When Fans Are Owners

It has often been noted that sports—particularly professional sports—are often one of the few galvanizing forces that bind the citizens of a given community together. That shared sense of a team representing the hopes and dreams of ordinary fans creates an emotional bond that transcends other forms of entertainment. The civic pride that cities aim for and the identity that is carved out of supporting a local team means that municipal leaders treat their teams as a vital industry and the owners of teams have significant influence. In the United States the emotional tie, and to a smaller degree the economic one, has led to painful situations in which the owners of professional sports teams have been able to leverage that devotion by requesting that cities (meaning the tax-payers) upgrade facilities or build new complexes in order to keep them in town. Some owners have even openly shopped their franchise around to the city that will offer them the best deal. While it has become common for cities and states to battle each other over economic incentives offered to sought after companies, citizens don’t root for IBM, General Electric, or Berkshire Hathaway like they do for their regional football, baseball, or basketball team. It seems that no amount of corporate welfare to wealthy private owners is too much for a municipality or state to pay in order to not lose their team.

Consider the following shameful incidents:

Jeffery Loria, a wealthy New York art dealer purchased a less than quarter stake of the Montreal Expos in 1999. After others dropped out, he acquired a controlling interest. Loria’s main consideration was for the city to build a new stadium. After wrangling with municipal leaders and the provincial government it was decided that the level of public support needed could not be met. With the support of Major League Baseball (MLB), Loria swapped his interest in the team to the league, for ownership in another team (Florida Marlins) and, eventually, the Expos were moved out of Canada to become the Washington Nationals. Many observers in Montreal believe Loria had no intentions of keeping the team in the city but to merely treat it as a commodity to be tended and dealt as he wished.

In Miami, Loria’s Marlins teams have consistently had some of the lowest pay and most player turnover of any club in the league. Not surprisingly, one of Loria’s chief complaints was, again, the poor facilities available for his team. In 2012 a deal was reached with the city and county to use bonds to pay $2.6 billion dollars to construct a new stadium. While Loria’s interests were required to chip in $155 million and pay for any possible cost overruns, they would also earn all of the completed stadium’s revenues. Suddenly the miserly Loria seemed to have money available after this hand out to sign big-ticket players for the season. Unfortunately the Marlins major influx of players did not result in a winning season and management essentially blew up the team, and they went back to being the stingiest paymasters in 2013. They would, however, still be worth $520 million according to Forbes [1], which did not sit well with fans or the local media, who had been the benefactors of the Marlins’ financial success with no corresponding effort toward building a winner.

In 1984, under the cover of darkness, Baltimore Colts’ owner Robert Irsay literally moved his team to Indianapolis in the middle of the night, out of fear that the Maryland legislature would take his NFL club by eminent domain after he spurned offers of economic assistance he believed were too low and openly courted the capital of Indiana after it coveted a football team to be the linchpin of a downtown renaissance plan. The state of Maryland apparently learned this lesson well by wresting away the Cleveland Browns from their long-time home with a sweetheart deal in 1996.

After shopping their team around to other cities that would have them as a bargaining tool, the owners of the Sacramento Kings NBA team may possibly receive a subsidy of anywhere from $290-$334 million to remain as the only major league sports franchise in California’s capital. The money to build a new downtown arena is expected to come from the general fund rather than in tax breaks as often happens in similar situations.

Of course, many observers might sit back and wonder how else it could possibly be. This is big time sports in our era, right? Perhaps in the U.S., yes. But some of the most lucrative sports teams in the world operate on very different models of ownership. Real Madrid and Barcelona FC of Spain’s top soccer league (La Liga) are not only arch-rivals but have similar models of club control, referred to as “socios.” Socios operate as fan-membership organizations, rather than having one particular owner or a group of investors make the primary financial decisions. The 93,000 fans pay the equivalent of $195 membership subscriptions, and elect a president and board to oversee the team’s affairs. While this might all sound very quaint, belonging to a past era when sports were primarily amateur, Real and Barca are no small-time outfits. According to Forbes they also rival each other as the most valuable teams in the world. Real is worth $3.3 billion as the wealthiest on the planet, and their Catalan counterparts are third most valuable at $2.6 billion.

The second most valuable sports team is England’s Manchester United soccer club ($3.17 billion). While their ownership structure might be more familiar to American sports fans—they are owned by the Glazer family who also run the NFL’s Tampa Bay Buccaneers—they also have issued public stock shares in the team, ensuring that there will be at least a variety of small investors with an interest in the team. [2].

