Marquette Sports Law Review

Volume 20 Article 8
Issue 2 Spring

Spring 2010

If You Build It, Will They Stay? An Examination of State-of-the-Art

Clauses in NFL Stadium Leases
Kristen E. Knauf

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Repository Citation
Kristen E. Knauf, If You Build It, Will They Stay? An Examination of State-of-the-Art Clauses in NFL Stadium
Leases, 20 Marq. Sports L. Rev. 479 (2010)
Available at: https://scholarship.law.marquette.edu/sportslaw/vol20/iss2/8

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 IF YOU BUILD IT, WILL THEY STAY?
AN EXAMINATION OF STATE-OF-THE-
ART CLAUSES IN NFL STADIUM
LEASES
I. INTRODUCTION

The most prominent and cherished asset in many communities across the
country is a local professional sports franchise. State and local governments
place a high value on the potential benefits of hosting a professional sports
franchise, as demonstrated by the extravagant offers of public funds to attract
or retain a franchise. With this in mind, it is easy to see how franchises could
take advantage of cities i and how cities ultimately agree to make promises
that are extremely difficult, if not impossible, to keep. One example of such a
difficult, if not impossible, promise is the "state-of-the-art" clause: a unique
agreement where the city promises to maintain a top-of-the-line sports venue
or else the sports franchise is free to break its lease and relocate with minimal,
if any, consequences. 2 It is important to consider the consequences of such a
powerful clause in the context of the National Football League (NFL), where
there has been an ugly history of franchise relocation. Yet, this is exactly what
is poised to happen as the city of St. Louis finds itself wondering how it will
comply with the demanding state-of-the-art clause in their lease with the St.
Louis Rams.' An analysis of these clauses will show that they set a dangerous
precedent that gives even more power to professional sports teams, with
leverage to potentially extract hundreds of millions of dollars from the nation's
urban areas and their citizens.
This Comment will first look at the history of NFL venues and how they
have evolved from borrowed baseball fields to palatial billion-dollar facilities.

1. The term "city" is used generally in this article to refer to cities, counties, and statutorily
created stadium districts, or any of the three that would own a sports facility and lease it to an NFL
franchise.
2. See LEASE BETWEEN ST. LOUIS RAMS AND REGIONAL CONVENTION AND VISITORS
COMMISSION AND ST. Louis NFL CORPORATION FOR TRANSWORLD DOME art. 16(e)(1) (1995)
[hereinafter LEASE].
3. See Jim Thomas, How Rams Could Get Out of St. Louis Dome Lease, ST. LOUIS POST-
DISPATCH, Aug. 2, 2009, at Cl.
 MARQUETTE SPORTS LAW REVIEW [Vol. 20:2

This Comment will then examine the city of St. Louis's long and complex
relationship with professional football, and how in its agreements to attract the
Rams from Los Angeles, the city received more than it bargained for. Next,
this Comment will examine the use of clauses in leases that require the facility
to be in the "top tier" of all similar sports facilities: state-of-the-art clauses.
This Comment will primarily focus on the St. Louis Rams's state-of-the-art
clause but will also discuss these clauses as applied to all sports teams and
venues. This Comment will also review the volatile history of franchise
movement in the NFL, and why both the NFL and individual cities are
relatively powerless to stop franchise relocation. Finally, this Comment
concludes that state-of-the-art clauses are unconscionable and unenforceable:
they exacerbate the problems of franchise free agency, and set an alarming
precedent.

11. TIhE HISTORY OF NFL VENUES

4
In the early days, NFL teams merely wanted a facility to call their own.
Following World War II, "[m]ost NFL teams played in baseball parks that
were owned by baseball teams .... -5 Historically, baseball teams controlled
the use of the shared ballparks, which forced NFL teams to schedule their
games around conflicts with their baseball landlords. 6 "[Baseball teams] also
drove hard bargains with respect to ancillary revenues: The Detroit Tigers, for
example, took all the concessions income when the Lions played in their
'7
ballpark."
The state-of-the-art arms race, as it exists today, began in 1965, when the
Astrodome opened in Houston "as the self-styled eighth wonder of the
world." 8 This was the first example of a "sports facility in which the building
[itself] was as much of an attraction as the team." 9 The Astrodome soon

4. See JAMES QUIRK & RODNEY D. FORT, PAY DIRT: THE BUSINESS OF PROFESSIONAL TEAM
SPORTS 131 (1992).
5. Id. Cleveland was the only team to play in a publicly-owned stadium. Id.
6. Id. It should be noted that "those were the days of natural grass playing fields, which created
major maintenance problems. Avoiding these maintenance issues required creative scheduling." Id.
For example, "the Bears didn't start their home season in Wrigley Field until the Cubs' season was
over, and the NFL Giants had late home season openings at the Polo Grounds." Id.; see also Bill
King, A Century of Change: Evolution of Sports FacilitiesDriven by New Building Techniques and
New Expectations, SPORTS BUS. J., Sept. 29, 2008, at 21.
7. MICHAEL N. DANIELSON, HOME TEAM: PROFESSIONAL SPORTS AND THE AMERICAN
METROPOLIS 238 (1997). The Detroit Lions played at Tiger Stadium from 1938 to 1974, when they
moved into the Pontiac Silverdome. Id.
8. Id. at 240.
9. Id. "[I]n light of the mediocre teams that played in the Astrodome," perhaps this was an
example of the building being even more of an attraction than the sports team itself. Id.
2010] STATE-OF-THE-ART CLA USES IN THE NFL 481

