy under the contract.
  (c) Definition of Financial Assistance.--For purposes of this 
section, the term ``financial assistance'' includes special tax 
treatment and financing of a stadium or arena in which a professional 
sports team plays.
  (d) Penalty.--A professional sports team owner who violates the 
requirement of subsection (a) is liable to the State or local 
government that provided financial assistance to the team for an amount 
equal to three times the value of the financial assistance provided by 
the State or local government to the team.

SEC. 7. ENFORCEMENT.

  (a) Penalties for Failure To Comply.--A league that violates the 
requirement of section 4(a) by failing to grant a new professional 
sports team franchise--
          (1) is liable to the community in which the team was 
        previously located for damages equal to three times the 
        purchase price or market value of the team, whichever is 
        greater;
          (2) is subject to the suspension for one season of its 
        antitrust exemption for pooling the broadcasting rights to 
        games under Public Law 87-331 (15 U.S.C. 1291 et seq.); and
          (3) is subject to the loss of the antitrust exemption under 
        section 5(a) of this Act for the franchise relocation that led 
        to the violation of section 4(a).
  (b) Enforcement Procedures.--
          (1) Declaratory judgment by department of justice.--The 
        Department of Justice may seek a declaratory judgment and 
        appropriate injunctive relief in an appropriate Federal 
        district court with respect to whether a league has complied 
        with section 4(a) of this Act.
          (2) Private right of action by local government.--A private 
        right of action may be brought in an appropriate Federal 
        district court to enforce the provisions of sections 3 and 4 of 
        this Act by--
                  (A) any local government that has provided, or been 
                requested to provide, financial assistance, including 
                tax abatement, to any professional sports team or that 
                team's existing or proposed stadium facility; or
                  (B) any local government, sports authority, or other 
                similar entity in the region or locality in which the 
                professional sports team's home stadium or facility is 
                located.
          (3) Private right of action by investor.--Any investor whose 
        name has been submitted under subsection 4(a) of this Act may 
        seek injunctive relief in an appropriate Federal district court 
        to enforce the provisions of subsection 4(a).

SEC. 8. INAPPLICABILITY TO CERTAIN MATTERS.

  Except as expressly provided in this Act, nothing in this Act shall 
be construed to alter, determine, or otherwise affect the applicability 
or inapplicability of the antitrust laws, labor laws, or any other 
provision of law to any act, contract, agreement, rule, course of 
conduct, or other activity by, between, or among persons engaging in, 
conducting, or participating in professional football, basketball, or 
hockey.

SEC. 9. DEFINITIONS.

  For purposes of this Act:
          (1) Antitrust laws.--The term ``antitrust laws''--
                  (A) has the meaning giving it in subsection (a) of 
                the first section of the Clayton Act (15 U.S.C. 12(a)), 
                except that such term includes section 5 of the Federal 
                Trade Commission Act (15 U.S.C. 45) to the extent such 
                section applies to unfair methods of competition; and
                  (B) includes any State law similar to the laws 
                referred to in subparagraph (A).
          (2) Community.--The term ``community'' means a city, county, 
        parish, town, township, village, or any other general function 
        governmental unit established by State law.
          (3) Investor.--The term ``investor'' includes a person, group 
        of persons, shareholders, or a community.
          (4) League.--The terms ``league'' and ``professional sports 
        league'' mean an association composed of two or more 
        professional sports teams (which have been engaged in 
        competition in their sport for more than seven years) which has 
        adopted, accepted, or put into effect rules for the conduct of 
        professional sports teams which are members of that association 
        and for the regulation of contests and exhibitions in which 
        such teams regularly engage. The term includes--
                  (A) the National Football League;
                  (B) the National Hockey League; and
                  (C) the National Basketball Association.
          (5) Located.--The term ``located'', with respect to a 
        professional sports team, means situated in the stadium or 
        arena in which the professional sports team plays its home 
        games.
          (6) Professional sports team.--The term ``professional sports 
        team'' means any group of professional athletes organized to 
        play major league football, hockey, or basketball.
          (7) State.--The term ``State'' means any of the 50 States and 
        the District of Columbia.

SEC. 10. EFFECTIVE DATE.

  This Act takes effect as of August 1, 1995.

                          purpose and summary

    H.R. 2740, the ``Fan Freedom and Community Protection Act 
of 1996,'' which was introduced by Congressman Martin R. Hoke, 
is a response to the growing problem of sports franchise 
relocation. Since a series of federal court decisions in the 
1980s--dealing with the applicability of the antitrust laws to 
professional sports leagues--professional sports teams have 
been free to move from one city to another. Often, they have 
extracted large public subsidies either to stay where they are 
or to move to a new city. Because there are far fewer 
franchises than there are cities who want franchises, local 
government officials often have little leverage in these 
negotiations.
    H.R. 2740, as reported by the Committee, seeks to address 
this issue in several ways. It clarifies the law regarding 
rules that allow leagues to block franchise moves by providing 
for an explicit antitrust exemption for such rules so long as 
the leagues base their decisions on neutral criteria and hold 
public hearings. It attempts to balance the bargaining power of 
the cities with that of the leagues by requiring that a league 
which approves a franchise move provide an expansion team to 
the city from which the franchise left, if the city submits the 
name of a qualified investor within three years after the team 
moves.
    It further requires that if a relocating team owner 
breaches a stadium contract with a local government, that owner 
must repay all of the financial assistance that he has received 
from that local government. Finally, H.R. 2740 would remove for 
one year the pooled broadcast rights antitrust exemption, 15 
U.S.C. Sec. 1291 et seq., that Congress gave the leagues, if 
they do not comply with the expansion provisions of the Act.

                background and need for the legislation

Background

    In 1960, the National Football League (``NFL'') came to the 
United States Congress seeking relief from antitrust laws. The 
NFL argued on behalf of all three of the major sports leagues 
not already enjoying exemptions from the federal antitrust laws 
(football, hockey, and basketball), that in the absence of a 
limited antitrust exemption, teams in smaller markets would not 
be able to survive financially because the television revenue 
available to teams in large markets would enable them to hire 
the best players--a situation that could seriously detract from 
balance on the playing field and threaten the leagues' very 
existence.
    To bring stability to the major professional sports leagues 
and protect fans and communities, Congress passed, and 
President Kennedy signed into law, the Sports Broadcasting Act 
of 1961, 15 U.S.C. Sec. 1291 et seq. The new law permitted each 
of the leagues to pool their separate broadcasting rights for 
sale to a single purchaser. This broadcast antitrust exemption 
has succeeded in providing the financial foundation for every 
team in each of the leagues. In the case of the NFL, the Act 
allowed the league's 30 teams to divide equally $1.2 billion in 
the 1995-1996 season.
    In 1966, arguing that competition between the NFL and the 
American Football League (``AFL'') was undermining the 
stability of teams in both leagues, the NFL approached Congress 
again seeking special protection under the law: an antitrust 
exemption to permit the NFL and the AFL to merge. In testimony 
before Congress, then-NFL commissioner Pete Rozelle argued 
forcefully for the merger, saying that if it were approved:

          Professional football operations will be preserved in 
        the 23 cities and 25 stadiums where such operations are 
        presently being conducted. This alone is a matter of 
        considerable public interest--to local economies, 
        stadium authorities, and consumers. Without the plan, 
        franchise moves and/or franchise failures will occur as 
        a matter of course within the next few years.

