Is The NFL Better Off Without A Team In LA?

Los Angeles has been without a football team since 1995 when the Rams moved to St. Louis and the Raiders returned to Oakland. As the nation’s second largest metropolitan area, it seems odd that the NFL wouldn’t have a single team call LA its home. Talk of finding a team for LA, either by expansion or by relocation, has been growing while the civic leaders clear the path for a possible new stadium.

It may be that the NFL would be foolish not to take advantage of such a large market, but perhaps the current 32 teams are better off leaving LA wanting for a team.

Without a team there, they sacrifice the exposure and revenue LA can provide. On the other hand, a team-less LA might provide the 32 NFL teams much more. As it currently stands, any team trying to wrangle a new stadium or other major concession from its home city and state has a credible threat of a lucrative destination.

If Vikings owner Zigi Wilf wants a new stadium, with LA in the mix, he’s likely to get more cooperation from Minnesotans, fans and government alike. If Jaguars owner Wayne Weaver is seeking deep discounts on his lease or a bigger share of the stadium concessions, he’ll get a better reception with LA as a suitor than if Portland or Oklahoma City were the next best alternatives.

In fact, here are the 10 largest US cities without an NFL team: Los Angeles, CA; San Antonio, TX; San Jose, CA; Columbus, OH; Austin, TX; Memphis, TN; El Paso, TX; Louisville, KY; Las Vegas, NV; and Portland, OR.

I don’t think the good fans of Minnesota are losing much sleep worrying about the El Paso Vikings, but they are worried about LA, the city that took their Lakers.

So perhaps the current 32 NFL teams are better off without a team in LA. Sure, putting a team in a big market like LA may be more profitable than the better deal that an individual team can extract from its current city, but consider how the effect multiplies across several teams. Teams in marginal markets like Buffalo, Jacksonville, Minneapolis, Nashville, Indianapolis, New Orleans, Charlotte, San Diego and others gain bargaining leverage thanks to the credible alternative that LA represents.

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21 Responses to “Is The NFL Better Off Without A Team In LA?”

  1. Anonymous says:

    >> As it currently stands, any team trying to wrangle a new stadium or other major concession from its home city and state has a credible threat of a lucrative destination.

    Brian, you have a point. All the same ...
    Let the teams leave, I watch them on TV anyway, they could be located in Madagascar for all I care. I wish local politicians would stop the wasteful spending on sports stadiums, they tend to be poor investments when compared with all alternatives.

    My favorite is what happened in Cininnatti, where the person who was reperesenting the city in the negotiations joined the Bengals after the deal was done, and the revenue from the Stadium doesn't even pay the maintenance cost. What a shady deal that was.

  2. Borat says:

    Brain:

    wat do yu no abut living ina city with no NFL teme? You liv in washerton where the commissioner is from and no teme is allowed to leve their. You don't know wat its feeeels like to have youre home teme leve!

  3. Jeff Clarke says:

    I lived nearly my whole life in DC (by far the largest metro area without a baseball team) and moved to Seattle barely after the Nats got there. Almost immediately, Seattle became the largest metro area without a basketball team. Ugggh.

    Still, I'm proud of my new city that finally learned how to draw the line at building new stadiums. They were extorted three times in a row. Getting a backbone late is better than getting none at all.

    You should do more work on the stadium issue. Its an absurd waste of taxpayer dollars. It can't be justified in any way. My favorite is when people try to use the multiplier studies to show that its worth it because every now and then, a fan stops for dinner after a game. Ummm, fixing potholes has a much higher multiple. So does hiring extra cops, teachers, cutting taxes, etc. etc. Nearly any other alternative for the money is better.

    The worst part about it is that I don't even think the owners really want the stadiums. I think that if you just told them "Hey we can build you a $500 million stadium or we can write you a check for $100 million", they would take the check the vast majority of the time. The economic term for this is "deadweight loss" and it is particularly annoying. Literally, everybody would be better off if owners dropped the pretense and just started demanding cash payouts from the politicians. But somehow cash bribes are illegal but real estate bribes are acceptable.

  4. Anonymous says:

    It would be difficult to imagine a situation, where for example, New York was not strongly represented by at least three if not all four top professional sports

    But in a sense it doesn't really matter and perhaps all ten top cities cited above should focus on getting one major sport and retaining them - those that haven't got something already.

    After all there is a huge second level with college football that plugs part of the gaps at least in the fall.