proved to be a trendsetter, as city after city planned its own versions of "the
domed wonder."' 10 Modem luxury seating, arguably "the most important part
of state-of-the-art sports facilities" today, made its debut in the Astrodome
with fifty-five luxury boxes. II
In the 1990s, the United States found itself in the midst of an
unprecedented boom in construction of sports facilities. 12 "Comfortable seats
in place of wooden benches, concessionaires peddling crab cakes as well as
hot dogs, electronic 'razzle-dazzle' in place of minimal score boards-all
[became] part of a total package 13in [fancy] new wrappings designed to
increase team and league revenues."
The newest stadiums today are designed to be multi-purpose venues,
capable of hosting conventions as well as football games. 14 This trend makes
sense because multi-purpose stadiums generate more revenue and "cost less to
build and operate than a pair of stadiums." 15 "In planning for new stadiums,
cities and teams are striving to create the biggest and the best, as well as an
individualized stamp for their particular setting." 16 Of course, building state-
of-the-art facilities with the latest bells and whistles has greatly increased the
costs of sports arenas and stadiums. '7

The Dallas Cowboys' new stadium in Arlington, [Texas]

debut[ed] in September 2009 at a cost of about $1 billion, and
the $1.3 billion Meadowlands Stadium in East Rutherford,
[New Jersey], which will be home to the [New York] Giants
and the [New York] Jets, is scheduled for completion in
August 201018

In contrast, University of Phoenix Stadium in Glendale, Arizona, which

opened in 2006, was built for a total cost of $455 million. 19
The standard of what is considered to be a "state-of-the-art" sports facility

10. Id.
11. Id. at 242.
12. See generally Allen R. Sanderson, Sports Facilities and Development: In Defense of New
Sports Stadiums, Ballparks, and Arenas, 10 MARQ. SPORTS L. J. 173 (2000).
13. DANIELSON, supra note 7, at 235-36.
14. See Sanderson, supra note 12, at 173.
15. DANIELSON, supra note 7, at 238.
16. Bill Coats, $1 Billion Price Tag? Glitzy New Stadiums Put City on Notice if It Wants to Keep
Rams, ST. LOUIS POST-DISPATCH, May 30, 2008, at Al.
17. Id.
18. Id.
19. Id.
 MARQUETTE SPORTS LAW REVIEW [Vol. 20:2

is constantly evolving and consequently, the cost of meeting this standard is

rising. 20 It is against this platinum standard that NFL host cities are
measuring their sports facilities. 2 1 In particular for the city of St. Louis,
22
this is
only the latest in a series of problems in keeping an NFL franchise.

III. THE SAGA OF PROFESSIONAL FOOTBALL IN ST. LouIs.

In the spring of 1987, after twenty-eight seasons, the city of St. Louis lost
its football team, the Cardinals, to Phoenix, Arizona. 23 The Cardinals had
been threatening to leave for years in attempts to get the city to build a new
stadium for the team. 24 In 1987, antagonism between the team and the St. 25
Louis community was so high that a new stadium was politically impossible.
"After the loss of the Cardinals, there was almost instant, tangible interest
in getting another team." 26 But while everyone wanted to bring NFL football
back to the St. Louis community, no one knew exactly how to do it. 2 7 In
1993, the NFL decided to add two new teams, and many believed St. Louis
would receive one of these franchises. 28 To establish itself as a suitable home
for a team, the city of St. Louis and St. Louis County, with help from the State
of Missouri, built a $260 million domed stadium as part of the Cervantes
Convention Center.29

Just as Indianapolis had built its Hoosier Dome as part of the

Indiana Convention Center and attracted the Colts, St.
Louis... wanted a... football stadium that would...
provide the [existing] Convention Center with thousands of
square feet of exhibition space to help elevate the city's image
30
as a premier convention site.

20. See Evan Weiner, New Stadiums Set High Barfor Rest of the NFL, N.Y. SUN, June 26, 2008,
at 29.
21. See id.
22. See MARK S. ROSENTRAUB, MAJOR LEAGUE LOSERS: THE REAL COST OF SPORTS AND
WHO'S PAYING FOR IT 299 (1997) (chronicling the political battles in St. Louis before and after the
loss of the Cardinals and during the search for a new football franchise).
23. See id.
24. Id.
25. Id.
26. Id.
27. Id.
28. Id. at 299-300.
29. Id. at 300.
30. Id.
2010] STATE-OF-THE-ART CLA USES IN THE NFL 483

Unfortunately, problems with establishing a local ownership group in St.