    Professional Football League Merger: Hearings on S. 3817 
Before the Antitrust Subcommittee of the House Committee on the 
Judiciary, 89th Cong., 2d Sess. 37 (1966). Congress once again 
responded to the leagues' entreaties, this time by enacting the 
Football Merger Act of 1966. See 15 U.S.C. Sec. 1291.
    During congressional consideration of the Sports 
Broadcasting Act and the Football Merger Act, the professional 
sports leagues made certain promises, both explicit and 
implicit, as to how they would behave if the exemptions were 
granted. Specifically, they argued that the exemptions would 
create stability for the leagues, communities, and the fans. 
Recent history indicates that this has not been the case. 
Instead of bringing stability, pro sports team owners have 
taken advantage of the guaranteed television income stream and 
the limited number of franchises available to pit city against 
city in ever-escalating bidding wars with public officials 
desperate to keep existing teams or attract new ones.
    Now, thirty years later, the leagues have returned to 
Congress looking for a third antitrust waiver to halt the 
recent rash of team movements because franchise relocations 
have caused continuing controversy for the NFL. In the 1980s, 
owner Al Davis moved the Oakland Raiders to Los Angeles; in 
1994, he moved them back to Oakland. The St. Louis Cardinals 
moved to Arizona in the late 1980s, while the Los Angeles Rams 
recently moved to St. Louis. The city of Baltimore lost its 
team in 1984 when the Baltimore Colts abruptly abandoned that 
city for Indianapolis, Indiana. At present, the Houston Oilers 
are actively seeking to move to Nashville, and there are 
numerous rumors concerning possible moves by other teams. Since 
the early 1980s, the number and cost of team movements have 
dramatically increased. For example, the state of Maryland 
agreed to spend approximately $200 million dollars of public 
money to entice the Cleveland Browns to move.
    The recent move of the former Cleveland Browns illustrates 
the problem that the cities and fans face. On November 6, 1995, 
the owner of the Browns, Art Modell, announced that he was 
moving the team to Baltimore, Maryland. Citing financial 
difficulty, Mr. Modell agreed to move his team in return for 
promises from the Maryland Stadium Authority of a new, multi-
million dollar, state-of-the-art stadium. The Cleveland 
community, which has fervently supported the Browns for years, 
erupted in a storm of protest. In the controversy which 
followed, the public has hotly debated the economic, social, 
and emotional costs and benefits of moving professional sports 
franchises from one city to another.
    In response, the city of Cleveland filed a lawsuit seeking 
to block the move. On February 8, 1996, the NFL reached a 
settlement with the city which, among other things, will 
provide Cleveland with a team by the 1999 season and allow the 
new team to use the ``Browns'' nickname. However, as part of 
the settlement, Cleveland will have to build a new stadium that 
will be funded in large part with public funds, but with a 
small part coming from a loan from the NFL. On February 9, the 
NFL owners voted to approve the settlement and to approve the 
relocation of the old team to Baltimore. Under the NFL 
Constitution, any move by an NFL owner must be approved by a 3/
4ths majority of the team owners. The owners approved the move 
by a vote of 25-2.
    Interestingly, a member of Congress at the time of the 1961 
sports broadcasting debate, Representative George Meader of 
Michigan, foresaw the current problem when he addressed Mr. 
Rozelle:

          Are you not asking us to place a rather large amount 
        of power in your football league, which you say you 
        will use judiciously? What I am trying to find out is 
        whether or not some phraseology could be included in 
        the statute itself so that we would not have to depend 
        upon the good will of the management of the 
        professional football league.
          * * * * * * *
          [Y]ou are now asking for an exemption from the 
        antitrust laws from Congress, and if there was concern 
        that the power granted by such an exemption would be 
        abused, I think the Congress would have the right to 
        make it conditional.

Telecasting of Professional Sports Contests: Hearings on H.R. 
8757 Before the Antitrust Subcommittee of the House Committee 
on the Judiciary, 87th Cong., 1st Sess. 38-39 (1961). It is 
clear from the historical record that the major professional 
sports leagues do not operate in a completely free market 
environment. Given the history of legislation relating to 
sports leagues, Congress has an ongoing obligation to ensure 
that not only that the financial health of the leagues is 
served, but that the public interest is served as well.

Antitrust implications of franchise relocations

            Current legal environment
    The NFL contends that under current law, it cannot prevent 
franchise relocations. That contention grows out of litigation 
in the 1980s over Section 4.3 of the NFL's Constitution and 
Bylaws. Section 4.3 provides in relevant part that: ``No member 
club shall have the right to transfer its franchise or playing 
site to a different city, either within or outside its home 
territory, without prior approval by the affirmative vote of 
three-fourths of the existing member clubs of the League.'' 
1
---------------------------------------------------------------------------
    \1\ Section 4.3 originally required unanimous approval for a move 
into another team's home territory, but it was changed in late 1978.
---------------------------------------------------------------------------
    When Al Davis announced that he would move the Oakland 
Raiders to Los Angeles, the NFL owners voted 22-0 to block the 
move under Rule 4.3. Mr. Davis brought an antitrust suit 
against the league claiming that the vote under Rule 4.3 
amounted to an illegal conspiracy to restrain trade in 
violation of Sec. 1 of the Sherman Act.
    Mr. Davis ultimately prevailed in the liability phase of 
the case on two grounds. Los Angeles Memorial Coliseum 
Commission v. National Football League, 726 F.2d 1381 (9th 
Cir.) (``Raiders I''), cert. denied, 469 U.S. 990 (1984). 
First, the Raiders I court held that, as a matter of law, the 
NFL is not a single entity incapable of conspiring with itself. 
Id. at 1387-90. Rather, the court found that the teams in the 
League compete with one another and may conspire with one 
another to restrain trade. One judge on the panel vigorously 
dissented from this holding arguing that the NFL is a single 
entity incapable of conspiring with itself. Id. at 1401, 1403-
10.
    Second, the Raiders I court considered whether the jury 
properly found that Rule 4.3 was an unreasonable ancillary 
restraint to the legitimate and necessary cooperation among NFL 
members. Applying a rule of reason analysis, the court held 
that ``the jury could have found that the rules restricting 
team movement do not sufficiently promote interbrand 
competition [i.e. competition among leagues] to justify the 
negative impact on intrabrand competition [i.e. competition 
among League members].'' Id. at 1397. The court further 
suggested that a league rule that included objective criteria 
and procedural due process mechanisms might pass antitrust 
scrutiny. Id. at 1397-98.
    Later, the appeal of the damages phase of the case shed 
further light on these issues. Los Angeles Memorial Coliseum 
Commission v. National Football League, 791 F.2d 1356 (9th Cir. 
1986) (``Raiders II''), cert. denied, 484 U.S. 826 (1987). In 
resolving the various claims as to how damages were to be 
offset, the Raiders II court held that the jury's verdict 
should be read as finding Rule 4.3 illegal only as it applied 
to this specific case. Id. at 1369. It was not to be read as 
finding the rule invalid in all cases. Id. The court 
specifically noted that the trial court's injunction only 
prohibited the NFL from enforcing the rule in the circumstances 
of this case and not in all other cases. Id. at 1369 & n.4.
    In a later case involving the relocation of the NBA's San 
Diego Clippers to Los Angeles, the Ninth Circuit reaffirmed the 
basic principles it set forth in Raiders I and Raiders II. 
National Basketball Association v. SDC Basketball Club, Inc., 
815 F.2d 562 (9th Cir.), cert. dismissed, 484 U.S. 960 (1987). 
The court held:

          Collectively, the Raiders opinions held that rule of 
        reason analysis governed a professional sports league's 
        efforts to restrict franchise movement. More narrowly, 
        however, Raiders I merely held that a reasonable jury 
        could have found that the NFL's application of its 
        franchise movement rule was an unreasonable restraint 
        of trade. * * * Neither the jury's verdict in Raiders, 
        nor the court's affirmance of that verdict, held that a 
        franchise movement rule, in and of itself, was invalid 
        under the antitrust laws.

815 F.2d at 567.
    The decisions in the Raiders cases may be read to mean more 
than they do. In particular, analysis of the Raiders decisions 
rarely focuses on the fact that the Raiders moved to a market 
in which another NFL team, the Los Angeles Rams, was already 
playing. That consideration raises competitive issues that are 
not present in a more typical move like the Browns' move to 
Baltimore where no other team is located. In short, the NFL's 
claims that it is powerless to prevent franchise relocations 
because of the antitrust laws have not been thoroughly tested, 
and they may be based on a decision that arose out of an 
atypical fact situation. Nonetheless, the NFL raises a 
legitimate concern about the expense and uncertainty of 
antitrust treble damage lawsuits hanging over its head for 
years.
            Objective criteria and procedural mechanisms
    As noted above, the Raiders I court suggested that an NFL 
rule that included objective criteria and procedural mechanisms 
to guide league decisions on franchise relocations might pass 
antitrust scrutiny. In December 1984, the League adopted a 
policy that provides for the types of objective criteria 
suggested by the court. These criteria include: (1) the 
adequacy of the team's stadium and the willingness of the city 
to renovate it; (2) the loyalty of the team's fans; (3) the 
extent of the team's public financial support; (4) the degree 
to which team management has contributed to the need to move; 
(5) the team's financial viability; (6) the degree to which the 
team has engaged in good faith negotiations with the city; (7) 
whether the existing city and the new city already have other 
teams; and (8) whether the stadium authority opposes the move. 
The criteria provided in H.R. 2740 for league review of 
franchise relocation decisions closely track these criteria.
    That NFL policy also provides a procedural mechanism for 
consideration of franchise relocations. However, these 
procedural mechanisms apply only to the subject team and other 
League members. The policy does not allow the affected 
communities any participation in the process. H.R. 2740 
requires notice to the communities and two public hearings. To 
the Committee's knowledge, no court has ever reviewed this 
policy to determine whether it would violate the antitrust 
laws.
            Sports leagues as single entities
    Despite the decision in Raiders I, there is an ongoing 
debate as to whether professional sports leagues should be 
treated as unified single entities (i.e., essentially 
partnerships or joint ventures) or whether each team in a 
particular league should be treated as a separate competing 
firm for antitrust analysis purposes. Many legal commentators, 
as well as the NFL, have advanced the single entity theory 
arguing that the leagues are joint ventures in which the owners 
are partners. Other courts have followed the Raiders I decision 
on this point holding that each team should be treated as an 
independent competitor. Sullivan v. NFL, 34 F.3d 1091, 1098-99. 
(1st Cir. 1994), cert. denied, 115 S.Ct. 1252 (1995); McNeil v. 
NFL, 790 F.Supp. 871, 879-80 (D. Minn. 1992).
    Professional sports leagues involve elements of both 
cooperation and competition. For example, sports leagues adopt 
uniform league rules and agree on the appropriate size of the 
playing field. They cooperate on scheduling dates, the number 
of games played, and the playoff structure. In addition, they 
also share revenue from television rights and gate receipts. 
The leagues argue that the economic success of each team 
depends on the economic strength and stability of the other 
league members and that they are not economic competitors.
    Others argue that the teams are separate competing 
entities. This argument carries the most weight when two teams 
play in the same city, as in the Raiders case. Each club makes 
most of its own business decisions on a day-to-day business. 
They have separate profit and loss results. Each team 
determines its own ticket prices, players' salaries, and player 
acquisitions. Each team hires its own coaches, negotiates the 
terms of its stadium leases, and enters into its own local 
radio broadcasting deals. These practices support the idea that 
the teams are economic competitors.
    Since the Committee ordered H.R. 2740 reported, the Supreme 
Court has held that the NFL is not a single entity for purposes 
of the antitrust exemption for multiemployer collective 
bargaining. Brown v. Pro Football, Inc., ---- U.S. ----, 1996 
U.S. Lexis 4047 (June 20, 1996). In making this decision, the 
Court made the following comments in dicta:

