If/when (when) one or more NFL teams relocate to Los Angeles, the owners will be required to fork over a significant transfer fee.
Per NIck Canepa of U-T San Diego, that amount could be up to $500 million per team.
The league’s relocation policy expressly states that a relocating team “will ordinarily be expected to pay a transfer fee to the League,” aimed at compensating other teams for the loss of the opportunity to move to the new market themselves and/or accounting for the enhanced value of the franchise arising from the move.
With Steve Ballmer buying the NBA’s L.A. Clippers for more than $2 billion last year, it’s safe to say the move of an NFL team to Los Angeles will enhance its value, dramatically. Because the factors include comparison of revenue streams and franchise value in the old market and the new market, it’s possible that, for example, the Rams and Chargers would face different transfer fees, if they move.
The relocation policy also gives the Commissioner discretion to adjust the transfer free based on the NFL’s interest in encouraging the move or discouraging the move. In other words, the NFL will once again be able to do whatever it wants to do.
The most prudent approach would be to negotiate all aspects of relocation between the team(s) that will be moving and the league office before ownership votes on the move. If an impasse is reached, an owner can decide to defy the rest of the NFL and move without paying a transfer fee or accepting any other terms. While the NFL believes it can impose its will on specific franchises, the late Al Davis proved when moving to L.A. more than 30 years ago that the antitrust laws prevent a collection of independent businesses from telling one specific business where to do its business.
That’s the ultimate leverage for the Rams, Chargers, and/or Raiders this time around. It requires a willingness to alienate the league office and most if not all other owners, but keeping up to $500 million could provide a strong incentive to deal with getting the cold shoulder at ownership meetings.