Louis eventually led to the NFL awarding its new franchises to Charlotte,
North Carolina and Jacksonville, Florida. 3 1 St. Louis's only remaining hope
for an NFL team was to convince an existing franchise to relocate. 32 Around
this time, the Los Angeles Rams were becoming increasingly dissatisfied with
their home in Anaheim. Although they had left the Los Angeles Coliseum for
supposedly greener pastures, the team still wanted a stadium with more of the
revenue sources that newer facilities could offer. 33 "When Los Angeles,
Anaheim, and Orange County all seemed unwilling to build a new facility, the
Rams cast a roving eye toward their original [M]idwestern roots .... "34 St.
Louis was able to offer the Rams a lease that would allow them to control
35
most, if not all, of the revenues produced by the stadium.
The Rams, however, had other "needs." The team not only needed a way
out of their lease obligations to the city of Anaheim and a new practice
facility, the team also had the cost of moving the team across the country to
consider.36 The revenues to meet many of these additional needs did not
come directly from taxpayers, but rather from the fans through the sale of
37
Private Seat Licenses (PSLs).
On January 17, 1995, Rams owner Georgia Frontiere announced that the
Rams would move to St. Louis for the 1995 season. 3 8 Two months later, the 39
other NFL team owners voted overwhelmingly to block the Rams's move."
However, a sudden reconsideration was in order after threats of litigation came
from the Rams and Missouri Attorney General Jay Nixon. 40 On April 12,
1995, the NFL team owners voted 23-6-1 to approve the Rams move to St.
Louis. 4 ' St. Louis once again had an NFL franchise, and the Rams entered
into a sweetheart of a lease.

31. Id. at307-08.

32. Seeid. at310.
33. Id.
34. Id.
35. Id. at310-11.
36. Id. at310-11.
37. Id.at311.
38. Id. at309.
39. Id.
40. Id.
41. Id. Interestingly, the owner of the Raiders abstained from this vote and the owner of the
Cardinals-the team that had just left St. Louis only a few years earlier-voted no. "Ironically, Rams
owner Ms. Frontiere cast the deciding vote since twenty-three were required for approval." Id.
 MARQUETTE SPORTS LA W REVIEW [Vol. 20:2

IV.THE STATE-OF-THE-ART CLAUSE

The St. Louis Rams are able to break their lease at ten-year intervals as a
result of a unique clause that requires the Edward Jones Dome to be in the
"'top' twenty-five (25%) percent of all NFL football stadia [or] all NFL
football facilities, if such NFL football stadia and facilities were to be rated or
ranked according to the matter sought to be measured. '42 As the lease
specifies, the stadium or any of its components must be in the "First Tier" by
March 1, 2005, and again by March 1, 2015, or the thirty-year lease becomes a
one-year lease:

In the event [that] the Facilities and each Component thereof

is not First Tier [by] March 1, 2005, or March 1, 2015, the
RAMS may by written notice to CVC convert the term of this
Amended Lease to an annual tenancy from the date of
notice ... with the RAMS having successive unilateral [sic]
annual renewal options thereafter until then end of the original
43
term of this Amended Lease.

The lease goes on to provide that "the RAMS will then be entitled to negotiate
and execute a lease with any person or entity and to relocate from [the Edward
'4
Jones Dome] as of the end of any year of the lease period."
There are a number of very good questions raised by this provision: Who
ranks the NFL stadiums? By what criteria are they ranked? The language of
the lease on this topic is, surprisingly, both exhaustive and vague. 45 Annex 1
of the lease states that:

the Facilities, taken as a whole, and each Component of the

Facilities, respectively taken as a whole, must be among the
'top' twenty-five percent (25%) of all NFL football stadia and
NFL football facilities, if such stadia and facilities were to be
rated or ranked according to the matter sought to be
measured. 46

42. ANNEX 1 TO LEASE BETWEEN ST. Louis RAMS AND REGIONAL CONVENTION AND VISITORS
COMMISSION AND ST. Louis NFL CORPORATION FOR TRANSWORLD DOME, art. 1.3.1-3.2 (1995)
[hereinafter ANNEX].
43. LEASE, supra note 2.
44. Id.
45. Thomas, supra note 3.
46. ANNEX, supra note 42, at art. 1.3.2.
2010] STATE-OF-THE-ART CLAUSES IN THE NFL 485

No less than fifteen components that must be "first-tier" are listed: "everything
from luxury boxes to club seats, lighting, to scoreboards,... regular stadium
seating, concession areas, common areas (such as concourses and restrooms),
electronic and telecommunications equipment," locker and training rooms, and
47
even the playing surface of the field itself.
None of the provisions for luxury boxes, club seats, or stadium seats,
however, specifically dictates the number of seats or suites. 4 8 It is not as if
adding a magic number of club seats or suites will automatically make the
stadium comply with the first-tier standards. Are the seats cushioned? Are the
seats six inches wider? How wide are the seating aisles? Is there more
legroom in other stadiums? Are the concourses wider? Is the lighting better?
Are the scoreboards more high tech? Is Wi-Fi Intemet access offered to the
fans throughout the stadium? These are all areas that can be measured fairly
easily. 4 9 When St. Louis opened its new football facility in 1995, it was a
$281 million, state-of-the-art, 66,000-seat sports palace; yet, "the state-of-the-
art facility from the mid-1990s is antiquated in 2008."5o
The next scheduled deadline for St. Louis's Edward Jones Dome to meet
first-tier status is March 1, 2015. However, the process of the Rams getting
out of the lease and potentially relocating could start within the next two
years. 5 1 On or before February 1, 2012, the St. Louis Convention and Visitors
Commission must deliver a preliminary compliance plan. 52 The Rams will
then have until March 1, 2012, to notify the St. Louis Convention and Visitors
Commission if they approve. 53 If the St. Louis Convention and Visitors
Commission and the Rams ultimately cannot agree, the matter will go before
an arbitration panel on June 15, 2012.54 If the St. Louis Convention and
Visitors Commission cannot afford the renovations called for by arbitrators,
the lease states, "[t]he Rams shall be entitled to negotiate and execute a lease
with any person or entity and to relocate from the [Edward Jones Dome] after
the 2015 First-Tier Measuring Date." 5 5 "The stadium lease would become a