        We concede that the clubs that make up a professional 
        sports league are not completely independent economic 
        competitors, as they depend upon a degree of 
        cooperation for economic survival. In the present 
        context, however, that circumstance makes the league 
        more like a single bargaining employer, which analogy 
        seems irrelevant to the legal issue before us.

Id. (citations omitted). This passing comment does not resolve 
this issue for purposes of franchise movement.
            Other sports antitrust exemptions
    Aside from the franchise relocation issue, professional 
football, basketball, hockey, and baseball leagues currently 
enjoy another important antitrust exemption under the Sports 
Broadcasting Act, 15 U.S.C. Sec. 1291 et seq., which allows the 
teams in each league to market the league's broadcast rights 
jointly. In addition, the NFL benefits from the Football Merger 
Act of 1966, Public Law No. 89-800, 80 Stat. 1508 (codified at 
15 U.S.C. Sec. 1291), which allowed the merger of the NFL with 
the old American Football League.
            The Hyde amendment in the nature of a substitute
    At the Committee's markup, Chairman Hyde offered an 
amendment in the nature of a substitute. The Hyde amendment 
followed the basic format of H.R. 2740 as introduced with some 
substantive changes.
    Most importantly, the Hyde amendment drops the language 
relating to trademarks that was included in Section 3 of H.R. 
2740. These provisions would have required a relocating team to 
leave its team name, logo, and other trademark items in the 
city to be used with the expansion team. Experts in the 
trademark field indicated that these provisions might cause a 
constitutional takings problem.
    The Hyde amendment also changes the terms under which 
required expansion franchises are to be granted. The Hyde 
amendment allows the league to charge the new expansion team up 
to 100%, rather than 85% as originally provided, of the fee 
charged to the last expansion team, but it further requires 
that the other financial terms and conditions given to the new 
team would be at least as favorable as those given the last 
expansion teams. At the suggestion of Congressman Flanagan, the 
Hyde amendment also requires a new expansion team whenever a 
team relocates across state lines.
    The Hyde amendment makes several changes to the league 
review provisions in H.R. 2740. It provides that when the 
league reviews a relocation, it must hold at least two public 
hearings and issue written findings. The criteria for the 
league's decision originally contained in H.R. 2740 are 
slightly modified so that they more closely track the criteria 
in the NFL's existing policy.
    The Hyde amendment also makes some changes to the remedies 
provisions of H.R. 2740. It provides for a Department of 
Justice suit for declaratory and injunctive relief to enforce 
the expansion provisions as well as private rights of action by 
local governments, sports authorities, and potential investors. 
It adds to the penalty provisions so that the league would lose 
the antitrust exemption that this Act provides if it does not 
comply with the expansion provisions. In addition, the Hyde 
amendment dropped baseball from the coverage of the bill 
because it already has a general exemption from the antitrust 
laws and therefore had no need for the protections of this 
bill. See Federal Baseball Club of Baltimore, Inc. v. National 
League of Professional Baseball Clubs, 259 U.S. 200 (1922). See 
also Toolson v. New York Yankees, Inc., 346 U.S. 356 (1953); 
Flood v. Kuhn, 407 U.S. 258 (1972). Finally, the amendment 
makes a variety of other minor substantive and technical 
changes. At the markup, the Committee adopted the Hyde 
amendment in the nature of a substitute, as further amended, by 
voice vote.

                                Hearings

    Before this year, the last time the Judiciary Committee had 
held hearings on the subject of sports franchise movement was 
in 1981 and 1982. 2 On February 6, 1996, the full 
Committee held a day of hearings on H.R. 2740. The Committee 
received testimony from thirteen witnesses, including four 
members of Congress.
---------------------------------------------------------------------------
    \2\  The Subcommittee on Economic and Commercial Law did hold a 
hearing in the 103rd Congress on baseball's antitrust exemption, and 
franchise relocation and movement was discussed extensively at that 
hearing.
---------------------------------------------------------------------------
    The first panel consisted of Representatives Martin Hoke of 
Ohio, Michael Flanagan of Illinois, and Louis Stokes of Ohio, 
and Senator John Glenn of Ohio. Representative Hoke pointed out 
that the National Football League had benefited greatly from 
the antitrust exemptions the Congress provided in the Sports 
Broadcasting Act and the Football Merger Act. He testified that 
the provisions of H.R. 2740, including the required expansion 
provisions, were a fair trade off for these antitrust 
exemptions. Representative Flanagan also testified in favor of 
H.R. 2740 with special emphasis on his amendment to require 
relocating teams to repay the financial assistance they have 
received from local governments.
    Representative Stokes testified in favor of his bill, H.R. 
2699, which is similar in some respects to H.R. 2740, but does 
not include the required expansion provisions. Senator Glenn 
also testified in favor of H.R. 2699 and noted that he is the 
sponsor of companion legislation in the Senate.
     The second panel consisted of Mayor Bob Lanier of Houston, 
Texas, Countywide Commissioner Joe Chillura of Hillsborough 
County, Florida, County Executive Gary Locke of King County 
Washington, and Mr. John ``Big Dawg'' Thompson of Cleveland, 
Ohio. Mayor Lanier testified about the Houston Oilers' pending 
move to Nashville, Tennessee in spite of Houston's long time 
support for the Oilers. He argued that the NFL has a monopoly 
status that gives them an advantage over the cities and that 
the leagues ought to be able to have rules to prevent franchise 
movements that take into account the public interest. He 
specifically endorsed the required expansion provisions of H.R. 
2740.
     Commissioner Chillura testified about the relationship 
between the Tampa community and the Tampa Bay Buccaneers. He 
noted that the Tampa community had provided many kinds of 
public support for the Buccaneers since the team's inception in 
1974. He said that despite this support, the Buccaneers are now 
threatening to leave and that the community has little leverage 
against the team. He applauded the provisions of both H.R. 2740 
and H.R. 2699.
    County Executive Locke testified about the investment that 
the Seattle community had made in the Seattle Seahawks and 
their threatened move to Los Angeles. He called for giving the 
National Football League a limited right to control franchise 
moves and for requiring franchises to give 180 days' notice to 
communities that they are leaving.
    Mr. Thompson testified about the human impact that the 
Browns' move from Cleveland had on the Browns' fans. He pointed 
to the loss of the charity work that the Browns' players had 
done for many years. He argued that the fans need rights that 
are equivalent to those that the owners have so as to preserve 
this important community asset.
    The third panel consisted of Mr. Paul Tagliabue, the 
commissioner of the National Football League. Mr. Jerry 
Richardson, the owner of the Carolina Panthers, appeared with 
Mr. Tagliabue for the purpose of answering questions, but he 
did not give a statement. Mr. Tagliabue testified that the 
League needed a narrow antitrust exemption to have some control 
over football franchise relocations. He further asserted that 
the decisions in the Oakland Raiders cases and other court 
decisions severely restrict the NFL's power to prevent an owner 
from moving a football team to a new city.
    The fourth panel consisted of Professor Gary Roberts of 
Tulane Law School, Professor Andy Zimbalist of Smith College, 
and Mr. Bruce Keller on behalf of the International Trademark 
Association. Professor Roberts testified that he believes that 
a sports league is a natural monopoly and that short of 
government regulation, the best solution to the franchise 
relocation problem is to grant a limited antitrust exemption.
    Professor Zimbalist testified that the franchise relocation 
problem arises out of the leagues' monopoly status. He argued 
that the problem could be dealt with either through breaking up 
the leagues or regulating them in some fashion. He favored the 
required expansion provisions as one way of regulating the 
leagues.
     Mr. Keller limited his testimony to the provisions of H.R. 
2740 that would require a team that moved to give up its 
trademark to the city that it was leaving. He argued that these 
provisions would effect an unconstitutional taking of the 
trademarks and would be inconsistent with the basic goals and 
principles of trademark law.