    Here in the UK, soccer has migrated in a not dissimilar fashion to the NFL and MLB with few of the original teams performing consistently at a high level, though having said that, through expansion rather than moves.

    11 of the original 12 are still going with no fewer than 7 being represented in the 20 team Premier League 2010-2011.

    Though London powerhouses Arsenal, more recently joined by Chelsea, as well as hot-and-cold Tottenham dominate in the south with Manchester United and Liverpool leading the way in the north.

    Ironically, one of the founding 12 - Aston Villa - are lead representatives for the second city, Birmingham (Birmingham City also play in the Premiership) whilst Leeds United in Yorkshire, representating the third major city have played at a lower grade for years though gradually rebuilding.

    Unlike soccer, Rugby League has remained dominated by northern clubs; Rugby Union whilst professional at the highest level, is possibly the closest equivalent to College Football, with Leicester in the Midlands being the benchmark team.

    Whilst still a major summer sport, cricket suffers due to the variable weather - not so much within any given season but from one year to the next. T20 has alleviated a bit, with game time equivalent to the NFL or MLB.

    Horseracing is proportionally more important in the UK than the States, except for the Breeders Cup and the Prix de l'Arc de Triomphe in Paris in the Fall; National Hunt (jumping) is now almost entirely dominant in the UK and Ireland. Whilst almost an all year round sport, although only one or two days a week in summer, the peak season runs from mid-November to mid-April.

    This gives it a peak focus of attention not dissimilar in terms of weeks to the NFL.

    Whilst many London tracks do host NH in the winter, the sport is very much a west country activity dominated by this country's equivalent of the Superbowl, attracting around 200000 fans to the (Championship) Cheltenham Festival in March and to a lesser extent the Grand National meeting at Aintree three weeks later.

    Hugh

  5. Jim says:

    I agree with Jeff. One of the articles about the effects of a new stadium for the Vikings actually comes to the conclusion that it would be cheaper for the state to pay the Vikings in cash rather than build them a new stadium for the same exact profit. I am going from memory here but I believe the expected increase in profits for a new stadium in MN would be about 14 million a year while the bond payments if the stadium was built on budget would be over 30 million.

    A similar situation is happening in Tampa with the Devil Rays (I refuse to go along with the name change). Even at the highest end of expected increase in revenue from a new stadium the profits would increase only around 20 percent since the Devil Rays would get less from revenue sharing and might actually end up as a contributor eating most of the potential profits up.

    As Jeff pointed out the money used can go to so many better uses where even throwing the money off the roof of the tallest building has a higher economic effect. The saddest part is once new stadium talk starts up you know that no matter what the local politicians will find some way to pay for it even if poll after election finds the citizens voting against it. You also get to hear how it produces so many trillions of jobs despite common sense. Exactly how many new jobs can a new stadium produce over the old one? I mean the old stadium workers will either move over to the new stadium to work or change jobs and need to be replaced. Most jobs at a stadium are temporary part time jobs. In normal economic times the boost in construction jobs is just moving jobs from one project to another and for the cost of a stadium a city could employee more construction jobs anyways building the 50 plus new schools that equals the cost of a stadium or a new spur on a rapid transit line where at least they can get some fed money to actually increase there investment.

  6. Chase says:

    Here in New York, they just built a $1.8 billion dollar stadium using no tax dollars. Of course, an endless amount of outrage has been thrown at teams for the insanely high cost of PSLs.

  7. Brian Burke says:

    Moving teams causes real heartbreak. Just want to be clear I'm not treating the issue cavalierly.

    Those of you interested in the boondoggle that is public stadium construction (or subsidy), would enjoy the Sports Economist blog.

  8. Anonymous says:

    Brian, I just tried to send you an email and it bounced back. Do you have a different email address than the one listed on your contact page?

  9. Brian Burke says:

    Oops. Sorry, I am in the middle of a move and my old address stopped working. I just posted the new address at the Contact/FAQ page.

  10. Anonymous says:

    I thought it was a close to done deal that Ari Gold was bringing a team to LA?

  11. Brendan Scolari says:

    Hey Brian, love the blog.

    One question, doesn't this ignore the fact that it's possible to have two teams in one city, particularly in a market like LA? Obviously they have two MLB teams and two NBA teams in LA, and other large markets have two NFL teams (the Bay Area and NYC), so I see no reason why the NFL couldn't move a team to LA and still use the same threat of relocation for other teams hoping for new stadiums. Because of this I just don't see the logic of not having ANY team there.