47. Thomas, supra note 3.

48. Id.
49. ANNEX, supra note 42, at art. 1.3.1; Thomas, supra note 3.
50. Weiner, supra note 20; see also Coats, supra note 16.
51. LEASE, supra note 2, at art. 25; Thomas, supra note 3.
52. Thomas, supra note 3. This "overall plan must include a financial plan as well as the
source(s) of funds." Id.
53. Id.; LEASE, supra note 2, at art. 25
54. Thomas, supra note 3. "The arbitration must be completed by the end of 2012." Id; see also
LEASE, supra note 2, at art. 25.
55. ANNEX, supra note 42, at art. 1.3.2.
 MARQUETTE SPORTS LAW REVIEW [Vol. 20:2

56
year-to-year lease, with the Rams free to move after the 2014 season."
A current $29 million renovation, which includes, among other things, two
new video boards in the end zones, has satisfied the clause requirements for
2005.57 However, the new Meadowlands stadium under construction in East
Rutherford, New Jersey, along with the recently completed Cowboys Stadium
in Arlington, Texas and Lucas Oil Field in Indianapolis, Indiana, are "the
cream of the crop" and will be no more than five or six years old by 2015.58
Furthermore, these three venues are the eighteenth, nineteenth, and twentieth
stadiums built since the Rams moved into the Edward Jones Dome. 59 Several
other stadiums, meanwhile, have undergone significant renovations, some
costing upwards of hundreds of millions of dollars. 60 This all leaves the St.
Louis Convention and Visitors Commission and Rams fans everywhere asking
a curious question: How does one make a 20-year-old building the caliber of a
brand-new $1 billion dollar stadium?
The state-of-the-art provision seems to assume that additional public funds
will need to be spent on the stadium on a fairly regular basis to keep up its
standing in stadium rankings. 61 Although the "St. Louis Convention and
Visitors Commission has set up a preservation fund with $4 million per year to
maintain the dome's ranking among all facilities," 62 this most likely will not
suffice to keep it in the top twenty-five percent of all NFL football venues.
One longtime NFL team executive recently estimated that the St. Louis
Convention and Visitors Commission would have to put in "10 to 20 times
what they're putting into the dome right now" in order to become a top eight
facility by 2015.63 Other estimates put the total public cost over the entire
64
thirty-year term of the Rams's lease at approximately $36 million per year.
Other NFL teams with similar clauses in their stadium leases are the
Cincinnati Bengals, Kansas City Chiefs, and San Diego Chargers. 65 The

56. Thomas, supra note 3.

57. Edward Jones Dome Renovation Plans Include New Video Displays, SPORTSBUSINESS
DAILY.COM, Oct. 4, 2007, http://www.sportsbusinessdaily.com/article/ 115447.
58. See Coats, supra note 16.
59. Id.
60. Id.
61. See id.
62. ROSENTRAUB, supra note 22, at 316.
63. Thomas, supra note 3.
64. JOANNA CAGAN & NEIL DEMAUSE, FIELD OF SCHEMES: HOW THE GREAT STADIUM
SWINDLE TURNS PUBLIC MONEY INTO PRIVATE PROFIT 61 (1998).
65. See LEASE AGREEMENT BY AND BETWEEN THE BOARD OF COMMISSIONERS OF HAMILTON
COUNTY, OHIO AND CINCINNATI BENGALS, INC., May 29, 1997, art. 12.3-12.4 [hereinafter LEASE
BENGALS]; Chiefs, Royals Plan to Stay Put, SPORTS BUS. J., Nov. 15, 2004, at 28; see also City,
2010] STA TE-OF-THE-ART CLA USES IN THE NFL 487

Bengals's lease for Paul Brown Stadium contains a state-of-the-art clause,

requiring Hamilton County to install any new technologies in use by fourteen
other NFL teams. 66 With new stadiums being constructed and other stadiums
frantically upgrading to compete with them, the cost to the taxpayers of
Hamilton County for upgrades to Paul Brown Stadium in the next decade
could run into the hundreds of millions of dollars. 67 The Kansas City Chiefs
are currently in the process of renovating Arrowhead Stadium to comply with
the state-of-the-art clause triggered in 2007.68 "This massive renovation
plan, to be completed by 2010, will include [a new] 'Horizons Level'
that will be constructed ... atop the upper deck on the south side of the
69
stadium,.... a new press box, luxury suites, and premium seats." The
San Diego Chargers also had a lease requirement for the city to maintain
a state-of-the-art stadium, but this was eliminated in 2004 under the
belief that building a new stadium would be a possibility within a few
years. 70
Although no team has yet exercised this provision in its lease in
order to relocate, it is a disturbing possibility. The NFL has had
71
problems with managing franchise relocation in the past, and the use of
state-of-the-art clauses could make this problem worse.