                        Committee Consideration

     On April 25, 1996, the full Committee met in open session 
and ordered favorably reported the bill H.R. 2740 as amended by 
the amendment in the nature of a substitute offered by Mr. 
Hyde, as amended, by a vote of 24 to 6, a quorum being present.

                         Votes of the Committee

    The following roll call votes took place during Committee 
deliberations on H.R. 2740 (April 25, 1996).
    1. An amendment by Mr. Flanagan to the amendment in the 
nature of a substitute by Mr. Hyde to add a new section to 
require relocating team owners who breach their contracts with 
State and local governments to reimburse State and local 
governments for the value of financial assistance received. 
(Before the roll call vote, the Committee adopted by unanimous 
consent an amendment by Mr. Barr to the underlying amendment by 
Mr. Flanagan to clarify that the State and local governments 
could not recover such assistance twice when such recovery was 
otherwise provided under the contract.) The Flanagan amendment, 
as amended by the Barr amendment, was adopted by a roll call 
vote of 20-8.

        AYES                          NAYS
Mr. Hyde                            Mr. Gallegly
Mr. Moorhead                        Mr. Inglis
Mr. Sensenbrenner                   Mr. Goodlatte
Mr. McCollum                        Mr. Bono
Mr. Smith (TX)                      Mr. Bryant (TN)
Mr. Canady                          Mr. Conyers
Mr. Buyer                           Mr. Boucher
Mr. Hoke                            Ms. Lofgren
Mr. Heineman
Mr. Chabot
Mr. Flanagan
Mr. Barr
Mr. Frank
Mr. Schumer
Mr. Reed
Mr. Nadler
Mr. Scott
Mr. Watt
Ms. Jackson Lee

    2. Three amendments en bloc by Mr. Bryant of Tennessee to 
the amendment in the nature of a substitute by Mr. Hyde to 
strike the required expansion provisions, the penalties 
provisions, and certain of the findings relating thereto, and 
to insert a modified judicial review procedure. The Bryant of 
Tennessee amendments en bloc were defeated by a roll call vote 
of 10-20.

        AYES                          NAYS
Mr. McCollum                        Mr. Hyde
Mr. Coble                           Mr. Moorhead
Mr. Buyer                           Mr. Sensenbrenner
Mr. Bono                            Mr. Gekas
Mr. Bryant (TN)                     Mr. Smith (TX)
Mr. Chabot                          Mr. Gallegly
Mr. Conyers                         Mr. Canady
Mr. Frank                           Mr. Inglis
Mr. Watt                            Mr. Goodlatte
Ms. Lofgren                         Mr. Hoke
                                    Mr. Heineman
                                    Mr. Flanagan
                                    Mr. Barr
                                    Mr. Schumer
                                    Mr. Boucher
                                    Mr. Reed
                                    Mr. Nadler
                                    Mr. Scott
                                    Mr. Becerra
                                    Ms. Jackson Lee

    3. An amendment by Messrs. Schumer and Nadler to the 
amendment in the nature of a substitute by Mr. Hyde to provide 
for limitations on the use of the names of professional sports 
teams in certain circumstances. The Schumer/Nadler amendment 
was defeated by a roll call vote of 12-18.

        AYES                          NAYS
Mr. Hoke                            Mr. Hyde
Mr. Heineman                        Mr. Moorhead
Mr. Flanagan                        Mr. Sensenbrenner
Mr. Barr                            Mr. McCollum
Mr. Conyers                         Mr. Gekas
Mr. Schumer                         Mr. Coble
Mr. Reed                            Mr. Smith (TX)
Mr. Nadler                          Mr. Gallegly
Mr. Scott                           Mr. Canady
Mr. Watt                            Mr. Inglis
Mr. Becerra                         Mr. Goodlatte
Ms. Jackson Lee                     Mr. Buyer
                                    Mr. Bono
                                    Mr. Bryant (TN)
                                    Mr. Chabot
                                    Mr. Frank
                                    Mr. Boucher
                                    Ms. Lofgren

    4. An amendment by Mr. Bryant of Tennessee to the amendment 
in the nature of a substitute by Mr. Hyde to strike the 
effective date (August 1, 1995). The Bryant of Tennessee 
amendment was defeated by a roll call vote of 8-22.

        AYES                          NAYS
Mr. McCollum                        Mr. Hyde
Mr. Coble                           Mr. Moorhead
Mr. Gallegly                        Mr. Sensenbrenner
Mr. Buyer                           Mr. Gekas
Mr. Bono                            Mr. Smith (TX)
Mr. Heineman                        Mr. Canady
Mr. Bryant (TN)                     Mr. Inglis
Mr. Watt                            Mr. Goodlatte
                                    Mr. Hoke
                                    Mr. Chabot
                                    Mr. Flanagan
                                    Mr. Barr
                                    Mr. Conyers
                                    Mr. Frank
                                    Mr. Schumer
                                    Mr. Boucher
                                    Mr. Reed
                                    Mr. Nadler
                                    Mr. Scott
                                    Mr. Becerra
                                    Ms. Lofgren
                                    Ms. Jackson Lee

    5. An amendment by Mr. Canady to the amendment in the 
nature of a substitute by Mr. Hyde to change the exception to 
the required expansion provision so that it applies when the 
team relocates within 25 miles of the original community rather 
than 60 miles. The Canady amendment was adopted by a roll call 
vote of 19-9.

        AYES                          NAYS
Mr. Hyde                            Mr. Moorhead
Mr. Coble                           Mr. Sensenbrenner
Mr. Smith (TX)                      Mr. McCollum
Mr. Gallegly                        Mr. Buyer
Mr. Canady                          Mr. Bono
Mr. Inglis                          Mr. Bryant (TN)
Mr. Goodlatte                       Mr. Chabot
Mr. Hoke                            Mr. Watt
Mr. Heineman                        Ms. Lofgren
Mr. Flanagan
Mr. Barr
Mr. Conyers
Mr. Schumer
Mr. Boucher
Mr. Reed
Mr. Nadler
Mr. Scott
Mr. Becerra
Ms. Jackson Lee

    6. A substitute amendment by Mr. Conyers (the text of H.R. 
2699) to the amendment in the nature of a substitute by Mr. 
Hyde. The Conyers substitute amendment was defeated by a roll 
call vote of 13-15.

        AYES                          NAYS
Mr. Sensenbrenner                   Mr. Hyde
Mr. Bryant (TN)                     Mr. Moorhead
Mr. Chabot                          Mr. Coble
Mr. Conyers                         Mr. Smith (TX)
Mr. Frank                           Mr. Gallegly
Mr. Schumer                         Mr. Canady
Mr. Boucher                         Mr. Inglis
Mr. Reed                            Mr. Goodlatte
Mr. Nadler                          Mr. Buyer
Mr. Scott                           Mr. Hoke
Mr. Watt                            Mr. Bono
Mr. Becerra                         Mr. Heineman
Ms. Lofgren                         Mr. Flanagan
                                    Mr. Barr
                                    Ms. Jackson Lee

    7. The motion to favorably report H.R. 2740 as amended by 
the amendment in the nature of a substitute by Mr. Hyde, as 
amended. The motion was agreed to by a roll call vote of 24-6.