  12. Football Polemics says:

    Brian,

    It's nitpicking and doesn't affect your point, but using media market size would radically change your potential NFL markets list. By that list, the largest media markets without NFL franchises are:

    LA (#2)
    Orlando (19)
    Sacramento (20)
    Portland (22)
    Raleigh-Durham (26) though Charlotte (24) has the Panthers
    Hartford/NewHaven (30) though has the Pats
    Salt Lake City (31)
    Columbus (34) - has OSU, plus Cincy and Cleve
    Milwaukee (35) -- covered by Green Bay
    Greenville SC (36)
    San Antonio (37)

    If you put Austin (48) and San Antonio (37) together, they would be about #16. Of course, they already have UTexas.

    After LA, there really isn't an obvious viable NFL franchise market. You list San Jose, but that's already served by the 49ers and Raiders. Orlando is only an hour and a half from Tampa. Likewise with Sacramento and the SanFran media market.

    So the two most likely markets after LA would probably be Austin/SA or Portland. But neither is useful for threat purposes.

  13. Football Polemics says:

    Also, the El Paso media market is #98.

  14. Anonymous says:

    Something that is really interesting is the extent to which teams compete for fans with the other sports. Cities that have only one pro team, that team tends to be disproportionately popular. Some good examples of this phenomenon are the Green Bay Packers, the Oklahoma City Thunder, the Utah Jazz and the Portland Trailblazers. It makes sense that fans will only go to X sporting events a year. If another league is right around the corner, they might not go. Its hard to think about the Bears and Bulls as rivals but in business terms, they definitely are. The presence of big time college sports is also a factor. Is it any coincidence that the biggest fan bases are in places that don't have pro teams in any sport (Kansas, Kentucky, Oklahoma, Nebraska etc)?

    That raises a question. What is the biggest metropolitan area that has nothing whatsoever in college or the pros?

    The answer and its not remotely close: Las Vegas

    All of the leagues feel that locating in a gambling city will somehow tarnish the reputation of their league. This is the most absurd premise I've ever heard. They seem to think that a gambler will pay off a multimillionaire athlete with a bribe large enough to make it worth his while, but not if he has to take a flight.

    Sooner or later, somebody is going to put a team in Vegas. The population has tripled in the last 20 years. The NHL will probably go first.

  15. Football Polemics says:

    Anonymous, have you spent much time in LV? I'm guessing not.

    First of all, Las Vegas is only the 42nd media market. It's not even ahead of the Greenville/Spartanburg SC media market (36) which doesn't have any sports teams either, unless you count Charlotte. It's even behind Birmingham, AL (40) though Birmingham does have Bama and Auburn. Unlike Birmingham, Vegas has about zero people outside of the technical media market who might be fans of its team.

    Second of all, no one is from Vegas. That's not the end of the world, but everyone who lives in Vegas has a favorite team somewhere else. I would also guess that it is the most transient population for a city of its size. My friends that live there aren't planning on staying.

    Third, who buys the corporate boxes? The big companies are casinos, but will whales really want to go see a Las Vegas pro sports team for their unforgettable Vegas comp? Highly doubtful.


    While I think Las Vegas will get a pro sports team eventually, it is less of a slamdunk than you think.

  16. Jeff says:

    This comment has nothing to do with LA. I thought I would use LA as leverage though. Throughout this site, I have seen many spectacular case studies. I wanted to ask for a specific study. If you threw out the top 4 and bottom 4 teams in the league, what would be the chance of a team having a significant advantage in a one game trial, i.e. better than 60% chance of winning?

    I ask because I am conducting a study of the point spread as a price, and my theory is that, most teams are very equal in one game series. This would mean the point spread is literally based on a perception and has nothing to do with the chance the team has of winning.

    Isolating when the numbers are largely inflated would make for a very profitable season..

  17. Anonymous says:

    What Brian is saying is right on point. He's talking about "threat point," which is an extremely good reason why the NFL probably enjoys having LA free of a team.