V. FRANCHISE MOVEMENT IN THE NFL

Franchise movement, sometimes called "[f]ranchise free agency," 72

tarnishes the image of the NFL. The public sees "extraordinarily rich owners
involved in high-stakes pursuit of new stadiums that will make them wealthier,
yet expect huge taxpayer funding."7 3 "When an owner uses one city's offer of
[a new venue] to up the ante in another city, that impression only gets

ChargersReach Middle Ground, SPORTS BUS. J., July 12, 2004, at 32.
66. See LEASE BENGALS, supra note 65, at art. 12.3. Interestingly, the Cincinnati Bengals's lease
specifies that the county must install any new technologies in use, up to and including "holographic
replay systems." Id.
67. See Ken Belson, Stadium Booms Deepens Municipal Woes, N.Y. TIMES, December 25, 2009,
at B8.
68. See Chiefs, Royals Plan to Stay Put, supra note 65.
69. Arrowhead Stadium, STADIUMSOFPROFOOTBALL.COM, http://stadiumsofprofootball.com/afc
/ArrowheadStadium.htm (last visited Feb. 4, 2010).
70. City, Chargers Reach Middle Ground, supra note 65.
71. Paul Attner, Seeing is Deceiving, THE SPORTING NEWS, Sept. 23, 1996, at 31.
72. See Katherine C. Leone, Note, No Team, No Peace: FranchiseFree Agency in the National
FootballLeague, 97 COLUM. L. REV. 473, 495-506 (1997) (quoting Attner, supra note 71, at 31).
73. Attner, supra note 71, at 31.
 MARQUETTE SPORTS LAW REVIEW [Vol. 20:2

worse." 74 Unfortunately, "[n]either the NFL nor cities with franchises possess
75
the regulatory tools necessary to stem the tide of franchise free agency."
Thus, franchise free agency poses a threat to the stability and vitality of the
league because it engenders negative public perceptions and erodes fan
76
support.
The trend of teams threatening to leave for greener pastures, greener in the
monetary sense at least, if cities did not build new stadiums for them can be
traced back to the 1950s. 77 Many thought that these were idle threats was
abandoned when team owner Walter O'Malley, after several years of
increasingly vocal lobbying for a new stadium, pulled Major League
Baseball's Brooklyn Dodgers out of town in 1957.78 Similar sentiments were
echoed in 1966, when the Milwaukee Braves moved to Atlanta, and into a
brand-new $18 million, 52,000-seat ballpark. 79 Mayors and city managers
everywhere got the hint, and began to invest in either updating, or completely
replacing, older facilities owned by existing major teams, in order to keep the
teams from leaving town. 80
The NFL, like other sports leagues, has sought to restrict franchise
relocation, and to control the geographic territories occupied by its league
members. 8 1 The NFL has a "home territory" clause in its constitution. 82 This
clause defines a team's home territory as "the city in which such club is
located and for which it holds a franchise and plays its home games and
includes the surrounding territory to the extent of 75 miles in every direction
from the exterior corporate limits of such city .... 83 Rule 4.3 of Article 4 of
the NFL Constitution provides that three-fourths of the league's members
must approve any request to relocate a franchise before relocation can occur:
The League shall have exclusive control of the exhibition
of football games by member clubs within the home territory
of each member. 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

74. Leone, supra note 72, at 495.

75. Id.
76. Id.
77. QUIRK & FORT, supra note 4, at 134-35.
78. Id.
79. Id. at 129.
80. Id. at 135.
81. See NFL CONST. AND BYLAWS art. IV, §4.1 (rev. 2006).
82. Id.
83. Id.
2010] STATE-OF-THE-ART CLAUSES IN THE NFL 489

the affirmative vote of three-fourths of the existing member

84
clubs of the League.
Despite these constitutional provisions, "the NFL has a very limited ability to
control franchise relocation under present antitrust laws." 85 Furthermore, the
NFL is reluctant to use its limited ability in large part due to the landmark
antitrust case Los Angeles Memorial Coliseum Commission v. National
FootballLeague (Raiders ).86
The Oakland Raiders's lease with the Oakland Coliseum expired in
1978.87 On March 1, 1980, Al Davis, the club's managing general partner,
and Los Angeles Coliseum officials signed an agreement outlining the terms
8
of a proposed Raiders relocation to Los Angeles. 8 At an NFL meeting two
89
days later, Davis announced his intentions. Davis further objected to Rule90
4.3, and insisted that it was illegal under federal antitrust laws.
Nevertheless, NFL team owners voted on March 10, 1980, 22-0 against the
move. 9 ' This vote did not meet Rule 4.3's requirement of three-quarters
approval. 92
The Coliseum Commission and the Oakland Raiders responded with an
antitrust suit against the NFL, charging that the League's three-fourths
approval rule for franchise relocations violated Section 1 of the Sherman
Act. 9 3 The Coliseum Commission and the Oakland Raiders eventually won a
jury verdict, and on July 14, 1982 the United States District Court for the
Central District of California permanently enjoined the NFL from interfering
94
with the Raiders's move.
Until recently, the Ninth Circuit's decision in Raiders I has been the
preeminent authority as to whether a professional sports league has the power
to deny approval of relocation. 95 However, further complicating this issue is
the Seventh Circuit's recent decision in American Needle Inc. v. National