Spain doesn’t stand alone in Europe in having a democratic culture for some sports teams’ ownership and control. In some countries that’s the only format allowed. In the Eurozone’s largest economy, German soccer clubs must be at least 51% member-owned. (There are some exceptions for clubs that were created by or associated with certain businesses.) Bayern Munich with its club members structure ranks #12 on Forbes’ list ($1.309 billion).

In Sweden and Turkey, it’s also members-only control or nothing. This phenomenon of fan associations is not limited to the sport of soccer or Europe. In Australia, the most popular spectator sport, Aussie-Rules football. has many fan owned teams in the AFL. Similarly, the recent winners of Canada’s Grey Cup (Canadian-rules equivalent of the Super Bowl) was won by the Saskatchewan Roughriders, who sell shares beginning at $250 Canadian dollars to any fan who wants to have a say in running the team and keep alive a civic tradition that won’t be threatened by the possible ulterior motives of a “carpetbag” owner. [3]

Must American “exceptionalism” extend to sports team ownership? These “small is beautiful” methods of club control are too unrealistic for the U.S., right? Well, actually, Forbes’ list contains the only American major league sports franchise that is democratically run in its #18 position: the Green Bay Packers.

Bill Simmons, the celebrated gonzo sports and pop-culture writer for Grantland and ESPN, took issue with the lack of an organized fan culture in most American major league sports stadia in 2006 resulting from the top-down style management of teams. In a piece in which he brought readers through his deliberations over which English soccer team he was going to select to begin rooting for he noted: 

“…American sports have been ravaged by TV timeouts, ticket price hikes and Jumbotrons that pretty much order fans how to act. Just look at what happened in the NBA playoffs. Miami fans were urged to wear all white like a bunch of outpatients from a psych ward; the Detroit announcer screamed, "Let's give it up!" and "Lemme HEAR YOU!" as the crowd responded like a bunch of trained seals; Clippers fans weren't able to stand and cheer after an outrageous Shaun Livingston dunk in the Denver series because disco music was blaring at deafening levels. And it's not just basketball. During Angels games in baseball, the crowd waits to make noise until a monkey appears on the scoreboard. You can't attend an NHL game without hearing the opening to "Welcome to the Jungle" 90 times. Even our NFL games have slipped—you cheer when the players run out, cheer on third downs, cheer on scores and sit the rest of the time. It's a crying shame.” [4]

Aside from Simmons’ winning sarcasm, ESPN has been publishing “Ultimate Standings” of each of the teams in the four biggest leagues to determine which teams—and their owners—are doing well or poorly for all the money, dreams, and emotions that fans invest in them. Creating these rankings at all suggests a deep unease with how American sports fans are treated through the management paradigm we have now. Each team is ranked by the current likelihood of winning a championship, honesty and loyalty by ownership to players and community, coaching, effort and likeability of players, outreach to fans, affordability of attending games, arena experience, and “bang for the buck”. Often, the teams in smaller cities are the ones that do best with their communities, while even wealthy teams that are successful might not deliver much bang for all the bucks. In 2013, the modest Memphis Grizzlies topped the charts followed by two other NBA teams, the San Antonio Spurs and the Indiana Pacers. Bringing up the rear at #122 are the Sacramento Kings who might still secure anyway the huge subsidy the writer mentioned earlier. Jeffery Loria’s Miami Marlins ranked third from the bottom. [5] The highest ranked NFL team, at #5 on the rankings (and #18 on the Forbes list), provides the true exception to the rule on how major American sports teams are run: the Green Bay Packers. 

So who owns the Packers? Well, try 112,000 people to begin with. As Dave Zirin writes in The New Yorker, they are the only non-profit, community-owned team in a league that is awash in money and is run like a cartel. Not only are they fan-owned today, they have been issuing shares to any fan who wanted to keep the team afloat since 1923 during the hardscrabble days of the NFL when the league was by no means one of the “Big 4” in American sports interest (i.e. baseball, boxing, college football, and horse racing). Today the “Pack” membership structure limits the amount of shares any one fan can own to prevent a takeover. The memberships, like the socios in Spain or “supporters’ trusts” in England, are simply that. They aren’t stockholders who will make money or get dividends if the value of the team rises. In fact, the Cheeseheads don’t even get free tickets for purchasing shares. Still, no professional sports team in America has as many fans awaiting season-tickets (over 100,000 according to ESPN). Green Bay scarcely has 100,000 residents, although their gridiron, Lambeau Field, packs 80,000 each game. What’s in it for the members then? An opportunity unlike any other in American sports: having the opportunity to elect directors and a committee to represent the team when the fat cat owners of the other teams get together to decide league business.  Since the team is a true community one, the professional staff can concentrate on building a winner rather than worrying about the bottom-line. Players truly represent the fans. Volunteers work concessions, and shovel snow on match days. Even the beer is rumored to be cheaper at Lambeau than other NFL stadia. Sixty percent of proceeds go to local charities. [6] 