        AYES                          NAYS
Mr. Hyde                            Mr. Buyer
Mr. Moorhead                        Mr. Bryant (TN)
Mr. Sensenbrenner                   Mr. Chabot
Mr. Gekas                           Mr. Conyers
Mr. Coble                           Mr. Frank
Mr. Smith (TX)                      Ms. Lofgren
Mr. Gallegly
Mr. Canady
Mr. Inglis
Mr. Goodlatte
Mr. Hoke
Mr. Bono
Mr. Heineman
Mr. Flanagan
Mr. Barr
Mr. Schumer
Mr. Berman
Mr. Boucher
Mr. Reed
Mr. Nadler
Mr. Scott
Mr. Watt
Mr. Becerra
Ms. Jackson Lee

                      committee oversight findings

    In compliance with clause 2(l)(3)(A) of rule XI of the 
Rules of the House of Representatives, the Committee reports 
that the findings and recommendations of the Committee, based 
on oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

         committee on government reform and oversight findings

    No findings or recommendations of the Committee on 
Government Reform and Oversight were received as referred to in 
clause 2(l)(3)(D) of rule XI of the Rules of the House of 
Representatives.

               new budget authority and tax expenditures

    Clause 2(l)(3)(B) of House Rule XI is inapplicable because 
this legislation does not provide new budgetary authority or 
increased tax expenditures.

               congressional budget office cost estimate

    In compliance with clause 2(l)(3)(C) of rule XI of the 
Rules of the House of Representatives, the Committee sets 
forth, with respect to H.R. 2740, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 403 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 21, 1996.
Hon. Henry J. Hyde,
Chairman, Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
reviewed H.R. 2740, the Fan Freedom and Community Protection 
Act of 1996, as ordered reported by the House Committee on the 
Judiciary on April 25, 1996. CBO estimates that enacting this 
legislation would have no significant impact on the federal 
budget. Because H.R. 2740 would not affect direct spending or 
receipts, pay-as-you-go procedures would not apply.
    Section 4 of the Unfunded Mandates Reform Act of 1995 
(Public Law 104-4) excludes from the application of that act 
legislative provisions that enforce the constitutional rights 
of individuals. CBO has determined that the bill's provisions 
pertaining to antitrust laws and local governments' private 
right of action in federal court fit within that exclusion. 
Other provisions in H.R. 2740 contain private-sector mandates 
that exceed the $100 million annual threshold established in 
Public Law 104-4 (see the enclosed mandate cost statement). 
These other provisions do not contain intergovernmental 
mandates, and would impose no direct costs on state, local, or 
tribal governments.
    Bill Purpose. H.R. 2740 would make several changes to the 
current laws relating to relocation of professional football, 
hockey, and basketball franchises. The bill would loosen 
federal and state antitrust restrictions, giving professional 
sports leagues approval authority over team relocations, and 
would place significant new requirements on leagues and team 
owners involved in such relocations.
    Intergovernmental Impact. The bill would protect state and 
local governments from some adverse impacts of team 
relocations. In particular, the bill would require owners of 
teams who breach a contract when moving out of existing playing 
facilities to reimburse state and local governments for the 
value of the financial assistance provided by those 
governments. The bill would also require a league that approves 
the relocation of a team to another state, or outside a 25-mile 
radius, to grant a replacement franchise to the community 
losing the team, and to do so on favorable financial terms. 
These requirements would be sufficiently onerous, however, that 
CBO expects few relocations would occur. In recent years, 
approximately three teams have relocated annually.
    Federal Budgetary Impact: Enacting H.R. 2740 could result 
in additional costs to the U.S. Department of Justice to 
enforce the bill's provisions and in additional costs to the 
federal courts to hear cases. Since we expect very few of these 
cases, however, CBO estimates that any such costs would be less 
than $500,000 annually.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Mark 
Grabowicz for federal costs and Karen McVey for effects on 
state, local, and tribal governments.
            Sincerely,
                                             James L. Blum,
                                   (For June E. O'Neill, Director).
    Enclosure.

    congressional budget office estimate of costs of private-sector 
                                mandates

    1. Bill number: H.R. 2740.
    2. Bill title: Fan Freedom and Community Protection Act of 
1996.
    3. Bill status: Ordered reported by the House Committee on 
the Judiciary on April 25, 1996.
    4. Bill purpose: H.R. 2740 would impose several new federal 
restrictions on the business operations of the National 
Football League (NFL), the National Hockey League (NHL), the 
National Basketball Association (NBA), and the owners of 
professional sports teams that compete in those leagues. New 
constraints, however, would not affect the governing body for 
Major League Baseball and owners of major league baseball 
franchises because of that sport's existing exemption from 
anti-trust-related laws. In addition, the bill would extend a 
limited exemption from anti-trust laws to the NFL, NHL, and 
NBA, which would grant those leagues greater control over 
franchise movement by league members.
    5. Private-sector mandates contained in the bill: In 
general, the private-sector mandates imposed by the bill fall 
into four categories: (1) those requiring certain actions by 
owners and sports leagues before teams can relocate from one 
community to another; (2) those mandating the expansion of 
professional sports leagues by requiring leagues to provide 
replacement franchises to communities from which teams have 
relocated; (3) those requiring team owners who relocate their 
franchise from one facility to another to reimburse state and 
local governments for financial assistance; and (4) those 
restricting franchise movement.
    6. Estimated district cost to the private sector: Because 
the legislation is retroactive and sports leagues and 
franchises have already planned for or are now completing team 
relocations, the cost of federal mandates proposed in the bill 
could be significant. CBO estimates the direct costs, as 
defined in Public Law 104-4, of complying with new federal 
private-sector mandates could exceed the $100 million annual 
threshold during the first five years that the mandates were in 
effect. That estimate is based on the effective date of August 
1, 1995; provisions that cap the fees that sports leagues could 
charge potential investors for the rights to replacement 
franchises; provisions that could require team owners who 
relocate their franchises from one playing facility to another 
to reimburse communities for financial support; and severe 
financial penalties that effectively restrict franchise 
movement and the income that owners may earn.
    In the future, the direct costs of complying with new 
federal private-sector mandates in H.R. 2740 would likely be 
much lower. That is because the bill would promote franchise 
stability and would more closely wed franchises to their 
current communities except where expansion is the desired 
outcome for leagues. Professional sports leagues, which act 
effectively as monopolies by controlling the supply of 
franchises below the quantity desired by communities, would 
approve team relocations only when benefits to the league 
exceed costs. Given the history of slow expansion by sports 
leagues and the addition of new teams by each league within the 
past three years, it is unlikely that leagues would voluntarily 
undergo another round of expansion until after 2000. In that 
case, the direct costs imposed on the NFL, NHL, NBA, and 
franchise owners to comply with new private-sector mandates 
would be negligible. The costs of forgone opportunities for 
sports leagues and owners resulting from new operating 
restrictions, however, would be much larger.