84. Id., at art. IV, §4.3 [hereinafter Rule 4.3].

85. Leone, supra note 72, at 495.
86. See generally Los Angeles Mem'I Coliseum Comm'n v. Nat'l Football League, 726 F.2d
1381 (9th Cir. 1984) [hereinafter Raiders].
87. Id.
88. Id.
89. Id.
90. Id.
91. See MATTHEW J. MITTEN ET.AL., SPORTS LAW AND REGULATION 459 (2nd ed. 2009)
(discussing the background facts leading up to Raiders). Five teams abstained from this vote. Id.
92. Id.
93. Id.; see also Sherman Act, 15 U.S.C. §1 (2009).
94. Raiders, 726 F.2d at 1386.
95. Leone, supra note 72, at 495.
490 9
MARQUETTE SPORTS LA W REVIEW [Vol. 20:2

Football League (American Needle). 96 The underlying facts of American

Needle are straightforward. For more than twenty years, American Needle
held a nonexclusive license to design and manufacture hats and other headgear
with the names and logos of NFL clubs. 97 Nine years ago, the NFL decided to
98
offer an exclusive license to Reebok, American Needle's main competitor.
American Needle sued, contending that the new NFL licensing arrangement
violated Section 1 of the Sherman Act. 99 The NFL responded by alleging not
only that their licensing agreement was procompetitive, but they also raised
the same "single entity" defense that was unsuccessfully used in Raiders L 100
The district court found that the NFL's teams acted as a single entity for
purposes of the licensing of intellectual property, and therefore, could issue an
exclusive license without violating the Sherman Act.10 1 On review, Judge
Kanne of the Seventh Circuit Court noted that the record amply established
that the league's teams had long "acted as one source of economic power...
to license their intellectual property," meaning that there was no basis for a
claim under Section 1 of the Sherman Act. 102 Remarkably, American Needle
held that when the league's clubs are producing NFL football as a product,
they are acting as a single economic entity. 10 3 Just because the individual
clubs are independently owned and operated, they can still be looked at as a
single collective entity. 10 4 On June 29, 2009, the Supreme Court agreed to
review the American Needle decision. 105 The case will be argued in either late
2009 or early 2010.106
Could the Supreme Court's holding in American Needle potentially
overrule Raiders I? "'This will be the first time the Supreme Court will
consider the merits of the single entity defense' . . ,,107 Although a broad
sweeping holding on the single entity defense is unlikely, it is possible that "a
favorable court decision could [potentially] give the league 'a lot more
[breathing] room not to have to fear suits' on issues such as

96. See generally American Needle Inc. v. Nat'l Football League 538 F.3d 736 (7th Cir. 2008).
97. Id. at 738.
98. Id.
99. Id. at 739.
100. Id. at 738-39.
101. Id. at 739-40.
102. Id. at 744.
103. Id. at 743.
104. Id.
105. Court Takes Case Over Licensing of NFL Apparel, ESPN.COM, June 29, 2009, http://
sports.espn.go.com/nfl/news/story?id-4294204.
106. Id. The case is American Needle v. National FootballLeague. Id.
107. Id.
2010] STATE-OF-THE-ART CLA USES IN THE NFL 491

relocation ....108 Yet, until the Supreme Court decides otherwise, the
looming uncertainty and threat of treble damages under Raiders I puts the
09
NFL in no position to prohibit franchise relocations. 1
Unfortunately, cities are in no better position than the league to prevent
relocations or even to protect their investments. 1 10 Although cities have tried
to find creative ways to keep these teams from jumping from place to place,
there has never been any true stability for cities and fans subject to the whims
and demands of team owners. 1 1' Even "Congress, in response to calls for help
from leagues, city officials, and stadium commissioners who feel abandoned
or 'blackmailed' by franchise owners," has tried to help.ll 2 Yet, out of the
numerous bills that would regulate 3team relocations, or otherwise protect the
cities, not one of them has passed. "1
Ultimately, the current fixed number of thirty-two NFL franchises coupled
with the obviously greater number of cities vying for professional sports teams
allows owners to "shop around for the best package of subsidies a city is
willing to offer." 1 14 "The multiple [franchise] movements in [1995]
illustrated that even owners of mediocre teams could manipulate cities" due to
5
some cities' desperation to host an NFL team. "1