    As for the fiscal conservative (I am, but love football) argument against stadium subsidies--look at some impact studies on google scholar, I'm sure you can find them. Cities definitely lose money on the stadiums they build, but the amount is often minimal on a per-taxpayer basis when you consider what is gained by each person who gets to chill and watch a game every Sunday. There is an extreme free-rider problem if you choose to finance it only by ticket sales & the league's TV money. Someone can watch them for minimal money per year without every buying a ticket, and it's up to the ticket buyers to pay exorbitant prices to finance the stadium that the guy who sits at home with basic cable and a Busch Light can basically enjoy for free. So, if you gave me the choice between paying $20 a year more in taxes and not having a team, I know what I'd chose.

  18. Jeff Clarke says:

    Anon,

    I think you are wrong. There isn't really a free rider problem. When you sit at home and watch, the NFL is getting paid. The league does get a lot of TV money. Between that and tickets, they have more than enough to meet their expenses and turn a healthy profit. There is definitely a demand for football and if capitalism is good at one thing, its supplying products that are in demand. Football won't go away if the owners are forced to meet their own real estate expenses.

    What I think you would see if a radical reevaluation of exactly how much they "need" new stadiums. Some stadiums are getting decommissioned when they are barely thirty years old and there is really nothing wrong with them. Speaking purely as a fan, I actually liked RFK considerably more than FedEx. I can't help but think about the fact that with many new stadiums, the most popular places in baseball are Wrigley and Fenway.

    If the new stadiums are worth the investment, let the owners pay for them. Frankly, I don't think it would hurt at all if they just stayed with the old ones. Splitting time with baseball and/or college teams isn't a horrible solution either.

  19. marparker says:

    Wasn't a study just completed that showed just the effect of Lebron James leaving Cleveland would have on its economy? We understand that adding a stadium might not be the best investment however, what happens when that team leaves the city? Those are the two extremes that have to be measured.

    Now, its up to the cities to understand the game they are playing. Are the Yankees ever going to leave New York? Most likely not. However, thats not the case in many cities. Lower tier cities have to realize their dilemma.

  20. Anonymous says:

    Jeff-
    The amount a team gets paid for you sitting home watching tv is:

    [how much you increase ratings * how much that increase is worth in new ad revenue and its contribution to a re-negotiation of TV contracts (in the future, it's set for now)] divided by 32 (all NFL teams split it evenly)

    The revenue a team gets from you going to a game is:

    60% of Ticket price

    I would be willing to bet that--to a given team--you watching a team's full season on TV is worth less than you going to 1 game (2, max). Definite free rider problem. If the stadium were financed by the team, guess who would pay the price? (hint: not the guy watching TV--thus, there is a free rider problem)

    Now, I won't deny that a major reason why owners want to build a new stadium is because the benefit (whatever) is greater than the cost (very little, cuz it's subsidized). Side note: the reason that they are getting rid of 30 year old stadiums is to increase non-revenue sharing space (luxury boxes, etc.), and because a new stadium flat-out attracts more fans, or possibly has a higher capacity.

    But what you're saying is in principle, the idea of a stadium subsidy is wrong. I agree with that, in theory. However, given the fact that other cities are willing to provide subsidies if my city isn't, I would gladly pay the extra taxes and have an NFL team in my city. Sorry, but I guess these are sacrifices you have to make if you're a big fan of a product produced by a monopoly.

  21. Justin says:

    I don't know. The ratings are high enough where the NFL gets over $500M from 3 TV sources (CBS, Fox, NBC), plus whatever ESPN gets for their cable package.

    I seem to hear over and over again that most NFL teams are in the black before selling ticket #1 because of TV deals.

    Vegas may be the largest city without a sports franchise, but the competition for the entertainment dollar is huge there. There are dozens of shows at dozens of casinos and many of them get prices similar to that of the NFL (by the way if you go, Penn and Teller at the Rio is AWESOME!). People might go to vegas to see their favorite team, but in my opinion the casual tourist going to Vegas is likely to pick entertainment they can't get at home (and in most cases, that includes the NFL).

    Living in Viking land the threat of a move to LA has been alluded to by Zygi a couple times. And I think it's credible, but I imagine the NFL would rather get the Jaguars moved before abandoning the Twin Cities market.

    But I think the number of existing sports franchises does play a factor. If you look at combined statistical areas (CSA, Minneapolis-St. Paul being 13th) 11 through 20 only two others besides the Twin Cities have teams in each of the "Big 4" major sports (Detroit 11th, and Denver 14th). After that you see a lot of 2 and 3 sport cities down into the 30s. So perhaps the Twin Cities market will end up losing one of its teams, but I guarantee you it won't be the Twins or the Wild.

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