Basis of estimate

            Section 3--Notice of proposed relocation of a professional 
                    sports team
    Section 3 contains provisions that would impose new federal 
private-sector mandates on the owners of professional sports 
teams who seek to relocate their franchises from one community 
to another by requiring owners to take specific actions to 
notify the community in which the team plays of a proposed 
relocation.
    CBO estimates that the direct costs of complying new 
federal private-sector mandates contained in Section 3 would be 
insignificant. Any costs incurred would be a function of the 
number of owners who proposed to relocate their teams from one 
community to another and the cost of publishing official notice 
in a local newspaper of general circulation. In addition, some 
cost would be associated with producing the summary of the 
reasons for moving. Lastly, in any given year, relatively few 
owners propose to relocate their franchises.
            Section 4--Requirement to make expansion teams available to 
                    communities upon the fulfillment of certain 
                    conditions
    Section 4 contains federal mandates that would impose new 
requirements on professional sports leagues that approve the 
relocation of a team from one community to another. Sports 
leagues would be required to grant a replacement franchise to 
the community from which a team relocates when that community 
fulfils certain conditions. Therefore, Section 4 effectively 
mandates the expansion of professional sports leagues and 
places an enforceable duty on leagues to operate in certain 
geographic locations but reduces slightly the ability of 
leagues to act as monopolists.
    Under Section 4(a), sports leagues that approve the 
relocation of a team are required to provide a replacement 
franchise to the community from which a team relocated within 
12 months, if a bona fide investor is identified. In addition, 
leagues are required to provide the replacement franchise to 
the community under terms and conditions no less favorable than 
provided to the most recent expansion team granted by the 
league. The window of opportunity for the community to identify 
a bona fide investor, however, is limited to three years. 
Penalties could be imposed on professional sports leagues that 
fail to comply with those two requirements, and leagues would 
also be liable for monetary damages.
    Provisions in Section 4 would not apply in cases where the 
site approved by a sports league for franchise relocation is 
not more that 25 miles from the community and is located within 
the same jurisdiction (state or the District of Columbia).
    CBO estimates that the direct private-section costs 
associated with new federal mandates contained in Section 4 
could exceed $100 million during the first five years that the 
mandates were effective. That estimate of costs assumes sports 
leagues would be able to charge a fee to investors in 
replacement franchises that is greater than the limit on such 
fees imposed by the bill. However, that level of direct costs 
is somewhat speculative because it relies on variables that are 
difficult to estimate with any certainty.
    First, the number of teams that would apply for and be 
given approval to move from one community to another is 
unpredictable. Second, the spread between the fee that the 
league could charge for a new franchise unconstrained by the 
cap in the bill and the franchise fee charged by the league 
during its most recent round to expansion is not fixed over 
time. In addition, league variable costs would rise somewhat 
because mandatory expansion would increase operating costs due 
to augmented league duties, an expanded game schedule, and 
hiring additional game officials.
    Because the effective date for H.R. 2740 is August 1, 1995, 
several franchise relocations that have already been executed, 
are in progress, or are planned for the near future would be 
affected. For example, the former Cleveland Browns of the NFL 
relocated to Baltimore for the beginning of the 1996-97 season. 
Section 4 would require the NFL to grant a replacement 
franchise to the city of Cleveland if a bona fide investor is 
identified by September 1999 (at this time, a replacement 
franchise has been promised to Cleveland by the NFL). However, 
the entry fee that the league may charge would be limited by 
the bill to the amount--$150 million--paid by investors in the 
Jacksonville and Carolina expansion franchises in 1993. CBO 
estimates that the entry fee that the NFL could now charge for 
an expansion franchise is about $175 million. Similarly, entry 
fees are capped for the NBA at the $125 million fee paid by the 
Toronto and Vancouver expansion franchises prior to competing 
in league play during the 1995-96 season and for the NHL at the 
$50 million fee paid by the Florida Panthers and Anaheim Mighty 
Ducks prior to the 1993-94 season. Given the growth in the 
value of sports franchises over the last decade, sport leagues 
could probably charge entry fees that are at least $25 million 
higher than those charged during the last round of league 
expansion. Thus, if the NFL, NBA, and NHL were each required in 
the same year to grant replacement franchises, the direct costs 
imposed by new mandates in Section 4 could eclipse $100 
million.
    Enacting H.R. 2740 would have other notable effects on 
professional sport leagues and team owners. First, the recent 
tide of franchise movement would probably be slowed for several 
years to come. That conclusion is evidenced by recent 
developments in the proposed relocation by the NFL's Houston 
Oilers to Nashville, Tennessee. Reports cite legislation before 
the Congress covering team relocations as a primary reason that 
the agreement between the Oilers and the city of Nashville has 
been temporarily suspended. Second, leagues would be given 
incentives to expand the number of cities with franchises at 
shorter intervals than in the past. Consequently, voluntary 
league expansion would become the more likely way that teams 
would play in communities where they had not previously 
competed. Third, franchises could be locked-in to playing 
facilities that are less preferable than alternative sites. 
Section 4(d) would create a cause of action against a sports 
league that approved the move of a franchise more than 25 miles 
from its current community or across state lines. For example, 
the proposed relocation of the NHL's Washington franchise from 
its playing facility in Landover, Maryland into a new arena in 
the District of Columbia could require the league to provide 
that metropolitan region with another franchise even though 
community support generally exists for such a move. Fourth, 
mandatory expansion of league play would reduce the amount of 
shared revenue (from television, for example) provided to each 
team by increasing the number of shares. Expansion could also 
reduce the quality of league play because existing teams would 
have to make some players available for selection by new 
franchises to ensure a minimum level of competitiveness by new 
teams. Finally, owners deterred from applying for relocation or 
whose applications are denied by leagues would forgo income 
that they could earn by relocating. (These costs are discussed 
in more detail in reference to Section 7).
            Section 5--League relocation authority and relocation 
                    determination criteria
    Section 5 contains new private-sector mandates that would 
require professional sports leagues to follow certain 
procedures before the relocation of a team from one community 
to another could be approved. It would, however, extend the 
antitrust exemption to leagues with regard to their authority 
over the relocation decisions by franchises that are league 
members. That exemption would enable sports leagues to legally 
enforce league by-laws that prohibit franchise relocation 
without league approval.
    Under the provisions of this section, leagues are required 
to conduct at least two public hearings on the relocation of 
franchises and to make public written findings regarding the 
relocation process. Decisions by leagues that approve the 
relocation of sports franchises and do not follow the 
procedures provided for in Section 5 would not be valid or 
final under federal law. Further, leagues would be required to 
publish written findings in one or more newspapers of general 
circulation in the community that state the basis of approving 
the proposed team relocation and to deliver its findings to the 
local government.
    CBO estimates that the direct costs imposed by mandates in 
Section 5 would be minor. Those costs would flow from new 
requirements to publish in one or more newspapers of general 
circulation the written findings from the mandatory public 
hearings on team relocation. Again, in any short period of 
time, few owners propose to relocate their franchise.
    By extending a limited anti-trust exemption to sports 
leagues such that they could exert real power over the movement 
of franchises, the Congress would also confer a significant 
benefit on sports leagues. That exemption should reduce both 
the legal costs that would now be incurred by sports leagues 
for attempts to block in court the relocation of franchises and 
the likelihood that leagues could be liable for monetary 
damages.
            Section 6--Requirement for professional sports team owners 
                    who relocate to new playing facilities to reimburse 
                    State and local governments for value of financial 
                    assistance received
    Section 6 would impose new mandates on the owners of 
professional sports teams that relocate their teams from one 
playing facility to another and, in the process of relocating, 
commit a breach of contract with a state or local government 
with regard to the original playing facility.
    Section 6(a) requires owners who fit the above criteria to 
reimburse the state or local government within 30 days of 
playing in a new facility for the amount of financial 
assistance--including special tax treatment and financing of a 
playing facility--provided to the team. Treble monetary 
penalties could be imposed on owners who fail to fulfill 
reimbursement requirements within the specified time period. 
However, those provisions do not apply in cases where recovery 
of financial assistance is already available to communities 
under the terms of existing contracts with professional sports 
teams.
    The reimbursement requirements in Section 6 could impose 
new costs on some owners. Those costs would be a function of 
the number of teams that apply to the league and are approved 
for relocation, that were provided with financial assistance by 
states or local governments, and that committed a breach of 
contract and were not liable for financial assistance 
reimbursement as part of a contract between the team and the 
community.
    CBO estimates that the direct costs of complying wih the 
federal mandate to reimburse governments for financial 
assistance provided would be small. Enacting H.R. 2740 would, 
in essence, lock-in franchises that have been provided with 
financial assistance to their current playing facilities until 
their lease is expired because the cost of reimbursement or 
potential monetary penalties would, in most cases, exceed the 
benefits of relocation. Under the requirements of H.R. 2740, if 
the Oilers relocate prior to the expiration of their lease with 
the Astrodome, for example, the Houston owner could be required 
to repay to Harris County, Texas in excess of $100 million for 
renovations performed on the playing facility in the 1980s. 
Thus, the relocation of franchises would likely be met with 
league approval only in those cases where franchises fulfill 
the condition to remain within a 25 mile radius of their 
current playing facility (in addition to not crossing state 
lines) and had been provided with insignificant levels of or no 
community financial assistance, or whose lease is due to 
expire.
            Section 7--Enforcement
    Section 7 creates several financial penalties that could be 
levied against sports leagues. Those penalties would 
effectively prohibit the movement by franchises from one 
community to another without prior approval by sports leagues 
unless league expansion was a desired outcome. Leagues would 
exercise their ability to restrict team movement to avoid being 
liable for monetary damages to abandoned communities in an 
amount equal to three times the purchase price or market value 
of the departed team--or about $100 million to $700 million 
depending on the franchise--if a replacement franchise is not 
appropriately granted. In addition, leagues could face a 
suspension for one season of their antitrust exemption for 
pooling the broadcasting rights to games and the loss of the 
antitrust exemption provided under this legislation. Thus, 
those penalties act as federal restrictions on franchise 
relocation.
    Federal restrictions on movement by teams would affect the 
profitability of franchises that wish to relocate. In general, 
owners who relocate can expect a medium-term boost to annual 
operating income of $10 million to $25 million. Severe 
penalties in Section 7, therefore, directly limit the income 
that team owners can earn. If, on average, one franchise from 
each sports league would relocate annually in the absence of 
H.R. 2740, enacting the bill would impose direct costs of 
between $30 million and $75 million in the first year that the 
mandate was effective. By the fifth year, the direct costs of 
provisions in Section 7 would be between $150 million and $375 
million.
    7. Previous CBO estimate: None.
    8. Estimate prepared by: Matt Eyles.
    9. Estimate approved by: Robert W. Hartman, Assistant 
Director for Special Studies.

                     inflationary impact statement

    Pursuant to clause 2(l)(4) of rule XI of the Rules of the 
House of Representatives, the Committee estimates that H.R. 
2740 will have no significant inflationary impact on prices and 
costs in the national economy.

                      Section-by-Section Analysis

Section 1

    Section 1 provides that this act may be cited as the ``Fan 
Freedom and Community Protection Act of 1996.''

Section 2

    Section 2 sets forth the congressional findings underlying 
the bill.

Section 3

    Section 3(a) provides that professional sports team owners 
who seek to relocate from one community to another must give 
notice to the community that they will be leaving not later 
than 180 days before the start of the season in which the team 
is to play in the new city.
    Section 3(b) sets forth the parties to whom the notice must 
be given--the local government for the community from which the 
team is moving; the sports authority for the team's stadium or 
facility; the owner or operator of the stadium or facility; and 
the professional sports league and each of its members.
    Section 3(c) requires that the notice must be delivered in 
person or by certified mail, that it must be published in a 
newspaper of general circulation in the community from which 
the team is leaving, and that it must contain the location to 
which the team is moving, a summary of the reasons for the 
move, and the date on which the move is effective.