108. Id.; see also Lester Munson, Antitrust Case Could be Armageddon, ESPN.COM, July 17,
2009, http://sports.espn.go.com/espn/colunins/story?columnist-munson-lester&id-4336261 (quoting
Matt Mitten, Director, National Sports Law Institute, Marquette University Law School). "Experts
agree that the case known as American Needle vs. NFL could easily be the most significant legal
turning point in the history of American sports." Id.
109. Commissioner Tagliabue said that if not for the league's antitrust exposure, "[tlhe Rams
move [to St. Louis] would have been blocked." Antitrust Issues in Relocation of ProfessionalSports
Franchises:Hearing before the Subcomm. on Antitrust, Bus. Rights, and Competition of the Senate
Comm. on the Judiciary, 104th Cong. 55 (1995) (statement of Comm'r Tagliabue).
110. See generally Indianapolis Colts v. Mayor & City Council of Baltimore, 741 F.2d 954 (7th
Cir. 1984), cert. denied, 407 U.S. 1052 (1985). Baltimore also tried to keep the Colts from playing in
Indianapolis through the power of eminent domain. Id. at 955.
111. Id; see generally City of Oakland v. Oakland Raiders, 176 Cal. Rptr. 646 (1981), vacated
and remanded, 646 P.2d 835 (1982). The city of Oakland attempted to use the power of eminent
domain to condemn the Oakland Raiders football team so they could manage the team and keep it
playing in Oakland-Alameda County Coliseum. Many leagues themselves have rules that require
individual team owners to get league approval before they relocate to a new city, but it is argued that
these restrictions are also illegal. Daniel E. Lazaroff, The Antitrust Implications of the Franchise
Relocation Restrictions in ProfessionalSports, 53 FORDHAM L. REv. 157, 210-11 (1984); Daniel S.
York, The ProfessionalSports Community Protection Act: Congress' Best Response to Raiders?, 38
HASTINGS L.J. 345, 351-54 (1987) (explaining that many leagues are afraid to try to enforce their
own rules against relocation after Raiders).
112. York, supra note 111, at 345-46.
113. Id.
114. Leone, supra note 72, at 481.
115. Bradley J. Stein, How the Home Team Can Keep from Getting Sacked: A City's Best
Defense to Franchise FreeAgency in ProfessionalFootball, 5 TEX. REv. ENT. & SPORTS L. 1, 4-9
 MARQUETTE SPORTS LA W REVIEW [Vol. 20:2

Although the biggest period of franchise free agency happened in 1995,116

the threat of further franchise movement in the NFL is alive and well today. 117
The St. Louis Rams are not the only NFL franchise that may be shopping
around for a new home. 118 The Minnesota Vikings currently "play in a[n] ...
antiquated and poor revenue-producing stadium, and have a lease [that runs
only] through 2011." 119 The Oakland Raiders's deal with McAfee Coliseum,
which first opened in 1966, ends in 2010;120 the Buffalo Bills's lease with
Ralph Wilson Stadium expires in 2012.121 There are also rumors that the
Jacksonville Jaguars may be interested in a new home. 122 Potential host cities
123
are paying close attention, though none more closely than Los Angeles.
After losing not one but two professional football franchises, Los Angeles
expressed a renewed interest in hosting an NFL team. 124 In April 2008,
Majestic Realty Chair & CEO Ed Roski unveiled plans for an NFL stadium
"'aimed at luring the league back' to the L.A. area." 125 Similar to St. Louis's
approach in the early 1990s, Roski is employing a "build it and they will
come" strategy.1 2 6 "Roski said that if an NFL team is 'willing to relocate,
construction on the stadium can begin this fall and be finished in time for the
2011 season."' 12 7 Roski's initial timeline has suffered a few setbacks, but the
Los Angeles businessman remains committed to moving forward with this
project.12 8 On October 22, 2009, Governor Arnold Schwarzenegger signed a
29
bill "granting final approval to an NFL stadium proposal." 1

(2003). In addition to the Los Angeles Rams relocating to St. Louis, 1995 also saw the Oilers's
relocating from Houston to Nashville, the Raiders moving back to Oakland, and, perhaps the most
infamous relocation of that year, the Browns forsaking Cleveland in favor of Baltimore. Id,
116. See Stein, supra note 115, at 4-9.
117. See Weiner, supra note 20.
118. Id.
119. Id.
120. Id.
121. Id.
122. Id.
123. Id.
124. Roski Set to Unveil Plansfor ProposedL.A.-Area NFL Stadium, SPORTSBUSINESSDAILY.C
OM, Apr. 17, 2008, http://www.sportsbusinessdaily.com/article/120117 [hereinafter Roski]. For more
information on Roski's proposed stadium, see also Los Angeles Stadium Homepage, LOSANGELESFO
OTBALLSTDIUM.COM, http-/Iwvivw.losangeesfootballstadium. corn (last visited Jan. 16, 2010).
125. Id.
126. Id.; FIELD OF DREAMS (Universal Studios 1989).
127. Id.
128. Id.
129. City of Industry Stadium Bill Signed Into Law Today, SPORTSBUSINESSDAILY.COM, Oct.
22, 2009, http://www.sportsbusinessdaily.com/article/134291.
2010] STA TE-OF-THE-ART CLA USES IN THE NFL 493

Upholding state-of-the-art clauses in stadium leases could lead to a new

wave of "franchise free agency."' 130 Combined with the current inability of
the NFL to control relocations, owners could move from city to city without
concern for fans or taxpayers. This nomadic situation could cause the erosion
of fan loyalty so as to harm the NFL beyond repair.