There’s one big problem with the idyllic system Green Bay has. The NFL wants to make sure it’s never replicated again. How can the NFL be opposed to a team that makes money, that would otherwise be considered profitable, has stable, deep roots in the community it plays in, and has generally been one of the more competitive franchises? The truth is they’ve never liked it. As far back as 1960 the league’s constitution banned non-profit ownership, with the Packers grandfathered in since they couldn’t ban one of the best teams. What the NFL won’t say is that community led teams would prevent the option that many other owners would always want as a last (or even first) resort. That option is to move their teams to wherever the owner is most satisfied as to profitability.

Zirin points out that this is hypocrisy, pure and simple. Television contracts covering the years 2006-11 gave the league $3 billion. Another $6 billion has been doled out by various levels of government to fund the current stadiums in use. Although taxpayers, some of whom, of course, have no interest in sports, are shouldering huge debt, the lords of the NFL still want the ability to wave “goodbye” whenever it may suit them. Zirin argues that “(i)n the United States, we socialize the debt of sports and privatize the profits. Green Bay stands as a living, breathing, and, for the owners, frightening example, that pro sports can aid our cities in tough economic times, not drain them of scarce public re-sources.”

Some teams make money even when they lose because of the deals they make, rather than the efforts they show during the games. The Houston Astros finished 2013 with the second-poorest record in the more than 100 year history of MLB. However, due to a payroll for players that would make Loria seem like a sailor on shore leave, and a lucrative local TV contract, the team earned $65 million. [7] An obvious question might be what could convince them to purchase better players if it meant less profit?

Other teams, knowing their ability to ransom fan passion, make demands that are quite simply outrageous. Philadelphia Eagles have requested money for upgrades at their Lincoln Financial Field despite its being only 10 years since they’ve moved in. [8] The Atlanta Braves are planning to move to a suburban county in 2017, notwithstanding more than $209 million spent (unusually most of it private, though not from the team) in 1996 in the creation of Turner Field. The city says the stadium will be demolished after the ball club leaves town.  Cobb County will spend roughly $450 million of the $672 million to build the new stadium for their clients. [9]

What can sports fans do to reverse this terrible state of affairs? There are several options and prongs of attack that may alleviate the excesses of American sports ownership, and provide regular paying supporters with more of a say on how their teams are run. The easiest (although by no means “easy”) initiative is for fans to organize themselves into a real lobbying force within their particular areas. Many professional sports teams have fan or booster clubs that have generally existed to help with fundraising and be a conduit of information and feedback from the club’s offices to the rank-and-file ticket buyer. What if more booster clubs decided that they weren’t satisfied with simply running raffles to assist the club’s charitable activities, but instead insisted on a fan representative to attend ownership meetings? What if fan organizations pooled their members’ money together to buy interests in the clubs they support? If a club balked at “mere” fans wanting a say, they could take their grievances to the media or organize boycotts. Fan organizations could and should communicate with like-minded booster clubs in other cities in their leagues to organize around common concerns.

In the U.K., through bi-partisan support in Parliament, the Supporters Direct [10] organization acts as a facilitator for grass-roots efforts for fan groups to form under charitable/non-profit guidelines, and work proactively for more democratic ownership. Depending on the situation and finances of the various soccer and rugby teams, activities might include fan representation on boards of directors, supporters assisting strapped clubs by pooling funds for development, or even fan groups taking over the day-to-day operations of teams that would have otherwise folded.  Particularly in smaller towns, far from the major leagues, fan organizations and trusts can help provide sustainability to their local communities by saving traditional teams and grounds. As the player-manager of Wrexham FC Andy Morrell told the BBC after the supporters’ saved his team from oblivion, “The fans haven't got a bottomless pit of money like a millionaire owner might, but they have put their money where their mouths are, and anything we earn goes (into) the team.” [11] What’s more, the more direct involvement fans have in the management of their teams, the more say they can have for larger issues like league rule changes, facilities, player mobility, ticket prices, or the use of new technologies. The goal is to get fans organized rather than being mere consumers (as alluded to in Simmons’ piece on American sports fans above).          