Section 4

    Section 4(a) provides that within twelve months after a 
community that has lost a team meets the conditions in section 
4(b), the professional sports league must make an expansion 
team available to that community. The league must provide the 
team at an expansion fee no greater than the amount of the fee 
charged to the last expansion franchise granted by the league. 
It must also grant the franchise on financial terms and 
conditions no less favorable than those granted to the last 
expansion franchise granted by the league.
    Section 4(b) provides that if the community from which a 
professional sports team has moved provides the name of a 
qualified investor within three years after the team moves, the 
league must provide it with an expansion team under section 
4(a). Section 4(c) provides that the league may approve a 
resale of an expansion franchise granted under section 4(a), 
but it may not approve the relocation of such an expansion 
franchise for ten years except as provided in Section 5.
    Section 4(d) provides for an exception from the 
requirements of this section for any relocation of a franchise 
which is within 25 miles of the original location and which 
remains within the same state.

Section 5

    Section 5(a) makes it explicit that a league does not 
violate the antitrust laws by enforcing rules which authorize 
the league to decide whether a franchise may relocate, subject 
to certain conditions.
    Section 5(b) requires that the league make any such 
decision based on the ten criteria enumerated in this section. 
These criteria track those currently included in the National 
Football League's relocation policy.
    Section 5(c) requires that the league must also hold at 
least two public hearings on a proposed relocation and publish 
its findings relating to the criteria.

Section 6

    Section 6(a) provides for a new, self-executing remedy for 
States and local governments when a professional sports team 
leaves one playing facility for another and, in doing so, 
breaches its contract with respect to playing in the facility. 
In such a case, the team must pay the government an amount 
equal to the financial assistance the government provided to 
the team within thirty days after the team plays its first game 
in the new facility. Section 6(b) limits this remedy to those 
cases in which the recovery is not already provided for under 
the contract that was breached. In other words, the Committee 
intends that the State or local government should be able to 
recover the amount of the financial assistance whenever the 
team has breached its contract, but that it should not be able 
to effect a double recovery when such recovery is otherwise 
available under the terms of the contract. Section 6(c) defines 
``financial assistance'' to include special tax treatment and 
the financing of a stadium or arena in which a professional 
sports team plays. The Committee intends that this definition 
should be read as inclusive, rather than limiting, and that the 
term ``financial assistance'' should be interpreted in a common 
sense fashion to include all forms of monetary help that a 
government may have provided to a team.
    Section 6(d) provides that if a team fails to pay the 
amount set forth in section 6(a) within the required time 
period, the government may bring a lawsuit and recover three 
times the financial assistance it provided to the team.

Section 7

    Section 7(a) provides for three remedies if a league does 
not comply with the expansion provisions of section 4(a). 
First, the league is liable to the community from which the 
team left for three times the purchase price or market value of 
the team, whichever is greater. Second, the league may lose its 
antitrust exemption for pooling its broadcasting rights under 
15 U.S.C. Sec. 1291 et seq. for one season. Third, the league 
may lose the antitrust exemption provided under section 5(a) 
for the franchise relocation that led to the violation of 
section 4(a).
    Section 7(b) provides for three causes of action to enforce 
various provisions of the Act. First, the Department of Justice 
may bring an action for declaratory and injunctive relief, 
including the injunctive relief provided in sections 7(a)(2) 
and 7(a)(3), to determine whether a league has complied with 
the expansion provisions of section 4(a).
    Second, any local government that has provided financial 
assistance to a team or any local government for a community in 
which a team's home stadium or facility is located may bring an 
action to enforce the notice provisions of section 3 and the 
expansion provisions of section 4.
    Third, an investor whose name has been submitted by a 
community under section 4 may bring an action for injunctive 
relief, including the injunctive relief provided in sections 
7(a)(2) and 7(a)(3), to enforce the provisions of section 4(a).
    The Committee intends that the actions and remedies 
enumerated in this Act are in addition to, and not in lieu of, 
any other appropriate actions and remedies that may be 
available under applicable law, except as explicitly provided 
in section 6(b). As in all other cases, the Committee intends 
that any of the actions provided for in this Act may be joined 
with any other actions, if appropriate under the applicable 
rules of joinder.

Section 8

    Section 8 provides that except as expressly provided in the 
Act, nothing in the Act shall be construed to alter, determine, 
or otherwise affect the applicability or inapplicability of the 
antitrust laws, labor laws, or other laws to any other matters 
involved in professional sports.

Section 9

    Section 9 defines various terms that are used in the Act. 
The term ``antitrust laws'' is defined to include state 
antitrust laws. The term ``professional sports team'' is 
defined as any group of athletes organized to play major league 
football, basketball, or hockey. The term ``State'' is defined 
as any of the 50 States and the District of Columbia. Section 
10. Section 10 provides that the effective date of the Act is 
August 1, 1995. The Committee realizes that some events 
triggering parts of the act have occurred after that date. 
Moreover, it is likely that additional such events will have 
occurred between the date this report is filed and the date of 
enactment, if enactment occurs.
    The Committee intends that the substantive requirements of 
the Act should fully apply to those events. However, in cases 
in which a time period provided under the Act would be 
shortened because part or all of the time period ran before the 
date of enactment, the Committee intends that the party 
required to act within the time period should get the full 
benefit of the time period provided in the Act and that the day 
after the date of enactment should be deemed to be the first 
day of any such time period. In cases in which a deadline for 
action required under the Act has already passed, the Committee 
intends that the party required to act shall act as soon as 
practicable after the date of enactment.
    At the markup, Congresswoman Lofgren pointed out that the 
Golden State Warriors will be playing the next season in San 
Jose while their regular arena in Oakland is being renovated. 
The Committee wishes to clarify that none of the provisions of 
this bill are intended to apply to temporary moves made for the 
purposes of renovation or other similar reasons. In addition, 
none of the provisions of this bill should be construed to 
apply to teams that play a small minority of their home games 
in a nearby city for the purpose of widening their market 
appeal.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3 of rule XIII of the Rules of 
the House of Representatives, the Committee notes that the 
bill, as reported, does not make any changes to existing law.
                            DISSENTING VIEWS

    On a bipartisan basis, we oppose the legislation reported 
by the Committee which constitutes an unwarranted and 
unprecedented intrusion into private economic decisions. In 
particular, by mandating franchise expansion, the legislation 
will engender greater economic uncertainty for sports leagues 
and lead to less stability for professional sports teams and 
their fans.
    In addition to being opposed by all of the affected major 
sports leagues--the National Football League; National 
Basketball Association; and National Hockey League 1--the 
legislation is opposed by the U.S. Conference of Mayors 
(through their Franchise Relocation Task Force). Task Force co-
chairman, Cleveland Mayor Michael White has written that the 
forced expansion potentially required under the legislation 
would compel sports leagues ``to retain economically unviable 
ventures in cities * * * [and] ultimately doom major sports 
leagues as we know it.'' 2
---------------------------------------------------------------------------
    \1\ See Letters from Paul Tagliabue, Commissioner, National 
Football League (April 23, 1996); Jeffrey A. Mishkin, Executive Vice 
President and Chief Legal Officer, National Basketball Association 
(April 19, 1996); and Gary B. Bettman, Commissioner, National Hockey 
League (April 17, 1996) to Members of the House Judiciary Committee.
    \2\ Letter from the Hon. Michael R. White, Mayor, City of Cleveland 
to the Hon. John Conyers, Jr. (April 24, 1996). Participants in the 
task force represented a cross-section of mayors with NFL franchises in 
their cities.
---------------------------------------------------------------------------
    We do agree that the record before us supports a 
legislative response to prevent unneeded and unwanted franchise 
relocations. And we would support confirming that the sports 
leagues have limited legal authority to prevent unwarranted 
relocations, so long as the clarification is coupled with 
notice requirements, specified relocation criteria, and permits 
affected communities to seek review of relocation decisions in 
federal court. Similar approaches were offered through 
amendments by Mr. Bryant (R-TN) and Mr. Conyers (D-MI), but 
were rejected by the Committee (the latter amendment failed by 
a 13-15 vote). Such proposals offered a far more non-
regulatory, free market approach to the problem of franchise 
relocation.
    Unfortunately, the legislation approved by the Committee 
goes well beyond such measured responses and forces the leagues 
to expand and enter into partnerships with potentially unwanted 
and undesired partners whenever a franchise relocates--even if 
the facts justify a relocation. In addition, the legislation 
reported by the Committee unnecessarily interferes with 
contractual arrangements entered into between sports franchises 
and public stadium authorities.