VI. THE SOLUTION

State-of-the-art clauses are unconscionable because they are inherently

one-sided in favor of the franchise. Furthermore, public policy outweighs the
interest in enforcing these clauses because they set the stage for an escalating
facilities arms race that cannot be won. The best solution would be to hold
such lease provisions unenforceable.
In contract law, something is said to be unconscionable when it "affronts
[the] sense of decency."131 A much-quoted judicial definition says that "an
absence of meaningful choice on the part of one of the parties together with
contract terms which are unreasonably favorable to the other party [is
unconscionable]."' 132 Furthermore, section 2-302(1) of the Uniform
Commercial Code (UCC) provides that:

[i]f the court as a matter of law finds the contract or any

clause term of the contract to have been unconscionable at the
time it was made, the court may refuse to enforce the contract,
or it may enforce the remainder of the contract without the
unconscionable clause term, or it may so limit the application
of any unconscionable clause term as to avoid any
33
unconscionable result. 1

However, courts will not simply make a new contract for the parties merely
because it has turned out badly for one of them. 134 Official Comment 1 to
UCC section 2-302 states that the ultimate question is "whether... the term or
contract involved is so one-sided as to be unconscionable35 under the
circumstances existing at the time of the making of the contract." 1
State-of-the-art clauses are inherently one-sided in favor of NFL team

130. See Leone, supra note 72, at 495-506.

131. Gimbel Bros., Inc. v. Swift, 307 N.Y.S.2d 952, 954 (N.Y. Civ. Ct. 1970).
132. Williams v. Walker-Thomas Furniture Co., 350 F.2d 445, 449 (D.C. Cir. 1965).
133. U.C.C. § 2-302(1) (2008).
134. § 2-302(1), Official Comment.
135. Id.
 MARQUETTE SPORTS LAW REVIEW [Vol. 20:2

owners. 136 The disproportionate number of NFL franchises versus the number
of willing host cities allows for franchise owners to obtain a substantial
windfall simply by threatening to leave. 137 State-of-the-art clauses
conveniently write these threats directly into the facility lease. 13 8 Although
fan attendance usually increases after upgrading a sports facility, city revenue
is virtually unaffected. 13 9 Consequently, the city gains no benefit by agreeing
to a state-of-the-art clause in a lease with a professional sports franchise other
than the continued presence of the franchise in the city, which should be
40
otherwise guaranteed by the length of time the lease runs. 1
The lopsided nature of these clauses is apparent in the lease for the St.
Louis Rams. 14 1 What is particularly alarming about the Rams's scenario is
that the state-of-the-art clause is rather vague. Although there are several
components listed, 142 nowhere does it define how much money should be set
aside for stadium maintenance, which aspects of the stadium should be
upgraded first, or even what the Rams consider a "tier one" stadium to actually
be. As such terms are never defined, the Rams could make any number of
demands, reasonable or otherwise, and if these requests are not met, the team
could just move. 14 3 This is not only overwhelmingly one-sided in favor of the
franchise owners, but also against public policy. 144
State-of-the-art clauses should be unenforceable on public policy grounds
because of the dangerous precedent that they set. There are a number of NFL
franchises that may actively seek new homes within the next few years. 145 As
previously mentioned, the Minnesota Vikings have a lease that runs only
through 2011, the Oakland Raiders's deal with McAfee Coliseum ends in
2010, and the Buffalo Bills's lease expires in 2010.146 These could be three
more teams that might want to include a powerful state-of-the-art clause in
their new leases. Hypothetically speaking, if all thirty-two teams in the league
were to add a clause to their venues' leases stating that the venue must be
within the top twenty-five percent of venues in use by the NFL every five

136. See Stein, supra note 115, at 4-9.

137. See Leone, supra note 72, at 481.
138. See LEASE, supra note 2, at art. 16(e)(1).
139. See generally QUIRK & FORT, supra note 4, at 137-76.
140. See Leone, supranote 72, at 481.
141. See supra Part IV (listing of fifteen first-tier components in St. Louis Rams's Lease).
142. See LEASE, supra note 2, at art. 16(e)(1).
143. See Thomas, supra note 3.
144. See § 2-302.
145. Weiner, supra note 20.
146. Id.
2010] STATE-OF-THE-ART CLA USES IN THE NFL 495

years, or in the top eight of up to thirty-two venues in use, chaos would surely
follow. These clauses would be habitually violated as there would be only a
handful of wealthy cities able to keep up with the excessive requirements.

VII. CONCLUSION

In some sense, St. Louis's situation could be seen as a lesson in contract

drafting for other communities and their professional sports franchises.
However, St. Louis's agreement to include the state-of-the-art clause in the
lease should not be construed as giving any kind of legitimacy to such clauses.
Franchise relocation has historically been one of the biggest problems that the
NFL has had to face. 14 7 The victims of franchise relocations are the fans,
cities, taxpayers, and, ultimately, the league itself. Although there have not
been any recent NFL franchise movements, only time will tell if state-of-the-
art clauses are the sparks that ignite a new fire of NFL franchise movement.

Kristen E. Knauf

147. See supra Part V discussing franchise movement in the NFL.

Kristen E. Knauf is a third-year law student at Marquette University Law
School who will
graduate in May 2010. Upon graduation, Kristen will earn a Certificate in Sports Law from the
National Sports Law Institute. Kristen is a 2006 graduate of the University of Wisconsin-Madison,
where she earned her B.A. in Political Science and Spanish. Kristen currently serves as the Lead
Articles Editor of the Marquette Sports Law Review.