Organizing by American sports fan in this way might bear fruit more quickly at the minor-league level, where good public-relations is very important, with fewer well-heeled owners. The lower level of financial resources by owners might make them more receptive to being approached by those who can assist or share the burden. The Wisconsin Timber Rattlers of the Class A Midwest League are similar to their Badger State brethren in Green Bay as a non-profit community-owned team. As recently as 2012 the club won the Larry MacPhail Trophy for the best promotions work in all of the ranks of minor league ball. The club has even completed major renovations at their diamond in Appleton- Fox Cities Stadium. [12]

The minor ranks also show that nothing less than complete will and determination will be required to bring forth more democratic sports ownership. Consider the Memphis Redbirds as a cautionary tale. In 1997, Dennis Jernigan brought a club to the River City. Not only was the club organized to be non-profit and community based, but the team’s board was intended to “look like its city” by having half of the members be women and minorities. Unfortunately, the well-meaning and high-minded principles the club was founded on couldn’t survive on the basis of those principles alone. [13] As this article goes to press, the parent club of the Redbirds, St. Louis Cardinals, may purchase the team from the non-profit organization as the annual bond payments on the building of AutoZone Park are not being met. There may be an opening for the City of Memphis to purchase the stadium, which would potentially increase the likelihood of community stability. However, the long history of baseball’s hierarchical “feeder” system of minor leagues suggests that the Cardinals might find it relatively easy to move operations to another park or city, even if they do buy the Redbirds, whenever a change in facilities or geography suits them.

The big fights for fans to pick are certainly worth the battle, but will involve a full-frontal assault on decades of political and financial “checks” that the powerful leagues and owners have benefited from. The major American sports leagues operate essentially as individual cartels. There is an obvious “common good” need in applying public pressure, media scrutiny, and enacting changes in the law. The anti-competitive mindset of the major leagues can be seen in the refusal to allow access by non-profit or government entities, and the requirement of 51% or more ownership in one hand rather than a broad, consensus-focused group (the opposite of the pro-member association policy in Germany mentioned earlier in this article). One solid proposal to defeat this anti-competitive climate has been U.S. Representative Earl Blumenauer’s “Give Fans a Chance Act,” proposed in the 2011 session of Congress. As Rep. Blumenauer described the legislation, as early as 1997 it would “tie the sports broadcast antitrust exemption to the elimination of rules that prohibit public ownership. And it would give communities a voice in relocation decisions….it would make stadium decisions based on what is good for a team and community, not on what looks to be blackmail; it will make it easier to get support for needed stadium expansions …(t)here is a congressional responsibility to help these fans, since we helped create this monster.” [14]

Another important piece of legislation that sports fans should get behind and support is Senator Tom Coburn’s “PRO Sports Act,” which would change the way major leagues are defined under the Internal Revenue Service’s code. Believe it or not, most major leagues are currently treated as 501 (c) (6) organizations, meaning that they are effectively treated as non-profits. Under Coburn’s proposal the mighty NFL, NHL, PGA, ATP, and some other major sporting leagues and tours would be required to pay the normal corporate tax rate of 35%. In his article “Sports Welfare Dies Hard” Patrick Hruby asks: “(h)ow much does this loophole cost taxpayers? Due to accounting vagaries, no one knows for sure... NFL and NHL collectively received about $260 million in membership dues from their teams in 2010—Coburn estimates that sports leagues are sheltering at least $91 million annually. But the actual amount is likely higher.” [15]

You’ll notice that Blumenauer and Coburn’s legislation have yet to pass, showing the ability of deep-pocketed major sports interests to defeat proposals that allow for competition and fan involvement. But if we’re serious about using grass-roots methods to rebuild social capital in our communities and working towards smart and sustainable growth, fighting the sports behemoths until they are more responsive to fan involvement will be vital. A series called “Cooperative Paths to Community Development” [16] from the University of California’s Co-op Extension blends together the possibility of fan organizations, foundations, local benefactors, and businesses coming together to create community-based corporations to oversee and keep teams rooted in their cities if the bans on non-profit ownership can be overturned. Capitalizing these groups will be the most difficult part. But having a broad base of local support can insure sports fans have decades of joy, pride (and the occasional heartbreak) from the thrills that few things other than sports provides so many Americans.

Kirk G. Morrison

Kirk Morrison chairs the National Committee of the American Solidarity Party.