       i. mandatory expansion is inappropriate and unprecedented

    Section 4(a) of H.R. 2740 provides that in the event of a 
franchise relocation ``the league shall grant to an investor 
[selected by the community] * * * a new expansion * * * 
franchise.'' In essence, this provision would force 
professional sports leagues to expand into all communities from 
which a team has relocated, whether or not the community is 
able to support a franchise economically or the relocation 
otherwise complied with the federally-mandated relocation 
criteria.
    Such forced expansion would threaten the financial 
stability of the sports leagues and clubs. Expansion of a 
sports league does not ordinarily produce additional net 
revenues for league members in the long run, even if a 
substantial expansion fee is paid up front. 3 Instead such 
expansion can dilute each member's share of shared revenue 
sources and jeopardize the ability of lower revenue clubs to 
field competitive teams. As the gulf between clubs widens, 
attendance could well decline, and with attendance, revenues. 
Such a circumstance would increase the pressure on clubs to 
relocate--a result completely contrary to that sought by the 
authors of the legislation.
---------------------------------------------------------------------------
    \3\ For example, in connection with the most recent NFL expansion, 
although each NFL team will receive $10 million in expansion payments 
over a 4-5 year period, it will forego at least $13.9 million in 
television payments in the first seven years alone. A similar dilution 
occurs with regard to team revenues from licensing and marketing. See 
Letter from Paul Tagliabue, Commissioner, National Football League, to 
the Hon. Arlen Specter (December 8, 1995).
    The Congressional Budget Office agrees that mandated expansion 
would reduce the revenues available to existing teams, concluding:
    [M]andatory expansion of league play would reduce the amount of 
shared revenue (from television, for example) provided to each team by 
increasing the number of shares. Letter from June O'Neil Director, 
Congressional Budget Office, to Honorable Henry J. Hyde, Chairman, 
Comm. on the Judiciary, June 21, 1996 [hereinafter, ``CBO Letter''].
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    Moreover, the forced expansion required by H.R. 2740 would 
deprive the leagues of the ability to ensure that the new 
owner--forced upon the league--is in compliance with the 
league's ownership policies. A wealthy investor with a criminal 
record or who otherwise does not meet a league's ownership 
criteria could undermine the integrity of a professional sports 
league's product and diminish fan interest. Although the sports 
leagues are free to exclude such owners today, H.R. 2740 would 
force them to accept anyone willing to pay the required fee. 
This is also true for investors whose other business 
investments create a conflict-of-interest involving the league.
    The legislation's geographical restrictions--which apply 
any time a franchise relocates outside of its current State or 
moves to a stadium 25 miles further than its current home--
could also result in unintended and undesirable consequences. 
For example, under the terms of H.R. 2740, the National 
Football League would be forced to provide the District of 
Columbia with a franchise to replace the Redskins, who are 
relocating from Washington, D.C. to nearby Landover, Maryland. 
This would result in the absurd situation of two professional 
football teams within a less than 5 mile radius. A recent Wall 
Street Journal editorial criticizing H.R. 2740 points out:

          If this law had been in effect when the football 
        Giants and Jets moved across the Hudson River from New 
        York City to the New Jersey Meadowlands, New York would 
        now have four football teams--two courtesy of Adam 
        Smith, two from Uncle Sam. If Cincinnati's Bengals 
        build a new stadium a couple of miles away in Kentucky, 
        Cincinnati would become the smallest city with two NFL 
        teams (it's already the fifth smallest city with one 
        team). 4
---------------------------------------------------------------------------
    \4\ Richard J. Tofel, ``When Conservatives Tilt the Playing 
Field,'' The Wall Street Journal, May 15, 1996 at A14. The legislation 
has also been criticized by The Washington Times. See ``Ministry of 
Football,'' The Washington Times, June 12, 1996 at A20.

    Another absurd consequence is the legislation's failure to 
specify any inflation or time adjustment for the franchise fee. 
As currently drafted, the investor selected by the community 
must pay a franchise fee ``no greater than * * * the franchise 
fee charged by the league for the last expansion * * * 
franchise granted.'' Thus if a league has not expanded for many 
years, or if a league has secured significant capital influx or 
otherwise realized a significant increase in franchise value 
since the last time a franchise was awarded, the league would 
be forced to offer a franchise at a significant discount from 
the fair market value. This would also allow a mayor or other 
public official to award valuable private benefits to whomever 
may be selected as the designated ``investor''--a significant 
political plum.
    In all likelihood, the net effect of these forced expansion 
provisions would be to freeze the status quo of major league 
sports franchises. Professional football, basketball, and 
hockey would all be discouraged from expanding into new markets 
because of the punitive new legal obligations associated with a 
sports franchise. Why expand into a new city if a league is 
already facing the threat of a significant increase in 
franchises through the legal device of forced expansion?
    We are aware of no other legislative precedent which 
authorizes such unilateral federal intervention into private 
decisions and financial arrangements. 5 The only 
comparable legislative context is the Worker Adjustment and 
Retraining Notification Act, 6 which ensures that large 
groups of dislocated workers (those working for employers of 
100 or more persons) receive at least 60 days notice before a 
plant closing. H.R. 2740 constitutes a quantum leap beyond the 
scope of the plant closing law--instead of providing a simple 
notice, the legislation provides for outright community 
acquisition of a new franchise from a private sports league.
---------------------------------------------------------------------------
    \5\ Indeed, it should be noted that CBO has estimated that the bill 
would constitute an unfunded private sector mandate, and that ``the 
direct costs * * * of complying with the new federal private-sector 
mandates could exceed the $100 million annual threshold during the 
first five years that the mandates were in effect.'' CBO Letter, supra. 
note 3.
    \6\ Pub. L. 100-379, 29 U.S.C. 2101 et seq.
---------------------------------------------------------------------------
    Finally, we would note that among the other punitive 
remedies for failing to comply with mandated league expansion 
is the legislation's imposing suspension of the Sports 
Broadcasting Act of 1961. 7 The Sports Broadcasting Act 
permits members of a professional sports league to pool their 
television rights for purposes of sale to networks. Absent such 
arrangements, clubs in smaller markets (such as Cincinnati, 
Green Bay, Indianapolis, Jacksonville, Kansas City, Salt Lake 
City, and San Antonio) would likely have been forced to 
relocate to larger communities and the expansion of each of the 
professional sports leagues to new and growing communities in 
recent years would not have occurred. Moreover, if clubs are 
precluded from pooling their television rights even for a 
single season, they would be faced with the economically 
untenable choice of either suspending their network rights 
agreements (which are negotiated on a multi-year basis) or 
maintaining those arrangements and facing the prospect of 
defending treble damage antitrust actions. Again the result--
increased franchise instability--would be the precise opposite 
of that intended by the bill's sponsors.
---------------------------------------------------------------------------
    \7\ 15 U.S.C. Sec. Sec. 1291 et seq.
---------------------------------------------------------------------------

   II. Unnecessary Intervention into Sports Contracting Arrangements

    We also have serious concerns with section 6 of the 
legislation, which would require a professional sport franchise 
that moves from one facility to another to reimburse the state 
or local government for any ``financial assistance'' if the 
move were in breach of a lease with that entity.
    This provision constitutes an unnecessary and unwarranted 
federal intervention into the domain of contract law. Our 
hearings disclosed no instance where a professional sports team 
breached a lease with a state or local government. Moreover, 
state and local governments can and do protect themselves from 
the prospect of such breaches by including liquidated damages 
or specific performance provisions in the contract. 8
---------------------------------------------------------------------------
    \8\ For example, the stadium lease signed between the Oilers and 
Nashville, TN has been described as ``ironclad'' and provides that if 
the team seeks to break the lease, they will be legally obligated to 
pay the city (i) $117 million if they break the lease in the first 12 
years; (ii) $87 million if they break the lease in the following 10 
years; (iii) $34 million if they break the lease in the following 8 
years; (iv) and $15 million if they break the lease in the following 
10-year extension. The lease also allows the city to seek an injunction 
barring any move. See Trebor Banstetter, Nashville's lease deal among 
NFL's toughest, Nashville Banner, April 17, 1996, et al.
---------------------------------------------------------------------------
    Moreover, even in the absence of an explicit contractual 
remedy, any stadium landlord would be free to bring an action 
for breach of contract if the tenant club breached its lease. 
If successful, the landlord would be entitled to recover all 
its actual and consequential damages--not an artificially 
imposed reimbursement for all ``financial assistance'' 
rendered, regardless of when the asserted assistance was 
rendered. No public policy consideration warrants such unusual 
remedies when traditional damages--and in many cases liquidated 
damages--are available to interested government parties.
    Finally, the term ``financial assistance'' is so vague that 
it could be interpreted to require compensation for all 
services (including police protection) for all time (not even 
limited to the period of the lease). Therefore, in addition to 
being discriminatory, this provision could prove to be 
extraordinarily punitive.
    For all of the foregoing reasons, we respectfully dissent 
from H.R. 2740. Although we support efforts to bring fairness 
and equity to the issue of sports franchise relocations, we 
cannot endorse legislation which co-opts private financial 
arrangements and exacerbates the financial problems that lead 
to the relocations that the sponsors of the bill would like to 
prevent.

                                   John Conyers, Jr.
                                   Zoe Lofgren.
                                   Stephen E. Buyer.
                                   Ed Bryant.